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 will the ageing UK population impact upon the benefit system?
At this moment in time there around 10,000 UK citizens who are aged over 100 but this figure is set to increase dramatically in the short to medium term. Forecasts suggest that over 280,000 Britons will be aged over 100 by the year 2050 and there will be around 16 million pensioners in the UK, many under the state pension system. So how will this impact upon the UK benefits system? In many ways...Read More
UK pensions sector in serious trouble
Aside from the fact that UK public sector pension schemes are in disarray, and allegedly looking towards a £50 billion deficit, there are serious concerns about the rest of the UK population. A number of surveys over the last few months have highlighted the fact that only 50% of the UK population are actually making adequate pension fund contributions for their later life. But this is not the onl...Read More
Calls for disgraced MPs pensions to be reduced
As we have covered on a number of occasions, the MPs expenses scandal has caught the attention of the UK public and ultimately led to the demise of a number of key figures in the UK government and UK opposition parties. However, it has become apparent that because of the very generous pension arrangements enjoyed by UK MPs, even those MPs who are set to resign at the next election will walk away w...Read More
Businesses urged to promote pensions
Employers are being called on to do more to promote pensions among staff and make people recognise how important a pension plan is to their future.Des Hamilton, technical director for The Pensions Advisory Service (TPAS), said that there is an onus to "make people understand that they cannot afford not to join" a pension scheme.He said that there exists a "lack of understanding" when it comes to p...Read More
CBI calls for changes in UK pension system
The CBI has today spoken out in support of UK businesses and demanded that the UK authorities review the current pension arrangements. The institute believes that UK businesses are at a "severe competitive disadvantage" because of the various rules and regulations present in certain areas of UK pension industry. One of the main problems is the short-term reviews required under current regulations...Read More