More companies could go bust if they fail to plug the gap in their pension funds.

vivatifosi

no_fat_chicks wrote: »

Don't these companies risk going bust if they do plug the gap in their pension funds? Eg. person one runs a small business selling goods to the public with no final salary pensions to fund, person two runs a small business funding numerous final salary pensions, and has to charge his customers more than person one does to cover the extra burden. Person two's company is not competitive and goes bust.

It isn't just the cost of plugging the gap, its the cost of staying even when you aren't getting reasonable returns from the market. As an example, my former FS pension was designed to pay in 7% as an employer contribution. Just to stay even they had to pay in 12%, that's before having to make up shortfalls and before the market dropped. That's why, imo, public sector schemes will have to close to new entrants.

StevieJ

vivatifosi wrote: »

I know Stevie, I was just having fun with you. On a more serious note, maybe we should have an MSE book club and read (or at least watch lectures that precis) Flat Earth News and compare thoughts. Then perhaps we could move onto other popular books that impact on what we discuss such as Freakonomics. Or discuss interesting books on the subject.

I've just read this back. I'm such a nerd sometimes.

Maybe we could have a thread on catchphrases, I will nominate this one, funny as they come

http://www.youtube.com/watch?v=Izet8zN1vmE

Malcolm.

StevieJ wrote: »

Maybe we could have a thread on catchphrases, I will nominate this one, funny as they come

http://www.youtube.com/watch?v=Izet8zN1vmE

That made me laugh out loud.

C_Mababejive

no..you dont go bust. You simply offload liabilities.

How about TUPEing members of your workforce elsewhere and employing them at arms length?

How about allowing high level managers to retire early, secure their pensions,become a liability on the pension scheme and then binning off the lower orders so that they dont increase the liabilities?

vivatifosi

C_Mababejive wrote: »

no..you dont go bust. You simply offload liabilities.

How about TUPEing members of your workforce elsewhere and employing them at arms length?

How about allowing high level managers to retire early, secure their pensions,become a liability on the pension scheme and then binning off the lower orders so that they dont increase the liabilities?

Or, of course, shut the scheme, either to new members or in its entirety. Money purchase much less of a gamble for company, much more of a gamble for employees.