The Great Debate UK
-Damian Stancombe is head of corporate defined contribution at Punter Southall. The opinions expressed are his own.-
Pensions were a prominent feature of the chancellors’ debate recently, and are becoming a key battleground in the run-up to the election. Perhaps more interesting for us, however, has been the reaction of UK plc to the pensions issue and any government-led ‘solution’.
Punter Southall recently undertook its annual Corporate Defined Contribution Survey 2010, one of the largest and most wide-ranging undertaken in its field. Responses were received from representatives of a diverse spread of over 330 companies, and considered all aspects of pensions, but focused on defined contribution in the UK and influencing issues: from the current and future impact of economic conditions to the far-reaching effects of planned pension reforms.
The respondents included some of the UK’s largest employers, including 24 FTSE 100 companies and the survey conveys an authoritative range of opinions reflecting the views of UK plc. It revealed a strong sense of dissatisfaction with politicians for their seeming inability to bring about positive changes with regard to pensions. The feeling was that any future political change would have little or no impact on pension legislation, for better or worse. This is borne out by the fact that 86 percent of respondents believe there will be a change of government at the next election, while 57 percent believe this will have little impact.
-Julia Whittle is principal and head of international, Punter Southall Financial Management. The opinions expressed are her own. She will participate in a Reuters Budget live blog at noon GMT on Wednesday, March 24, 2010. Please tune in and join the discussion. –
We would certainly expect Chancellor Alistair Darling to use this budget to make a strong statement ahead of the general election to try to repair public confidence, but this may be difficult without making the situation worse.
-Julia Whittle is principal and head of international, Punter Southall Financial Management. She will participate in a Reuters pre-budget live blog on Dec. 9, at 12 p.m. British time. The opinions expressed are her own.-
The attack on high earners has probably not reached a pinnacle and those earning above £100,000 have reason to be nervous in this current climate. The Pre-Budget statement so close to an election shouldn’t produce anything too drastic as there is little time to implement anything radical or complicated. However an attempt at some “vote winners” is a distinct possibility.
-Damian Stancombe is head of Corporate Defined Contribution Pensions at Punter Southall Group. The opinions expressed are his own.-
Three things to keep in mind for defined contribution pensions:
Pension plans help build financial security in retirement, and in the face of a looming pensioner crisis the government continues its efforts to increase the number of savers. There is one exception: if you earn more than 150,000 pounds all bets are off.
A bulk annuity buy-out is an insurance contract which allows a defined benefit pension scheme sponsor and its trustees to absolve themselves of their responsibilities in regard of the accrued liabilities to members.
-Simon Banks is a principal at Punter Southall. The opinions expressed are his own.-
This summer we have seen the closure of many “defined benefit” pension schemes, which provide benefits based on a formula linked to salary. They are closing because they are reliant on employer support and have either become too expensive, or have grown too large relative to the employer.