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  • FIRST POST
    • DiggerUK
    • By DiggerUK 6th Dec 17, 7:00 PM
    • 2,809Posts
    • 2,698Thanks
    DiggerUK
    On ôsleaze and spivveryö
    • #1
    • 6th Dec 17, 7:00 PM
    On ôsleaze and spivveryö 6th Dec 17 at 7:00 PM
    “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
    Last edited by DiggerUK; 07-12-2017 at 7:04 PM. Reason: Independent link disappeared. Thanks go to Paul_Herring and wooly_wombat
    I am not now, nor have I ever been, a Financial Adviser.
    Forward, to the 'British Spring'
Page 1
    • hyubh
    • By hyubh 6th Dec 17, 7:55 PM
    • 1,980 Posts
    • 1,491 Thanks
    hyubh
    • #2
    • 6th Dec 17, 7:55 PM
    • #2
    • 6th Dec 17, 7:55 PM
    If the employers that sponsor those schemes hit the rocks so do their membersĺ retirements.ö
    Originally posted by DiggerUK
    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 scrambled 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 Ĺpension holidayĺ scam
    What was that then, in your understanding...?
    • Paul_Herring
    • By Paul_Herring 6th Dec 17, 8:06 PM
    • 6,193 Posts
    • 2,928 Thanks
    Paul_Herring
    • #3
    • 6th Dec 17, 8:06 PM
    • #3
    • 6th Dec 17, 8:06 PM
    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
    • By Aegis 6th Dec 17, 8:23 PM
    • 4,793 Posts
    • 2,917 Thanks
    Aegis
    • #4
    • 6th Dec 17, 8:23 PM
    • #4
    • 6th Dec 17, 8:23 PM
    On the other hand:

    PPF tells IFAs not to use deficits to encourage DB transfers
    I am an Independent Financial Adviser
    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
    • By hugheskevi 6th Dec 17, 8:32 PM
    • 1,924 Posts
    • 2,334 Thanks
    hugheskevi
    • #5
    • 6th Dec 17, 8:32 PM
    • #5
    • 6th Dec 17, 8:32 PM
    Britainĺs 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

    Britainĺs 5,794 final salary pension schemes have the highest funding level since 2014.
    Source: Purple Book
    • atush
    • By atush 6th Dec 17, 9:12 PM
    • 16,374 Posts
    • 10,132 Thanks
    atush
    • #6
    • 6th Dec 17, 9:12 PM
    • #6
    • 6th Dec 17, 9:12 PM
    ôAccording to the latest figures released by the PPF (Pension Protection Fund) Britainĺs 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 membersĺ retirements.ö

    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 Ĺpension holidayĺ scam should be ended immediately..._
    Originally posted by DiggerUK
    More sleaze and spivery in the retail gold market/pawn shops I am sure.
    • DiggerUK
    • By DiggerUK 6th Dec 17, 9:23 PM
    • 2,809 Posts
    • 2,698 Thanks
    DiggerUK
    • #7
    • 6th Dec 17, 9:23 PM
    On the ôpension holiday scamö
    • #7
    • 6th Dec 17, 9:23 PM
    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..._
    Last edited by DiggerUK; 06-12-2017 at 9:27 PM.
    I am not now, nor have I ever been, a Financial Adviser.
    Forward, to the 'British Spring'
    • DiggerUK
    • By DiggerUK 6th Dec 17, 9:29 PM
    • 2,809 Posts
    • 2,698 Thanks
    DiggerUK
    • #8
    • 6th Dec 17, 9:29 PM
    • #8
    • 6th Dec 17, 9:29 PM
    More sleaze and spivery in the retail gold market/pawn shops I am sure.
    Originally posted by atush
    Can you at least stay on topic. Thankyou..._
    I am not now, nor have I ever been, a Financial Adviser.
    Forward, to the 'British Spring'
    • hyubh
    • By hyubh 6th Dec 17, 9:54 PM
    • 1,980 Posts
    • 1,491 Thanks
    hyubh
    • #9
    • 6th Dec 17, 9:54 PM
    • #9
    • 6th Dec 17, 9:54 PM
    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.
    Originally posted by DiggerUK
    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 Planĺs 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
    Last edited by hyubh; 06-12-2017 at 9:58 PM.
    • dunstonh
    • By dunstonh 6th Dec 17, 11:06 PM
    • 89,873 Posts
    • 56,545 Thanks
    dunstonh
    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). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • hyubh
    • By hyubh 7th Dec 17, 12:09 AM
    • 1,980 Posts
    • 1,491 Thanks
    hyubh
    Currently, the assumptions used for pension liabilities is quite extreme and effectively prices liabilities higher than they will likely be.
    Originally posted by dunstonh
    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.
    • sandsy
    • By sandsy 7th Dec 17, 7:46 AM
    • 1,224 Posts
    • 721 Thanks
    sandsy
    It doesn't mean that all the schemes in deficit will go bust though. Increases in interest rates would have an immediate impact on the funding numbers.

    The vast majority of schemes in deficit will survive. Spreading fear about something that very few schemes will suffer is highly irresponsible, given the value of the benefits they offer to their members.
    • atush
    • By atush 7th Dec 17, 9:03 AM
    • 16,374 Posts
    • 10,132 Thanks
    atush
    Can you at least stay on topic. Thankyou..._
    Originally posted by DiggerUK
    I am an topic. Sleaze and spivery right?
    • Malthusian
    • By Malthusian 7th Dec 17, 9:31 AM
    • 3,435 Posts
    • 5,271 Thanks
    Malthusian
    It has been the case that profits for shareholders, was put ahead of pensions for employees...
    Originally posted by DiggerUK
    At the order of HMRC. If a company put money into a pension scheme that all the actuaries agreed had more than enough money already, it was considered tax avoidance. Can't have big corporations avoiding their fair share of tax, now can we?
    • DiggerUK
    • By DiggerUK 7th Dec 17, 9:49 AM
    • 2,809 Posts
    • 2,698 Thanks
    DiggerUK
    Who gets the pleasure, who gets the pain
    At the order of HMRC.........
    Originally posted by Malthusian
    Successive governments have allowed this to happen. The truth is that surpluses are far from the norm. Current Ĺstrengthĺ of pension funds seems to be based on highly contentious valuations. On the figures in the articles linked to on this thread, a permanent 10% dive in the markets would cause enormous problems.

    Go back as far as you want, but it seems that when firms crash, so does the pension fund, BHS was one of the worst, but thatĺs all.
    Woolworths, MFI, Austin Reed, all had the same problem..._
    I am not now, nor have I ever been, a Financial Adviser.
    Forward, to the 'British Spring'
    • hyubh
    • By hyubh 7th Dec 17, 11:15 AM
    • 1,980 Posts
    • 1,491 Thanks
    hyubh
    Successive governments have allowed this to happen. The truth is that surpluses are far from the norm.
    Originally posted by DiggerUK
    The regulatory situation now is radically different to the situation in the 80s, let alone the 90s.

    Current ‘strength’ of pension funds seems to be based on highly contentious valuations.
    This isn't true, DB liabilities reported in company accounts are done on a standardised, very prudent basis (wasn't like this 30 years ago, i.e. this is something that has got better).

    On the figures in the articles linked to on this thread, a permanent 10% dive in the markets would cause enormous problems.
    What figures? You cited the PPF 7800 Index before - this exclusively uses gilt yields (which remain at historic lows) to assess liabilities:

    http://www.pensionprotectionfund.org.uk/Pages/PPF7800.aspx
    http://www.pensionprotectionfund.org.uk/DocumentLibrary/Documents/S179%20Assumptions%20Guidance.pdf

    Go back as far as you want,
    The PPF began in 2005. Looking at before then to justify scaremongering about the present is entirely specious.

    but it seems that when firms crash, so does the pension fund, BHS was one of the worst
    You realise BHS pension entitlements didn't actually 'hit the rocks' however? See here:

    http://www.thepensionsregulator.gov.uk/docs/quick-guide-bhs-pension-settlement.pdf

    If the company had the same result as the pension scheme members, there would still be lots of BHS shops in business.

    Woolworths
    Entered the PPF.

    MFI
    Ditto.

    Austin Reed
    PPF assessment period; probably will enter the PPF permanently.

    all had the same problem...
    Being backed by one or more sponsoring employers is just how DB works in this country. The employer failing and its pension scheme entering the PPF does involve a hit to member benefits, yes, however this happening isn't a disaster for the member, and doesn't involve any taxpayer bailout.
    • Triumph13
    • By Triumph13 7th Dec 17, 1:15 PM
    • 1,117 Posts
    • 1,373 Thanks
    Triumph13
    The truth is that surpluses are far from the norm.
    Originally posted by DiggerUK
    They were at the time HMRC stepped in to stop them. Companies were commonly stuffing 'excess' earning into the pension fund both to delay paying tax and to 'smooth' published earnings. They had quite deliberately put much more into the schemes than was genuinely thought necessary. The 'holidays' occurred when HMRC said they couldn't have any more tax deductions until these excess positions were unwound.
    You are clearly unhappy that employees didn't get contribution holidays too. I take it therefore you believe that employees should stump up for their share of current shortfalls too? Thought not.
    • Intoodeep
    • By Intoodeep 7th Dec 17, 1:54 PM
    • 937 Posts
    • 1,341 Thanks
    Intoodeep
    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

    Source: Purple Book
    Originally posted by hugheskevi

    Yes but you know how it is, that's being far too positive
    • DiggerUK
    • By DiggerUK 7th Dec 17, 2:02 PM
    • 2,809 Posts
    • 2,698 Thanks
    DiggerUK
    .............I take it therefore you believe that employees should stump up for their share of current shortfalls too? Thought not.
    Originally posted by Triumph13
    Sadly, that is the reality of what many have to do, Tata steelworkers have been finding that reality out..._
    I am not now, nor have I ever been, a Financial Adviser.
    Forward, to the 'British Spring'
    • woolly_wombat
    • By woolly_wombat 7th Dec 17, 3:51 PM
    • 501 Posts
    • 302 Thanks
    woolly_wombat

    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
    Originally posted by DiggerUK
    That article now appears to have been pulled from The Independent website.
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