Posts Tagged ‘ defined benefits ’

More companies getting rid of pensions burden

More companies getting rid of pensions burden.

More evidence is emerging on how large UK companies are buying-out of a British pension fund – with the biggest one yet occurring this week, as £1.5 billion were transferred from the EMI’s scheme to Pension Insurance Corporation.

Citigroup had became the music company EMI’s pension-fund sponsor in 2011, when it seized EMI from Terra Firma. EMI’s operating businesses have already been sold, now the bank has got rid of the pension fund.

Under a buy-out, an insurer is paid to take on the burden of paying the final-salary (or defined-benefit) pensions of current and future retirees, setting the sponsoring company free of all its obligations.

British companies have been getting rid of their pension schemes for several years, but the trend has also spread to America. In fact, both General Motors and Verizon offloaded part of their schemes last year.

When companies are faced with the high cost of paying final-salary pensions, many choose to close their schemes to new members, whilst others have switched current workers into stingier defined-contribution schemes.

The main reason behind such move is that most companies can no longer afford to pay employees their pensions, as legacy pension obligations often overshadow the company’s current business, particularly when earnings are smaller than in the past.

Therefore, it has become more important than ever for individuals to take the time to plan their finances and put money aside for retirement, in order to truly secure a sustainable pension. Speak to a deVere Financial Adviser today to learn more about the options available for private retirement planning.


UK pension defict increased to – £236 BILLION

This problems seams not to get better , FTSE was up over 10% in the first quarter and yet the deficit increases . £236 billion or $360 billion USD that’s the equivalent as the GDP of Thailand or if it would be its own country it would be the 26th largest country in the world!

I personally advising clients to transfer out of these as its a matter of when not if ,

I wrote in the British Chamber of Commerce Japan an article on this . If you like to read it , click here

UK Pension Deficits Increase yet Again

Scary , time to act now .

Tony Evans , Tokyo

The total UK pension deficits of defined benefit schemes increased by GBP35billion in one month!!

The Pension Protection Fund released figures suggesting that the deficit for the 6,300 Defined Benefit Schemes in the UK, which have 12million members, jumped to GBP236 billion in February.

The increasing deficits can be attributed to the drop in Government gilt yields due to Quantative Easing and also lower longer term investment returns – meaning that Pension Fund Investment Managers are now having to take bigger risks to support their funding liabilities.

The figures are all the more remarkable considering that it is estimated that the UK top 100 Companies contributed in excess of GBP12 billion in extra contributions in an attempt to close the deficits.

Clearly, with most schemes now closed to new members, existing members may well begin to see some of their existing benefits eroded, as schemes reduce pension increases or increase normal retirement ages. What a mess!

Blog written on Monday 15th April, by Nigel Smith.


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