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.
New pensions secretary is a part of the family
Gordon Brown yesterday appointed Yvette Cooper as the new Secretary of State for Work and Pensions, replacing James Purnell who resigned from the Cabinet just days ago. Yvette Cooper is the wife of Childrens School Secretary Ed balls and said to be part of Gordon Brown's "inner circle". She becomes the ninth Secretary for Work and Pensions since Labour came to power in 1997. Is this position somet...Read More
Do I need a pension?
Many people don't take the opportunity to arrange a pension plan. There are other things in life, particularly at a young age, which people would find more important than organising a pension. This is perfectly normal, but a major role of a financial advisor is to ensure the protection of a person’s long term financial future, and starting a pension scheme is one way of doing this.
Past 12 months see sharp rise in demand for financial advice
23/04/2015 There has been a sharp rise in people looking for financial advice over the past 12 months, with more than a third of accountants experiencing an increase in potential clients. Research from Investec Wealth & Investment showed that 37% of accountants had seen a sharp rise in demand for advice, with the majority of consumers needing guidance on pensions, followed by inheritance tax...Read More
William Morrison dumps final salary pension scheme
As Barclays bank moves towards a significant change in its final salary pension scheme, supermarket chain William Morrison has today followed suit suggesting that future benefits for its 10,000 final salary scheme members will be based on average career earnings and not their final salary. This is a significant change in the future make-up of the William Morrison pension scheme and one which is be...Read More
Aegon withdraws guaranteed pension plan
In a fresh blow for the UK pension industry Aegon has been forced to withdraw its flagship 5 for Life Variable Annuity which guaranteed a minimum 5% annuity rate on pension arrangements. The plan will be replaced by the Secure Lifetime Income plan at the end of June which will also be a variable annuity arrangement but with no guaranteed minimum.
Slowly but surely we have seen a gra...