Jump to content
House Price Crash Forum
Sign in to follow this  
Sancho Panza

Inflation Link On Final Salary Pensions Faces Axe

Recommended Posts

Telegraph 7/11/13

' The Government has outlined plans to scrap the requirement for final salary pensions to offer widower benefits and to link the income they pay to inflation.

The plan was announced as part of attempts to drive a "renaissance" in company pensions, where gold-plated final salary pensions are fast disappearing.

These defined benefit (DB) schemes guarantee a level of income in retirement but have fallen into rapid decline because employers shoulder all the risk associated with investment returns and rising life expectancy, making them very expensive to run. Most employers now offer defined contribution (DC) schemes, which force employees to bear the risks.

The inflation-link proposal is part of of wider plans being proposed by the Department of Work and Pensions in an attempt to offer a third way, what Steve Webb, the pensions minister, has called "defined ambition".

"There are less than two million people in DB schemes now and that will fall away completely in the years to come," said Mr Webb. "Over time we hope employers will see they can pay salary-related pensions without all the risk, so we could see a renaissance in this space, but these things take time." '

Share this post


Link to post
Share on other sites

So Mervyn Kings retirement payments will not track inflation?

Oh, new entrants only - feck over the young again. At this rate when the under 35's get in power they with be making euthanasia comulsory for the over 70's.

Share this post


Link to post
Share on other sites

They are slowly screwing over the proles, luckily the 1% have champers all round!

In the case of pensions - many proles seem to be doing very well.

My avg salaried civil servant parents retired at 55, own their house, drive new cars and take several foreign holidays a year.

Share this post


Link to post
Share on other sites

In the case of pensions - many proles seem to be doing very well.

My avg salaried civil servant parents retired at 55, own their house, drive new cars and take several foreign holidays a year.

Doubt your parents would qualify as average, the average civil servant earns around £18k and retires on a pension of around £6k .

Share this post


Link to post
Share on other sites

Doubt your parents would qualify as average, the average civil servant earns around £18k and retires on a pension of around £6k .

They also retired at 60 not 55 until the government upped the age to 65 recently.

Edited by stormymonday_2011

Share this post


Link to post
Share on other sites

So Mervyn Kings retirement payments will not track inflation?

Oh, new entrants only - feck over the young again. At this rate when the under 35's get in power they with be making euthanasia comulsory for the over 70's.

Strictly speaking the proposals would effect new accruals rather than new entrants so existing Defined Benefit scheme members could be impacted but since King has already trousered away most of his pension benefits he wont be much effected

http://www.gov.uk/government/uploads/system/uploads/attachment_data/file/255541/reshaping-workplace-pensions-for-future-generations.pdf

To be honest the proposals are too little too late since most of the employers who wanted to cap their final salary liabilities have already done so by simply shutting their schemes. I doubt these proposals will persuade them to reopen them. There are now less than 2 million employees in the UK that are members of final salary schemes and more than half of those are in schemes that are shut to new entrants. Outside the public sector the DB scheme is effectively dead. Interestingly even the TUC seem to recognise that fact even though it eludes HMG. They also recognise that the key problem is lack of contributions into schemes be they from employees or employers

http://www.actuarialpost.co.uk/article/tuc-welcomes-dwp-paper-on-defined-ambition-pensions-5599.htm

Edited by stormymonday_2011

Share this post


Link to post
Share on other sites

The good thing with final salary being dead for us young is it is one less thing to trap you in a company. The number of late 40 and 50 year olds I meet who are so depressed and worn down but stick with their job for the sake of their pension is unreal. How many marriage breakup, health problems are caused by 2 decades of sticking out a job you hate for the sake of a pension?

Share this post


Link to post
Share on other sites

The good thing with final salary being dead for us young is it is one less thing to trap you in a company. The number of late 40 and 50 year olds I meet who are so depressed and worn down but stick with their job for the sake of their pension is unreal. How many marriage breakup, health problems are caused by 2 decades of sticking out a job you hate for the sake of a pension?

Pensions like mortgages and other long term financial commitments are mechanisms of social control which is why governments always want to lure people into them

Share this post


Link to post
Share on other sites

I have a few ideas for my pension. I have some physical PM's tucked away, I will see what they're worth in 30 years time.

One of the other ideas is that I buy 10 or less acres of land and produce quality cider and perry on a small scale (Have quiet a lot of knowledge in this area). I think that will be quite manageable and pay a living when I am in my 60's and 70's.

There are a lot of old boy cattle farmers around here who you see cruising around once a day in their tractors - can't be that difficult if there in their that old.

Share this post


Link to post
Share on other sites

BTW most people do not realise that the indexation link in Defined Benefit pensions has been eroding for years

Since 2005 the amount of indexation that an employer has had to provide in law is only 2.5% so if inflation takes off most final salary pensioners are vulnerable to seeing the value of their pension reduced even under existing rules.

http://www.parliament.uk/briefing-papers/sn05656.pdf

Edited by stormymonday_2011

Share this post


Link to post
Share on other sites

....I love it the way they try to sell something that is not so good as being the same or better...how ever they try to polish it, pensions how we knew them will never be the same again for most working people....one positive thing we will all be sailing in the the same boat together. ;)

Share this post


Link to post
Share on other sites

Telegraph 7/11/13

' The Government has outlined plans to scrap the requirement for final salary pensions to offer widower benefits and to link the income they pay to inflation.

The plan was announced as part of attempts to drive a "renaissance" in company pensions, where gold-plated final salary pensions are fast disappearing.

These defined benefit (DB) schemes guarantee a level of income in retirement but have fallen into rapid decline because employers shoulder all the risk associated with investment returns and rising life expectancy, making them very expensive to run. Most employers now offer defined contribution (DC) schemes, which force employees to bear the risks.

The inflation-link proposal is part of of wider plans being proposed by the Department of Work and Pensions in an attempt to offer a third way, what Steve Webb, the pensions minister, has called "defined ambition".

"There are less than two million people in DB schemes now and that will fall away completely in the years to come," said Mr Webb. "Over time we hope employers will see they can pay salary-related pensions without all the risk, so we could see a renaissance in this space, but these things take time." '

Just another attack on the workers of this country, this will not effect most of the people who have lived on benefits most of their life, and they will probably end up with more income at post retirement age than people who have contributed all their working life,what a sad state this country is becoming.

Share this post


Link to post
Share on other sites

Just another attack on the workers of this country, this will not effect most of the people who have lived on benefits most of their life, and they will probably end up with more income at post retirement age than people who have contributed all their working life,what a sad state this country is becoming.

Well it basically means the end of final salary pensions in the private sector - the public sector (bar Transport for London) is moving to career average schemes from April.

If your pension is not uprated by inflation then after about 10-15 years you probably will be better off on benefits - as at least that gets uprated.

How is the government going to support all the elderly when no one has any provision of their own - bar the 1%. Its a recipe for long term disaster.

Share this post


Link to post
Share on other sites

Took ER from major uk company 6 years ago since then I have enjoyed 3 x 5% rises and 3 around 3.5 on average. Nearly catching up with my old colleges wages who over the same period have not had a bean rise.

Happy Boomer days :D

Share this post


Link to post
Share on other sites

Took ER from major uk company 6 years ago since then I have enjoyed 3 x 5% rises and 3 around 3.5 on average. Nearly catching up with my old colleges wages who over the same period have not had a bean rise.

Happy Boomer days :D

Sorry - "ER"?

Share this post


Link to post
Share on other sites

Just come out and admit it, the entire pension system is a fecking con!

They are slowly screwing over the proles, luckily the 1% have champers all round!

Why do so many people think pensions are a con?

The maths is simple:-

In my pension scheme I contribute 10% of my salary...about £300

My employer matches my contribution of £300

I get 40% tax relief on my contribution, so I get £120 back from HMRC

i.e. I pay £180 and my pension fund increases by £600 per month.

OK the pension managers take 1 to 1.5% to run the scheme but it would have to be a poor scheme that actually loses £600 per month on my £180 contribution.

I have been paying into company pension schemes since I was 16 years old....25 years of that was a final salary scheme which ended in 2006 and I had to go onto the defined contribution scheme outlined above, but by my estimation it looks like I should be OK in retirement....certainly better off than just stashing it in the bank at 1.5% interest (0.9% after tax)

Edited by walker127

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   206 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.