Reform threat to 'gold-plated' private pensions

StevieJ

This govt are now extracting the urine

Ministers are reported to be reconsidering reforms, once deemed too politically difficult, which would involve scrapping inflation protection for final salary schemes.
Steve Webb, the pensions minister, has said the protections could be scrapped to help employers reduce their costs.Figures suggest such changes could save employers up to £7 billion a year in pension costs.

http://uk.finance.yahoo.com/news/reform-threat-gold-plated-private-082608965.html

BobQ

Surprise! Surprise!

The Tories trying to punish hard working orindary people for providing for their retirement. The Tories helping big business to renege on its obligations. And the Lib Dems helping them!

This will continue to happen until ordinary people are prepared to stand up for themselves and say enough is enough.

So will hard working private sector workers now have a good moan about the wasters in private sector who do not deserve their gold plated private pensions?

Will the ConDem's continue advocating this while retaining their own index leaked platinum plated scheme?

kidmugsy

BobQ wrote: »

Surprise! Surprise!

The Tories trying to punish hard working orindary people for providing for their retirement.

Wasn't it The Tories who imposed inflation-linking on final salary pensions in the first place?

StevieJ

kidmugsy wrote: »

Wasn't it The Tories who imposed inflation-linking on final salary pensions in the first place?

I guess so, but the act that introduced it was in response to a private sector boss stealing the workers funds (Maxwell). Todays company bosses (and our grovelling govt) are a bit more subtle (not much though ).

downshifter98

I'm assuming (rather hopefully) that this would only affect future entitlements and not pension rights already built up - otherwise it would be quite a blow (especially after the rpi/cpi debacle) to discover that I'm now going to lose all price protection at an age when it would be quite difficult to make up the difference.....

downshifter (who apologises for being a little selfish on this occasion).

Le73Uq86Uv

Race to the bottom.


The unions were right after all.

Just accept it and don't complain or fight for a decent pension, after all we know we can't afford to pay for them

So now private pensions and being asked to pay and get less.

telegraph.co.uk

BobQ

downshifter98 wrote: »

I'm assuming (rather hopefully) that this would only affect future entitlements and not pension rights already built up - otherwise it would be quite a blow (especially after the rpi/cpi debacle) to discover that I'm now going to lose all price protection at an age when it would be quite difficult to make up the difference.....

downshifter (who apologises for being a little selfish on this occasion).

I would hope so too.

But the argument could be made that we earned the benefits in the past and retain them, its just that the rules for paying them in the future are being changed. I guess it depends on how cast iron your annuity agreement is defined.

downshifter98

As far as I'm aware the government has relied on the wording of individual final salary schemes to determine whether schemes can switch from rpi to cpi uprating and resisted the option to retrospectively change the law so I think it pretty unlikely that they would now be willing to legistrate to completely remove the basic principle of price uprating on benefits already built up (although I'm aware that desperate times etc). Benefits yet to be earnt are, however, a different subject and the juggernaut of watering down future pension promises seems unstoppable; how complicated a longer and longer life is becoming...

Downshifter

jamesd

This change would make them closer to defined contribution schemes, where the vast majority of annuities purchased are level, with no inflation additions. This leads to a higher initial payout when you're younger and better able to use the higher income. If you don't need it you can invest it for later. For an employer the effect is a transfer of some longevity and inflation risk from employer to employee, so the employee can choose to take a view on inflation and life expectancy at an individual level and customise income to better suit their individual circumstances.

It should also lead to an elimination of remaining defined benefit pension schemes, since they would effectively become shared investment schemes where the members are unable to choose appropriate investments for their individual circumstances and risk tolerance. This would have the advantage of increasing labour mobility between jobs, particularly of value if applied to the public sector as well as the private sector, for new contributions only.

StevieJ

jamesd wrote: »

.

It should also lead to an elimination of remaining defined benefit pension schemes, since they would effectively become shared investment schemes where the members are unable to choose appropriate investments for their individual circumstances and risk tolerance. This would have the advantage of increasing labour mobility between jobs, particularly of value if applied to the public sector as well as the private sector, for new contributions only.

Are you suggesting that it will be for new money only?

C_Mababejive

Fight or flight...up to you...