Government notice period for private pension rules

DullGreyGuy

whitehartal said:

Is there a "notice period" that any UK Government has to give if they were to bring in new private pension rules, for example changes to the 25% "tax free" allowance?

No, they can even apply things retrospectively if they wanted. 

Somethings are part of legislation and some things are in the domain of the relevant minister(s). Where it's part of legislation there is a process to draft new legislation and get it passed but these things can be fast tracked and so can in principle go through in days rather than the normal months. Given the possibility for retroactive dates it's a bit moot anyway. 

Whilst things are possible it doesn't mean they will necessarily will exercise those powers, most legislation has a future effective date to give people time to prepare (even if thats just pension fund administrators to update their software) and so it'd be unlikely to be done immediately or retrospectively. 

Hoenir

DBdoobydoo said:

JoeCrystal said:

Peter999_2 said:

Let's face it, it's Labour.   They don't give a crap about the working man, just look at how they decimated final salary pensions.

Unfortunately they can literally do whatever they want as they are the government.   Hopefully people who voted them in are now realising just what they have done.   Turkeys voting for Christmas springs to mind.

Remember that we should not have political debates on this forum according to the rules, and your post didn't even answer the question in the first place. I think you meant that final salary pension schemes are going the way of the dodo since they are costly for private sector employers to operate, especially since the investment returns are nothing like the ones in previous decades. However, final salary pension schemes in the private sector are still around; SWR comes to mind for example.

It's not even necesarrily the cost of providing DB pensions but perhaps more importantly that private sector employers have realised that employees in general don't appreciate the value of DB pensions so they have been able to close company schemes without much complaint from the workforce. Theeir actions facilitated by the large decline in trades union membership over the last 30-40 years.

Unfortunately it wasn't. Almost as bad the comment that the the stopping of the WFA was to protect the £. Really concerning the level of understanding that exists in many quarters today. Ideology over comprehensenion. 

zagfles

hugheskevi said:

zagfles said:

DBdoobydoo said:

zagfles said:

DBdoobydoo said:

Peter999_2 said:

shortseller09 said:

Peter999_2 said:

se that I shouldn't have posted political things.  I thought that it was very relevant but what do I know.

Not relevant and utterly wrong, do some reading.

Haha.  Don't think it's me who need to do the reading.     Why don't you have a look at what happened when Gordon Brown made the disasterous pension dividend changes in 1997 - or do you just think it's a co-incidence that so many companies no longer offer them?    

But, if you want to keep your head in the sand that is also fine, I won't waste my time responding further.

I think it's more that employees in general don't appreciate the value of DB pensions so employers have been able to get away without providing this benefit so maximising company profits.

The LGPS provides a model  for sustainable DB pensions but at a cost of 30% employer contributuons & 5-5-12.5% employee contributions. Private employers aren't prepared to do this & the lack of interest in pensions by employees allows this to continue.

It's not just cost it's risk. The narrative of greedy employers trying to maximise profits at the expense of the downtrodden worker who doesn't understand pensions and won't join a union is tempting but doesn't reflect reality. It's not like DB pensions were a hard fought for benefit by workers. They were a tool companies used to create loyalty and act as almost golden handcuffs. 

Prior to about 1988, employers could force employees to join the DB pension scheme. Most did. Then the govt changed the rules to allow people to opt out, and we had to go to meetings with HR where they practically begged us to stay in the pension scheme! This was a 1/60th final salary DB scheme. There were logical reasons to opt out, eg for someone in their 20's who envisaged moving jobs in a few years. Deferred DB pension with no/limited inflation protection for several decades could end up worthless. 

Then the govt gradually piled extra costs on DB schemes to fix some of their deficiencies. Such as inflation protection, PPF costs, rules to stop dipping (Maxwell etc). Plus changes in the investment environment, dividend reclaim rules, life expectancy etc. All massively increased the cost of providing a benefit which previously employers wanted to provide, not for the workers' benefit, but their own. 

The last Labour govt even attempted to water down inflation protection for DB pensions in around 2009 in a last ditch desperate attempt to stop them all closing. It didn't work of course, too little too late. 

DB pensions of course remain in the public sector, but when risk is underwritten by the taxpayer, it's not a real risk. Perhaps if the govt had underwritten all private sector schemes instead of creating the PPF and imposing a levy then more private sector DB schemes would remain. 

That's why I gave the example of the LGPS which mirrors other public sector pension schemes but is fully funded & not underwritten by the taxpayer.

If the LGPS funds ever weren't enough to pay benefits they'd be bailed out by the taxpayer, probably through an increase on employer contribution (ie mainly local govt, ie the taxpayer).

Isn't that just the standard process that occurs now?

An open, funded, DB scheme should always have plenty of assets to meet cash-flow requirements, even if it is heavily underfunded (I think about 15 years of cashflow was fairly typical for schemes entering the PPF). So there should never be a concern that pensioners won't be paid due to no money in the short or even medium-term.

The actuarial valuations regularly assess the funding the scheme and set employer contribution rates accordingly. So if a shortfall emerges, the rates go up, and employers have to fund the higher contribution however they choose.

Of course, but if the employer goes bust and the scheme then gets into trouble they're in the PPF. It's happened to nearly 300,000 people. The PPF doesn't guarantee the same benefits as the original scheme, there is no indexation of benefits accrued pre 1997 and a 2.5% cap on post 1997, and if you've not reached NRA you only get 90%.

It's better than nothing like the old days, but it's nowhere near as good as a taxpayer backed guarantee.