Br Steel and the big Pension question

Br Steel and the big Pension question

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Welshbeef

Original Poster:

49,633 posts

197 months

Thursday 26th May 2016
quotequote all
So in the news today we could be seeing special measurers being put through Parliment which will reduce the cost for BR Steel re pension costs.

It's raising the question of actually taking money away from already retired and drawing pension. Or if they don't then the company and the jobs may be lost.

It's tricky and could set the president for the decimation of every final salary scheme.


However to even think you can retire on 2/3rds salary is a bit of a joke and it's time those in the public sector to start to understand how different it is in the real world defined contributions set up no safety net.


But taking from those already retired - the logic being why should those who are paying in now subsidise those retired and without question will not get anything like the same. Why is it fair.
Is this the start of the old v young revolt???

FredClogs

14,041 posts

160 months

Thursday 26th May 2016
quotequote all
I think we need to take all the money from the poor and give it to the rich, it's the only way to ensure that businesses stay profitable and after all that's what's in everyone's best interests, isn't it?

And after all if the bosses at Indian steel firms don't have all the cash how are they going to bribe UK politicians? (I realise that it's not the same lot but you get my drift....)

Welshbeef

Original Poster:

49,633 posts

197 months

Thursday 26th May 2016
quotequote all
FredClogs said:
I think we need to take all the money from the poor and give it to the rich, it's the only way to ensure that businesses stay profitable and after all that's what's in everyone's best interests, isn't it?

And after all if the bosses at Indian steel firms don't have all the cash how are they going to bribe UK politicians? (I realise that it's not the same lot but you get my drift....)
They bought what was Br Steel/Corus for £7billion in 2006/7 they are selling it for £1 or shutting it down. For all the profits they have made in those years the loss on this is materially more than they ever earned from it.
What exactly should they use to pay?

Why should any new buyer accept the pension issues? Instead no buyer = everyone loses much much more.

FredClogs

14,041 posts

160 months

Thursday 26th May 2016
quotequote all
Welshbeef said:
They bought what was Br Steel/Corus for £7billion in 2006/7 they are selling it for £1 or shutting it down. For all the profits they have made in those years the loss on this is materially more than they ever earned from it.
What exactly should they use to pay?

Why should any new buyer accept the pension issues? Instead no buyer = everyone loses much much more.
Last year the TATA group did $6.7billion of profit on $109billion revenue, total assets of $118billion

The pension liabilities are around $0.7billion from what I understand. They could cover it - they won't - the system is broken, humans have err'd, there's a glitch in the matrix.

Restart...



Foliage

3,861 posts

121 months

Thursday 26th May 2016
quotequote all
FredClogs said:
Welshbeef said:
They bought what was Br Steel/Corus for £7billion in 2006/7 they are selling it for £1 or shutting it down. For all the profits they have made in those years the loss on this is materially more than they ever earned from it.
What exactly should they use to pay?

Why should any new buyer accept the pension issues? Instead no buyer = everyone loses much much more.
Last year the TATA group did $6.7billion of profit on $109billion revenue, total assets of $118billion

The pension liabilities are around $0.7billion from what I understand. They could cover it - they won't - the system is broken, humans have err'd, there's a glitch in the matrix.

Restart...
And usually to be eligible for the pension you have to have paid in, so how much did employees pay in over the years and what percentage of the liability is that? surely the people that paid in signed a contract with the pension supplier? how can they just change the terms?

FredClogs

14,041 posts

160 months

Thursday 26th May 2016
quotequote all
Foliage said:
And usually to be eligible for the pension you have to have paid in, so how much did employees pay in over the years and what percentage of the liability is that? surely the people that paid in signed a contract with the pension supplier? how can they just change the terms?
Because capitalism, because golden rule, because system is broken, because government is weak, because government is corrupt, because political lobbying, because unions are scared.

Fatal exception error occurred, restart now...

sidicks

25,218 posts

220 months

Thursday 26th May 2016
quotequote all
Foliage said:
And usually to be eligible for the pension you have to have paid in, so how much did employees pay in over the years and what percentage of the liability is that? surely the people that paid in signed a contract with the pension supplier? how can they just change the terms?
1. The employee contributions will have been a relatively small proportion of the total costs i.e. any sensible reduction to benefits is still likely to mean that employees will be taking out much more than they put in.

2. The contract for the pension is with the employer - they don't have the money!

Having said all that, this situation has existed in the past and will exist in the future - the fund should go to the PPF, pensioners will be unaffected and other members will inevitably see some reduction in their benefits.

FredClogs

14,041 posts

160 months

Thursday 26th May 2016
quotequote all
sidicks said:
Foliage said:
And usually to be eligible for the pension you have to have paid in, so how much did employees pay in over the years and what percentage of the liability is that? surely the people that paid in signed a contract with the pension supplier? how can they just change the terms?
1. The employee contributions will have been a relatively small proportion of the total costs i.e. any sensible reduction to benefits is still likely to mean that employees will be taking out much more than they put in.

2. The contract for the pension is with the employer - they don't have the money!

Having said all that, this situation has existed in the past and will exist in the future - the fund should go to the PPF, pensioners will be unaffected and other members will inevitably see some reduction in their benefits.
This is essentially the best way forward, get the mass population to take on the liabilities and payments through the PPF (I won't say tax payers because I know the PPF isn't funded by tax payers but it is funded by our pension money) and then the senior execs at TATA can enjoy their lunches in Monaco with Sir Green and the likes.

System will reboot, it's just a matter of time...

Welshbeef

Original Poster:

49,633 posts

197 months

Thursday 26th May 2016
quotequote all
FredClogs said:
Welshbeef said:
They bought what was Br Steel/Corus for £7billion in 2006/7 they are selling it for £1 or shutting it down. For all the profits they have made in those years the loss on this is materially more than they ever earned from it.
What exactly should they use to pay?

Why should any new buyer accept the pension issues? Instead no buyer = everyone loses much much more.
Last year the TATA group did $6.7billion of profit on $109billion revenue, total assets of $118billion

The pension liabilities are around $0.7billion from what I understand. They could cover it - they won't - the system is broken, humans have err'd, there's a glitch in the matrix.

Restart...
Right let's start again since when does Tata global employees have to subsidise UK enployees?
U.K. Business purchased for £7 billion worth £1 now if not actually a golden payment from Tata to the new owner ie worthless. It's been hugely loss making £1-2m a day for years. The U.K. Business for Tata will have been a horrific investment lose £7billion then on top of that the year on year losses.
Oddly you seem to think that it's ok for a global company to use its full years profit to pay for the UK? What if that causes huge job losses or massive detriment to T&Cs elsewhere in the globe due to greedy UK stomping their feet?


Foliage

3,861 posts

121 months

Thursday 26th May 2016
quotequote all
sidicks said:
Foliage said:
And usually to be eligible for the pension you have to have paid in, so how much did employees pay in over the years and what percentage of the liability is that? surely the people that paid in signed a contract with the pension supplier? how can they just change the terms?
1. The employee contributions will have been a relatively small proportion of the total costs i.e. any sensible reduction to benefits is still likely to mean that employees will be taking out much more than they put in.

2. The contract for the pension is with the employer - they don't have the money!

Having said all that, this situation has existed in the past and will exist in the future - the fund should go to the PPF, pensioners will be unaffected and other members will inevitably see some reduction in their benefits.
1. Yep I get that, was just curious how much, under 1%? So where does the rest of the money come from? company profits + the profits from the investment of the money, why was the pension overstated, to who's benefit was it to overstate it. I don't believe that 'recession' can be a simple catch all answer for financial failings.

2. But surely when the employee authorised a contribution from his wages to go towards his pension he has some kind of recourse, he/she is paying money for goods or services. I wouldn't just hand someone money from my wages every month without something concrete in writing of my rights.

I really don't understand pensions, and personally I just wont touch them, they are goods/services that are paid for but the customer seems to have no recourse under any form of consumer protection...

Welshbeef

Original Poster:

49,633 posts

197 months

Thursday 26th May 2016
quotequote all
FredClogs said:
This is essentially the best way forward, get the mass population to take on the liabilities and payments through the PPF (I won't say tax payers because I know the PPF isn't funded by tax payers but it is funded by our pension money) and then the senior execs at TATA can enjoy their lunches in Monaco with Sir Green and the likes.

System will reboot, it's just a matter of time...
It did 20-25 years ago in the private sector now the final salary schemes are coming under attack as they are so costly it's unfair to punish those in work now to pay for retired people knowing they will get a fraction of the retired person. And yes the same argument can be used they too will have put in a lifetimes work in fact probably over 10 years longer to get less out and then have a shorter retirement with less cash and be so old and frail enjoying the money fancy trips forget about it.

System will reboot for sure the young will rise and not stand for paying so much for the old knowing they will have a massively poorer retirement yet the current retired refuse to have a little less so the young can have a little more.

Foliage

3,861 posts

121 months

Thursday 26th May 2016
quotequote all
Welshbeef said:
Right let's start again since when does Tata global employees have to subsidise UK enployees?
U.K. Business purchased for £7 billion worth £1 now if not actually a golden payment from Tata to the new owner ie worthless. It's been hugely loss making £1-2m a day for years. The U.K. Business for Tata will have been a horrific investment lose £7billion then on top of that the year on year losses.
Oddly you seem to think that it's ok for a global company to use its full years profit to pay for the UK? What if that causes huge job losses or massive detriment to T&Cs elsewhere in the globe due to greedy UK stomping their feet?
I think they should be liable for the pensions, they knew what they where getting themselves into. It is a shame that it couldn't continue to make a profit at the rate it did when they bought it, but I don't think that should be a get out of paying out the pension they promised, they shouldn't have bought it if they didn't want to be liable for ALL the companies debt..

Why should the worker miss out so the shareholders can make more money? I know that's how business works though.

Welshbeef

Original Poster:

49,633 posts

197 months

Thursday 26th May 2016
quotequote all
Foliage said:
I think they should be liable for the pensions, they knew what they where getting themselves into. It is a shame that it couldn't continue to make a profit at the rate it did when they bought it, but I don't think that should be a get out of paying out the pension they promised, they shouldn't have bought it if they didn't want to be liable for ALL the companies debt..

Why should the worker miss out so the shareholders can make more money? I know that's how business works though.
You do know that most of the shareholders globally are pension funds don't you?
The problem with a deficit is it's an estimate looking up to what 60-70 years in the future. It will be wrong. Today it could be fully funded physically but then someone states guess what mortality rate has upped by half a year - fk we have a massive funding hole. What if lots of middle aged die much younger due to drinking and fatty lifestyle? The deficit could actually be a massive surplus.

Also note promises are just that they are not guaranteed. If the company is bust like it is now in the UK the liability drops to PPI or whatever it's called. Limited liability different legal entities etc.

sidicks

25,218 posts

220 months

Thursday 26th May 2016
quotequote all
Foliage said:
1. Yep I get that, was just curious how much, under 1%? So where does the rest of the money come from? company profits + the profits from the investment of the money, why was the pension overstated, to who's benefit was it to overstate it. I don't believe that 'recession' can be a simple catch all answer for financial failings.
I don't know the details of the scheme but i imagine that around 25% of the cost of the pensions would be funded by the employee (plus investment income) and 75% from the employer (plus investment income).

Under the PPF they are likely to get c. 90% back, I think.

The pensions weren't overstated, the company simply didn't save enough money to fund them due to a combination of poor investment returns, insufficient employee and employer contributions, improving longevity and government changes (not least the imposition of a tax charge by Gordon Brown).

Foliage said:
2. But surely when the employee authorised a contribution from his wages to go towards his pension he has some kind of recourse, he/she is paying money for goods or services. I wouldn't just hand someone money from my wages every month without something concrete in writing of my rights.
They do have rights.

Foliage said:
I really don't understand pensions and personally I just wont touch them, they are goods/services that are paid for but the customer seems to have no recourse under any form of consumer protection...
Your former statement is confirmed by your latter statements. Which probably means it's best if you don't comment on pension-related threads...


FredClogs

14,041 posts

160 months

Thursday 26th May 2016
quotequote all
Welshbeef said:
Right let's start again since when does Tata global employees have to subsidise UK enployees?
Since never, apparently, I owe £300 on my credit card, but it was my right hand what spent the money, that's the loss making part of my body because that's the bit what types the PIN into the cash point... What I'm going to do is chop my right arm off, that will mean I'm no longer liable for the money it had lost in the past, while the rest of my body, in particular my feet, can enjoy the velvet slippered walk through my new marbled palace.

That's right isn't it? Is that how things work is it?



Adrian W

13,848 posts

227 months

Thursday 26th May 2016
quotequote all
FredClogs said:
Last year the TATA group did $6.7billion of profit on $109billion revenue, total assets of $118billion

The pension liabilities are around $0.7billion from what I understand. They could cover it - they won't - the system is broken, humans have err'd, there's a glitch in the matrix.

Restart...
How much did the Tata group car companies spend with Tata steel? in the UK, and how much did they spend on cheap subsidised imported steel?

Foliage

3,861 posts

121 months

Thursday 26th May 2016
quotequote all
sidicks said:
Your former statement is confirmed by your latter statements. Which probably means it's best if you don't comment on pension-related threads...
Yep, but I'm trying to figure it out, hence why I'm trying to just ask questions, and put my moral/common sense stand point across.

From what you guys have said I have changed my standpoint.

Welshbeef

Original Poster:

49,633 posts

197 months

Thursday 26th May 2016
quotequote all
Foliage said:
1. Yep I get that, was just curious how much, under 1%? So where does the rest of the money come from? company profits + the profits from the investment of the money, why was the pension overstated, to who's benefit was it to overstate it. I don't believe that 'recession' can be a simple catch all answer for financial failings.

2. But surely when the employee authorised a contribution from his wages to go towards his pension he has some kind of recourse, he/she is paying money for goods or services. I wouldn't just hand someone money from my wages every month without something concrete in writing of my rights.

I really don't understand pensions, and personally I just wont touch them, they are goods/services that are paid for but the customer seems to have no recourse under any form of consumer protection...
What has changed is when these pensions were first offered 50 years ago people lived about 5 years tops in retirement that's now changed drastically due to improvements in healthcare so a man will on average live to 82yo 12 years longer. So the problem is no one picked up on that issue so the employees didn't pay in the necessary extra NOR did companies consult to reduce the annual pension payment nor did they push back the earliest start date of he pension.

Then came along Mr Gordon Brown and his stealth tax which removed the dividend tax credit from memory that tax in 1998/99 has to date taken out more than £400billion from pension funds. Oddly that's a similar value to the combined net deficit of all pension funds. Also at that time no employer said me employee due to nasty labour adding in this cost you need to pay in more to cover.

Then we have had a massive recession.
We have had 0.5% interest rates for what 7-8years. Pension funds have to be invested in govt bonds and equity mainly so the equity market has dropped 11% since 1999 and govt bond yeilds are 1% ish. So where are the returns required to meet the investment return.

Then we had the crazy situation which govt gave companies the option of pension payment holidays if they were in surplus - why to get more upfront taxes and the companies more profits.

So the country has had the "benefit" to the exchequer already so really we as tax payers should pay it back. ....

Then we have the BP collapse macondo well -- so many of our pension funds were heavily invested in it due to its great dividends. Well dividends stopped and market cap plummeted. Ditto the banks high holding in areas with massive losses RBS 96% loss.

Make sense now.

So who should pay and why?

FredClogs

14,041 posts

160 months

Thursday 26th May 2016
quotequote all
Adrian W said:
FredClogs said:
Last year the TATA group did $6.7billion of profit on $109billion revenue, total assets of $118billion

The pension liabilities are around $0.7billion from what I understand. They could cover it - they won't - the system is broken, humans have err'd, there's a glitch in the matrix.

Restart...
How much did the Tata group car companies spend with Tata steel? in the UK, and how much did they spend on cheap subsidised imported steel?
I don't know, I'm the village idiot, why are you asking me?

Whilst I'm not keen on industrial multinational corporate subverting the law, corrupting politics and imposing standards of living via abandonment of their commitments, I also don't think we should be telling them how to run their businesses.

There is a moral question here about how corporations operate, TATA as a group company is massively successful and massively profitable - when the super rich and successful start abandoning their responsibilities we're in real trouble as a society.

It's gone too far, the stack has overflowed. Clear the cache, restart.

FourWheelDrift

88,381 posts

283 months

Thursday 26th May 2016
quotequote all
Welshbeef said:
You do know that most of the shareholders globally are pension funds don't you?
No they're not - https://en.wikipedia.org/wiki/Tata_Sons#Shareholdi...

Majority are TATA trusts - http://www.tata.com/aboutus/sub_index/Leadership-w...

"The Tata trusts, majority shareholders of Tata Sons, have endowed institutions for science and technology, medical research, social studies and the performing arts. The trusts also provide aid and assistance to non-government organisations working in the areas of education, health care and livelihoods."

No British pension funds in there.