Three Million Savers With ‘Final Salary’ Pensions Have 50% Chance of Losing up to a Fifth of Their Income

New pension scheme rules challengedThree million workers with final salary pensions have a 50 per cent chance of losing up to fifth of their income because their employers have made unaffordable promises, a recent report has warned. Could you be one of them?
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UK Pension Transfers Hit With 25% Tax Charge

QROPS Tax Charge

British expats living abroad and foreign nationals based in the UK face being stung by a new 25 per cent tax charge if they move their pensions out of the UK.

New rules, which came into effect on 9 March, 2017 after being announced in the 2017 UK Spring Budget, will see the charge levied when retirement funds are transferred outside the UK, unless they meet strict criteria.

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FTSE 100 Pension Costs to Double Without ‘Drastic Action’, Retail Sector Pension Black Hole Widens by £6bn to Match Annual Profit

royal-dutch-shell-pension-deficitThe UK’s 100 largest listed companies face seeing their defined benefit pension costs double over the next three years unless “drastic action” is taken, according to JLT Employee Benefits.

In March this year, JLT put the combined FTSE 100 deficit at £87bn. It said only 29 companies disclosed a pension surplus in their most recent annual reports, while 59 companies disclosed pension deficits.

Royal Dutch Shell had the biggest pension liability, at £57bn, while 15 other companies had liabilities of more than £10bn.

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Sterling Plunges as Bank of England Cuts Interest Rates For First Time Since 2009, Pension Funding Gap Widens

BoE cuts interest ratesThe Bank of England has unveiled a fourpronged stimulus package designed to boost the economy and prevent a recession following the vote to leave the European Union.

Sterling tumbled and UK gilt yields dropped to fresh lows after the Bank surprised markets by restarting its money printing programme to buy government and corporate debt alongside the first interest rate cut in seven years.

Subsequently, the deficit of defined benefit or “final salary” pensions, which pay out an income linked to an employee’s final salary, jumped GBP70billion as a direct consequence of the decision to reduce interest rates by 0.25%.

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Brexit, what does it mean for your pension and your retirement planning?


Do you still have a final salary or “defined benefit” pension scheme in the UK?

Defined Benefit PensionHistorically these were viewed as a great benefit to have, providing a defined pension benefit for life that moved up with inflation. Over time these benefits have been eroded as the costs to the employer for providing these schemes has simply become too great. Consequently it has been widely accepted for some time now that the majority of these schemes are “underfunded” and running large deficits. The news for the past few years now has been full of large scale examples, the most recent being the BHS employees pension scheme.

The UK’s recent vote for a Brexit also has significant implications if you have a UK pension.

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