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.
Is it right that public sector workers suffer for government mistakes?
No matter how the government and various political parties attempt to wrap up the issue of public-sector pensions there is no doubt that public sector workers will suffer one way or another because of decisions made by previous governments. While it is easy to place all of the blame at the doorstep of the Labour Party the truth is that previous governments also played their part. But is it right t...Read More
Pensions Act 'to allow more National Insurance top-ups'
Around 500,000 Britons could benefit from new amendations to the upcoming Pensions Act.The rules over National Insurance contributions are to be relaxed, with people now allowed to top up shortfalls with one-off lump sum payments.Effectively, this will mean that many women, who took years off work to bring up children, will now be able to take out the full basic state pension.The change applies to...Read More
British Telecom under attack over pension funding strategy
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 C...Read More
How much does the government invest in pensions?
Yesterday's news that the UK government is reducing the amount of money which can be injected into your pension fund in any one year from £255,000 to between £30,000 and £50,000 has caused some consternation in the financial sector. However, many people will be unaware that the UK government currently "invests" around £20 billion a year in individual pension arrangements via the tax relief sys...Read More
Phone fraud – Over 55s more likely to become victims
A recent study conducted by the Financial Ombudsman has revealed that people aged 55 years and over are more likely to become victims of phone fraud. This is when fraudsters pose as a bank or the police and request bank details to be given over the phone. The study, which reviewed 200 phone scam cases involving ‘vishing’ or a ‘no-hang up’ scam, has found that 80% of those who were tric...Read More