When the UK government announced plans to introduce a personal pension scheme for those in the UK without access to a quality employer pension scheme there was much applauds from all areas of business. Initially it was thought that fees would be kept to a competitive 0.3% per annum, which is well below the pension industry average, but it now emerges that a 2% initial charge will be introduced which is unlikely to go down well with those automatically enrolled into the scheme.
The UK government is this evening breathing a sigh of relief after winning a European Court of Human Rights battle which could have resulted in a £500 million a year additional bill for the UK state pension. The case revolves around a number of expats who have moved overseas to places such as Australia and Canada and are currently only receiving the pension payable upon their retirement in the UK without any increases to take in annual inflation.
It has been revealed that the U.K.'s four largest public sector pension schemes saw a 56% increase in employee contributions between 1999/2000 and 2008/09. While this would appear to be a good move on behalf of taxpayers, in reality the vast majority of the extra income was created by a large number of new members, although there was an increase in contribution rates.
The Pension Protection Fund (PPF), the safety net for the UK pension fund members, has today announced plans to widen its investment criteria to take in new areas of investment. Currently the PPF has a portfolio of around £4 billion which is predominantly invested in cash and bonds. The current benchmark target return for the fund is around 1.4% although this will be increased to 1.8% over the next 12 months when the range of investments eligible for the fund will be expanded.
A report this week has confirmed that the UK pensions industry is in turmoil with more than 66% of the UK population concerned about their pension fund arrangements and their retirement years. As a consequence many people are asking themselves - Is it ever too soon to sort out your pension?
If there is one sector of the financial industry which has suffered more than most over the last 10 years it has to be pensions. We have seen the demise, and almost extinction, of the final salary pension scheme in the private sector and investment returns reduced significantly over the last decade. As a consequence more and more people are now becoming more and more concerned about their prospects for retirement and whether indeed they will have sufficient funding to lead the life they crave.
The Taxpayers Alliance (TPA) has today issued a damning report on public sector pension schemes in the UK with local government pension funding estimated to have a shortfall of around £53 billion. The figure for the 2008/09 tax year sees more than 15 councils with a deficit of over £500 million each which will be funded by UK taxpayers in due course.
British Telecom (BT) has today come under attack after a number of UK competitors stepped forward to make public their concerns about the proposed 4% increase in wholesale telecom prices. Despite the fact that the UK telecoms market has never been more competitive, BT is still central to the sector and controls the vast majority of wholesale services to the likes of BSkyB, Carphone Warehouse and Cable & Wireless to name but a few. So how will the 4% increase in wholesale telecom prices impact upon the BT pension scheme?
A report by PwC has recommended that the UK government increase the state pension age to 70 from the current level of 65 for men and 60 for women. However, those who are currently in employment and have paid their taxes since day one are effectively seeing the goalposts moved and their working lives extended by anything up to 10 years. Is this fair?
The chairman of the London Pension Funds Authority, the largest council pension fund in the UK, has today joined calls for the next government to introduce a wide ranging review of public sector pensions. This comes just ahead of next month's revaluation of council pension funds which is expected to show a deficit of around £70 billion!