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Minister softens up 11 million workers for pensions blow

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IMO, everyone needs to be moved onto a Defined Contribution arrangement.

As for existing DB scheme members, its harsh to reduce their benefits but cuts have to be taken from somewhere because it doesn't stack up otherwise.

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disingenuous reporting.  For example:

 Now, in the wake of the BHS scandal, which saw Sir Philip Green forced to pay £363m to fill a hole in the staff pension fund, the Government is looking for ways to ease the burden on firms by watering down benefits.

no, he nicked it and then was made to pay some of it back.

 

and further on it says:

But now he concedes that savers will have to feel some pain if the system is to survive.

how about instead of nicking money from those who have actually contributed we stop chucking benefits at those from outside the UK who have never contributed  

 

 

 

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45 minutes ago, One-percent said:

who have actually contributed we stop chucking benefits at those from outside the UK who have never contributed  

Stop making stuff up.

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33 minutes ago, frederico said:

They will do anything they can to take money from people they can legally force to pay.

The country is entering a very dangerous time, 

 

People are in complete denial if they think this honey pot of cash will not be pilfered in someway by the government and their mates. It is only the banking sector that must be made whole everybody else will feel the pain.

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1 hour ago, Drummer said:

IMO, everyone needs to be moved onto a Defined Contribution arrangement.

As for existing DB scheme members, its harsh to reduce their benefits but cuts have to be taken from somewhere because it doesn't stack up otherwise.

Interestingly DC schemes have been doing ok recently with the market rises.

The issue for DB schemes is the ludicrous unfunded promises made and the accounting rules which mean they can't take as many risks.

Stock based pensions seem to average 7% PA growth, but DB schemes are often stuck in "safe" bonds.

 

 

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39 minutes ago, frederico said:

They will do anything they can to take money from people they can legally force to pay.

The country is entering a very dangerous time, 

 

Hence the way they're extracting huge sums from public sector contractors post April 5th via forcing IR35.

 

And it's been leaked that the same will be hoisted onto private sector contractors next year. Algorithms are being developed which will force most self-employed contractors to be deemed employed. 

 

Then they will start retrospectively claiming tax.

 

If you've been outside IR35 for a number of years, it might be prudent to downloaded the IR35 calculator and estimate back payments to avoid penalty charges and interest. 

I guess a number of individuals may be forced into selling their houses and becoming bankrupt.

 

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7 minutes ago, Mikhail Liebenstein said:

Interestingly DC schemes have been doing ok recently with the market rises.

The issue for DB schemes is the ludicrous unfunded promises made and the accounting rules which mean they can't take as many risks.

Stock based pensions seem to average 7% PA growth, but DB schemes are often stuck in "safe" bonds.

 

 

Don't worry, when the bond bubble crashes and shares are at all time highs I'm sure some ******wit politician will pass some legislation forcing them out of bonds and into shares. :)

 

 

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1 minute ago, SpectrumFX said:

Don't worry, when the bond bubble crashes and shares are at all time highs I'm sure some ******wit politician will pass some legislation forcing them out of bonds and into shares. :)

 

 

Yes, highly probable :-)

I'm still think of Gordon Brown's Goldfinger moment! 

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14 minutes ago, Mikhail Liebenstein said:

Interestingly DC schemes have been doing ok recently with the market rises.

The issue for DB schemes is the ludicrous unfunded promises made and the accounting rules which mean they can't take as many risks.

Stock based pensions seem to average 7% PA growth, but DB schemes are often stuck in "safe" bonds.

Since Oct 2007 my diversified balanced portfolio, which is partially wrapped in a DC pension, has returned an annualised 7.0%.  That's a real 4.4% (using RPI as the deflator).

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4 minutes ago, Mikhail Liebenstein said:

Yes, highly probable :-)

I'm still think of Gordon Brown's Goldfinger moment! 

That was bordering on criminal.  Tell everyone what you're going to do in advance and then put it all on the market at once.  It's as though he wanted to deliberately screw the taxpayer.

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36 minutes ago, Wahoo said:

Hence the way they're extracting huge sums from public sector contractors post April 5th via forcing IR35.

 

And it's been leaked that the same will be hoisted onto private sector contractors next year. Algorithms are being developed which will force most self-employed contractors to be deemed employed. 

 

Then they will start retrospectively claiming tax.

 

If you've been outside IR35 for a number of years, it might be prudent to downloaded the IR35 calculator and estimate back payments to avoid penalty charges and interest. 

I guess a number of individuals may be forced into selling their houses and becoming bankrupt.

 

Yup.  It is going to get much worse before it gets better.

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Mixed feelings on this.

 

On the one hand, a lot of these schemes are totally unaffordable, so reality has to bite at some time.

 

One the other the defined benifit pension was offered to a lot of people in lieu of higher salaries.  For example I worked with people who had been TUPE'D from British Rail to the IT outsourcing company i was working for.  At the time the IT jobs market was hot, and some could have got a better basic salary elsewhere.  But many stayed because the final salary pension scheme they were allowed to retain as part of the TUPE was so amazing.  doesn't seem very fair if what was contractually agreed is taken away from them, especially if they have taken big lifetime decisions on the back of the agreement.

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2 hours ago, Drummer said:

IMO, everyone needs to be moved onto a Defined Contribution arrangement.

As for existing DB scheme members, its harsh to reduce their benefits but cuts have to be taken from somewhere because it doesn't stack up otherwise.

DB schemes could stack up if the rules around them weren't so crazy and if interest rates were normalised. The rules that prevent companies from over-funding a scheme for example are just insane and mean that any firm that has one of these is walking a constant tight-rope whereby they can't save for a rainy day and have to be constantly aware of what's going on in the financial markets. It's almost as if some crypto-communist was chancellor for 10 years and subtly manipulated the rules so as to engineer a client state.

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1 hour ago, wish I could afford one said:

That was bordering on criminal.  Tell everyone what you're going to do in advance and then put it all on the market at once.  It's as though he wanted to deliberately screw the taxpayer.

You might think that .... I was under the impression it was all deliberate, an unofficial bailout shall we say, because some banking friends had got their Gold bet wrong.

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15 minutes ago, Unbowed said:

You might think that .... I was under the impression it was all deliberate, an unofficial bailout shall we say, because some banking friends had got their Gold bet wrong.

There're plenty of unsubstantiated rumours like that. I prefer to go with the more obvious explanation: Gordon Brown is a f***ing idiot.

Edited by TheBlueCat

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I noticed that the Pensions Minister was claiming that MPs had seen their Pensions arrangements changed so it was right this should be done to other DB schemes.

What he forgot to mention was it only applied to MPs under 55 and that all MPs got a whooping great pay rise in compensation.

In fact for most current sitting MPs the new arrangements mean they actually got a bigger Pension

https://www.theguardian.com/money/blog/2013/jul/16/mps-pay-truth-pension-cuts

It seems to be forgotten in the controversy over DB schemes that employees are essentially the victims. They had no say over how the Company schemes were defined, they had no say over what contributions were paid in by their employers, they did not set the investment rules and they had very little say in the tax changes introduced by Gordon Brown and others that have helped run schemes into massive deficits. 

Personally I think if the rules are going to be changed then at the very least the employers should be forced to buy out the Pensioners rights in hard cash terms. That at least would give the Pensioners the opportunity to make their own investment decisions rather than having them foisted on them by businesses and governments who have consistently f*cked it up for decades. At the very least it would enable those pensioners who die young to pass on the money to their children and grand children rather than seeing their pensions die with them.

Edited by stormymonday_2011

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Pension changes are just another transfer of wealth from the little people to executives. When firms can reduce payments and the pension age increases, they can use the savings to increase executive pay and executive pensions.

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1 minute ago, Democorruptcy said:

Pension changes are just another transfer of wealth from the little people to executives. When firms can reduce payments and the pension age increases, they can use the savings to increase executive pay and executive pensions.

Been happening for years.

Decades ago I audited a mid sized company where the payments into the Directors pension pot each year was more than the combined annual salaries of all the the staff added together. In nearly every business I visited back then the Directors pensions were always in a different scheme to the employees. Absolutely no sharing of risk there.

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3 hours ago, frederico said:

They will do anything they can to take money from people they can legally force to pay.

The country is entering a very dangerous time, 

 

Yup. The square mile needs feeding.

Nom nom nom

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1 minute ago, shindigger said:

Yup. The square mile needs feeding.

Nom nom nom

Given that Pensioners pay at least 30% of their income in various forms of taxes and contribute an estimated £51 billion to the Treasury each year cutting or limiting  private sector DB company pensions is potentially going to hit the tax take as well the overall level of spending in the economy

http://www.thisismoney.co.uk/money/pensions/article-3747156/Pensioner-households-pay-30-income-taxman.html

I would say the net long term impact could be deflationary which may not be quite what the City wants.

 

 

 

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I don't understand why this will be necessary - Brexit is just around the corner and the vast sums left over after we've given the NHS £350 million a week will surely allow these pensions to be adequately funded? 

I was under the impression that we are going to cut such a sweet deal with the EU we'll literally be rolling in it, and in the extremely unlikely event this doesn't happen, trading via WTO rules will be hugely beneficial to these companies. 

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