Who is to blame for the UK pension debacle?
Proposals by the UK government to increase the retirement age in the UK have been met with a mixture of disdain and relief. While there is no doubt that more and more pensioners are struggling to make ends meet in their retirement years there is also no doubt that allowing people to work longer will reduce the potential employment opportunities, and promotions, for the young of today. So who is really to blame for the UK pension problem?
The truth is that while we can look back at changes introduced by Gordon Brown, such as the withdrawal of tax relief on certain pension assets, the fact is that miscalculations over the years are now coming home to roost. Only a few years ago we saw a massive change in annuity rates which was purely and simply because of the fact people are living longer and investment returns seen in the 80s have not been replicated in the 90s and the 2000s.
It is not the fact that investment returns over a short period have been less than "the average" but the fact that a lower return on investments leads to less money available to be reinvested and the vicious circle begins. While Gordon Brown has taken much of the flak regarding the pension debacle there is no doubt that this is a problem which has been growing for years, as we have seen on the continent.
Share this..
Related stories
BT announces profits fall but pension fund concerns are greater
Despite announcing first-quarter figures which showed profits down 45%, it is the issue of BT's final salary pension scheme which is causing more concern amongst investors. This is the largest UK final salary scheme in existence and is currently said to be around £8 billion in deficit. Even though the figure of £8 billion may well have fallen after the recent run of the UK stock market, there ar...
Read MoreBBC set to tackle £2 billion pension fund deficit
While the announcement in April 2008 that the BBC pension scheme was around £470 million in deficit caught the headlines and concerned many members of the scheme, experts predict that figure is now nearer £2 billion after subsequent stock market falls. As a consequence the corporation looks likely to reduce its programming budget by millions of pounds in order to try and alleviate the growing pe...
Read MoreBlue-chip companies battered by pension storm
Blue-chip companies in the UK are now using £2 out of every £3 in pension scheme premiums to reduce their liabilities as opposed to investing in employee benefits for the future. A report by KPMG indicates that overall there has been a £15 billion increase in pension fund liabilities for FTSE 100 companies during 2010 so far. The figure now stands at £65 billion which is an enormous 50% increa...
Read MorePension Protection Fund to increase funding
The Pension Protection Fund, the rescue authority which covers corporate pension failures, has announced plans to increase its liquidity and its asset backing in the medium to longer term. The authority will increase its solvency ratio, the amount of assets available compared to the amount of liabilities taken on, from 88% in March 2009 to 110% over next 20 years. The Pension Protection Fund is...
Read MoreThe Pensions Regulator warns companies about cutting pension contributions
The UK Pensions Regulator has stepped in today to warn companies in the UK that they would take a dim view of those paying dividends to shareholders while attempting in any way shape or form to reduce their company pension scheme obligations. While the regulator admits it has no legal authority to enforce pension contributions before dividend payments there are other actions which can be taken wit...
Read More