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.
Premier Foods calls the end of the final salary pension scheme
Robert Schofield, the chief executive of Premier Foods, has today called the end of the final salary pension scheme in the UK having effectively been forced to ditch the company scheme for its 17,000 strong workforce because of the company's high level of debt. Premier Foods, which owns brands such as Hovis, Mr. Kipling and other well-known food names, was the last FTSE 350 company to open a final...Read More
OECD: UK has one of the least generous state pensions
02/12/2015 The UK state pension has been found to be one of the least generous in the world, according to a report from The Organisation for Economic Co-operation and Development (OECD). The report from the international think tank found that out of the 34 countries who are members of the OECD, 31 countries have more generous pensions than the UK. Only two countries pay poorer pensions, Mexi...Read More
Have you made sufficient pension provisions for the future?
As money becomes ever tighter in the UK marketplace it is still vital for consumers to look further ahead and ensure they have sufficient pension provisions for the future. Many of those who have moved employers in the past and have a number of pension scheme "pots" will probably be aware of a growing trend which has seen many pension providers offer incentivised terms to transfer people out of th...Read More
Pensioners could be given ‘death estimate’
22/04/2014 In a bid to get pensioners to stretch their savings out long enough to live the rest of their lives, retirees could be given ‘guidance’ on how long they have left to live. The idea is that people will be given a ‘broad-brush’ estimate as to how long they might live, ultimately allowing people to plan their finances more effectively. The Pensions Minister, Steve Webb cla...Read More
Sainsbury In Talks To Sell Final Salary Pension Scheme
In line with many other companies with final salary schemes it has been reported that Sainsbury has requested a number of quotes from pension fund specialists looking to acquire the company’s final salary scheme. While no figures have been mentioned the fund itself is fairly large at £2 billion, but proving to be something of a drag on Sainsbury finances.
The ongoing confusi...