An article in the Times today (20 Jun 2011) has raised the issue of the development of a two tier occupational pension being provided by companies. Those of us well versed in the machinations of the UK pension industry would probably say ’so what else is new’ but maybe for some readers of this blog, it needs a bit more explanation. So here goes:
Posts Tagged ‘retirement’
Get with the Rhythm…
After a bit of a break to recharge my pension batteries (lounging on a beach works wonders!!) normal service is resumed with a report of recent happenings in the pensionsphere.
I have just got back from a fantastic conference organised by Mallowstreet which was frankly unlike any pension conference I’ve ever been to. I loved the motivational speakers and the drumming session (yes really!!) was amazing once one got over the slightly cultish feel to the rhythmic beat.
A truth universally acknowledged…?
Today’s big story of course is the Government green paper on the future of the basic state pension. Currently one of the lowest in the developed world it stands at a paltry £97.65 a week (assuming you have a full National Insurance record) rising to a minimum income guraranteed top up figure of £132.60 if you have no other income from other sources such as a company pension scheme.
Hutton speaks…and makes sense
We have now had the full report which did not fundamentally differ from the Interim Report issued at the back end of last year. Workers will now have to work to 65, pay higher contributions and the final salary scheme will become a career average scheme, meaning that rather than a final salary figure being used in the pension calculation instead, a salary will be averaged over the working life so generally this will be a lower figure but actually fairer to most workers. The losers will be those who would expect rapid promotion over their working lives.
A is for Apple, B is for Ball….
Now we all know that pensions are difficult. That’s why my clients pay me very reasonable fees to sort it out for them. The National Employment Savings Trust (NEST) have just published their research paper showing that its target audiences don’t understand many of the terms and phrases used by the pension industry and have produced a ‘phrasebook’ to help raise levels of understanding. I don’t know how much they paid for that piece of research but I (and any one else involved in pensions) could have told them that for free!!
To annuity and beyond
To make up for the dearth of blogs over the past couple of weeks, here’s the second in two days!! Today boys and girls, we are going to talk annuities. The Government, in an effort not to let a day go by without some sort of pension announcement, are expected to call an end to the compulsory purchase of an annuity from pension savings by the age of 75. What’s all that about then I hear you ask.
It all seemed so easy
Your favourite pension lawyer spent most of last week snowed in so has been a little remiss in posting but with the thaw comes the need to write so here goes.
This weeks bon mots concern the Government proposals to allow schemes to adopt the Consumer Price Index (CPI) in place of the Retail Price Index (RPI) when calculating the amount by which pensions should increase each year. Now I can already hear the yawns but bear with me because this actually is pretty important. First, some background.
The Price We Pay
Well, the Gods have spoken and we have a slightly better idea (but not by much) on how the Spending Review will impact on pensions. The main point to arise so far concerns the not totally unexpected rise in State Pension Age to 66 by 2020.
This will have a far greater impact on women than men, in that female SPA will rise steeply from 60 to 65 from 2016 to 2018 and then both male and female SPA will rise to 66 by 2020. By the way, there is a highly amusing typo in the Spending Review document at page 69 where the Treasury officials seem unable to spell ‘equalisation’ correctly. Edukashun eh??
Bonfire of the Vanities
Well, what a day it’s been. First, the Government has just annouced the result of its review of the way pension contributions are to be taxed, especially in relation to high earners. The previous administration had proposed an impossibly complicated way of ‘bashing the rich’ which the Coalition immediately on entering office decided to scrap. After the appropriate period of *ahem* consultation they have just announced that the previous £255,000 annual limit on tax relieved contributions is to be reduced to £50,000
Servants may not be Civil…
So, at long last we have Lord Hutton’s interim report on the future of Public Sector Pension Schemes (PSS). We are already hearing the entirely predictable howls from the Unions that they will fight any attempt to take away their cherished (and expensive) Final Salary benefits but maybe, just maybe, we need to have a little reality check here.
Jennie advises large multi-employer schemes as well as smaller single employer arrangements and has wide experience of both Defined Contribution and Defined Benefit schemes. Jennie qualified in 1986 originally as a criminal prosecutor. She sits as a Magistrate in her local justice area and is an Approved Chairman and Deputy Chair of the Bench Training and Development Committee. Jennie was formerly Legal Director of the Occupational Pensions Regulatory Authority. When her busy practice allows, Jennie likes to indulge her passion for travelling. To consult Jennie on any corporate Pensions matter, please call her on +44 (0)20 7749 2700 or send her an email by clicking below: