Pension Release News from Grove
by Michael Ormond on October 28, 2009
Workplace pension scheme are letting savers down according to The Pensions Regulator.
More than 50% of occupational pensions could be improved simply by informing their members as to what was going on.
In 30% of the 97 defined contribution pension plans that The Pensions Regulator investigated it was found that they breached retirement disclosure regulations. 6% of the 97 schemes are also now being handled by caseworkers to improve literature given to members to inform them of the pension scheme processes.
The review looked at each DC (defined contribution) scheme and assessed whether they were being run properly, including whether they were adhering to legislation. They also assessed the prominence of the open market option in the pension documents and whether or not they were going to be understood by all of those receiving them.
Experts in the field of pensions and investments always urge people to explore the open market option (OMO) and to look around for better deals instead of accepting the annuity offered by the pension provider.
Although 98% of the schemes offered the OMO, the take up was a slender 23%, probably due to the lack of information available and clarity of how OMO works.
The findings will now be distributed to the 4,500 schemes across the country asking them to revise all literature sent out to members. It is estimated that those who shop around and are aware of their options could boost their retirement funds by as much as 20%.
The major findings of the review were that better communication regarding schemes and the understanding of the many options available will give scheme holders the opportunity to take control of their pension funds. This in turn will give them the ability to make more for their retirement.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on
2012 will see British workers automatically participate in company pension schemes.
Individuals will be obliged to contribute at least 4% of their pay, which will be matched by contributions from employers (3%) and the government (1%).
Today about 40% of the British working age population are enrolled in a company or personal pension scheme, a number expected to rise to 60% with the new reforms in place.
The Pensions Policy Institute is hoping that the current 14 million private pension holders will turn into 21 million following the changes.
The current 5 million workers actively participating in defined contribution schemes is expected to rise to 17 million by 2050.
A major concern, however, is the fact that under said pension schemes individuals rather than employers bear the risk of investment volatility.
According to PPI research director Chris Curry, from 2012, an increased risk of investment performance will increase the need to turn pension savings into retirement income and retirees will have to engage more and more with the retirement and annuity markets.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on October 23, 2009
The government is planning to increase the age at which retirees can start claiming their state pension to 68 by 2046. The Institute of Directors (IOD) wants to go a step further to a 70 year threshold, an idea strongly opposed by the Trade Union Congress (TUC).
According to IOD plans, most means tested pensions would be made redundant, while those workers willing to hold off on claiming their pension would earn larger payments.
The TUC strongly opposes the proposal on the grounds that it would put many workers into the predicament of being too old to work and too young to retire.
According to the TUC, the wealthier live longer than the poor. Consequently, the less affluent stand to miss out on a much greater portion of their pension than their longer-living counterparts.
The TUC have hit out stating that this is ‘taking from the poor to give to the rich’, a plan that is never going to reform pensions. The IODs report doesn’t even mention the pensions enjoyed by the directors in the FTSE 100 who annually take pleasure in £250,000, which is available at 60.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on October 21, 2009
By April of next year, state pensions will rise by £2.40 per week, despite the negative Retail Index Price of last month.
September’s inflation usually determines the rate at which pensions are altered in April. However, since 2001 the government has implemented a new policy whereby a minimum of 2.5% is awarded if the RPI is lower.
It was announced on Tuesday that the Retail Price Index was -1.4%. The RPI is also linked similarly to other benefits like the carer’s allowance, disability living allowance, council tax benefit and incapacity benefit. This is measured as the Rossi Index (RPI minus housing costs) and this is currently set at +1.8%.
It is likely that benefits and allowances will also rise by 2.5% in April, although the final amount will be determined by the Chancellor’s pre-Budget report.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on
British pensioners have been hit hard by the recession, says foreign exchange specialist HiFX.
Over one million British citizens are living overseas and receiving state pension. HiFX estimates a five million pound loss to their wages due to the weak pound.
Those living in New Zealand and Australia have been hit hardest. Ex-pats living in New Zealand are worst off with an estimated loss of £103 in the last three months, closely followed by those living in Australia who have lost an average of £85, based on an average state pension of £628 per month
The last four months have seen cuts to pensions in Europe of £56 and £34 in the States.
On top of the effect the weak pound has on ex-pat pensioners, Brits living overseas spend an average £300 on bank charges annually to change over currencies.
It is recommended that pensioners living abroad should use one of the Regular Payments Abroad services offered by UK currency specialists to help combat charges.
With further falls in the value of the pound predicted, pensioners are urged to do what they can to keep as much of their pension enacted as possible.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on October 1, 2009
Dairy Crest has joined the many other companies who have taken the drastic steps to close their final salary schemes to existing members.
Dairy Crest is following closely behind the heels of Barclays, Morrisons and the UK side of IBM in closing their final salary schemes. This comes at a time when the government tries to find a way to restore the link between earnings and pensions.
Dairy Crest will now be transferring employees of the final salary scheme to defined benefit schemes. This is seen as a less generous scheme and will affect around 3,500 of the 8,000 staff.
It is not understood just how much this will save the company struggling in these hard times or how many people would be signing up to the defined benefit scheme.
Over the past 6 months the company has been putting into place strategies to ‘de-risk’ the business and this is another move to do so. Dairy Crest could no longer have an ‘open-ended commitment’ to the final salary scheme when funds were not steady.
The Dairy Crest group’s pension fund are already looking at a deficit of around £63 million, but this figure is only set to rise at the end of the financial year. The scheme had already closed its doors to new members in 2006.
Dairy Crest did however say that their heavy marketing investment in the Country Life brand and Johnny Rotten as campaign front man had helped growth over the last 6 months. It seems that only time will tell for final salary schemes and whether any will survive.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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