The difference between private sector and public sector pension arrangements?
The release of Lord Hutton's report into public sector pension schemes perfectly illustrates how an explosion in the number of public-sector workers in the UK has contributed to an ever-growing liability for UK taxpayers. The vast majority of public-sector pension arrangements are based on an employee's final salary which can often bear little or no resemblance to the potential investment return on the pension funds in question. So why is there such a big difference between the private sector and the public sector pension setup?
The truth is that the public sector is guaranteed by the UK taxpayer and boom and bust periods in the UK economy have no impact upon funding arrangements. However, boom and bust scenarios have a major impact upon private companies which can in many cases lead to pension fund deficits and cash flow problems. When you also take into account the fact that private pension funds are invested in the stock market in the UK and worldwide assets for the future, thereby exposing them to the varying rates of return, this can and does have a major impact upon the final funding available to each and every pension scheme member.
Final salary pension schemes are few and far between in the private sector today despite the fact they are commonplace in the public sector. The UK government needs to reduce the difference between public sector pension payments and private sector pension payments otherwise more and more UK taxpayers will be funding public sector arrangements while they struggle to arrange their own funding for the future.
Should you continue to pay into your pension fund?
As the economic downturn in the UK continues to gather pace it seems as though everybody in UK is looking to save as much cash as possible for the tough times ahead. Many people are looking at their investments, their insurance policies and some are even looking at their contributions towards their retirement. But is it right to cut your pension fund payments at this moment in time?
Types of Pension
The type of pension scheme you end up with will broadly depend on your situation and your goals for retirement. There are a number of different schemes available, and you can have more than on e at any one time.
Below is a bit of detail about the most common types of pension, and how you can go about starting a scheme.
Company / Occupational Pension
This type...Read More
UK government accused of raising pension age too quickly
The National Association of Pension Funds has today stepped into the mix to suggest that the UK government is being "too hasty" with regards to proposals to increase the state pension age for men to 66 years of age from 2016. The Association believes the government should look to equalise the state pension age for men and women to 66 years of age from 2020 in order to give those in their mid-50s m...Read More
Pensions Black Hole May Reduce Taxes By Ã‚£10 Billion A Year
Even though we are seeing more and more final salary company pension schemes sold off to third parties in order to reduce company liabilities and exposure, it seems that the short fall which many are having to make-up before selling their schemes may cost the Treasury dearly. Leaders of the pensions industry have flagged the problem which seems to be getting worse. In essence the problem revol...Read More
500,000 mothers missing out on pensions
A large number of women are suspected to be missing out on the full pension they are entitled to because of a flaw in recording their details, according to the Liberal Democrats.Steve Webb, who is in charge of the Lib Dems' manifesto, says that up to 500,000 women could be affected but he is appealing to the government to find out exact figures.Speaking on Radio 4's Money Box programme, Mr Webb sa...Read More