Pension fund holes

[Viva_Palmeiras]

Alongside the striked news I see (from Scotsman online) £3.6 BILLION Pensions Deficit with British Airways.

My question is this - as someone who does not have a pension (nor does my wife) why invest when the whole industry looks like its ****ed. I donno what happened to the poor souls that lost their life pensions contributions but it doesn't half put you off.

But whats the alternative...? We do have savings (in ISAs) but there's really been no incentive from this Govt for anyone to save yet we get hit with other folks imprudence!

Confused, Edinburgh.

[Woody1985]

Is there's a final salary? I think pretty much every final salary pension scheme has a pretty big deficit!

The pension schemes will also currently be skewed due to the recent fall in markets, i.e. last year ours was looking a bit healthier but this year the deficit has grown by a fair bit and previous projections will now take an estimated 2 years longer to reach.

Personally, I put a token amount into a pension pot. I figure that the retirement age will be about bloody 70 by the time I get there. I reckon my lifestyle will dictate that I'll be dead by then so I'm not that worried about it.

[johnbc70]

Alongside the striked news I see (from Scotsman online) £3.6 BILLION Pensions Deficit with British Airways.

My question is this - as someone who does not have a pension (nor does my wife) why invest when the whole industry looks like its ****ed. I donno what happened to the poor souls that lost their life pensions contributions but it doesn't half put you off.

But whats the alternative...? We do have savings (in ISAs) but there's really been no incentive from this Govt for anyone to save yet we get hit with other folks imprudence!

Confused, Edinburgh.

Not sure what age you are but you should look into getting one. I am pretty certain there will come a day when the state pension will just simply not exist. Probably a long time away yet, but if you were to retire tomorrow then do you think you could live on the state pension of £95 a week.

[Beefster]

Alongside the striked news I see (from Scotsman online) £3.6 BILLION Pensions Deficit with British Airways.

My question is this - as someone who does not have a pension (nor does my wife) why invest when the whole industry looks like its ****ed. I donno what happened to the poor souls that lost their life pensions contributions but it doesn't half put you off.

But whats the alternative...? We do have savings (in ISAs) but there's really been no incentive from this Govt for anyone to save yet we get hit with other folks imprudence!

Confused, Edinburgh.

Pension contributions attract tax relief so it's always worthwhile to put something away and you'd be astonished how much folk need to live comfortably in their retirement. There are plenty of safe, cash deposit type ways to make sure that your cash won't disappear either (but likely won't grow much more than the interest rates).

As someone has said, all the schemes with deficits have at least an element of guarantee about them and have been going for years. Most new arrangements are based on building up a fund to pay for the pension.

[Phil D. Rolls]

I've got 25 years worth of final salary credits sitting. We used to be told out non contributory scheme was in lieu of pay. I don't think I'll see a penny of it.

I am in the position where someone is holding an "asset" for me, which should be untouchable. Given the way that successive governments have enforced the rules which are supposed to protect future pension payments, I am very pessimistic.

You'd think a large section of the population would be up in arms about this, but they aren't. By the way, 20m people watched the X Factor on Sunday night.

[ArabHibee]

I've got 25 years worth of final salary credits sitting. We used to be told out non contributory scheme was in lieu of pay. I don't think I'll see a penny of it.

I am in the position where someone is holding an "asset" for me, which should be untouchable. Given the way that successive governments have enforced the rules which are supposed to protect future pension payments, I am very pessimistic.

You'd think a large section of the population would be up in arms about this, but they aren't. By the way, 20m people watched the X Factor on Sunday night.

Why do you think you won't see a penny of it?

[Phil D. Rolls]

Why do you think you won't see a penny of it?

Because it seems that it is too easy for companies to fail to honour commitments, and to change the rules to suit them. At the end of the day, I am relying on the government to keep them in check, and I don't think they do.

[ArabHibee]

Because it seems that it is too easy for companies to fail to honour commitments, and to change the rules to suit them. At the end of the day, I am relying on the government to keep them in check, and I don't think they do.

So you think I should be worried about my company pension then?

[Killiehibbie]

The companies were warned years ago about the escalating cost of pensions. What did they do? Nothing for a while, in fact they took payment holidays when it looked good but failed to take heed of warnings about people living much longer than they did in the past.

[Phil D. Rolls]

So you think I should be worried about my company pension then?

Who knows, maybe it's just me getting older but it seems that promises don't amount to much these days, even ones that are supposed to be backed up by law. An IFA would be able to point you in the right direction.

[RyeSloan]

Alongside the striked news I see (from Scotsman online) £3.6 BILLION Pensions Deficit with British Airways.

My question is this - as someone who does not have a pension (nor does my wife) why invest when the whole industry looks like its ****ed. I donno what happened to the poor souls that lost their life pensions contributions but it doesn't half put you off.

But whats the alternative...? We do have savings (in ISAs) but there's really been no incentive from this Govt for anyone to save yet we get hit with other folks imprudence!

Confused, Edinburgh.

Loko, if you don't have a pension or more accurately don't work for BA then why are you concerned about the BA Pension deficit??

There are plenty of company pension plans that are perfectly sustainable and the ones facing major deficits have almost entirely closed those plans and moved new employees to defined contributions.

If your employer does not offer a pension plan then there are plenty of alternatives for you to choose from, as ever a mix of savings will be the best but Pension savings are very tax efficient so always worth considering (although you pay for that through lack of flexibility and access)

The real issue is with the state pension, this unlike almost all others is not paid for out of a pot of accumulated contributions but paid for by current
tax (or NI) receipts....as the population ages this becomes untenable, hence the goverments constant desire to push up the retirement age.

Therefore saving per se is even more recommended and part of that should be (IMHO anyway) utilising the tax benefits of the pension laws.

[ancient hibee]

The deficits that are highlighted are based on everyone who is currently working say for Company A working for them until they retire with factored in estimates of pay increases over the working life-obviously this is not going to happen so concerns are overdone.For many of the public sector jobs there are no pension funds-they're just paid from current taxation.

[Toaods]

Great time to invest in AVCs if you are in a Final salary scheme IMHO.

Take the higher risk and pay the managerial handling charges as generally they can switch the money around quicker when the need arises, good or bad.

Not so long ago quite a few of our members fired some major monies into CASH Funds through fear of a stock market crash. yes that came but many have stayed in there and are only now sitting at 1% ahead or less.

I'm small fry compared to those big guys but upped my AVC rate and now sit at (net of charges) around 15% ahead (excluding my tax relief each month). Dont' forget you can offsett your eventual total AVCc fund against your tax free lump sum at retirement, thus commuting less pension.

Many plcs are on their knees, others are underpriced due to scare stories and real life casualties.

...one mans loss is another gain.......:greengrin


NB

No real need to panic if you are in a final salary scheme as they are all about the very long term and even if it closes/ has closed to new entrants you will likely have your benefits protected if things don't improve. Schemes have found ways of saving on their EE NIC with salary sacrafice, etc and in our case, the extra money is being pumped back into the scheme.

Also, your scheme will have valuations made every three years to ensure everything is above board and at a level it should be at or higher than.

Still look up my pension online and think to myself....Jees that'll never be enough..!!!:cool2:

[Silversand]

Alongside the striked news I see (from Scotsman online) £3.6 BILLION Pensions Deficit with British Airways.

My question is this - as someone who does not have a pension (nor does my wife) why invest when the whole industry looks like its ****ed. I donno what happened to the poor souls that lost their life pensions contributions but it doesn't half put you off.

But whats the alternative...? We do have savings (in ISAs) but there's really been no incentive from this Govt for anyone to save yet we get hit with other folks imprudence!

Confused, Edinburgh.

Some good stuff posted by other folk. In simple terms :


Current bad news stories surrounding pensions are very specifically about Final Salary schemes
The chances of anyone getting added to a Final Salary scheme that they are currently not a member of are very slim (99% of schemes are closed to new members)
Final Salary schemes are limited to employees of large organisations
There are loads of good schemes out there that people without pension arrangements can invest in, for self employed folk to people in non pensionable employment
Everyone over the age of 18 should consider investing in a pension
Anyone over the age of 40 should definitely be considering a pension investment, if they currently do not have one



As always, speak to your local IFA for all independent pensions advice.

And good luck.

[Bishop Hibee]

The companies were warned years ago about the escalating cost of pensions. What did they do? Nothing for a while, in fact they took payment holidays when it looked good but failed to take heed of warnings about people living much longer than they did in the past.

Correct.

It's perfectly legal for employers, both public and private sector, to take 'holidays' from pension payments without penalty but illegal for employees to do so without penalty.

If employers had fulfilled their obligations, a lot wouldn't be in as deep a mess as they are now.

[Toaods]

Correct.

It's perfectly legal for employers, both public and private sector, to take 'holidays' from pension payments without penalty but illegal for employees to do so without penalty.

If employers had fulfilled their obligations, a lot wouldn't be in as deep a mess as they are now.

not quite as basic as that...many employers were unable to take a 'holiday' period form making contributions as their scheme may not have had sufficient funding to do so. Of those that did they were further weakened with the dropping stock markets and other factors like longevity of the members.(almost sounds naughty :wink: )....!!!

[Killiehibbie]

not quite as basic as that...many employers were unable to take a 'holiday' period form making contributions as their scheme may not have had sufficient funding to do so. Of those that did they were further weakened with the dropping stock markets and other factors like longevity of the members.(almost sounds naughty :wink: )....!!!

Why did some companies not bother putting money in when everything looked good? I would've thought that was the time to build up an even bigger buffer for when the inevitable harder times come.

[ancient hibee]

Why did some companies not bother putting money in when everything looked good? I would've thought that was the time to build up an even bigger buffer for when the inevitable harder times come.
Because shareholders would rightly have told them that they own the company and want increased dividends(many of which of course go to pension funds)and not to see profits salted away elsewhere.

[Killiehibbie]

Because shareholders would rightly have told them that they own the company and want increased dividends(many of which of course go to pension funds)and not to see profits salted away elsewhere.

At the expense of loyal workers future pensions? Lets not worry about them hopefully we'll have worked them into an early grave, problem solved.

[ArabHibee]

At the expense of loyal workers future pensions? Lets not worry about them hopefully we'll have worked them into an early grave, problem solved.

Or punted them to be replaced with new staff on money purchase schemes.

[Stonewall]

Why did some companies not bother putting money in when everything looked good? I would've thought that was the time to build up an even bigger buffer for when the inevitable harder times come.

Perhaps there are some Actuaries on the board who could explain this better but the legislation surrounding the valuation of pension schemes at the time prevented schemes from being overfunded as the government were trying to prevent companies using their pension schemes as a tax dodge.

Surpluses were then eroded by companies taking contribution holidays and using the pension schemes to part finance redundancy programmes.

The real question is whether the Actuarial assumptions used in valuations were realistic. Clearly they weren't.

[ancient hibee]

The actuarial methods are the same but obviously results must fluctuate as projections are based on past behaviour and while they can make a decent stab at longevity it's impossible to allow for massive changes in employment and market prices.