On “sleaze and spivvery”

DiggerUK
DiggerUK Posts: 4,992 Forumite
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edited 7 December 2017 at 8:04PM in Pensions, annuities & retirement planning
“According to the latest figures released by the PPF (Pension Protection Fund) Britain’s 5,794 final salary pension schemes have just 91.2 per cent of the funds they need to meet the promises made to their members. Just under a third are in surplus, so many of the 4,000 or so individual schemes running short look an awful lot worse than that. If the employers that sponsor those schemes hit the rocks so do their members’ retirements.”

This article from The Independent, serves as a dire warning of how unsafe many retirement funds in Defined Benefit (DB) schemes really are. Successive governments have allowed this situation to get to the level of crisis we see.
http://www.independent.co.uk/news/business/comment/pension-wolves-preying-on-steelworkers-highlight-scandal-of-cash-strapped-retirement-schemes-a8092716.html

Best check out your DB Pension if you have one. Deficits in such pension schemes, including the notorious ‘pension holiday’ scam should be ended immediately..._

Not as pretty, but: http://archive.is/OQsLD#selection-1025.0-1030.0
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  • hyubh
    hyubh Posts: 3,531 Forumite
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    DiggerUK wrote: »
    If the employers that sponsor those schemes hit the rocks so do their members’ retirements.”

    Entering the PPF does not cause pension entitlements to 'hit the rocks', unless by 'rocks' you are thinking of some pretty high cliffs that are climbed over.
    This article from The Independent, serves as a dire warning of how unsafe many retirement funds in Defined Benefit (DB) schemes really are.

    Not it doesn't, it's pointless scaremongering (and with 'mood music' not shared by the PPF analysis quoted by the way). The PPF itself has worked very well since set up.
    Successive governments have allowed this situation to get to the level of crisis we see.

    Having set up the regulatory framework, the best thing the government can do is keep its nose out. Despite some passing verbal kerfuffles, that's pretty much what has happened over the past few parliaments.
    Best check out your DB Pension if you have one.

    'Transfer out while you still can', is that your advice...?
    the notorious ‘pension holiday’ scam

    What was that then, in your understanding...?
  • Paul_Herring
    Paul_Herring Posts: 7,481 Forumite
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    just 91.2 per cent of the funds they need to meet the promises made to their members

    Based on current projections, mandated by government.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
  • Aegis
    Aegis Posts: 5,688 Forumite
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    On the other hand:

    PPF tells IFAs not to use deficits to encourage DB transfers
    I am a Chartered Financial Planner
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
  • hugheskevi
    hugheskevi Posts: 3,852 Forumite
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    Britain’s 5,794 final salary pension schemes have just 91.2 per cent of the funds they need to meet the promises made to their members.
    Nonsense. Britain's 5,794 have just 91.2 per cent of the funds they need to meet s179 pension liabilities, ie, PPF-level benefits. This is considerably lower than what they have promised to their members.

    The schemes have a little under 70% of the assets they would need to meet full buy-out liabilities (what they have promised to members, valued on a gilt-yield basis). That would have been a far better statistic for a sensationalist article.

    Also worth considering the previous levels of s179 liability funding:

    2012 83.4%
    2013 84.1%
    2014 96.7%
    2015 84.2%
    2016 85.5%
    2017 90.5%

    So put in perspective, it is reasonable to say something like
    Britain’s 5,794 final salary pension schemes have the highest funding level since 2014.
    Source: Purple Book
  • atush
    atush Posts: 18,726 Forumite
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    DiggerUK wrote: »
    “According to the latest figures released by the PPF (Pension Protection Fund) Britain’s 5,794 final salary pension schemes have just 91.2 per cent of the funds they need to meet the promises made to their members. Just under a third are in surplus, so many of the 4,000 or so individual schemes running short look an awful lot worse than that. If the employers that sponsor those schemes hit the rocks so do their members’ retirements.”

    This article from The Independent, serves as a dire warning of how unsafe many retirement funds in Defined Benefit (DB) schemes really are. Successive governments have allowed this situation to get to the level of crisis we see.
    http://www.independent.co.uk/news/business/comment/pension-wolves-preying-on-steelworkers-highlight-scandal-of-cash-strapped-retirement-schemes-a8092716.html

    Best check out your DB Pension if you have one. Deficits in such pension schemes, including the notorious ‘pension holiday’ scam should be ended immediately..._

    More sleaze and spivery in the retail gold market/pawn shops I am sure.
  • DiggerUK
    DiggerUK Posts: 4,992 Forumite
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    edited 6 December 2017 at 10:27PM
    On the surface it could be used to allow both employer and employee to stop contributions in times of surplus. I have never found an instance were employee contributions had a holiday. That seems to have been a privilege for employers only.
    It has been the case that profits for shareholders, was put ahead of pensions for employees..._
    https://www.professionalpensions.com/professional-pensions/feature/2261768/how-thatchers-governments-changed-pensions

    Edit, no I am not suggesting those in DB schemes opt out. Just accept my word to the wise to watch what’s going down. None of the usual suspects seems overly keen to advise people to keep their eyes fixed on the eggs in their DB basket.......nor do they seem keen to offer any worthwhile guidance on the matter..._
  • DiggerUK
    DiggerUK Posts: 4,992 Forumite
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    atush wrote: »
    More sleaze and spivery in the retail gold market/pawn shops I am sure.

    Can you at least stay on topic. Thankyou..._
  • hyubh
    hyubh Posts: 3,531 Forumite
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    edited 6 December 2017 at 10:58PM
    DiggerUK wrote: »
    On the surface it could be used to allow both employer and employee to stop contributions in times of surplus. I have never found an instance were employee contributions had a holiday.

    In the 'heyday' of final salary schemes, employee contributions were typically negligible compared to what a contemporary private (or even middle class public) sector worker should (must) put in. As such, the mechanism for benefiting (ex-)employees in times of 'surplus' (as then defined) was granting additional pension benefits - a higher discretionary pensions increase, more generous early retirement terms, etc.
    That seems to have been a privilege for employers only.
    It has been the case that profits for shareholders, was put ahead of pensions for employees..._
    https://www.professionalpensions.com/professional-pensions/feature/2261768/how-thatchers-governments-changed-pensions

    Inflation proofing for early leavers beyond their GMP; anti-franking legislation; reduction in the minimum vesting period for DB schemes from 5 to 2 years; and under Major, opening up of final salary schemes to part timers. Oh, and the implications of the Barber judgement.

    Edit: at my time of writing, from the latest published Pensions Ombudsman determination:
    ... The 1994 Plan valuation showed it to be in surplus. In order to comply with the tax legislation in force at the time, the Plan’s trustees were required to put a plan in place to reduce the surplus (the Remedial Plan). Amongst other things, the Remedial Plan referred to the steps taken to equalise retirement ages for men and women...

    https://www.pensions-ombudsman.org.uk/wp-content/uploads/PPFO-12943.pdf
  • dunstonh
    dunstonh Posts: 116,342 Forumite
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    Currently, the assumptions used for pension liabilities is quite extreme and effectively prices liabilities higher than they will likely be.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • hyubh
    hyubh Posts: 3,531 Forumite
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    dunstonh wrote: »
    Currently, the assumptions used for pension liabilities is quite extreme and effectively prices liabilities higher than they will likely be.

    To quote DiggerUK himself, albeit not while discussing pensions specifically:
    The claims that investing in equities long term is safe and solid, and all the downs will eventually become ups, is a trick and a half.

    http://forums.moneysavingexpert.com/showpost.php?p=73508682&postcount=5

    Digger's view is now broadly accepted when costing funded DB benefits (i.e. you don't reduce the cost of a DB promise if you increase the risk of not affording it when due), whereas in the past... not so much.
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