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.
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
Annuity rates have fallen at fastest rate in 3 years
11/09/2014 Annuity rates have fallen at their fastest pace in three years, the information website Moneyfacts has found. Annuity rates, which determine the value of private pensions, have fallen by 2.6% during August. This means rates, and the returns offered, are only getting worse. Anyone buying an annuity, or an income for life, will receive a lower pension. This means a person with a...Read More
Have you considered your pension fund arrangements?
As the controversy regarding the UK budget continues to die down many people are now looking towards the future and their pension fund arrangements. However, there are a growing number of people in the UK who have either ditched their short-term pension arrangements or not even considered them. These are the people who will suffer severely as the value of the UK state pension continues to fall in...Read More
Who will cover the growing BT pension fund deficit?
It is believed that the BT pension deficit has now reached £9.4 billion and while there are plans afoot to fill the hole left in the pension scheme, it would seem that BT's competitors may well be asked to pay "their fair share". Ofcom is said to be considering a request to increase wholesale telephony charges, the fees which BT is allowed to charge competitors for using the BT network, by 4% a y...Read More
Can you trust your pension scheme?
As pension funds hit the headlines once again with massive shortfalls across the UK there is concern amongst many pensioners and would-be pensioners about their future. Can their current employer pension scheme be trusted? Are they protected in any way for the future?
When the government has changed the regulations regarding pensions and pension protection over the last few years it...