Posts Tagged ‘ hsbc ’

Re blogging -Nigel Green Blog -HSBC cut pensions despite huge profit

The below is comments from deVere CEO Nigel Green blog which I have copied , a link to the article is also below .

It’s very interesting , anyone who thinks these scheme are guarantee are mistaken, a guarantee is only as good as the person guarantee it.

Nigel Green Blog -HSBC cut pensions despite huge profit ( link to blog and article )

HSBC bank bosses yesterday posted profits today of £13.7 billion – at the same time as launching an attack on their workers’ pension scheme.

The bank’s chiefs plan to close down HSBC’s final-salary pension scheme in an effort to boost their huge profits even further.

They announced the decision to close the pension scheme to “future accrual” – the build-up in value of pensions – effectively freezing the scheme. It condemns future retirees to struggle financially and potential poverty after a lifetime’s work.

HSBC bosses said that shutting the scheme, combined with cutting holidays and sick pay, would save the bank £46 million a year.

Ex HSBC employees may well decide, that if HSBC aren’t committed to the pension, they may well be better off transferring existing benefits.

Companies are increasingly scrapping private-salary schemes to save money. The reality is whether employees like it or not, they we are all have to plan and take responsibility for our own pensions.

Individuals can’t rely on company schemes or the government in today’s world.

Nigel Green deVere Group

UK company pensions – the end is nigh? Or even closer??

BCCJ Acumen March 2013 issue

UK company pensions – the end is nigh? Or even closer??

2007 saw the world suffer the largest financial meltdown of our generation, and while this was a key catalyst in today’s pension crisis, it is not the sole issue.

Coupled with a rise in life expectancies, this has now created a major problem for ANYONE (British, or non-British), with a UK pension, and expecting to receive an income in retirement.

The UK retirement age was set at 65 in1948 to provide financial support in the final year or two of life – the average life expectancy for a male at this time was 66.8.

Today the average life expectancy is in the 80’s and rising!

Pensions were designed to fund short retirements, not 20 or 30 years of retirement. As people’s life expectancy rose so did their expectations for an early and long retirement; in some cases 30 years of work and 30 years of retirement!!!
Pure Madness

Today 80% of UK company pension schemes are in serious deficit; they do not have the financial assets to meet their liabilities. Consequently the amount of pension income received in retirement could be significantly less than expected. Ten people for tea, only six sandwiches on the plate…

A guarantee is only as good as the one making the guarantee! In the words of Benjamin Franklin “‘In this world nothing can be said to be certain, except death and taxes.”

The UK has 7,800 pension schemes, and 1,184 have gone bust due to company failure or unsustainable funding ratios.

On average, 15 schemes a month are falling into Pension Protection Fund (PPF) and at this rate 25% of all Final Salary schemes will fall within the PPF within 7 years.

The PPF is a statutory fund run by a statutory corporation, not the government and has neither government guarantees or funding. It’s objective is to be commended, to pay compensation to defined benefit pension scheme members when their employers go bust and cannot afford to pay what they promised.

PPF Assets per member 2010/2011 £86,500
PPF anticipated assets per member 2015 £34,000

Once a DB scheme enters PPF assessment the opportunity for members to transfer out is gone.

But won’t the value of my pension recover?

Very unlikely :

• 60% of UK pension scheme money is invested in government bonds, not equities, therefore little growth!
• It is a myth that final salary schemes are guaranteed, they are NOT.
So in the BOOM in the stock market in 2013 (FTSE up 7.26%) UK pension schemes missed out!

11 FTSE 100 companies have pension liabilities in excess of their market capitalization:-

British Airways
British Telecom
BAE Systems
Royal Bank of Scotland
RSA Aviva
Lloyds TSB
GlaxoSmithKline
Marks & Spencer
Barclays
ITV
Sainsbury’s

BA’s DB pension scheme liabilities are 5 times the value of the company.

Many schemes are unsustainable and represent a serious risk to the future survival of the company.

What should you do?

If you have a frozen (DB) final salary scheme, then there has never been a better time to transfer into a Qualified Recognized Overseas Pension Scheme (QROPS). Why? Transfer values are 80 per cent higher today than they were six years ago.
Why the increase in QROPS ?
People are frustrated with Chancellor Osborne moving the goal post on pension benefit , age of retirement , contribution . When there is confusion people don’t do anything . People want some certainty , in Japan people have seen the £ go from 240 to 140 , seeing their incomes halved !

What can I do ?
Sit down and review your current situation , the pension itself and the scheme.
In my position as Area Manager of deVere Group Japan I have personally seen an increase in individuals fearful of the current UK pension crisis . With good reason there is an unprecedented window of opportunity available to eligible DB scheme members today that may well not be there tomorrow.
Due to the complex and convoluted nature of pension & pension transfers, the deVere Group have commissioned an independent actuary to prepare a report for interested individuals , this is very simple to initiate.

Download the article :
Industry_deVere

QROPS – deVere Japan reaffirms importance of pension transfers.

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