FAS (PPF) May Start Offering Inflation Increases on Pensions Prior to 1997

PensionsStuff

hyubh said:

PensionsStuff said:

hyubh said:

PensionsStuff said:

hyubh said:

PensionsStuff said:

the already minor levies should be kept the same / increased.

Very droll. 

PPF levy is a incredibly, incredibly, small cost to a pension scheme. As shown by this news, the funding can be used in much better places than shaving 0.0001% off a Schemes liabilities 

It is effectively a tax on schemes well supported by their sponsoring employer to provide a backstop to those that were/are not. Do you yourself receive PPF compensation, or are a deferred member...?

We ignoring the risk based levy (which is the majority of the total levy) by definition is the opposite of what you've just said ?. It punishes those most at risk, those not can reduce this massively.. so im not entirely sure the point you're trying to make.

All private sector DB schemes have to pay it. How is that not effectively a tax? I was also responding to your claim that the levy should be increased to pay for unfunded discretionary obligations of failed schemes. The fact the levy is not single tier has no bearing on that.

It is car insurance, in simple terms drive safely for years and it goes down, drive badly and yours goes up, people who drive safely aren't paying more to cover for the other group

The PPF did not exist when most schemes subject to the levy began. In fact when the PPF was introduced, the general closure of private sector DB schemes was well under way. The introduction of the levy, in other words, was inherently retrospective.

I'm still interested whether you yourself would be personally set to gain from what you propose, and if not, whether someone close to you would...

I don't particularly care or not whether someone views it as a tax, it doesn't make a difference to anything. 

You don't need to be interested, I already told you. I work in the industry, I see what Pension Schemes spend money on, i see the incredibly over inflated adviser costs, i see the expenses, i see the meetings to discuss when the next meeting will be to then have a meeting to discuss what happened in the meeting which the Scheme lawyer is charging £400 a pop to attend.

A scheme member should not be punished through absolutely no fault of their own if their Scheme fails. This isn't someone making bad investments, they have zero say in their DB pension. Ill repeat. I would much rather all Schemes pay extra that they will quite literally not even notice as it will be a 4th decimal rounding error on their accounts , to allow members better benefits e.g in the form of inflation linked pre97 increases .

Welcome to the real world where people are expected to cover the costs of others are times. If anyone has a problem with it, don't use the road outside your house as someone else paid for that.

westv

hyubh said:

westv said:

hyubh said:

PensionsStuff said:

hyubh said:

PensionsStuff said:

the already minor levies should be kept the same / increased.

Very droll. 

PPF levy is a incredibly, incredibly, small cost to a pension scheme. As shown by this news, the funding can be used in much better places than shaving 0.0001% off a Schemes liabilities 

It is effectively a tax on schemes well supported by their sponsoring employer to provide a backstop to those that were/are not. Do you yourself receive PPF compensation, or are a deferred member...?

Levy or tax, it's still better than the previous situation

My objection is to the idea that actually existing PPF compensation is not enough, and well funded schemes and their sponsoring employers should be made to pay for 'rectifying' this situation.

So hard luck to those with service prior to 97?to
Has/will there be an increase in the levy to fund the new indexation?

Kryten_the_Titan

westv said:

Just got an email today from the FAS to say that there was an announcement about pension inflation increases (capped at 2.5%) for service prior to 1997. I have no idea if I will benefit (all mine was prior to 97) or if it will just be future members when they reach pension age.

Dear Mr ....,

 

I’m writing to let you know about a government announcement which could positively affect some FAS members in the future. What’s happened? The government has announced that it intends to change the law in relation to the inflation increases on pensions built up before 1997 for FAS members. This is often known or referred to as ‘pre-97 indexation’. As you likely know, the current law doesn’t allow us to pay inflation increases on pre-97 pensions. The government has said it will legislate through the Pension Schemes Bill to change this. The government has said it wants to enable us in future to pay pre-97 increases capped at 2.5 per cent for members whose schemes promised them. These would then be paid going forwards. A positive development This is a significant and positive development. We currently estimate that as many as 91,000 FAS members could stand in the future to benefit from this change. I’d also like to pay tribute to the member campaigners who’ve made the case so powerfully for change. We’re pleased your voices have been heard and the government has acted positively. What happens next? It’s important to stress that the law hasn’t yet been changed. There is still a long way for the Bill to go. MPs and Peers will now need to consider this change and agree to it. The Bill is expected to become law sometime next year (2026). When this has happened, we’ll then be in a better position to say when we think we can make this change to uplift affected members’ assistance payments. In the meantime, we’re working hard to get ready to make this change. There’s a lot of work to do, so we’re getting on with it now. We’ll make this change at the first opportunity We’re fully committed to making this change at the earliest feasible opportunity after the Bill becomes law. Currently we must apply increases to members’ payments in January each year. If the Bill becomes law sometime next year as expected, the first opportunity to begin applying any change to pre-97 indexation would then be January 2027. Staying informed on progress Over the coming weeks and months, we’ll post updates and more information on our member websites so you can stay fully informed of developments. When the Bill has become law, we then intend to write out to those FAS members we expect will benefit from this change. You don’t need to do anything – if you will benefit from this change, we’ll contact you when the time is right. Sara Protheroe Chief Customer Officer, Pension Protection Fund

I wanted to thank original poster here as this is how I found out about this possible change to pre-'97 indexation for PPF/FAS members.

It brings me some hope.  The first 11 years of my working career was in to a DB scheme which ended up in the PPF, 90% of which was pre-'97.  To hear that legislation is being discussed in parliament now and next year in order to give PPF/FAS members indexation up to 2.5% (where their original pension scheme give pre-'97 indexation), gives hope to a better outcome in retirement.

Marcon

Kryten_the_Titan said:

westv said:

Just got an email today from the FAS to say that there was an announcement about pension inflation increases (capped at 2.5%) for service prior to 1997. I have no idea if I will benefit (all mine was prior to 97) or if it will just be future members when they reach pension age.

I wanted to thank original poster here as this is how I found out about this possible change to pre-'97 indexation for PPF/FAS members.

It brings me some hope.  The first 11 years of my working career was in to a DB scheme which ended up in the PPF, 90% of which was pre-'97.  To hear that legislation is being discussed in parliament now and next year in order to give PPF/FAS members indexation up to 2.5% (where their original pension scheme give pre-'97 indexation), gives hope to a better outcome in retirement.

Unfortunately it will give false hope to a lot of people who were in a scheme which didn't give pre-97 indexation....

westv

Marcon said:

Kryten_the_Titan said:

westv said:

Just got an email today from the FAS to say that there was an announcement about pension inflation increases (capped at 2.5%) for service prior to 1997. I have no idea if I will benefit (all mine was prior to 97) or if it will just be future members when they reach pension age.

I wanted to thank original poster here as this is how I found out about this possible change to pre-'97 indexation for PPF/FAS members.

It brings me some hope.  The first 11 years of my working career was in to a DB scheme which ended up in the PPF, 90% of which was pre-'97.  To hear that legislation is being discussed in parliament now and next year in order to give PPF/FAS members indexation up to 2.5% (where their original pension scheme give pre-'97 indexation), gives hope to a better outcome in retirement.

Unfortunately it will give false hope to a lot of people who were in a scheme which didn't give pre-97 indexation....

Are there many? I can't imagine many older DB wouldn't have had inflation increases when in payment but that is just my guess.

hyubh

PensionsStuff said:

hyubh said:

PensionsStuff said:

hyubh said:

PensionsStuff said:

hyubh said:

PensionsStuff said:

the already minor levies should be kept the same / increased.

Very droll. 

PPF levy is a incredibly, incredibly, small cost to a pension scheme. As shown by this news, the funding can be used in much better places than shaving 0.0001% off a Schemes liabilities 

It is effectively a tax on schemes well supported by their sponsoring employer to provide a backstop to those that were/are not. Do you yourself receive PPF compensation, or are a deferred member...?

We ignoring the risk based levy (which is the majority of the total levy) by definition is the opposite of what you've just said ?. It punishes those most at risk, those not can reduce this massively.. so im not entirely sure the point you're trying to make.

All private sector DB schemes have to pay it. How is that not effectively a tax? I was also responding to your claim that the levy should be increased to pay for unfunded discretionary obligations of failed schemes. The fact the levy is not single tier has no bearing on that.

It is car insurance, in simple terms drive safely for years and it goes down, drive badly and yours goes up, people who drive safely aren't paying more to cover for the other group

The PPF did not exist when most schemes subject to the levy began. In fact when the PPF was introduced, the general closure of private sector DB schemes was well under way. The introduction of the levy, in other words, was inherently retrospective.

I'm still interested whether you yourself would be personally set to gain from what you propose, and if not, whether someone close to you would...

I don't particularly care or not whether someone views it as a tax, it doesn't make a difference to anything. 

You don't need to be interested, I already told you. I work in the industry, I see what Pension Schemes spend money on, i see the incredibly over inflated adviser costs, i see the expenses, i see the meetings to discuss when the next meeting will be to then have a meeting to discuss what happened in the meeting which the Scheme lawyer is charging £400 a pop to attend.

A scheme member should not be punished through absolutely no fault of their own if their Scheme fails. This isn't someone making bad investments, they have zero say in their DB pension. Ill repeat. I would much rather all Schemes pay extra that they will quite literally not even notice as it will be a 4th decimal rounding error on their accounts , to allow members better benefits e.g in the form of inflation linked pre97 increases .

Compared to current government policies like higher employer NICs (a direct tax on jobs), would your wish be majorly significant in itself? Maybe not. But that's not the point - you want to impose a cost to benefit a small subset of the population. (Most people under 40 have no concept of a DB pension at all!) Who's to say even higher costs on businesses, if we accept the principle, shouldn't be used for something else? Higher compulsory Auto-Enrolment contributions, for example. Or thinking bigger, maybe the replacement of AE with the reintroduction of a salary-related additional state pension? And that's just within pensions.

Welcome to the real world where people are expected to cover the costs of others are times. If anyone has a problem with it, don't use the road outside your house as someone else paid for that.

I live in the real world where the economy is at best moderate, private sector pay is stagnating, and there is a government that is imposing more and more costs on businesses as it is.

Kryten_the_Titan

westv said:

Marcon said:

Kryten_the_Titan said:

westv said:

Just got an email today from the FAS to say that there was an announcement about pension inflation increases (capped at 2.5%) for service prior to 1997. I have no idea if I will benefit (all mine was prior to 97) or if it will just be future members when they reach pension age.

I wanted to thank original poster here as this is how I found out about this possible change to pre-'97 indexation for PPF/FAS members.

It brings me some hope.  The first 11 years of my working career was in to a DB scheme which ended up in the PPF, 90% of which was pre-'97.  To hear that legislation is being discussed in parliament now and next year in order to give PPF/FAS members indexation up to 2.5% (where their original pension scheme give pre-'97 indexation), gives hope to a better outcome in retirement.

Unfortunately it will give false hope to a lot of people who were in a scheme which didn't give pre-97 indexation....

Are there many? I can't imagine many older DB wouldn't have had inflation increases when in payment but that is just my guess.

When I heard the news the first thing I checked was my original pension scheme documents and statements.  I checked and discovered (or should say, I was reminded) that my original scheme gave up to 5% RPI indexation.  Of course, until this all gets ratified and passed as law, myself and many others can only wait and hope.

hyubh

westv said:

hyubh said:

westv said:

hyubh said:

PensionsStuff said:

hyubh said:

PensionsStuff said:

the already minor levies should be kept the same / increased.

Very droll. 

PPF levy is a incredibly, incredibly, small cost to a pension scheme. As shown by this news, the funding can be used in much better places than shaving 0.0001% off a Schemes liabilities 

It is effectively a tax on schemes well supported by their sponsoring employer to provide a backstop to those that were/are not. Do you yourself receive PPF compensation, or are a deferred member...?

Levy or tax, it's still better than the previous situation

My objection is to the idea that actually existing PPF compensation is not enough, and well funded schemes and their sponsoring employers should be made to pay for 'rectifying' this situation.

So hard luck to those with service prior to 97?

Short answer, yes, that should be the default position. The existence of the PFF and PPF Compensation by itself makes things a lot better than when these individuals were active members of their old scheme. In the so-called heyday of final salary pensions, when a sponsoring employer went bust, the scheme's assets as they stood had to do and nothing else.

Has/will there be an increase in the levy to fund the new indexation?

The question has arisen because practically all DB schemes (legacy private sector, council pension funds, USS, PPF, etc.) are currently enjoying must better funding positions than before due to higher interest rates etc.

westv

hyubh said:

westv said:

hyubh said:

westv said:

hyubh said:

PensionsStuff said:

hyubh said:

PensionsStuff said:

the already minor levies should be kept the same / increased.

Very droll. 

PPF levy is a incredibly, incredibly, small cost to a pension scheme. As shown by this news, the funding can be used in much better places than shaving 0.0001% off a Schemes liabilities 

It is effectively a tax on schemes well supported by their sponsoring employer to provide a backstop to those that were/are not. Do you yourself receive PPF compensation, or are a deferred member...?

Levy or tax, it's still better than the previous situation

My objection is to the idea that actually existing PPF compensation is not enough, and well funded schemes and their sponsoring employers should be made to pay for 'rectifying' this situation.

So hard luck to those with service prior to 97?

Short answer, yes, that should be the default position, as those were the terms when these people were active members of the scheme.

No they weren't. The whole point of this amendment is to give inflation increases up to 2,5% for those members whose service was prior to 97 but whose original schemes had increases.

westv

Kryten_the_Titan said:

westv said:

Marcon said:

Kryten_the_Titan said:

westv said:

Just got an email today from the FAS to say that there was an announcement about pension inflation increases (capped at 2.5%) for service prior to 1997. I have no idea if I will benefit (all mine was prior to 97) or if it will just be future members when they reach pension age.

I wanted to thank original poster here as this is how I found out about this possible change to pre-'97 indexation for PPF/FAS members.

It brings me some hope.  The first 11 years of my working career was in to a DB scheme which ended up in the PPF, 90% of which was pre-'97.  To hear that legislation is being discussed in parliament now and next year in order to give PPF/FAS members indexation up to 2.5% (where their original pension scheme give pre-'97 indexation), gives hope to a better outcome in retirement.

Unfortunately it will give false hope to a lot of people who were in a scheme which didn't give pre-97 indexation....

Are there many? I can't imagine many older DB wouldn't have had inflation increases when in payment but that is just my guess.

When I heard the news the first thing I checked was my original pension scheme documents and statements.  I checked and discovered (or should say, I was reminded) that my original scheme gave up to 5% RPI indexation.  Of course, until this all gets ratified and passed as law, myself and many others can only wait and hope.

I assumed it was almost guaranteed and just had to go through the usual process to come into effect.