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Why did nobody see the pensions disaster approaching?

As we hear about more and more multibillion pound deficits across a variety of private sector final salary pension schemes, many people are now starting to wonder why nobody saw this potentially fatal problem emerging. Not only have we seen a reduction in the amount of tax which pension funds are allowed to reclaim with regards to expenses and income, but we've also seen the UK stock market fall after the worldwide credit crunch. These factors have created multibillion pound pension deficits across the UK pensions sector and caused significant unrest in many boardrooms up and down the country.

Ultimately, despite what the official line from many companies may be, a number of these final salary schemes will not be able to fulfil their total obligations in the future. When you take into account rising debt amongst UK companies, longer life expectancy for the UK public as well as ever increasing pension fund contributions, the situation is hurtling towards disaster.

When you compare the private sector against the public sector, where all pensions are final salary and supported by the UK taxpayer, you could not have two more diverse situations. UK taxpayers, who in the future will require more and more income to cover their own potential pension fund deficits, will be required to pay more and more money to public sector pensions, which are final salary and very expensive to maintain.

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