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.
Can We Blame Companies For Closing Final Salary Schemes?
The pensions industry has gone through some major changes over the last 10 years and there still appear to be many more changes on the way. However, one element which always seems to cause a conflict of opinion is the debate regarding the closure of many Final Salary Schemes and who really is to blame. The work force and the Unions blame the management, the management blame the government, so wh...Read More
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
Pensioners "sitting pretty"
Contrary to the view that pensioners struggle to make ends meet many of those aged over 55 are actually "sitting pretty", new research has suggested.One in ten of those who fall within the older age bracket are satisfied that they can afford to indulge in luxuries, according to a poll conducted on behalf of Birmingham Midshires.In contrast just one in 50 of those aged between 18 and 24 believe tha...Read More
Is it time to overhaul the whole UK pension system?
As finally the UK government comes round to the fact that public-sector final salary pension schemes are no longer affordable it seems as though we are reaching a significant crossroads for the UK pension sector as a whole. The last couple of years have seen a total collapse in the number of private sector final salary pension schemes with more and more companies admitting to large liabilities, wi...Read More
Reader's Digest goes into administration
It has been revealed that the US parent company of the UK version of the Reader's Digest has placed the operation into administration today. This is a matter which we covered some weeks ago in relation to a £125 million pension fund deficit which the US parent company had been trying to resolve with UK pension trustees and the Pensions Regulator. While a deal between the US parent company and...Read More