Can we kiss goodbye to final salary pension schemes in the private sector?
The news that the top companies in the UK have combined pension fund deficits in excess of £100 billion due to the fall in share prices, property values and income, we may be on the verge of kissing goodbye to final salary pension schemes. The situation has worsened significantly over the last 12 months and has also shown the fragility associated with pension fund investments in stock markets. The ever-increasing tax burden on pension income and pension funds has also reduced investment returns and ultimately the combination of the above has proved devastating to many.
With the likes of Shell showing a multibillion pound deficit on their pension scheme it is only matter of time before final salary pension schemes in the private sector are no more. This comes at a time when public sector pension schemes, i.e. MPs and local authorities, continue to thrive and are still commonplace around the UK. While these funds are covered by the UK taxpayer, there is no such safety net for the UK population who have to fund their own pension arrangements due to an ongoing reduction in the real value of the UK state pension.
The UK pension industry has changed significantly over the last 20 years and could change significantly over the next 20 years.
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