Pensions

[frugi]

A case for introducing compulsory financial education at school perhaps, a subject which makes a huge difference to people's lives yet isn't even touched upon in the national curriculum? Amaze pupils with the joys of compounding returns, teach them about the necessity of saving early and regularly, outline the various markets and the problem with so-called experts that run funds in them etc., thus empowering them to make more of an informed choice as to where their money goes in later life.

Derestrict and simplify pensions so that anyone is entitled to set aside a percentage of their earnings, tax free, whenever they want, to wherever they want and when they retire it is totally tax free and still theirs to do with what they wish.

 

[chump]

compulsory thinking might achieve more

 

[JTrader]

£57 billion pensions deficit

Hi

Are only certain type/s of pension schemes are affected by the £57 billion pensions deficit? if so, which ones?

Are all pension schemes and contributions invested into the stockmarkets?

I have heard of local government final salary schemes and Armed Forces full pensions after 16 years service. Are these types of schemes and whether/how much they pay out dependent upon the performance of some Pension Fund Manager?


Were those who have been/will be afected by the £57 billion pensions deficit, upon starting to contribute to their particular scheme, given a definitive outline of how their pension would perform/provide for them in their retirement? i.e. you will get £200 per week from age 65 onwards etc.?................

Is it the case that such promises/terms and conditions have simply been wiped out and made invalid?


Does the £57 billion pensions deficit affects just those people who have been contributing to schemes, or will this problem directly affect people who haven't started working yet, schoolkids etc? if so, how?

Many thanks

jtrader.

 

[barjon]

as I understand it the £57b (per annum) deficit is the shortfall in the amount of savings that would be necessary to give people a 2/3rds of salary pension in retirement.


ps: can I leave a stop loss order in which says "I stand corrected" thanks!!!

 

[chump]

JT,
I am not a pensions expert but I will attempt to answer your questions and if i err perhaps someone can step in and make the correction..

Pensions are in two broad categories for the sake of your questions... Public sector and private sector..

Public sector include (all forms of ggovt employee national and local ,NHS,Armed Forces,Police etc)...these pensions rights are in the form of a contract which must be honoured out of the National purse when the rights arise... that is they have to be paid regardless of what happens ( maybe ?)

Private sector pensions are subject to what is happening in the marketplace into which those funds have been invested..simple as that so no one truly knows what the future situation will be although of course they will attempt to forecast same...

having forecast what may be available against what will be required you have the forecasted shortfall of £57Billion..

Within the private sector have been a number of employers who have historically offered the benefit of pensions linked to final salaries which again is a contractual benefit...but a large number of those employers have now withdrawn those schemes to new entrants ,because they are not willing to incur the unknown risk of not being able to honour them due to market variations and indeed the political taxing of pension investments...

Any clearer?

 

[JTrader]

Yes that does help - thanks chump

so it does seem that the future of private sector pensions is looking bleak and perhaps bleaker, given that companies are withdrawing the right to join final salary pension schemes to new entrants.


If pension contributions are to be invested in financial markets - in the hope of producing good returns - What lessons can be learned from the current crisis, and what changes can be made for future generations of pension scheme managers and people who contribute to a pension scheme?

Cheers

jtrader.

 

[axthree]

We mustn't forget that it was M. Thatcher who prevented companys from continuing to build huge "War Chests" to insure against future problems (which have now arrived).
Neither should we forget that ALL governments have known about the "ageing population" problem since 1950.
If they didn't know, why do we pay for a census and have an office of national statistics? Or is it the "Department for Guesswork, Head in Sand Until After the Election section)."
As has been mooted already on this thread, "every man for himself and the devil take the hindmost".
Although not precisely in those words.

 

[chump]

JT,
Though the withdrawal of final salary schemes in the private sector is a concern for some it is not the critical part of the problem....

At the core people are living longer , there are more and more people within our population that are falling into the 'retired' age group and who are therefore not dircetly producing wealth any longer...inflation across time also increases the costs that people will incur at some future retirement point..... against this all pensions even public have to be funded from somewhere..now where can you put today's pension investments so that you can guarantee at some future time there will be sufficient net return to fund all of the above issues ? Using today's pension arrangements arguably nowhere...hence the need for change of some of the parameters involved... exactly what form that change will take is going to be very interesting to see..
Cheers