Hi all,
I wonder what the feeling is here about the fact that every business no matter how small that employs someone - just one person even- now has to set up a pension scheme. What will be the upshot of this new law, d'ya think?
cheers, cd
Or, at the very least, pay into one of umpty-ump commercial offerings that meet the requirement.
This if course is back to front. Companies whose core business is not pensions should be forbidden by law from setting up a pension scheme that *they* manage. They should be obliged to contract with a proper pension company.
I think the default of you going into a pension scheme unless you actively opt out is the right way around. Lots of people never went into a scheme because they didn't really know anything about pensions at the beginning of their career, and that's the wrong default.
That's what most do nowadays. I can't see any company setting up its own scheme anymore - they were for defined benefit pensions, and those are mostly closed to any new entry now.
Local authority pensions are a notable exception, and they are mostly well under water - a time bomb waiting to go off, because they are mostly run by unqualified local authority staff, a situation which companies have planned their way out of over the last 20 years.
Just research the countries that already do it.
That has been the law since not long after Robert Maxwell fell off the back of his yacht. It was really annoying to have to pay a pension company for the privilege of having them agree that I was administering my pension scheme properly.
AIUI under the Workplace Pension scheme, pension suppliers offer a variety of schemes and the employer chooses from one of those.
Yes this was how we got into a mess the last time workplace pensions was being touted back when I were young. Its noting new, just new paintwork on an old idea, but the gov does not want to run it any more so they have allowed the fat cats to do it instead. Brian
Good thing too.
These should also be closed to new entrants and wound down.
Seems reasonable (Schemes like nest
As far as I can many small companies have until 2017.
The government has never run a pension fund as far as I know. There is no fund just pensions paid from current taxes.
This is the lie the unions always quote about the pensions being in credit when they aren't, the current payments are sometimes enough to cover expenditure that month but not always and there is no fund to pay pensions if the workers stop paying tax like they do when they retire or get sacked.
Private pensions have a fund and that will be able to pay the pensions even if all the workers retire or get sacked (well unless its been thieved by brown or maxwell).
That depends entirely on the investment return the fund gets.
Well, if it is defined contributions they can pay what they promised to pay on retirement (the current value of the units bought) - but that may not be what the employee hoped for.
I don't see defined benefit lasting that much longer for anyone (even MPs)
I'd ask what's changed. Plenty of companies had final salary schemes and managed to fund them.
Of course people may now live longer - but they also tend to retire later.
But that can be calculated, and the contributions adjusted accordingly.
Main difference might be the fees charged by the organisations that now run most pension schemes.
MPs pensions are bound to be the last to suffer - after all when did a turkey vote for Xmas?
Gordon Brown, when Chancellor, changed the tax system that applied to pension schemes. Prior to his action, pension schemes could relaim the tax on dividends they received. They suddenly suffered a 20% drop in income.
Pension Holidays taken by firms plus change in Taxation
If that were the sole reason, existing final salary pension schemes would have gone bankrupt.
The pensions holidays were forced on the companies by tax laws, if the fund became over funded they had to do something. The mistake was in assuming the funds would always be overfunded.
Both the pension funds that I am in are quite a lot in deficit - the fund i s too small to pay the predicted pensions, although that liability has not yet fallen due so they are not bankrupt. But in any case, these funds are usually backed by companies. Gordon could simply take the money out and l eave the companies to replace it.
Which is the only sustainable way the pensions system can work. Defined benefits is just c*ck.
It is very noticable that when the FTSE went down there was a cry saying that Pension Fund investments were down and various schemes were no longer viable and must be closed or reduced.
Nothing is being said now about how schemes must have improved as the FTSE is very high.
It is the usual "ratchet" - take away but not give back.
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