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Monday 8th June 2009
As the UK pension market continues to crumble, with more and more final salary schemes biting the dust, there are serious concerns about future pensioners in the UK. For many years workers have had something to fall back on in the knowledge that their pension fund arrangements would deliver an easy to understand and definitive income based upon their final salary and their years of service. However, now that final salary schemes have disappeared in many sectors of the UK, although they are still very much alive in the public sector, there are serious concerns for the future.
The unfortunate reality is that more and more people in the UK will be forced to "look after themselves" as they approach retirement in years to come. Like so many European counterparts, the UK public sector pension liability continues to move higher at an alarming rate, with no government or political party willing to break the mould and upset the millions of workers in the public sector.
There is no doubt that the UK pensions sector, aside from the public services sector, is in need of a desperate overhaul with more tax incentives required - or at worst those taken away over the last decade reinstated. Many people do not understand that by taking tax from pension fund income this not only reduces the value today but it means there is less money to invest tomorrow and less potential returns into the future. If you have any concerns about your pension fund arrangements you should take professional advice as soon as possible. |
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Comments (1)
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Colston Hicks said:
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10th Jun 2009 @ 17:20
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The solution is simple,put the clock back to before May 1997.
Before May 1997 if a members' final salary pension scheme fund earned a £1000000 interest in the mortgage an loan market the treasury would take a cut of about 15%,£150000 for the taxpayers coffers,leaving the members' fund with £850000.
From May 1997 the Treasury's cut is 75% of the £1000000, the Treasury taking £750000 for the taxpayers' coffers,leaving the members'fund with only £250000.
This is worked out by reducing the simple interest on a Gilt by 20% (Gordon's immediate tax)and then calculating the true AER (compound interest),using the price and total return,( net simple interest x no.of years to redemption + £100).
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