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 the state look after us in later life?
There has been much mention of the UK pensions industry over the last few weeks, in both the public and private sectors, with many changes forecast in the future. However, it is becoming more and more apparent that many people in the UK are unwilling or unable to put aside savings for their retirement and will become more dependent upon the state to fund their later life. But should the state look...Read More
Personal finance 'scarier than terrorists'
Britons are more concerned about their own financial situation than the threat of a terrorist attack, a new survey claims.According to bank Abbey, climate change and everyday crime also cause much fewer sleepless nights than money worries.Today's research shows that finances are perceived as the biggest threat to the quality of life in the UK by 24 per cent of respondents.In contrast, 11 per cent...Read More
When can I cash my Pension?
This is a question that is asked regularly. While most people understand that they can’t start to receive money from their pension plan before the age of 55 at the earliest, there are many who don’t fully understand how they receive benefits once they retire.
It is important to remember that a pension is not a savings account. You don’t put your money into it, add to it here and t...Read More
Is Pension Regulation Red Tape Killing Final Salary Schemes?
News that the government is going to be adding a new layer of regulations and rules with regards to final salary pension schemes has provoked a furious response for the CBI who's membership are growing tired of continuous meddling in the sector. The new raft of regulations will tighten the funding which needs to be in place and place a straight jacket around the funds in question, very much restr...Read More
When did you last review your pension plan?
Despite the fact that pensions are in the news each and every day the moment, with more and more final salary schemes going out of business and pensioners struggling to survive on a state pension, many people have not even looked at their pension arrangements for some time.
It is vital that you review your pension plan on a regular basis, annually if possible, because ultimately if...