New Pension type??
Discussion
We all know about
Final Salary - issue due to Govt stealth tax and permitted pension holiday payments the gaps in funding have appeared and these are now dead.
CARE - career average salary. Each year your salary is locked and banked at 1/60th or whatever the rate is. Seems a very sensible route to take cheaper than final salary and clearly a good deal for the employee and encourages them to progress
Defined Contribution - doesn't work all the risk on the individual you could lose vast amounts of your pension pot with ten years or less to go and never recover it's a real off putting reality.
What does the new deal used by Morrisons and suggested by the Govt as the pension which will work?
Final Salary - issue due to Govt stealth tax and permitted pension holiday payments the gaps in funding have appeared and these are now dead.
CARE - career average salary. Each year your salary is locked and banked at 1/60th or whatever the rate is. Seems a very sensible route to take cheaper than final salary and clearly a good deal for the employee and encourages them to progress
Defined Contribution - doesn't work all the risk on the individual you could lose vast amounts of your pension pot with ten years or less to go and never recover it's a real off putting reality.
What does the new deal used by Morrisons and suggested by the Govt as the pension which will work?
Rising Life expectancy means that final salary is dead, and without either a significant raise in the pension age or a drop in life expectancy, career average isn't likely to be viable for much longer either...
Defined Contribution is the only way that doesn't impose huge legacy costs on employers (making them less competitive than newer entrants to the market) - probably legislation is needed to improve the performance of the funds (i.e. so fund managers don't get paid for s
t performance - perhaps fees can only be taken out of the amount that the fund grows above inflation etc)...
Defined Contribution is the only way that doesn't impose huge legacy costs on employers (making them less competitive than newer entrants to the market) - probably legislation is needed to improve the performance of the funds (i.e. so fund managers don't get paid for s
t performance - perhaps fees can only be taken out of the amount that the fund grows above inflation etc)...Welshbeef said:
Anyone?
Well said!I have a decent familiarity in this area and I'm struggling to see anything new in it. To be honest I'm wondering whether it's a governmemt ploy to try to sidestep the urgent need for them to shut off final salary pensions in the public sector - including, of course, their own mega-generous pensions.
With a bit of luck Sidicks will be along with a point of view....
Pension payment holidays should be made illegal they are a significant reason why so many funds are in defecit and then decided they were not affordable so shut them.
Browns stealth tax on pension funds added to the pension holiday gap - no employer increased their payments into the fund due to this as duh over years a huge gap built up.
Finally as we all know life expectancy is increasing so causes future liability to increase. Thing is though in the last decade life expectancy hasn't jumped up... So the issue here is that the old way of assessing life expectancy say in 1997 was different and under estimated the costs as such the catch up required back then never happened and when they amended the way they assessed liabilities suddenly a big gap defecit was created.
So add those up and suddenly final salary are not in vogue and too expensive
Browns stealth tax on pension funds added to the pension holiday gap - no employer increased their payments into the fund due to this as duh over years a huge gap built up.
Finally as we all know life expectancy is increasing so causes future liability to increase. Thing is though in the last decade life expectancy hasn't jumped up... So the issue here is that the old way of assessing life expectancy say in 1997 was different and under estimated the costs as such the catch up required back then never happened and when they amended the way they assessed liabilities suddenly a big gap defecit was created.
So add those up and suddenly final salary are not in vogue and too expensive
Welshbeef said:
Pension payment holidays should be made illegal they are a significant reason why so many funds are in defecit and then decided they were not affordable so shut them.
I kind of agree with you. The "logic" is what I consider to be classic beancounter speak,- When there's a surplus it's "taxable". Thank you Gordon Brown.
- When there's a shortfall it's "unaffordable". Thank you Gordon Brown.
Welshbeef said:
Pension payment holidays should be made illegal they are a significant reason why so many funds are in defecit and then decided they were not affordable so shut them.
Browns stealth tax on pension funds added to the pension holiday gap - no employer increased their payments into the fund due to this as duh over years a huge gap built up.
Finally as we all know life expectancy is increasing so causes future liability to increase. Thing is though in the last decade life expectancy hasn't jumped up... So the issue here is that the old way of assessing life expectancy say in 1997 was different and under estimated the costs as such the catch up required back then never happened and when they amended the way they assessed liabilities suddenly a big gap defecit was created.
So add those up and suddenly final salary are not in vogue and too expensive
Look how many times do I have to say this.Browns stealth tax on pension funds added to the pension holiday gap - no employer increased their payments into the fund due to this as duh over years a huge gap built up.
Finally as we all know life expectancy is increasing so causes future liability to increase. Thing is though in the last decade life expectancy hasn't jumped up... So the issue here is that the old way of assessing life expectancy say in 1997 was different and under estimated the costs as such the catch up required back then never happened and when they amended the way they assessed liabilities suddenly a big gap defecit was created.
So add those up and suddenly final salary are not in vogue and too expensive
Pension funds like ours were in surplus. This was due to good investment times and prudence.
Then along comes Govt (HMRC) and says unless you deal with this surplus we will tax it at punitive levels and take it off you. So we increased benefits and various other things. Not enough said the revenue, the only solution was to take a forced pension holiday. They refused to accept our arguments that bad times could follow good.
Then along came a Winky, massive raid, recession, different way pension deficits had to be reported on balance sheets, increased life expectancy and all the rest you know.
Meanwhile Govt doesn't change its own rules regarding he massive Ponzi scheme of public sector pensions.
However the point of this post is to say STOP, JUST BLOODY STOP, peddling these lies that it's all the fault of greedy companies taking pension holidays.
We ae going a bit off topic here Butkus good to be clear what has caused the downfall of the final salary schemes ad likewise we know what the flaw is with defined contributions.
So what is this new idea? I'm struggling to understand what is different I'm thinking it's just a different name for exactt the same thing which males the public think oh pension now not so bad put money in.... Rather than there being any substance.
So what is this new idea? I'm struggling to understand what is different I'm thinking it's just a different name for exactt the same thing which males the public think oh pension now not so bad put money in.... Rather than there being any substance.
Morrisons appear to be trying to make their new pension plans bit affordable and worthwhile. You could argue this must be better than the current nonsense of unfundable funds.
However the devil will be in the detail IMO. It always is particularly so with pension schemes. Remember Equitable Life. That promised much and delivered total Insolvency. All whilst authorised and regulated by Fimbra I think at the time later the FSA. Not one prosecution. As usual.
I think it is a defined contribution scheme with an annuity mixed in but the detail is lacking. I have grave doubts about any pensions in the future given the complete Horlicks successive governments have made of our economy.
I really do wonder whether any pension scheme can be Actuarially solvent with investment returns at 2 to 3% and inflation at 4%. I cannot see how that can work almost irrespective of the fund structure.
However the devil will be in the detail IMO. It always is particularly so with pension schemes. Remember Equitable Life. That promised much and delivered total Insolvency. All whilst authorised and regulated by Fimbra I think at the time later the FSA. Not one prosecution. As usual.
I think it is a defined contribution scheme with an annuity mixed in but the detail is lacking. I have grave doubts about any pensions in the future given the complete Horlicks successive governments have made of our economy.
I really do wonder whether any pension scheme can be Actuarially solvent with investment returns at 2 to 3% and inflation at 4%. I cannot see how that can work almost irrespective of the fund structure.
Steffan totally agree and the worst bit of all is generations of people had turned off from retirement savings as they don't trust it etc.
So the money they would have invested into a pension is spent in consumer goods or eating out or whatever. Problem is come retirement oh ive got to live on state pension which now starts at 75yo and it's £5k in today's money. I'm 63 now and want to stop at 65 latest... But have nothing put aside to allow that not to suppliment the low state pension.
So state pension means I can survive that's is all and as it's now too late I have no way of increasing my retirement income. Given I should have 30 years in retirement on a survival income that is so epically bleak....
Which is why I push fr biggest pension /retirement investment I can and encourage others to do the same some I have converted from zero retirement savings to A sensible level. Or make it dead clear to them what they want in retirement what that costs and how much you need to save to enable you to reach that goal. Some were shocked at how little they would get and how much their lives will have to change. Glad I'm doing my bit to help - with these they were all confused some were mid 20's others mid 30's and one late 40's... All now actually doing something about it at least they know the problem accept what they want realistically then accept what they need to do now until then to make that happen.
So the money they would have invested into a pension is spent in consumer goods or eating out or whatever. Problem is come retirement oh ive got to live on state pension which now starts at 75yo and it's £5k in today's money. I'm 63 now and want to stop at 65 latest... But have nothing put aside to allow that not to suppliment the low state pension.
So state pension means I can survive that's is all and as it's now too late I have no way of increasing my retirement income. Given I should have 30 years in retirement on a survival income that is so epically bleak....
Which is why I push fr biggest pension /retirement investment I can and encourage others to do the same some I have converted from zero retirement savings to A sensible level. Or make it dead clear to them what they want in retirement what that costs and how much you need to save to enable you to reach that goal. Some were shocked at how little they would get and how much their lives will have to change. Glad I'm doing my bit to help - with these they were all confused some were mid 20's others mid 30's and one late 40's... All now actually doing something about it at least they know the problem accept what they want realistically then accept what they need to do now until then to make that happen.
Welshbeef said:
and the worst bit of all is generations of people had turned off from retirement savings as they don't trust it etc.
This ^^^.The younger end see me retiring early in a few weeks and quite happy about my lot.
They think the 4% they are contributing into their DC schemed and imagine themselves in my shoes. They ignore that plans were set out to retire at 55 from the mainstream and do something else and that significant funds were set aside each year from age 26 on top of any company DB schemes. Thanks to Winky et al those plans have meant a later than planned retirement, and tbh not as comfortable as it might have been, but at least realistically achievable.
The 26 yr olds today have no chance of doing this.
When istarted work I had a final salary pension which requirem me to pay in 3%....
A number of years later and different company and that final salary scheme needed me to pay in 7% - which I sucked up as the alternative defined contribution really isn't what I want.
And then some years after that another company with final salary I need to pay in 9% which I'm happy to do.
All of these have been 1/60th and the time frame is over a ten year period.
So the employee has had to pay more
A number of years later and different company and that final salary scheme needed me to pay in 7% - which I sucked up as the alternative defined contribution really isn't what I want.
And then some years after that another company with final salary I need to pay in 9% which I'm happy to do.
All of these have been 1/60th and the time frame is over a ten year period.
So the employee has had to pay more
Welshbeef said:
anonymous said:
[redacted]
Is there an MPs pension fund? If not then it's totally unfunded Ponzi like state pensionWith a failing economy, rising retired population and ever increasing Benefits system, which is also completely unfunded, we have recipe for disaster.
And it will come to pass. Politicians will not address this in any way.
mattnunn said:
The pension system is completely unsustainable, we're doooooooooomed.
There are people in jail, who were running ponzi and pyramid schemes upto 2008, that had more chance of survival.
Doomed, I tell you, doooomed.
Not necessarily.There are people in jail, who were running ponzi and pyramid schemes upto 2008, that had more chance of survival.
Doomed, I tell you, doooomed.
Pensioners like me who are already in the system will probably be OK till we drop off the perch.
However, if the welfare state continues as it is now, those following will not receive decent pensions.
It is going to be tricky. But then we have not had to face two world wars. Yet.
Each generation has to find its own solutions. I believe the complete Horlicks of the current workless society will gradually disappear.
Changes will come. Probably painful. But I do not think we are doomed.
anonymous said:
[redacted]
It is unfunded There is no MPs pension fund it is a Ponzi scheme.
If a scheme did exist then you would see it in the UKs balance sheet as an asset it is not there just like the state pension. You nay hear the term "off balance sheet" which is what these pension funds are - what that means is there is no provision at all it is totally unfunded which means when the costs of that pension scheme to pay pensioners are higher than the new entrants what they pay in suddenly you have a defecit. This is the problem
With little or no long term rise in the "value" of the FTSE for the last 12 years, no sign of it rising in the mid term, interest rates at nowt and values of land and housing stagnant for the mid term, there is very little chance of any pension "fund" or any other form of saving keeping in touch with inflation.
Even with resorting to complex and flawed systems of gambling, there is no chance that the whole of the market can be catered for, financial dealing is purely a money passing excercise, not a creation excercise, i.e for each winner there is a loser.
We will not all be okay. You will not get out what is put in unless you're lucky.
We're, as I said, Dooooomed...
Even with resorting to complex and flawed systems of gambling, there is no chance that the whole of the market can be catered for, financial dealing is purely a money passing excercise, not a creation excercise, i.e for each winner there is a loser.
We will not all be okay. You will not get out what is put in unless you're lucky.
We're, as I said, Dooooomed...
mattnunn said:
With little or no long term rise in the "value" of the FTSE for the last 12 years, no sign of it rising in the mid term, interest rates at nowt and values of land and housing stagnant for the mid term, there is very little chance of any pension "fund" or any other form of saving keeping in touch with inflation.
Even with resorting to complex and flawed systems of gambling, there is no chance that the whole of the market can be catered for, financial dealing is purely a money passing excercise, not a creation excercise, i.e for each winner there is a loser.
We will not all be okay. You will not get out what is put in unless you're lucky.
We're, as I said, Dooooomed...
Not if we use our own abilities and efforts to create a secure base from which to live, personally. The big danger is relying on the state. The Welfare State will be forced to reduce. The workless will find it more and more difficult to remain workshy. Those that rely on the state will be in serious difficulty because the government is unwilling to face any of these problems. This refusal to face reality in the government will bring the whole welfare system into collapse eventuallyEven with resorting to complex and flawed systems of gambling, there is no chance that the whole of the market can be catered for, financial dealing is purely a money passing excercise, not a creation excercise, i.e for each winner there is a loser.
We will not all be okay. You will not get out what is put in unless you're lucky.
We're, as I said, Dooooomed...
My recommendation is for every individual to rely upon themselves. We have not had World Wars or conscription to deal with in my generation, thank God. We do have economic problems. Up to every individual to look after themselves.
You may be doomed. Many will not be because they will not allow this to bring them down. Up to the individual.
Steffan said:
mattnunn said:
With little or no long term rise in the "value" of the FTSE for the last 12 years, no sign of it rising in the mid term, interest rates at nowt and values of land and housing stagnant for the mid term, there is very little chance of any pension "fund" or any other form of saving keeping in touch with inflation.
Even with resorting to complex and flawed systems of gambling, there is no chance that the whole of the market can be catered for, financial dealing is purely a money passing excercise, not a creation excercise, i.e for each winner there is a loser.
We will not all be okay. You will not get out what is put in unless you're lucky.
We're, as I said, Dooooomed...
Not if we use our own abilities and efforts to create a secure base from which to live, personally. The big danger is relying on the state. The Welfare State will be forced to reduce. The workless will find it more and more difficult to remain workshy. Those that rely on the state will be in serious difficulty because the government is unwilling to face any of these problems. This refusal to face reality in the government will bring the whole welfare system into collapse eventuallyEven with resorting to complex and flawed systems of gambling, there is no chance that the whole of the market can be catered for, financial dealing is purely a money passing excercise, not a creation excercise, i.e for each winner there is a loser.
We will not all be okay. You will not get out what is put in unless you're lucky.
We're, as I said, Dooooomed...
My recommendation is for every individual to rely upon themselves. We have not had World Wars or conscription to deal with in my generation, thank God. We do have economic problems. Up to every individual to look after themselves.
You may be doomed. Many will not be because they will not allow this to bring them down. Up to the individual.
And they wonder why the under 40s try so hard to be tax efficient.
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