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.
How do I get a Pension?
This is not a question enough young people are asking. A lack of awareness is a major contributing factor to the fact that so many people are ill-equipped for their retirement. People are typically ignoring or failing to realise the importance of making sure they have a pension plan in place from a young age, and as such are set to struggle when they reach retirement age.
How you get a...Read More
Kraft Foods looking to freeze US pension scheme
Kraft Foods has today revealed plans to freeze future payments towards its US pension scheme from 31 December 2019. While this date is obviously some way off into the future it has prompted concern amongst the Cadbury workforce and Cadbury pension fund trustees. So what plans does Kraft Foods have for the Cadbury pension scheme? At this point in time there is actually a deficit in the Cadbury p...Read More
Is the government's pension policy working?
With 9 out of 10 final salary pension schemes now closed to new members there are serious concerns that the UK government's pension policy is not working. More employers than ever before are also complaining about the cost of enrolling their members in pension schemes and indeed the introduction of new pension regulations has not helped the situation. The pension situation in the UK is now at a cr...Read More
EHRC suggest retirement age should be scrapped
The Equality and Human Rights Commission (EHRC) has today issued a report suggesting that the official retirement age in the UK should be scrapped. The commission believes that employers in the UK should be incentivised to maintain older staff within their workforce and utilise their experience and skills into later years. However, is there an undercurrent to this particular suggestion? While i...Read More
Is This The End Of Final Salary Pension Schemes?
News that the UK's top 100 companies have seen a massive fall in their pension funds values has led to suggestions that the end of the final salary pension scheme is nearing. In total the top 100 companies in the UK saw pension fund values fall from a surplus of £12 billion this time last year to a deficit of £41 billion today. The trend is being replicated across the board in the final salary...Read More