Archive for the ‘ UK Pension Crisis ’ Category

Almost half of Britons say they will rely on their state pension to fund holidays in retirement

Almost half of Britons say they will rely on their state pension to fund holidays in retirement

A scary article , this doesn’t need to be the case .

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Pension gap widens at FTSE 100 companies

BBC -Pension gap widens at FTSE 100 companies

Pension gap widens at FTSE 100 companies
6 August 2013 Last updated at 00:10

The average FTSE 100 pension scheme’s assets can cover 91% of its liabilities, the report says
The pension deficit at the UK’s largest companies has grown slightly, according to a report by pensions expert LCP.

Its annual report shows the gap between assets and liabilities in defined pension schemes widened from £42bn to £43bn in the year to the end of June.

This was despite an increase in funding and a rising stock market.

The main cause was continuing low interest rates, which affect the calculation of a pension scheme’s future liabilities.

LCP’s Accounting for Pensions report, which looks at the pension schemes of the FTSE 100 companies, also found that rising life expectancy has added £40bn to liabilities over the last eight years.

The report also looked back over the past 20 years.

Even though share prices are rising and employers put £22bn more into their schemes, a deficit of £43bn remains.

Final salary schemes

This means that the average FTSE 100 pension scheme’s assets today can cover 91% of its liabilities.

Twenty years ago, that figure was 120% and companies were able to enjoy contribution “holidays”.

LCP also pointed out that 20 years ago, virtually all FTSE 100 companies offered a final salary scheme. Today, no FTSE 100 company offers such schemes to new employees.

LCP notes that auto-enrolment is back, having disappeared from the pension landscape in 1988.

LCP partner and the report’s author, Bob Scott, said that FTSE 100 companies now disclose much more about the state of their pension schemes in their annual accounts, compared with 20 years ago.

He added that going forward companies would be aiming and hoping to “completely remove any pensions risk from their balance sheets”.

“This may be good news for their shareholders but is unlikely to improve the lot of those employees who are relying on good workplace pensions for their retirement,” he said.

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UK firms contribute £35bn to reduce their pensions bill but deficits keeps rising .

UK firms contributed over £35bn to their pensions pot to reduce deficit but this didn’t touch the surface as deficits keeps rising .

The largest 350 British firms are still struggling to meet their final salary pension commitments to their current and former employees, with total deficits only reducing by £4.1billion to £64.9billion since 2009 despite the hefty contributions by firms.

I keep a very close eye on this as this is a problem that’s just getting worst and people are not aware of it , I started a 3 part article in the British Chamber of Commerce Japan to highlight this , the first of these post was “UK FIRM PENSIONS: IS THE END NIGH? and this talks about this and the problems facing UK defined benefits scheme .

Number of these companies with pension deficit are flirting with the prospect of going into administration as their pension deficits at more than 20 per cent of their market value, according to pension consultants Barnett Waddingham.

Last month i posted ” 7,000 mineworkers retirement takes HUGE HIT ! British Coal Pension enters PPF , Who’s Next ?” this explains what happens to people in a scheme like this .

Deficits are calculated based on the promises made to current and past employees. They can fluctuate as investment returns rise and fall and as life expectancy increases.

I like to emphasis it’s a promise not a guarantee ,companies have the right to change the benefits they pay a recent example is Thousands set to lose out as drugs giant Glaxo slashes pension benefits for UK workforce

Defined benefit (DB) pensions see employers guarantee workers an income for life once they retire.
The amount they get is calculated by multiplying a fraction of their final salary, or their career average salary, by the number of years they have worked.

The schemes have been closing down at a record rate – particularly in the private sector – as they have become increasingly unaffordable and have caused firms to build up significant deficits.
Instead, most companies are now offering defined contribution schemes – known as money purchase pensions – where they offer to match or double an employee’s contributions to a pension pot, which is then invested.

Upon retirement, it’s up to the pension holder to buy a retirement income – either through an annuity or income drawdown.

Barnett Waddingham says that with firms having to fork out so much to meet their final salary pension commitments, those on money purchase schemes may well be losing out.

If you like more information on your options on this let me know ,

Tony Evans

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BT Pension Deficit swells to £6billion !

BT pension funds has continued to widen at an alarming rate !Liabilities at the £41bn BT Pension Scheme rose twice as fast as assets.

The deficit has swelled to £5.7bn ! Expert believe this looks at growing to £7b very soon or 30% of market cap !

“The increase in the deficit during the year principally reflects an exceptionally low real discount rate of 0.87%,” the report noted.

“This includes the impact of quantitative easing on the debt markets and a higher inflation assumption.”

Nigel Green CEO deVere group wrote in his blog A Big Company Pension will Fall shortly, will it be BT ? looks like he could be right !

If you have any questions please don’t hesitate to contact me .

Tony Evans

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Barclays schemes report £1.1bn increase in deficit in six months

Barclays schemes report £1.1bn increase in deficit in six months

Barclays has seen its pensions shortfall shoot up by more than a billion pounds over the last six months, despite paying in £700m to cut the deficit.

With them asking for money from shareholders , this is not getting better .

Looking at a £4billion !

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Is QROPS changing?

QROPS Blog – Is QROPS changing?

Is QROPS changing?
JULY 26, 2013
June 2013 brought a major shockwave in the QROPS industry, as the HM Revenue & Customs has been forced to deliver a policy statement that reviews its policies in selecting and handling qualifying recognised overseas pension schemes.

This policy statement was then delivered on the 12 July – but has not been made public yet.

Experts warned that the delay could be a sign of a major shake-up in the way QROPS will be operated.

We have put together a list of what impact HMRC’s new review may have:

1. Nothing could change

HMRC could simply restate its aims – since it is not technically required to do anything beyond publishing a review of policies. HMRC could simply justify its policies in the public domain and where necessary, provide additional clarification for confused UK pension holders.

2. HMRC may become more selective in QROPS providers

HMRC may become more rigid in the way offshore pension schemes like QROPS are designated.

Fewer schemes could mean better relationships between HMRC and QROPS providers, ensuring that misunderstandings happen far less often.

3. HMRC may try to make QROPS unattractive to savers

HMRC may deliberately make QROPS less attractive to expats by increasing the minimum level which must be set aside to provide savers with an income for life, which is currently set at 70%. The remaining 30% can be taken as tax free lump-sum.

4. HMRC may try to make QROPS unattractive to providers

HMRC could impose charges on providers to maintain their QROPS status, in order to reduce the attractiveness of QROPS.

The option for QROPS providers would be to either pass this cost to their customers, resulting in lower returns, or end their involvement with QROPS all together.

5. HMRC may cancel QROPS all together

The notion of HMRC drastically rebranding the scheme to make it unrecognisable, or removing the UK pension transfer ability altogether, is not beyond the realm of possibility – according to experts. Especially when considering the amount of hassle HMRC faces to maintain QROPS.

Sources: International Adviser

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Warning: Final Salary Schemes’ Deficit Grows « BCCJ Acumen

This is a new article I just published in the British Chamber of Commerce Japan on the pension crisis in the UK .

Warning: Final Salary Schemes’ Deficit Grows « BCCJ Acumen – The Magazine of the British Chamber of Commerce in Japan.

The first article was :
UK Firm Pensions: Is the End Nigh

If you like more info please don’t hesitate to contact me .

Tony Evans
Tokyo

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