Pension protection fund or new Kodak pension plan

armour

Hi all,
I'm a member of the Kodak Prnsion Plan (kpp). Kodak went bust so I thought that the pension liabilities would go to the pension protection fund. There is however an offer from Kodak, which the kpp seem keen to accept, which would keep the kpp out of the pension protection fund
Here's a link to the kpp page (pages 5&6 apply to me)
http://yournewkpp.co.uk/pdf/document-overview-20130508.pdf

Here's a link to a news article regarding the proposed deal
http://www.independent.co.uk/news/business/news/pensions-watchdog-under-fire-over-419m-kodak-settlement-8604754.html

I'm minded to vote no so I get into the pension protection fund before the goalposts are moved. Can anyone give me a steer in either direction please?

I should mention that I'm a deferred member under normal retirement age. I'm 50

roddydogs

Im a current K pensioners and the bumf I have seems to be uriging me to vote yes, but I dont know what's best.

mania112

I can't see any benefit in voting for the PPF, am i missing something?

And i'm sure that PPF will always remain an option in the future.

armour

There's not been much discussion in the media regarding this deal, but I've found one 'independent pensions specialist' named John Rolfe who's scathing about it.

http://www.ft.com/cms/s/0/ef4a34d0-b315-11e2-b5a5-00144feabdc0.html#axzz2V0G8sXuN

This seems to suggest that the deal has been cooked up by the pensions regulator and Kodak to:

A) stop Kodak being sued for the full £1.9bn.
keep the kpp out of the pension protection fund.

Here's a selected quote:

How much would the PPF lose if it took on the Kodak pension plan? With £1bn of assets and £2.9bn of buyout liabilities, the PPF liabilities are around £2bn. Before including the difference between the value of the two businesses bought and the $650m purchase price, this is a £1bn hit for the PPF, its largest single hit by a long way.
The PPF’s £1bn surplus at March 2012 would be wiped out by taking on the Kodak pension plan. It would signal the need for hefty increases in pension scheme levies, a possible reduction in compensation payable to claimants, and even call into question the PPF’s long-term viability.
The regulator must demonstrate, without any shadow of a doubt, that it approved this deal for genuine reasons, not just as a convenient way to keep the Kodak pension plan out of the PPF.


A further concern is that, if the deal goes ahead, the kpp (a pension fund) will be running 2 businesses whose activities are:

1) Document imaging, which I beleive to be production and sale of commercial document scanners.
2) Pesonal imaging, which I beleive to be a business based on producing hard copy photos from digital images.

I dont think that a pension fund should be running a business at all and both these businesses don't seem to me to have much of a future.

I know the kpp bumf says that the new plan will be protected By the PPF in the same way as was the old one, so it is a no lose situation, but I'm concerned that in the future the PPF rules may change so that I'd be even more disadvantaged.

xylophone

but I'm concerned that in the future the PPF rules may change

The same would apply if the scheme were in PPF now?

the new plan will be protected By the PPF in the same way as was the old one,

In which case there seems nothing to lose by going with the new scheme?

jamesd

Some key things to know about joining the PPF are:

1. For those over normal retirement age taking a pension:
All pensioners are likely to face a substantial loss because the inflation cap is 2.5% instead of 5%, lump sum on death is removed.
2. For those under normal retirement age already taking a pension:
Some will face a large and immediate loss of income because of the PPF income cap. Likely to apply to many who were getting paid higher rate tax and higher levels of income.
All face at least a 10% loss because the payout is only 90% of the pension at best.
All pensioners are likely to face a substantial loss because the inflation cap is 2.5% instead of 5%, lump sum on death is removed.
3. For those under normal retirement age, not taking the pension yet:
Similar to 2 but also loss of the ill health benefit.

Every pensioner and possible pensioner loses out in some way if this deal is not approved.

Worst case is that the fund ends up in the PPF at some point in the future. By which time more people will be over normal retirement age and would suffer less due to the various caps and limitations when it happens.

Those with higher incomes would presumably have the option of transferring out to avoid the large cut in income that they would face.

There are issues to wonder about when it comes to PPF funding and whether this is a good deal for the PPF but it is a better deal for the employees and the pensioners than joining the PPF.

roddydogs

Well, im voting for the "New" plan, as it seem much better than the PPF, and "What have I got to lose?" it goes back to PPF anyway if the new plan dosent work.

armour

I suppose you're right Roddydogs.
BUT
I don't believethat the profits from the two businesses will be able to plug the shortfall & the new KPP will become unsustainable.
My concern is that if we go into the new plan & it fails, what guarantee have we that the PPF will still exist in it's current form?
I imaging that there will be more final salary pensions applying to join in the coming years & there's bound to be a limit.

littleladybird

I voted 'yes' for exactly the same reasons as roddydogs......