Posts Tagged ‘ UK Pension Crisis ’

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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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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Lehman pensions case: a much needed reality check –

This was written by our CEO Nigel Green ,
Very interesting article on some “safe pension schemes ” that turned out not to be so safe .

Nigel Green -Lehman pensions case: a much needed reality check

Lehman pensions case: a much needed reality check The bankrupt groups Lehman Brothers and Nortel Networks (a Canadian telecoms organisation) won a landmark case in the Supreme Court yesterday over The Pensions Regulator’s (TPR) assertion that pension members should be given priority over the firms’ other creditors. Lehman Brothers and Nortel Networks left pension deficits of £130 million and £2.1 billion, respectively. This is a case where the term ‘landmark’ is certainly not wheeled out flippantly, as the ruling is likely to set a precedent for the other companies which fail and subsequently leave behind pension deficits. If nothing else, this judgement finally provides clarity to pension members that their pensions take no special priority within the company and any handout of assets in the event of liquidation. There is growing realisation among pension members that their once-considered ‘bullet proof’ final salary schemes are not so secure after all – and should their sponsoring company go into liquidation then they may find themselves waiting patiently in line with the rest of the company’s unsecured creditors. With economic concerns still prevailing, coupled with huge advances in technology (making it likely that some corporate giants of today might not even exist in decades to come) , it would be almost impossible to say that, in the vast majority of cases, company pension schemes are these days ‘guaranteed’. Indeed, as I recently pointed out, these schemes are, by their very nature, reliant on the financial stability of the members’ firm. The question someone, especially a younger worker, should ask themselves is ‘will my company still exist and be financially sound in three or four decades’ time when I come to draw my pension?’ The news underscores once again what deVere has been saying for years – that financial security is increasingly becoming a personal responsibility for each and every one of us – we can no longer hold on to assumptions that greater agencies (such as companies, the State) will be able to provide for us in the way they have done for previous generations. The world has changed. With this in mind, we need to ensure we have a sound, efficient and achievable financial plan in order to reach – and hopefully exceed – our objectives, which include for most people is financial freedom in our mature years.

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#BBC’s #pension bill rises to £2 billion

Interesting article on another British institutions who’s pension pot has huge deficits .

Scary

Telegraph – BBC’s pension bill rises to £2 billion

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Weak pound has cost British expats ‘billions’ as their pension shrinks in value versus local currencies

Weak pound has cost British expats ‘billions’ as their state pension shrinks in value versus local currencies

Good article for individuals that are living from the UK to read .
In my role as a financial advisor I see the effects this has done on individuals standard of living .

And it could get worst, this is a article in the Telegraph http://www.telegraph.co.uk/finance/comment/rogerbootle/10123660/The-pound-must-fall-further-if-Britain-is-to-have-a-lasting-recovery.html?placement=mid3
But there are things one can do , take control is the main thing . Mail me of you have ay questions.

Tony Evans

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UK pension rises are at risk – Webb

UK pension rises are at risk – Webb.

Pensions minister Steve Webb said that nobody could guarantee the survival of the ‘triple lock’ system after the next general election.

The triple lock system, which ensures that sure the basic state pension will always rise according to the highest of average earnings, inflation, or 2.5%, has so far kept pensions on an upwards path. It has so far been key to maintaining the ‘grey vote’.

But Webb’s comments are the latest in the fiery debate in Parliament over whether the advantages offered to pensioners can be sustained.

In an interview with the Financial Times, Webb said that in 2015, each party would say what it would do about the triple lock. He said he was personally in favour of keeping it, but that the issue would have to be discussed as a party.
Benefits for high income pensioners are also set to be trimmed down.

Webb said that in light of an increasing generation gap in intergenerational equity, it was unfair to expect “our children and grandchildren [to just do] more and more.”

UK Firm Pensions: Is the End Nigh? « BCCJ Acumen – The Magazine of the British Chamber of Commerce in Japan

UK Firm Pensions: Is the End Nigh? « BCCJ Acumen – The Magazine of the British Chamber of Commerce in Japan.

Millions face retirement poverty as pension payouts are slashed

I keep get asking by people What can I do ? What are my options ?

All I can say is drop me a mail and I can help , we specialize in helping individuals in regards to taking control of their pensions and making it work for you .

Tony Evans
tony.evans@devere-group.com

A great article below .

Millions face retirement poverty as pension payouts are slashed.

In the last four years the price of an annuity – the retirement income bought with pension savings – has soared by 29 per cent.

Official figures show the impact on people about to retire. In 2009 a £5,000 annual income would have cost a man £118,000 and a woman £133,500. Today, based on unisex rates, it would be £152,800.

Many people will not even be able to afford that. The typical private pension savings pot for households where the head is aged 50 to 64 is £135,200 – which will buy just £4,421 a year.

Pensions expert Joanne Segars said: “Annuity rates have taken a hammering and there is a big ­difference between the pension you could have got and what you would get now.

“Offers that were on the table a few years ago have evaporated. The poor rates are largely because of rising ­longevity, new EU rules, and the weak economy.” Ms Segars, chief executive at the National Association of Pension Funds (NAPF), also warned: “Retirees should think about the type of annuity they want, and whether they have health issues that would get them a better rate.

“Those who fail to shop around risk being locked into a poor deal for the rest of their life.”

Pension expert and former Government adviser Ros ­Altmann blamed the Bank of England’s quantitative ­easing policy for the dramatic drop in annuity rates. “This has meant people’s pensions have been devalued. They are struggling to afford a decent pension even after years of saving,” she said.

“Annuity rates are so poor, and generally offer no protection against inflation or becoming seriously ill and often leave widows out, so most people will have to work longer to have a chance of a decent lifestyle later.”

Figures from the Office for National Statistics Pension Trends report, also show the growing wealth gap between those with gold-plated final salary defined benefit pensions and the rest of the population.

Annuity rates have taken a hammering and there is a big ­difference between the pension you could have got and what you would get now.

Pensions expert Joanne Segars

The average value of a final salary scheme is £178,000 – six times more than the £29,000 for standard schemes.

Of private pension savers only 48 per cent of households now have guaranteed pension rights, while 51 per cent have defined contribution pensions – where the saver bears the risk of investments going down.

As companies close down the expensive final salary schemes, savers in defined contribution plans are set to rise from 6.6 million today to 16 million by 2020.

Tom McPhail, pensions expert at Hargreaves Lansdown, said that many people’s expectations of their retirement incomes were likely to be over-optimistic.

“There is a risk that because people haven’t saved enough they will look to maximise their income today, at the expense of inflation proofing and death benefits for their spouse tomorrow,” he said.

James Baxter, of Tideway Investment Partners, said: “The days of double digit annuity returns are long gone. Savers need to back up their pensions with other tax free investments such as bonds and Isas.”

However the Department for Work and Pensions yesterday announced help for millions with plans to cut the number of “dormant” pensions forgotten by workers who have left a scheme when they start a new job.

The new “pot follows member” system will mean that any payouts accrued of less than £10,000 will automatically move with them. Estimates show that the average person has 11 jobs during their working life. By 2050 there will be around 50 million dormant pension pots.

Last October the NAPF voiced fears that the “pot follows member” approach could erode pension savings. Darren Philp, policy director at NAPF, said: “We’re concerned that a worker’s pension could be automatically shunted from an excellent pension into a bad one with high charges. The Government now recognises this, but we cannot be sure there will be strong safeguards in place.”

Article and pics from Express .

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