Will the unions sit back and let David Cameron amend public sector pension schemes?
The BBC has today announced plans to close its final salary pension scheme to new entrants and also limit pensionable salary increases to no more than 1% a year. This is the first major public sector operation to announce such a move and many believe that David Cameron will use this as a launchpad to attack public sector pensions which have built up massive deficits which UK taxpayers will need to cover.
It is estimated that final salary pension scheme liabilities in the public sector amount to upwards of £1 trillion and the situation could become much worse before it gets better. Unless the UK government is able to attack this particular area of public funding, and either limit pensionable salaries upon retirement or force members to contribute to the scheme, the £1 trillion deficit at the moment could seem like chicken feed in years to come!
There is no way that the UK unions will allow David Cameron to walk all over the UK pension system in the private sector and we can expect significant friction in the short to medium term. Whether the battles between the government and the unions will be on a par the 1980s and Margaret Thatcher's hardline approach remains to be seen but there is no doubt further conflict and further disputes will be announced in due course.
Are you happy with your pension arrangements?
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 prospect...Read More
OFT to crack down on poor value pensions
19/09/2013 The Office of Fair Trading (OFT) has ordered a crackdown on schemes that offer poor value to savers. The crackdown involves recommending a series of reforms that will give new and increased powers to the Pensions Regulator. The OFT concluded that the complexity of schemes makes it particularly difficult for employers and individuals to assess their options in order to make the rig...Read More
How are so many pension schemes in deficit?
While the British Telecom final salary pension scheme is currently attracting all of the headlines, there are many more major UK pension schemes in significant deficit. As we have covered on numerous occasions, the situation has arisen because of a number of factors which include:-
The assumption that the average pensioner will live longer than first thought
Fat cats in the city avoid pension tax
The UK government recently announced a number of changes to the pension system which would effectively see an increase in taxation for large value contributions to pension schemes which many thought would hit the high earners in the City. However a report by the Guardian has today confirmed that a significant number of top earning directors in the UK opted to receive their pension fund contributi...Read More
Peers to vote on pensions 'lifeboat'
A key vote on whether the government should compensate thousands of people whose pension schemes collapsed will be held in the House of Lords tonight.More than 125,000 people lost millions of pounds worth of retirement savings when their companies went bust between 1997 and 2005.The government intends to compensate affected people with 80 per cent of their expected basic pensions under the Financi...Read More