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28th April 2016, 18:33 | #31 | |
Passed Away
Rover 75 Connie Tourer Join Date: Dec 2013
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New owner of a company automatically becomes principle advisor of how to invest the pension fund. More often than not they advise it should be invested in the company they've just bought. Then they then declare, due to massive input to shares the value of the company has increased, so award themselves a bonus, roughly equal to the pension fund they've put in. To put it another way, they are exploiting a loop hole that allows them to legally steal the pension fund. Robert Maxwell did that when he bought the Mirror group and despite all of the outcry after it's bankruptcy, nothing has changed. Time to stop Company Directors having control of pension funds methinks. |
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28th April 2016, 19:43 | #32 | |
This is my second home
Audi A2 1.4TDI Join Date: Aug 2010
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29th April 2016, 07:51 | #33 | |
This is my second home
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Increased liabilities due to retirees living longer than expected. Increased Liabilities due to legislation increasing the pensions paid. Reduced investment returns. Hence most companies scrapping the Defined Benefit Pensions and moving to Defined Contribution schemes. To give you an idea of what has hit these pension schemes - in the 1990's we had inflation in double figures - which also meant that investment returns were higher then - as indeed were interest rates. If you had a pension pot of £100K you could buy an annuity at about 11% - so £100K gave you £11K income a year. So after about 9 years you have had your £100K paid back to you and after that you are in "profit". Today with the BoE base rate at 0.5% and the fact that we are all living longer means that annuity rates are down to about 5% for someone at retirement. This means you have to live for 20 years before you even achieve repayment of your own £100K fund back to you. So if you role this out to Final Salary Schemes - you can see that where a company has a scheme that guarantees a percentage of Final Salary - the money it needs to have in the scheme to meet that liability has truly sky-rocketed. |
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30th April 2016, 22:57 | #34 |
Posted a thing or two
MG ZT 260 SE, ZS120, ZR105 Join Date: Mar 2014
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But isn't Alanjay nearer the real problem? As Darcy says it is perhaps more expensive to run a final salary scheme now, but the suggestion that the higher interest rates of the 70's somehow kept the schemes afloat, doesn't quite ring try either. Inflation during that period ran well ahead of interest rates. So the contributions made during the early years were in coppers whilst the pension at the end of the seventies would be in pounds.
Yes the bank interest rate is 0.5%, but far higher rates than that are still available to investors. The real problem is that on the one hand employers are more concerned about their own pension and would prefer not to contribute to a workers scheme, then added to that, any profit made on the investments are creamed off by the investment managers, hence we have to survive in pension for at least 20 years, just to get our own contributions back. And of course no mention is made of the interest the fund was earning during that 20 years. OK, some of us are now living beyond the three score years and ten, but I don't believe the average age has reached 85. Sent from my iPhone using Tapatalk |
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