Pension Release News from Grove
by Michael Ormond on August 28, 2009
Consultants Aon have suggested that fewer requests regarding the state of workers’ pensions indicate a rise in confidence in retirement savings.
Requests have dropped by 17% between the first and second quarter of the year from pension scheme members, in relation to the value of their pension pot.
The number of people asking about their pension based on the current service plan they are with fell by 9% in the second quarter of the year, in comparison to the first three months of 2009. Although, numbers were still 36% greater than those for the same first quarter of 2008.
However, the head of pensions at Towers Perrin, Mark Duke, said it was a “huge leap” to indicate the figures represented a rise in pension confidence. He suggests few people check the value of their pension pot frequently, so that these were most likely marginal figures. Duke also stated that when people had checked, the downturn resulted in their pension pot looking dismal so they did not want to check again too soon.
In Aon’s sample of 350,000 members in 35 UK pension schemes, there was a 37% fall in the number of new workers joining schemes quarter-on-quarter.
Aon Consulting’s commercial director, Colin Hamilton, said: “If stock market performance is dictating confidence levels among savers, this would suggest a lack of understanding of the long-term nature of pension saving.
“Effective member communication and education has an essential role to play in explaining the long-term nature of saving for retirement and ensuring that members are well informed during periods of economic volatility so that they do not rely on equity markets to solely dictate their concerns.”
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on August 26, 2009
Just months after paying Sir Fred Goodwin, the Royal Bank of Scotland’s disgraced previous boss, a retirement lump sum of £12.3 million, RBS has now slashed pension benefits for over 60,000 workers.
Yesterday the bank continued to anger its loyal staff by capping pay-outs to members of its final salary pension plan. This was all with the aim to save on money – an estimated £100 million a year will be cut from its pension contributions.
RBS is not the only bank to cut on pension benefits. Barclays has previously announced the closure of its final salary pension scheme to new members. Now, along with RBS, Barclays is shutting it to existing members of the bank also.
RBS’s current pension scheme entitles employees to a fixed percentage of their final salary when they retire, dependant on their length of time spent at RBS. However, the new rules now limit increases in workers’ pensionable pay – to either the rate of inflation or 2% a year; whichever is lower.
Speaking about the changes, Neil Roden, human resources chief at RBS, said: “It is a pragmatic and necessary course of action and not a decision the Board have taken lightly.”
However, experts suggest that members of the RBS scheme are in line for much more comfortable retirements than many private sector workers in the UK.
Ros Altmann, an independent pension’s expert, said: ‘Taxpayers are standing behind this bank. The fact that staff are accruing a pension linked to inflation is something they should be thankful for.’
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on August 25, 2009
Andre Konstantinow is the new boss of Barclays UK Pension Fund.
Konstantinow has previously worked at Morgan Stanley Investment Management, where he was a senior investment manger controlling the European and emerging markets hedge fund managers, research and strategies. In 2000 he entered an alternative investments career when he became a Scheeweis Partners (now Alternative Investment Analytics) research analyst. Here he was a part of the designing of the Down Jones Hedge Fund indices.
He then joined and became co-portfolio manager of the fund of hedge funds business, managed by Coronation Fund Managers.
Discussing the decision Tony Broccardo, Chief Investment Officer of Barclays Pension Fund said: “Manager selection and asset allocation are two sides of the same coin and Andre’s addition to our integrated in-house team will enable us to enhance the speed and flexibility of our investment decision-making, and to react more rapidly to market conditions.”
Barclays PLC is ranked by Forbes Global 2000 (2008 list) as the 25th largest company in the world, and the fourth largest financial services provider in the world. Based on asset size, it is the second largest bank in the UK, although its share price is excessively lower due to a decrease in investor confidence (40% fall in the past year as of 10 May 2009.)
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on August 24, 2009
The assets in employees’ defined-contribution (DC) pension funds value has rebounded in July, consultants Aon state, due to rising share prices.
The combined value of DC pension schemes has been put at £451bn, up by 7% (£31 bn) from June by Aon.
This meant the combined pensions funds are worth £1bn more that last September. The value of DC funds are affected by the volatile stock markets and other investments Aon suggest.
Helen Dowsey, of Aon Consulting indicated: “These figures look promising as we return to asset figures roughly at the same value as they were a year ago.”
“Someone retiring at the end of July may have a significantly higher projected retirement income than someone retiring a month before.
“These volatile conditions highlight the need for workers to pre-plan for their pension, and understand and regularly review their investments, whose value can change dramatically in a short space of time.”
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on August 19, 2009
We have been talking about the UK pension crisis for some months now, and it is becoming increasingly clear that many companies are in difficulty.
The fallout from the current economic financial predicament means that many companies will be forced to close their expensive defined benefit pension schemes. Instead companies will be looking to find cheaper arrangements and slowly ease themselves out of debt.
It is expected that over 50% of UK companies will be forced to close their defined benefit schemes by 2012. Defined benefit schemes mean that a level of pension is linked to your salary and so many companies will have to pull the plug on their schemes.
Pensions are being examined in detail by employers who are desperate to manage the risks that their pension schemes are exposed to.
The one million plus employees that are currently in defined benefit schemes will have to rely on defined contribution schemes instead. This means that the employers will directly suffer or benefit at the hands of employer investments and risks.
Equity markets are failing but people are living longer and the new regulations mean that the trend of companies closing their DB schemes is pretty much expected.
Both IBM and BP are closing their final salary schemes for all new employees, whilst Barclays said that they would be freezing the scheme for all British staff.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on
Those managing the BT pension schemes are investing funds in the debt of companies or those who are going into bankruptcy.
According to Frank Naylor, of Hermes Pension Fund who manages the schemes, ‘distressed debt’ offers a host of opportunities for investment.
Investing in bankruptcies and insolvencies should provide good returns for BT, despite the view that the outlook could be improving.
BT’s pension fund is said to be in a dire state, approaching the £11 billion deficit mark. They have cut their exposure to equity markets from 46% to 35% and instead are looking towards bonds and cash.
BT’s pension fund has increased its hold in leverage loans and mortgage backed securities and increased the distressed debt proportions from 3% to 4%.
It seems that the BT scheme is the first big player to invest in this particularly niche area.
As the times change, distressed debt now holds opportunity for investment, where a year ago it did not. Distressed debt is up 10.5% so far this year according to the Credit Suisse/ Tremont Hedge Fund index – so it is clear why BT are looking at this opportunities.
The deficit that BT has nearly doubled between March and June to £5.8 billion.
The 360,000 member scheme is up for a triennial review next spring, but fears are that by then the deficit will be nearer the £11 billion figure. BT has agreed to pay further £525 million into the fund for the next 3 years, regardless of what happens, but where will they be then?
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on August 16, 2009
It has been recently reported that almost a quarter of the biggest companies on the stock market, will not be able to pay off their pension deficits.
According to KPMG 22% of firms in the FTSE 100 share index will not be able to find the spare cash to make the necessary payments to pensions.
The problems facing company pensions schemes, will force many to close their final-salary schemes to existing members of staff.
It has come to light that many FTSE 100 companies are paying as much into pensions to rid themselves of the deficit as they are in contributions.
KPMG have predicted that £4 out of every £5 will go towards clearing the debts. This gives more ammunition to a reason for companies to opt out of final-salary pension schemes and go for defined-benefit schemes.
Barclays, Morrisons, Fujitsu, IBM and Dairy Crest have been some of the companies who have closed their final-salary pension schemes to existing employees and new recruits. It seems that the problem extends to the Royal Mail pension scheme too. Senior management have suggested that they too will close their pension schemes to all UK postal staff.
According to the figures released by KPMG, the combined pension deficit of the FTSE 100 index companies stood at around the £80 billion mark at the end of June. When compared with £20 billion from the end of 2007, you can see the problem.
The economic downturn has seen revenues and company assets fall, so it is no wonder that pensions are in this much trouble.
The problems has been highlighted by BT, whose deficit doubled in 3 months to £8 billion and BAE Systems whose deficit rose to £3.1 billion in the first half of 2009.
If the pension deficit of the FTSE 100 index firms wasn’t bad enough, it is estimated that of all of the UK’s 6,400 final-salary schemes, the debt was closer to £158 billion.
Billions of pounds have been pumped into company pensions over the past few years to pay off deficits, but it seems as though this has been too little too late.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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