Additional inflation Adjustment, what are my chances?

bjorn_toby_wilde

hyubh said:

Marcon said:

Complete waste of time for various reasons

[snip]

Remember too that any discretionary increase to pensions will hit the employer's P&L account, which in turn could impact on any bonus schemes available to current employees, who will be in a much less favourable DC pension arrangement. Bit tricky to explain that one to employees, particularly those who may not be thrilled with recent modest wage increases.

While I would agree that the OP challenging a lack of discretionary increases would likely get nowhere, it's unclear why the overall remuneration package for current employees is something that the OP should be concerned with...?

That bit is maybe a stretch, but I’d agree with the main point that any extra payment to pensioners hits the P&L, not just now but in future, and that is the main reason I think that companies don't support them.

They are more concerned with current workers and their productivity than retired workers who have no impact on the business.

pterri

hyubh said:

Marcon said:

Complete waste of time for various reasons

[snip]

Remember too that any discretionary increase to pensions will hit the employer's P&L account, which in turn could impact on any bonus schemes available to current employees, who will be in a much less favourable DC pension arrangement. Bit tricky to explain that one to employees, particularly those who may not be thrilled with recent modest wage increases.

While I would agree that the OP challenging a lack of discretionary increases would likely get nowhere, it's unclear why the overall remuneration package for current employees is something that the OP should be concerned with...?

No, but (i think) that the sponsoring company is also a voice on the administration and will reasonably argue that they have a responsibility to use any of their profit to reward their current employees, investment etc while maintaining g the DB scheme. 

MarkCarnage

You can ask the Trustees if they've discussed/requested a discretionary increase with the sponsoring employer and you may well find that they have....and the answer has been no. I'm assuming that it requires employer consent as they almost invariably do. 
Most of the reasons have already been outlined above: buy-in, buffer for future 'shocks' etc. The point about comparison with pay awards to current employees is valid too; the sponsor will not want to be seen to be awarding what might be seen as egregious payments to pensioners. It may be that pension increases have been better than pay awards in some cases in recent years.
My experience is that if trustees do ask the question they are best to focus on any specific sub groups of pensioners who have been more disadvantaged e.g. they have a lower inflation rise, or higher element of fixed pension....this might be more sympathetically received.
 Unfortunately, there doesn't appear to be a mechanism to make single year 'one off' payments in times of high inflation....appears that the tax treatment of these is punitive and often no mechanism in the scheme rules. 

CTFC

Thanks  all for your comments, I will write to ask if it has been considered,

pterri

CTFC said:

Thanks  all for your comments, I will write to ask if it has been considered,

Good luck, would be interested to see the response. A couple of our trustees are union members, they are quite pragmatic though and they do seem to recognise that the sponsoring company has to remain healthy for the long term future of the fund. It’s still accepting new members. If liabilities spiral out of control that could come under pressure I guess. 

Marcon

hyubh said:

Marcon said:

Complete waste of time for various reasons

[snip]

Remember too that any discretionary increase to pensions will hit the employer's P&L account, which in turn could impact on any bonus schemes available to current employees, who will be in a much less favourable DC pension arrangement. Bit tricky to explain that one to employees, particularly those who may not be thrilled with recent modest wage increases.

While I would agree that the OP challenging a lack of discretionary increases would likely get nowhere, it's unclear why the overall remuneration package for current employees is something that the OP should be concerned with...?

OP won't be, but the employer will - and they're the ones who will ultimately foot the bill for any discretionary increase.

bjorn_toby_wilde said:

hyubh said:

Marcon said:

Complete waste of time for various reasons

[snip]

Remember too that any discretionary increase to pensions will hit the employer's P&L account, which in turn could impact on any bonus schemes available to current employees, who will be in a much less favourable DC pension arrangement. Bit tricky to explain that one to employees, particularly those who may not be thrilled with recent modest wage increases.

While I would agree that the OP challenging a lack of discretionary increases would likely get nowhere, it's unclear why the overall remuneration package for current employees is something that the OP should be concerned with...?

That bit is maybe a stretch, but I’d agree with the main point that any extra payment to pensioners hits the P&L, not just now but in future, and that is the main reason I think that companies don't support them.

They are more concerned with current workers and their productivity than retired workers who have no impact on the business.

On the contrary - it is a burning issue for many employers put in this position. Very few people understand the impact on a company's financial statements, but the Finance Director certainly does!

Lowtrawler

This topic is going to become more pertinent as time goes on. Most DB schemes were closed to new membership over the past 20 years and so within the next 60 - 80 years these schemes will dwindle to a small number of pensioners. It is likely many of these schemes will have significant surpluses that could amount to millions per remaining pensioner. There could be a last man standing windfall to those pensioners.

QrizB

Lowtrawler said:

There could be a last man standing windfall to those pensioners.

Or, more likely, to the legacy employer or insurance company.

Marcon

Lowtrawler said:

This topic is going to become more pertinent as time goes on. Most DB schemes were closed to new membership over the past 20 years and so within the next 60 - 80 years these schemes will dwindle to a small number of pensioners. It is likely many of these schemes will have significant surpluses that could amount to millions per remaining pensioner. There could be a last man standing windfall to those pensioners.

Highly unlikely. The schemes will have been bought out with an insurer long before that happens, with the surplus being returned to the sponsoring employer and/or used to augment benefits, depending on the rules of the scheme and the attitude of the employer (and trustees if they have a say - not all do).

pterri

Marcon said:

Lowtrawler said:

This topic is going to become more pertinent as time goes on. Most DB schemes were closed to new membership over the past 20 years and so within the next 60 - 80 years these schemes will dwindle to a small number of pensioners. It is likely many of these schemes will have significant surpluses that could amount to millions per remaining pensioner. There could be a last man standing windfall to those pensioners.

Highly unlikely. The schemes will have been bought out with an insurer long before that happens, with the surplus being returned to the sponsoring employer and/or used to augment benefits, depending on the rules of the scheme and the attitude of the employer (and trustees if they have a say - not all do).

Hoping to be amongst the last few dozen at  age112, buy a Ferrari to transport myself to the crematorium.