“The public service pension arrangements announced by Brian Lenihan yesterday will barely apply before 2014 given that it only applies to new entrants and there is a staff recruitment ban for the next four years …” (more)

[Stephen Rogers, Irish Examiner, 10 December]

Each year, the State sets a “contribution rate” for its various pension systems, the amount of each employee’s salary that must be paid by the employer into the system for the year. This calculation — based each year on actuarial analysis of current funding conditions and needs — has meaningful effects on both the State budget (for State employees and teachers) as well as for local governments who participate in the State pension system as a benefit for their own employees.

For FY 2011, the proposed contribution rates are:


14.34% Teachers Retirement and Pension
11.69% State Employees Retirement and Pension
57.03% State Police
47.67% Law Enforcement Officers (LEOPS)
59.07% Judges


According to the November 20 letter to the Governor (and other stakeholders) from the Maryland State Retirement and Pension System (actually their supplemental materials), total contributions to all employees in the various systems will total more than $1.4 billion for the coming year.

By way of comparison, last year’s failed legislation to shift some part of teacher pension costs to counties included a fiscal note that incorporated some estimations of future year contribution rates. The fiscal note for one of those bills suggested that the expected rate for the teacher system for FY 2011 would be 14.27%. In short, the announced rates, despite volatility in equity markets in the last year, have seemingly followed a predicted (upward) path — the contribution rate for teachers in FY 2010 is 13.15%.

According to some old conference notes, this joke was made by Geof Pearson, Sainsbury’s Pension Manager exactly ten years ago.

It may have taken ten years but the precipitous drop to DC is now no joke. 2010 is likely to be a tipping point for many workplace pension schemes. Here are my personal predictions for the year ahead.

Warning-tons of jargon ahead!

1.There will be a concerted drive to provide integrated workplace savings vehicles for more sophisticated employers.  Watch out for employer portals allowing members to switch between share-save schemes, ISA and approved pensions with innovative means to do this “in specie”

2.Investment consultants will turn their attention to the increasing funds within DC schemes and will concentrate on the defaults. Look forward to plenty of argument between the equity purists and  advocates of the “smooth ride”, lifestyle v DGF etc. with plenty of off the wall suggestions!

3.The impact of EU Solvency II on annuities will drive innovation in the de-accumulation phase.

4. The DC governance budget will continue to come under pressure and we will see more large unbundled DC schemes (like Logica) looking for contract based solutions such as GPPs and ISAs

5. PADA will continue to prepare for Personal Accounts, hoping they have sufficient momentum to guide the project past the formation of a new Government.

6. We will see more Mastertrusts looking to bridge the gap between the low-level governance of contract-based schemes and the high cost governance of traditional occupational DC models

7. Capital flows into DC sill surge as ETVs pump money out of DB and into super low-cost DC plans

8. The fundamental costs of DC will continue to fall as providers consolidate, adopt greater STP and use leverage to drive down fund costs. This will be accelerated by pressure from Personal Accounts and greater competition in the passive market (Vanguard)

9.The DWP will continue to put pressure on insurers running contract based plans to smarten up their fund governance, especially their default funds.

10.The DC industry will wake up to the opportunities of social media to pass information to members though the impact won’t be felt for a couple of years

We are all faced with the constant reminder of preparing for our retirement be that by investment or saving via a pension. It is important for us all to recognise that the lifestyles we accustom ourselves to today, may not be sustainable if we do not prepare for those years when we are no longer gaining an income.

There are, therefore two major problems seen today:

1. “The fastest population increase has been in the number of those aged 85 and over, the ’oldest old‘. In 1983, there were just over 600,000 people in the UK aged 85 and over. Since then the numbers have more than doubled reaching 1.3 million in 2008. By 2033 the number of people aged 85 and over is projected to more than double again to reach 3.2 million, and to account for 5 per cent of the total population.” (Mid-year population estimates, Office for National Statistics, Published 27 August 2009)

2. Research commissioned by Employee Benefits adviser Foster Denovo found more than a third of Brits who are not already retired do not have personal or company retirement pensions;  of those two thirds believed to have made a provision, they may only be relying on the equity in their homes and would therefore have to downgrade drastically to support themselves.

I have come across many debates as to the reasons why we are at this juncture in the UK society such as:

a) Many people failing to understand the need to prepare for retirement believing that the state will look after them; this is a dire position for the country when taking into consideration that people are living longer.

b) Many believing they are going to cash in on their homes purchased.

c) Relying on inheritance from parents.

d) Higher price of living, families not recognising any dispensable income for a pension.

e) The focus of materiality, wanting more luxury in life (cars / holidays / gadgets)

f) The breakdown of the household, many families now opting to use old age homes instead of bringing families into the fold, changing the dynamic of the overall cost per family.

g) The lack of stigma attached to debt or bankruptcy, debt kept for longer.

h) People tend to move between jobs more rapidly in today’s industries.

But there is one more problem I would like to draw your attention to, that may not be immediately recognisable.  This problem is that many organistions are not flexible enough to meet the needs that exist in the diverse cultures of our various industries, and it is not seen that the government are offering enough advice and taking the fight to these industries to help this pensions crisis.  This is, of course, ignoring the recent problem of organisations not keeping their employee pensions safe and paid into properly.  I have had experience, first hand, of seeing individuals requiring ethical pensions, which the organisations do not support, or employees wishing to keep a personal pension but quickly informed that the organisation does not pay into a personal pension but only personal pension that the organisation has set up.

So if you mix these issues and say that as lots of people do not tend to stay in organisations for the long term, you may find that your pension provision is not sufficient and that you are not benefitting from the contribution organisations make to employees. It should be that organisations are seen to make a contribution to employees no matter what pension the employee has (understanding it may not be equal to that of an organisation’s pension), otherwise you may be left with dozens of small pension plans that you cannot consolidate as you may lose in the conversion. I think it is important more is done to make pensions available to everyone’s needs, and that organisations take some responsibility in ensuring that all employees get some kind of contribution into their pension plan.

We will leave the discussion of getting the population off the mindset of replying on the state to another time…….

Interesting links :

http://www.prudentminds.com/news/19243663/brits-not-prepared-with-retirement-pensions

http://www.adamsmith.org/think-piece/welfare/a-proposal-for-solving-the-pension-crisis-200911094405/

http://www.fairinvestment.co.uk/News/pension-news-Shrinking-pension-pots-force-older-people-to-work-longer-18470173.html

 http://www.guardian.co.uk/money/2009/jun/10/hsbc-pensions-survey

http://news.bbc.co.uk/1/hi/2082800.stm

http://www.ft.com/personal-finance/pensions

I guess that when you reach a certain age retirement becomes an obvious planning decision to take.

If you have a final salary scheme, well done and make sure you read the rules properly before making your decision. In some ways a final salary scheme is brilliant however it may lack a little flexibility as first of all there is the “Years of Service” to consider. Most work on a 40/80ths basis. That simply means you need 40 years service to get half-pay at retirement and so if you joined the scheme in your 40’s, and retire when you are  60 something, you might do well to get a pension based on 25% of final salary.

That’s another thing, final salary often means the average of the last THREE years salary. Many people like to wind down to retirement and start working fewer hours to help work in to all those extra days on the golf course. If you’re on a final salary scheme, this could be a seriously bad idea as it will effectively reduce your pension. So make sure you get proper financial advice before making your decision.

If like the majority of the population you have a personal pension of one sort or another, you have other considerations: size of your fund, how much of a lump sum you can/ will take and what kind of income can you expect from what is left.

Pensions income is taxable of course but at least there is no National Insurance to pay on it – at least not yet anyway. Some ball park figures to work on:

Salary of £25000 as a worker and basic personal allowances of £6445 will work out at about £1600 per month take home.

A Pension of £12500 with the same allowances works out at £940 per month so as you can see half pay works out at just slight more than half your normal take home pay.

Watch out for the pre budget report this week though there are rumours that Alistair Darling will on the instructions of Big Gordy attack pension funds again and attempt to tax the capital gains they make from year to year. If that happens, you can expect the value of your pension fund to drop again.

I just love being the bearer of bad news. NOT!

Watch out for our pre budget report later this week. Use the subscription button to make sure you don’t miss out

JohnF

“You don’t get paid to have opinions ” ….”If I wanted your opinion I’d ask for it”. Two stock put downs that were turned to by television scriptwriters in the 60s and 70s to tag the workplace bully.

Of course we’ve moved on from there. Now the  phrase is  ”I value your opinion but..” , which is as loaded as “we have every confidence in our manager..” or “with all due respect”. Value, confidence and respect too often get lip such service in the workplace. An opinion from a subordinate is as popular as a computer virus.

An opinion box is installed to lance the boil of employee discontent and the contents may be used to add some innocent merriment at the next staff management meeting. More IT-savvy companies may  create bulletin boards which the occasional naive subaltern will post to. This  to the amusement of colleagues who watch the post  sit indelibe and isolated,  to the embarassement of the hapless contributor.

All this of course creates resentment. The disempowered workforce gathers around water coolers- or more properly in the pub and vents their collective rage, they return to the workplace to get paid, not to contribute. Productivity drops, people leave, businesses fail.

The human spirit being what it is, people retain value, respect and confidence in themselves and find alternative means for self-expression. They sing, play football, do stand-up. Recently they have gone to social websites where huge numbers express the opinions that have no place at work!

And herein lies a great truth that should be embedded in the HR policy of every organisation.

When people feel free to express themselves without constraints they do so constructively. If you don’t believe me- look!

Twitter, LinkedIn and You Tube are jam-packed with information, advice and goodwill freely posted for the benefit of others.

It’s amazing- people leave work, go home and then post the things they wanted to say at work but couldn’t… and it’s all positive!

It suggests that social media is the pressure valve that releases our frustrations and allows millions of us decent people to walk back into our work places with our heads held high.

by Cynthia Marcotte Stamer

The Pension Benefit Guarantee (PBGC) recently published a Final Rule that broadens the pension benefit guarantee protection provided for private pension benefits of military service members protected by the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) beginning December 17, 2009 .

USERRA provides that an individual who leaves a job to serve in the uniformed services is generally entitled to reemployment by the previous employer and, upon reemployment, to receive credit for benefits, including employee pension plan benefits, that would have accrued but for the employee’s absence due to the military service.

Before the publication of the Final Regulation on November 17, 2009, PBGC’s benefit payments regulation provided for a benefit only if the participant satisfies the conditions for entitlement to the benefit on or before the plan’s termination date.

Effective December 17, 2009, the Final Regulation final rule provides that so long as a service member is reemployed within the time limits set by USERRA, even if the reemployment occurs after the plan’s termination date, PBGC will treat the service member as having satisfied the reemployment condition as of the termination date. This will ensure that the pension benefits of reemployed service members, like those of other employees, will generally be guaranteed for periods up to the plan’s termination date. The change will apply to reemployments under USERRA initiated on or after December 12, 1994. Once the final rule is effective, PBGC will begin adjusting final benefit determinations of affected participants and make back payments with interest.

In addition to broadening PBGC benefit guarantee protection for service members, the Federal government also stepping up enforcement of the provisions of USERRA against private employers.  A lawsuit filed by the Justice Department on November 30, 2009 against an employer for allegedly violating the reemployment rights of a military service member is the 22nd filed during 2009 by the Civil Rights Division on behalf of service members.  It highlights the growing liability risks that employers face for failing to properly comply with the evolving military leave mandates of USERRA and other applicable laws.

Curran Tomko Tarski LLP Can Help

If your organization needs assistance with assessing, managing or defending these or other labor and employment, compensation or benefit practices, please contact the author of this article, Curran Tomko Tarski LLP Labor & Employment Practice Group Chair Cynthia Marcotte Stamer or another Curran Tomko Tarski LLP attorney of your choice.  Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization and Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Group and a nationally recognized author and speaker, Ms. Stamer is experienced with advising and assisting employers with these and other labor and employment, employee benefit, compensation, risk management  and internal controls matters. Ms. Stamer is experienced with assisting employers and others about compliance with federal and state equal employment opportunity, compensation, health and other employee benefit, workplace safety, and other labor and employment laws, as well as advising and defending employers and others against tax, employment discrimination and other labor and employment, and other related audits, investigations and litigation, charges, audits, claims and investigations by the IRS, Department of Labor and other federal and state regulators. She has counseled and represented employers on these and other workforce matters for more than 22 years. Ms. Stamer also speaks and writes extensively on these and other related matters. For additional information about Ms. Stamer and her experience or to access other publications by Ms. Stamer see here or contact Ms. Stamer directly.   For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi LLP team, see here.

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• “Disability” Definition Not Retroactive, Employer Action Needed To Manage Post 1/1/2009 Risks
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Budget minus 5 – Friday 4 December

“On the fifth day before the budget, Older People asked of Brian …”

Don’t tax household benefits for older people

Dear Brian,

Over the years Older People have gained a number of very helpful schemes. These so-called “free schemes” include the provision of passports, electricity or gas, telephone and the television license.

Please do not succumb to the temptation to tax these schemes.

“Why not?” You may ask. Don’t we all have to bear the budgetary burden?

These schemes have a direct effect on the living standards of the poorest & most vulnerable people in Ireland. If you tax the schemes, you will get hardly any extra money. Indeed the cost of collection could well exceed the amount collected.

It makes no sense to tax vulnerable older people for little or no gain.

Indeed you should modestly add to the schemes. Free broadband access would extend social participation for Older People at minimal cost.

Yours sincerely

Ireland’s Older People

Over the past five months I’ve been working with an entrepreneur to help him take a business concept to a start up.  It’s not been an easy process – we’ve had several false starts – but he now has a strong concept which is due to launch in early January.  It’s been a great experience for me and it’s taken me into a business sector that I’ve not worked in before – financial services.

I must say that I was very sceptical about the values and ethics of this sector.  We’ve heard a lot over the years about mis-selling and the current financial mess and issues around banker’s bonuses had only served to re-enforce my scepticism.

But working with my client and his contacts has exposed me to a group of financial specialists with the highest ethics and values, who will never recommend or deliver a financial solution that does not place the client in a better position.

Through my work and through getting to know these contacts I’ve learnt a lot about this sector, its products and the performance of the various providers.  It’s been a bit of an eye opener for me and it’s made me change my views and outlook on my own personal finances – both in the short and long term.  Through a series of blogs I’d like to share some of my newly gained knowledge, experiences and contacts with you – but remember I’m just a naïve outsider. If you want real advice, you’ll need to ask the recognised experts.

So this is the first in the series and it’s based around pensions.
I think it’s safe to say that the majority of people reading this blog with have a personal pension or a frozen pension from a previous supplier.  These will be being provided by a recognised name and we probably don’t question the returns we are getting on our investments – after all, it’s with a reputable provider.

But I was shocked to learn of the difference in performance between the ‘best’ and the ‘worst’!

• Over a five year period the best personal pensions averaged a 37% growth rate before charges (source: Money Management)
• Over the same period the worst personal pensions averaged a -6% growth rate before charges (source: Money Management)

In mathematical terms this means that if you had a fund worth £10,000 5 years ago, it could be worth over £48,000 before charges – or as little as £7,500 before charges!

This information made me start asking questions! 

• What was the return I was getting on my personal pension plans? 
• Was I with the right provider?
• Was my advisor looking after my interests or had I dropped off the radar?
• Where do I go to get the right answers?

Well I was lucky.  I’d been introduced to a great pensions expert – Darrell Cable (he’s regulated by the FSA).  Chatting with him he was able to explain to me why it’s important to the review the following types of pensions on a regular basis: -

• A Personal Pension
• A frozen Personal Pension
• A With Profits Personal Pension
• A Personal Pension with a company that may be overpriced
• A Personal Pension where the provider no longer sells new pensions
• A Company Pension with an employer who has ceased trading
• A Company Pension which is being closed or changed

He then offered to undertake an independent, no obligation, free pension review.  What did this involve me in doing – sorting out the Pension Plan Account Numbers and signing a document giving Darrell authority to obtain information on my behalf.

Four weeks later, we’d switched to a higher performing provider and I never felt any pain! And he’ll review the plans performance with me annually

I’d suggest you review your pension plans without delay.  I’m happy to introduce you to Darrell Cable.  He’s a great bloke and he’ll do the same for you – an independent, no obligation, free pension review no matter what size your investment is.  Drop an email to me at neil@ifonly.uk.com and I’ll send you the form you need to fill in together with Darrell’s contact details.  Fill in the form and pop it in the post to him – he’ll manage everything else for you and keep you well informed.

Oh! and before I finish I learnt something else. If you are 50 or over you can take up to 25% of your pension as a tax free, lump sum now!  But in April 2010, the government is changing the age limit to 55!  What can you use this tax free sum for? Well the FSA have been quite critical of firms for releasing tax free cash without good reason.   Broadly speaking good reasons could include:

• If the client is perhaps facing some form of financial hardship and might be better off repaying expensive loans or credit cards.
• If the client needs capital to start a business, and there are good reasons for not wanting to get a bank loan.
• If the client is actually retiring, but feels they only need the tax-free cash now and can defer the income until later years.  (If they have other sources of income for example).

Unacceptable reasons would include:

• Accessing the tax free cash to invest in another Investment Bond or other product.
• Accessing the tax-free cash simply to hold it on deposit without any longer term objective.

Food for thought!

Wait a minute — we thought that the tax hike was to hire police and firemen? Truth always comes out…

Official: Use extra tax money for pensions: Second billing could be set aside for later liabilities
By Camie Young – Gwinnett Daily Post

LAWRENCEVILLE — The $59 million Gwinnett County will collect next spring during a second billing of 2009 taxes could be set aside for employee pension liabilities, the county chief financial officer said.

Commissioners adopted a 2.28 mill property tax this week, causing a second billing since temporary tax bills were issued earlier this year.

Despite the fact that the money is part of the 2009 tax levy, CFO Aaron Bovos said the county considers those dollars 2010 revenues, since they won’t come in until after the March billing, and this year’s books will closed.

During a meeting of the Engage Gwinnett committee, he said the 13.25 total millage rate adopted will be key to balancing a 2010 spending plan, but county officials consider the incremental bills a “one-time revenue.”

“It is absolutely critical that we put (the money) to good use,” Bovos said.

While commissioners have to formally vote on how to spend the money, Bovos said his staff is considering a recommendation to use it to fund accrued liabilities for an employee pension plan.

Between the pension and medical benefits — which haven’t been offered to new employees since 2007 because of the expense — the county has about $300 million in liabilities that haven’t been funded, he said.

Currently, the county contributes 21 percent of each registered employee’s salary to the pension fund, but in three years, actuarial estimates show that will increase to 41 percent.

Bovos said using the increment for the liabilities will help offset those rising costs. An actuarial study is currently being conducted to determine the impact.

Our last blog outlined some of the indirect pressures on annuity rates, particularly from legislation which, at first glance, has no impact on the pensions savings of the ordinary “man in the street”.

There are other discussions ongoing, again often from Europe, aimed at reducing the risk of our financial institutions facing melt down again in the future.

One aspect that the law makers are considering is to ensure that financial institutions have sufficient liquid capital to meet their obligations at all times. Sounds all well and good for consumer protection doesn’t it?

But let us consider this in more detail, especially when we relate this to our retirement incomes. When we convert our pension fund into an income, the route used by most people is to purchase an annuity. In return for our fund, the annuity provider gives us an income for life.

Currently, the annuity provider considers how much of a return they can expect from investing your fund over their estimate of your life expectancy. They then offer you an income which is somewhat less than their expected return, hence giving them a profit. The advantage for you is a guaranteed income for life and all the risk transferred to the annuity provider. If the investment returns don’t match expectations, then they carry the can but your income continues (unless they go bust!).

These new proposals would restrict the investment freedom of the insurance companies by forcing them to hold, effectively in cash, enough money at all times to meet both your current and future income payments. There would be no additional investment return for the insurance company to make their profit and with interest rates at around 1% at best, you can see what this would do to annuity rates. How can they maintain profits? By reducing the level of income they offer.

So once again we see that the decision to purchase an annuity with your fund is not the simple and straightforward decision it once seemed.

The world changes and impartial advice from a source like Comparemypension.com can be vital to ensure that your pension planning keeps pace.

Public Announcement

Friday December 4, 2009 at 9 am

There is a TransLink public meeting on the second floor of the Firefighters Club on Bonsor Avenue in Burnaby.  (There is an elevator to the 2nd floor)

The address is 6515 Bonsor St.  It is across the street from Bonsor Pool and kitty corner to The Bay on Bennett.

Free parking in the parkade beside the Firefighters Club.

The link is to a map.   http://maps.google.ca/maps?hl=en&tab=wl

It is recommended to be there early so you can get in and get a seat.

Take your signs…Keep Canadian $$ in Canada.  We Carry People Not Parcels.  Pensions not Profits. Etc.

The MVT  VP of Operations, John Siragusa will be present.  This is an opportunity to hear him say his untruths in person.

Budget minus 6 – Thursday 3 December

“On the sixth day before the budget, Older People asked of Brian …”

Keep the Travel Pass

Dear Brian,

It is essential that the Free Travel Scheme remains in place for all Older People!

The free travel scheme is a major enabling factor in allowing the social participation of Older People in their communities. Social participation is extremely important in tackling loneliness and isolation amongst Older People. Not only does this scheme enable Older People to take part in social and civic life, it also provides them with access to essential services such as hospitals etc.

Many Older People find themselves isolated due to increasing frailty or because of high costs many of them have stopped driving. The number of people holding a full driver’s licence decreases with age; in 2006 only 44.5% of men over 80 and a mere 12.8% of women over 80 had a driver’s licence. Therefore public transport is an essential service for the many people unable to drive themselves. (CSO, 2007)

Taxi fares for a pensioner for medical visits can represent as much as 1/4 of their weekly pension. Recommendations included in the “Report of the Special Group on Public Service Numbers and Expenditures Programmes” to reduce the costs in HSE funded non-emergency transport services by 20% would result in this service being cut by 1/5 on the ground. This would only serve to worsen the situation for many vulnerable and sick Older People.

Yours sincerely
Ireland’s Older People

Budget minus 7 – Wednesday 2 December

“On the seventh day before the budget, Older People asked of Brian …”

Re-instate the pensioners Christmas payment

Dear Brian,

We strongly urge you to reconsider the withdrawal of the extra week’s payment for pensioners.

This payment provided many vulnerable Older People with additional income to help with the cost of heating and fuel bills during the long winter period.

Older People have become dependent on this extra payment in the dead of winter to help with their fuel, heating and lighting bills. The Central Statistics Office has found that since August 2008 the cost of natural gas has increased by 6.5%, bottled gas has risen by 6.6% and solid fuel by 6.3%. If the proposed carbon tax is introduced in this year’s budget we know that these prices will be further increased.

Hypothermia is a major difficulty for many Older People and causes a number of deaths each year.

We know that almost 10% of pensioner households experience fuel poverty in the winter months. This is an unnecessary type of poverty in today’s society; no person should be forced to endure an Irish winter without adequate heat.

While this payment is termed a “Bonus” the fact is that Older People are reliant on this additional payment to help defray these additional winter costs.

Yours sincerely

Ireland’s Older People

A 50-year-old who switches £100,000 into the highest-charging pension could pay more than that again in charges by the time he retires.

Research carried out by Money Mail lays bare the devastating effect these charges have on our pensions.

We took an imaginary saver and calculated the pension pot he’d be able to retire on with different insurance companies.

Aged 50, he has already built up a £100,000 nest-egg and plans to retire, aged 65, in 2024.

The calculations assume annual investment growth of 7% and a commission payment of 3%.

We’ve assumed all the money goes into the firms’ giant ‘balanced managed’ funds, rather than specialist funds, which might incur extra charges.

The results are startling, with a difference of more than a third between the pensions paid by the highest and lowest-charging firms.

Without charges, the saver would have £275,903. If he saves into the cheapest option, Friends Provident’s Individual Pension, his £100,000 would have grown to £253,000 by age 65. Charges would have depleted his fund by 8%.

But he could have done far worse. MetLife’s Self Invested Personal Pension would grow to just £161,000 – with charges accounting for an eye-watering £114,903 – 42% of his savings.

In fairness, this pension includes expensive guarantees designed to protect you if stock markets fall.

But other pensions trailing at the foot of the table include bog-standard stakeholder pensions, which are supposed to be low-cost.

Aegon’s stakeholder, for example, would return just £232,000 at age 65, meaning £43,903, or 16%, had vanished due to charges. This is a far cry from the 1.5% a year quoted.

Brian at Credencis says “‘The clients coming to us are surprised to discover how much has been taken out in charges. We find that in more than half of cases people will be better off switching to a cheaper pension, despite the costs involved.’

‘No-frills’ stakeholders can be more expensive over the longer term than standard personal pensions, despite offering less choice.

This is because the commission paid to advisers is spread over the life of the contract, instead of being deducted in the early years.

This explains why Aegon’s standard personal pension is the second best-performing, worth £252,000. More expensive are the new breed of Self Invested Personal Pensions, or pensions which offer expensive guarantees that investments won’t fall below a certain level.

High chargers include Skandia Investment Solutions, with a projected retirement pot of £224,000, Standard Life’s Sipp (£239,000) and Prudential’s Flexible Retirement Plan (£241,000).

Please don’t make the same mistakes highlighted out in this blog! You could cost yourself thousands of pounds at retirement!

For bespoke independent pension advice contact Credencis.

We are situated close to Derby, Leicester, and Nottingham.

Credencis

“Live for today, Invest for tomorrow”

The company I work for came to site yesterday as arranged at 11am and the redundancies have been sorted out.

The company are keeping the two youngest members of the team, and making the other three redundant. One of my colleagues has taken voluntary redundancy anyway. The meeting showed up some amazing facts though.

Three of my colleagues have pensions in addition to their wages. One of these has a pension of an incredible £27,000 per year, but still has to fight for every penny he can get hold of. The second colleague also has a pension of about £500 a month, plus his old age pension from the state of about £400 per month. Neither of these guys can survive on their pensions alone.

I feel betrayed, I think. I am dependant on what I bring in through the door every month, and I earn less than what my colleagues pick up in pensions every month. And they’re the ones who are taking my overtime away from me because (they say) they need the money.

One thing this occasion has taught me; never to live outside my means. These guys have mortgaged themselves up to the hilt to live their extravagant lifestyles. And their decisions are affecting me; because they’re fighting for their jobs against me and constantly take the overtime off me by virtue of their contracts. I stay in poverty partly because they need the money.

I am determined to ensure I don’t end up in this position; needing to have to work over retirement age to pay for my life. I am determined to maintain my “Pay As You Go” lifestyle, meaning that I won’t max out credit cards or mortgages. Credit, and more correctly, debt, is criminal.

I won’t owe anyone a penny when I die, and I intend to retire as soon as I can. In the meantime, I have “won” my job back by virtue of being the youngest on shift at 45 and the fact that I’ve been there the longest.

Carrying on carrying on.

Nearly a third of people approaching retirement still plan to use their property to boost their income despite recent house price falls.

Around 27% of those aged over 50 said they planned to use money tied up in their home to provide themselves with a retirement income, such as through downsizing or releasing equity, according to life insurer LV=.

The average homeowner in this age group believes around £27,000 has been wiped off the value of their property during the downturn.

But despite this only 2% of people said house price falls had put them off using their home to fund their retirement.

The research also found that previous house price booms have left many people reliant on the wealth tied up in their property, with 12% admitting they had saved less into a pension because of the rising value of their home.

A further 13% claimed they could not afford to buy their own property and invest in a traditional pension because house prices were so high.

A third of homeowners think it will take between three to five years for house prices to return to their former values.

Around 17% of people hope to recoup some of their lost equity by carrying out home improvements, while 21% will save extra and 29% will wait for house prices to recover.

Vanessa Owen, head of equity release at LV=, said: “In the decade leading up to the credit crunch, more and more homeowners saw their property as a potential cash cow to aid retirement.

“But in a matter of months millions of pre-retirees have seen both their property and pension fund values battered. Despite this, their confidence in the long-term value of bricks and mortar remains.”

For bespoke independent financial advice on pensions, and equity release contact Credencis.

We are situated close to Derby, Leicester, and Nottingham.

Credencis

“Live for today, Invest for tomorrow”

Après les prépensions et les restrictions légales pour y avoir droit, les patrons s’attaquent à nouveau aux fins de carrières en demandant simultanément un énième allongement du temps de carrière ainsi qu’une activation des chômeurs de plus de 50 ans.

Il y a quelques années, et encore aujourd’hui, la mise à la retraite anticipée, la prépension, lors d’une restructuration c’était la panacée.

Une entreprise pharmaceutique licencie. Résultat : quelques licenciements secs et beaucoup de mises à la retraite anticipée.

VW Forest ferme ses portes il y a trois ans. Résultat : beaucoup de licenciements secs et de mises à la retraite anticipée.

Sauf que depuis lors, il y a eu le fameux pacte des générations à l’aide duquel libéraux et patrons, entre autres, s’attaquaient aux fameuses prépensions si souvent utilisées. Leur but était d’en réduire le nombre de bénéficiaires en modifiant et augmentant le nombre d’années requises pour y avoir droit.

Maintenant que nous avons aujourd’hui des restrictions sur ces prépensions, le patronat demande le rallongement du temps de travail en général, de la carrière en particulier, tout en exigeant une activation des chômeurs de plus de 50 ans.

Dans dix ans lorsque l’entreprise pharmaceutique licenciera et qu’Audi Forest fermera une nouvelle fois ses portes, il faudra lire. « Résultat : licenciements secs et mises…en activation anticipée pour les travailleurs âgés.

Le but ultime : renforcer la concurrence entre les travailleurs et donc forcer les salaires à la baisse.

Car entre un jeune malléable, interchangeable, activable, jetable et un travailleur âgé auquel colle l’étiquette « périssable ». Je choisis le jeune et la flexibilité qui va avec. Le vieux ? Il sera sur le côté mais activé !

At comparemypension.com we passionately believe that individuals have to take greater control of their own pension planning. Before taking control, it is vital to understand the options available to all and, once we have made our initial decision, to ensure that the options we select remain appropriate. 

Is taking personal control of your pensions really that important? For an increasing number of us, it is not only important, it is essential and we don’t have a choice as employers back off from looking after us. 

Previous generations had the luxury of automatically joining their employer’s pension scheme. They often didn’t need to contribute and at retirement, as well as the nice clock, they were handed a lump sum and pension for life. This pension would have been based on a percentage of their salary for each year of loyal service to the company.

 Now it is not quite so simple. We change jobs more frequently for a start, very few jobs for life these days. We also enter the workforce later, after college, university and gap years. We have the option to join schemes, no longer being automatically enrolled when we start the job and, when the pressure is on to buy your first property or to enjoy your new found salary, then the option of saving for a pension always seems a distant prospect.

Many private sector employers closed their “final salary” schemes to new members over the past decade or so. Even those which retained them for existing members are now starting to close the schemes and move the members to “money purchase”. This has important implications for the members. In the final salary scheme, the risk of having enough money to meet the promised pension lies with the employer. In a money purchase scheme, the risk transfers to the member. You therefore need to ensure that the money is invested in line with your personal feelings and expectations of how much the investments can make. You also need to make sure that you are saving enough to meet your income requirements when you are older.

A further worrying development is some employers, particularly in the financial sector, now even reducing the level of contributions they make to money purchase pensions, in at least one case, they have stopped contributions entirely for their staff.

Combine these changes to employer schemes with starting to save until later in life plus living longer and having greater expectations for a retirement and we can see a recipe for unfulfilled expectations compared to our parent’s and grandparent’s retirements’. Did you know that when the retirement age was set at age 65, the average pensioner died by 67? Now the average pensioner at 65 can expect to live well into their mid 80’s and beyond.

Why is continuing to run a health check on our pension every so often important? Two reasons mainly, although there can often be more than two.

Firstly, and probably most importantly, we change and our lives change. Think of how your priorities change from when you are young, free and single, to being in a relationship, having children and the family eventually leaving the nest. All of these things change our focus and make us reassess what is important just now. We just have to bear in mind that priorities can change.

Secondly, pensions don’t stand still. Markets develop, new products are launched and politicians continually meddle. This can mean that the choices we made in the past may no longer be the best option available to us now.

Given these developments, you can see that it is no longer an option to bury your head in the sand and to think that pensions are a long way off.

Are pensions still a good idea then? The simple answer is yes. A pension is like any other form of saving or investing, only with much better tax advantages. Other savings must come from income which has already been taxed, pension contributions have the tax refunded plus the fund grows more tax efficiently than almost any other form of investing so pensions do still represent good value.

The comparemypension.com blog is therefore designed to keep you updated of some of the changes in the pension landscape which we feel are important to savers. After all, an informed investor should hopefully not encounter many nasty surprises in the future. This blog is no substitute for good advice from a highly qualified adviser, but it will hopefully help you to decide when you need advice and give you some pointers to ensure that the advice you receive is well informed.

We hope that you will find these blogs informative, if not interesting. We will try to keep things simple and straightforward since, for most people, pensions can be wrapped up in jargon. So apologies for those of you who do have more knowledge, you’re the lucky ones but we hope you’ll still find something interesting here from time to time.