22 Jan, 2013
Pension actuaries ignored the
greatest risk of all time
According to the latest report from Anglia Ruskin University,
pension actuaries have not correctly analysed the risks in certain
pension schemes because they left out those posed by climate change
and resource scarcity.
The report questions how such professionals ignored 'the
biggest risk humanity has ever faced' - despite the fact that
these issues have been known for years and the consequences could
spell disaster for companies.
Conversely, recent reports also explain that global warming and its
associated challenges could wipe out the entire defined benefits
pensions industry within 30 years, if companies do not rapidly
change course. Experts wrote that 'the assets of pension schemes
will effectively be wiped out and pensions will be reduced to
negligible levels'. If the neglected resource constraints are in
fact significant, this means that the current models will
persistently understate the value of companies' liabilities.
This could indeed spell disaster for millions of workers who will
lose their entire nest egg and will be forced to rely only on their
basic state pension, at a time when prices of food, energy and
water are rocketing.
If you wish to learn more about safeguarding your pension, speak
to a deVere
Financial Adviser today.
63% agree that UK pensions
are too complicated to understand
A survey by the Department for Work and Pensions found that 63%
agree with the statement that the UK pension system is so
complicated that one cannot really understand the best thing to do.
The study comes at a time when the UK Government proposed sweeping
reforms that would see Britain adopt a one-size-fits-all state
pension system. Scheduled to take place in 2017, only 4 years away,
the basic pension replaces just 37% of the median retiree's working
income, compared with 61% of the average OECD country. Workers are
therefore confused about what their retirement income is going to
Pensions experts commented that the move comes without surprise as
the UK Government is drowning in its debt. Indeed, the cost of
state pensions would rise from 6.9% of GDP in the current tax year
to 8.5% by 2060, without such reforms.
Moreover, employees and employers who have contracted out of the
state second pension scheme are currently entitled to a discount on
their national insurance contributions - which will disappear in
five years' time, thus pushing up their tax bill. This will
undoubtedly create more problems for employers who are already
struggling to cope with regulations, increased longevity and poor
During such times, the deVere Group has created simple,
tax-efficient pension planning vehicles that facilitate UK pension
holders in planning a comfortable retirement. Speak to a deVere
Financial Adviser to learn more.
flat-rate state pension expected in 2017
Following months of speculation, the Government is shortly expected
to announce that a flat rate state pension will come into force in
A universal flat-rate payment, what is expected to be the biggest
overhaul in the UK pensions system in decades, would see new
pensioners receive merely £144 plus inflation per week -
regardless of the contribution they paid during their working life.
Those affected are said to include more than a million private
sector workers enrolled in final salary schemes and an estimated
five million public sector workers.
However, GMB trade union national officer Brian Strutton warned of
'a very serious consequence'. He explained that employers are
facing an increase in National Insurance contributions of about
3.4% of the NI ranking earnings, whilst for the six million
employees affected it will be an extra 1.4%. Most DB scheme
employers and members will simply find this unaffordable.
Moreover, the unfairness of a flat rate that makes no distinction
between poor and wealthy pensioners is also likely to cause a stir.
The National Pensioners Convention immediately condemned the
announcement as a 'con trick' for future generations, claiming that
women who take time out of work to care for their children will
suffer because pensioners will have to make national insurance
contributions for 35 years, rather than the current 30, to benefit
from the new pension.
Meanwhile, some newspapers have reported that the government is
expected to announce that those who have not paid National
Insurance for at least 10 years will not qualify for a state
pension, whereas those who have paid for less than 35 years will
see their pension reduced.
If you wish to learn more about alternative pension planning
arrangements that could secure you and your family a comfortable
retirement, speak to a deVere
Financial Adviser today about retirement planning.
Pensions to be extinct by
Private pensions will cease to exist according to experts in the
field as young people today are not saving money for their
retirement, opting instead to spend money on today.
Research by pension groups has indicated how people aged 25 to 34
years old today are not choosing to save 'because young people see
having immediate access to savings as far more important than
putting money aside for their retirement', the
Telegraph has reported. The research found that only 12% of
people in their 20s and early 30s have created a pension pot to
start saving into - 'despite the Treasury offering tax relief on
This result contradicts the recent action taken by the British
government to implement a mentality of saving through the
auto-enrolment scheme. Instead, these young people are opening
individual saving accounts rather than pension pots so they can dip
in this sum whenever they need to.
Indeed, according to pension group experts 'the word "pension"
does not resonate with Generation Y. Immediate access to savings is
far more important to them than the 2% bribe that is tax relief'.
'Pension saving among young people is extremely low' because they
seek to pay off their student loans; they seek to buy a house and
ultimately they seek to enjoy life but unless they prepare
financially for their retirement years they then must let go of
their 'entirely unrealistic' assumptions as the research also found
how most of them believed they would retire on £30,000 a
The Telegraph reports that 'for this £30,000 figure to be
reached, a 25-year-old would have to save £400 every month
until they reach retirement age, assuming an annual return of 5 per
cent. Meanwhile a 35-year-old would have to save £750 a
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