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.
Is it easy to transfer your pension arrangement overseas?
As more and more people look to retire to foreign lands it is becoming evident that the transfer of your pension arrangements from the UK to your new home country may not be as straightforward as many had assumed. Differing pension regulations and pension systems are causing significant concern across the UK pensions industry although the April 2006 introduction of the Qualifying Recognised Overse...Read More
The great pension divide
It has been revealed that public sector pension funding requirements will approach £4 billion a year over the next few years. While the ordinary worker in the private sector struggles with funding for the future, final salary schemes are now commonplace in the public sector. There is great concern that a divide is appearing in the UK whereby taxpayers are being saddled with massive future debts t...Read More
Do You Want To Work Until You Are 70?
A report by Lord Turner of Ecchinswell into the UK state pension scheme has advised the government that in order to maintain the relative value of today's pension, the age of retirement will need to rise to age 70 by the mid 2000s. The prediction for the new 70 retirement age is an increase on the 68 year old figure which was calculated just a couple of years ago and will see more of the UK popul...Read More
Royal Bank of Scotland pension scheme set for £800m injection
The multibillion pound bailout of Royal Bank of Scotland by the UK taxpayer has seen £800 million of this funding set aside to cover a growing deficit with the company's final salary pension scheme. There was more outrage today when the gold plated pension scheme operated by the company was confirmed to be just under £2 billion in deficit as opposed to a small surplus just 12 months ago. However...Read More
NAPF calls on government to guarantee pension protection fund
The National Association of Pension Funds (NAPF) has today released a statement urging the UK government to guarantee the pension protection fund. This is the industry financed arrangement with funds used to compensate those who may have lost money in a failed pension fund or pension arrangement. The NAPF has also suggested the government needs to be more flexible regarding rules for pension schem...Read More