Pension Release News from Grove
by Michael Ormond on December 9, 2009
UK Pension Schemes are turning away from private equity as they need a more reliable investment to ensure a solid income.
The shift in private equity, the allocation of funds has fallen from 2.5% to just 1%. Although the adjustment doesn’t seem like it will have much impact, it is likely to have longer term issues.
The UK pensions industry is in trouble and with so many well known companies at a deficit with their pension funds, it is no wonder that they are looking to stronger investments for pensions. Pension trustees are looking to maintain a high level of fixed interest assets in order to accurately predict income.
Pension funds are therefore reducing their potential investment returns on an annual basis in order to secure income.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on
Annuity rates have halved in the last 15 years, meaning that those who are facing retirement within the not too distant future, are looking at daunting prospects.
This enormous fall in annuity rates will mean that those about to retire will have to weigh up their options and rethink lifestyle and financial commitments.
The financial options for pensioners living in the UK are slim and include working beyond the ages of 60 and 70 and/ or selling the family home.
With worrying predictions for future pensioners, we are inevitably going to see more and more of them falling into the ‘poverty trap’. With UK state pensions facing real problems those who had planned to retire 10, 20 or even 30 years ago with the idea that annuity rates would have doubled, are going to have to re-evaluate their plan.
You cannot underestimate the problems faced by the UK pensions industry and those intending to retire sooner rather than later. It is also important to bear in mind that these issues might be here to stay for good.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on November 9, 2009
Figures released by the Organisation of Economic Co-operation and development in October have given rise to a new debate on the UK pension sector and its in-capabilities.
The figures revealed a 4% rise in pension fund net deficits from 9% to 13% in six months.
Furthermore, many large business final salary schemes have been abandoned in the last few months as these have become too expensive for employers suffering the effects of the recession. Currently only one in twenty of the biggest businesses are offering final salary schemes to new employees.
Head of pensions at Hargreaves Lansdown, Tom Mc Phail, blames bad political decisions for the demise of the British pensions sector and the weakened position of today’s pensioners.
He explains that the pensions sector is witnessing a shift away from guaranteed pensions like the state pension and final salary schemes towards a situation where individuals are personally responsible for their retirement savings and the associated risks.
Pensions are difficult enough to navigate at the best of times and in a time when even experts agree that the pensions system is ‘not fit for purpose’ the task of finding an appropriate scheme seems even more daunting.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on
AVIVA is optimistic about its full-year profits in spite of its poor domestic performance in the first three quarters of this year. The firm’s domestic performance revealed a 25% drop in life and pension sales and was so weak, it dragged global sales down by 11% to a worse than anticipated £24.06 billion.
Aviva’s pension sales in the UK fell to £2.9 in the first three quarters of the year compared to £3.5 billion a year last year and protection insurance product sales decreased by 19%.
The recession has caused the UK’s pension industry enormous problems and protection insurance sales to drop considerably. Soaring unemployment rates have seen a shift in consumer focus with a drop in demand for pensions and savings products.
AVIVA explains the effect of the drop in demand for insurance and pension products on profit is being offset by a focus on quality rather than quantity and the positive developments in the stock market and predicts good total profitability for 2009.
As a result of this optimistic outlook, the life and pensions firm saw its shares rise by over 6% and its capital buffer expand by half a billion pounds to £3.7 billion.
So, in spite of a slow start to the year, it looks like the recession is not all gloom and doom and investors can indeed still profit.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on November 5, 2009
Everyone knows the UK pension industry is looking pretty sorry for itself, but in a new report by AXA, this is only the tip of the iceberg.
More than 3 in 5 UK citizens are intending to rely upon their state pension fund in retirement, which only spells disaster. It is also a clear indication of how private pensions have failed.
64% of people in the UK will be planning to depend on their state pension, but because of several different taxes and changes in regulations, state pensions are now looking at huge deficits. The raid on pensions helped ‘line the government’s coffers’ but has proved almost fatal for state pensions. Even if taxes were reversed on pensions, this would almost definitely be too little too late.
With more pressure likely to be put on state pensions, the government is going to find it increasingly hard to cope.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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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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