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.
Enhanced pension transfer values under scrutiny
The Pensions Regulator has today stepped into the fray regarding enhanced pension transfer values which are being used more and more by UK companies as a means of reducing their pension fund deficits for the future. In simple terms, members are given the option of transferring their pension funds from a specific scheme and in order to incentivise this potential transfer the value is enhanced with...Read More
Can a child have a pension ?
You may be surprised to hear that the answer to this is yes. It may not be very common yet, but it is now possible for children to have a pension. There are a few different options, but the most common is a Stakeholder Pension fund. A child's pension can be opened from as little as £20 and you can pay in up to a maximum of £2,808 per annum net of income tax in a single tax year. Like an adult's...Read More
Can we really depend on the state for future pensions?
The pension industry has never been far from the headlines over the last 10 years as the situation has changed dramatically to the detriment of UK consumers. Only recently we have seen dozens of final salary pension schemes biting the dust and tax changes which have again hit the long-term attractions of personal pensions. The fact that the UK state pension has effectively fallen in real terms ove...Read More
Marc Bolland attacks Marks & Spencer pension fund deficit
In what is a very positive move in his early days in office, Marc Bolland, the new chief executive of Marks & Spencer, has confirmed the company will inject £800 million into the company's pension scheme between now and 2018. The pension scheme is rumoured to have a £1.3 billion shortfall and there were concerns about how the company would tackle this problem. It appears that the company will...Read More
1 in 4 between 65 and 74 still Work
A quarter of pensioners between the ages of 65 and 74 in the UK are continuing to take a wage, despite passing the retirement age. Research from Aviva has highlighted the fact that the workforce continues to age, and that 23pc of people in this age group were still wage earners in December 2012, compared to 18pc recorded three years ago. Changes in the law mean that workers can no longer b...Read More