Private sector pensions in seismic collapse

tartanterra

Worth a glance:

http://www.bbc.co.uk/news/business-16385381

The ACA said that while more than five million public sector employees enjoyed "open" defined benefit pension schemes, fewer than two million workers in the private sector do so, and were now in largely "closed" schemes.

A spokesperson for the Department for Work and Pensions said: "Automatic enrolment is the most radical action taken by any government to help address the question of saving for retirement".

Funny that. Is that the same government who have just done this?:

http://www.bbc.co.uk/news/business-16068918

Auto-enrolment: Brakes applied to pension reforms

It would be nice to see a government "man up" and deal with this. We are sitting on a future time bomb.

Ilya_Ilyich

I'm not sure that there's much of a solution either way -- the problem is the changing age distribution and that isn't something that we can address by changing the details of how we fund retirement in the future. At best we can reduce current consumption in order to improve our debt position relative to other countries but even then we'd just be positioning ourselves to harm the retirements of their future pensioners.

Generali

Ilya_Ilyich wrote: »

I'm not sure that there's much of a solution either way -- the problem is the changing age distribution and that isn't something that we can address by changing the details of how we fund retirement in the future. At best we can reduce current consumption in order to improve our debt position relative to other countries but even then we'd just be positioning ourselves to harm the retirements of their future pensioners.

People will have to work longer or die earlier. Neither are likely to be popular choices but I'm guessing they'll vote for the former when push comes to shove.

Ilya_Ilyich

Come to think of it, it might help if we stopped transferring so much capital to the wealthy as our increasing inequality can presumably exacerbate the problem of providing for everyone reasonably.

RichandJ

Slow news day ?

There's nothing 'seismic' about this, it's been building for years. We still have one or two clients with open DB schemes, but most are either closed to new entrants and/or further accrual and have been for some time.

Increased longevity and the costs loaded on to DB schemes, and thus directly on to employers, due to the last 40 odd years of political interference have made them unviable. Unless, of course, you can increase your cash flow by demanding money from people on pain of imprisonment.

The valuation method changing a few years back didn't help either.

IronWolf

The real problem is that the sensible and responsible will end up paying for the irresponsible at the end of the day. Those that save all their life and build up for their retirement will be deemed "wealthy" and be taxed on their hard earned money.

kabayiri

Generali wrote: »

People will have to work longer or die earlier. Neither are likely to be popular choices but I'm guessing they'll vote for the former when push comes to shove.

I guess if you die whilst working longer you're just plain unlucky.

Perhaps we should find a way of hibernating pensioners for the coldest 6 months of the year.

RichandJ

kabayiri wrote: »

I guess if you die whilst working longer you're just plain unlucky.

Perhaps we should find a way of hibernating pensioners for the coldest 6 months of the year.

I thought that was called cheap holidays in Malta/Cyprus/Turkey etc.

PaulF81

Generali wrote: »

People will have to work longer or die earlier. Neither are likely to be popular choices but I'm guessing they'll vote for the former when push comes to shove.

I wish I had the choice. If the Government offered me either a defined pension from 55 to 75 then a one way ticket to dignitas, I would take that any day over a pension to old age and dementia.

kabayiri

RichandJ wrote: »

I thought that was called cheap holidays in Malta/Cyprus/Turkey etc.

The state could probably pick up a few Greek islands cheap in a firesale coming soon.

Load up the Easyjet and Ryan Air planes, and pack the villas and hotels out there. Way cheaper than what Manchester Council spends on care homes.

It may seem absurd, but then so is the idea of trusting the private pension industry in coming up with a solution.

Linton

PaulF81 wrote: »

I wish I had the choice. If the Government offered me either a defined pension from 55 to 75 then a one way ticket to dignitas, I would take that any day over a pension to old age and dementia.

I wonder whether you would still take the same view in 50 (or however many years it is until you are close to 75) years time?