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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