Will your pension be there when you need it?
It is a worrying time for some people. There are constant stories coming through about failed Pension Funds. These are funds that people have spent a lifetime investing into in preparation for retirement. It is now clear that some of these Pension Funds may not be around to pay out when people need to access their money.
There are some eye watering stories – stories where people have been told their pension pot is empty and that they actually owe funds. In December last year, the Financial Times published an article predicting that certain Pension Plans would not be able to meet their predicted pay outs to their members.
In response to these developing issues, according to some news reports, the UK Government has initiated a project to look at more effective ways to review pension prediction calculations. This is all part of a plan to help ease the pressure on rising pension fund deficits.
Ros Altmann, who is the current Pensions Minister, said she was reviewing how schemes could account for their liabilities, as new measures to ease the economic shocks from Brexit are expected to inflate pension shortfalls.
Astonishingly, additional research and statistics from the Office of National Statistics (ONS) reveals that more than 11 million people are relying on a defined benefit pension to deliver their essential retirement income. The term defined benefit means that a person’s employer is backing the scheme and this company is expected to meet the predicted pension promises at the time when the pension age is reached.
However, according to Hymans Robertson, UK pension deficits are reported to have hit a record £935 billion in the last few weeks. One of the influencing factors is that gilt yields, the assets used to help value the cost of future payments, have hit record lows.
At the present time, employers and Pension Fund Trustees currently have some flexibility in how they value future pension predictions and promises. However, there is clearly insufficient focus on this essential aspect of Pension Fund performance and management.
In the light of these worrying Pension Fund predictions, there are rumours that the Government may introduce some type of legislation that means Pension Fund operators have to show more transparency in how pension liabilities are valued.
Two months ago, the Pensions Regulator said that many employers were able to maintain or increase contributions to repair their pension deficits. It has since said that in the light of Brexit, it may look to review this guidance.
Commenting on this same scenario via the Financial Times Newspaper, Patrick Bloomfield, Partner at Hymans Robertson said “There is definitely a case for a new review in light of the prospect of more quantitative easing. Questions do need to be asked if the current legislation is adequate and is being adequately applied.”
It is pretty clear that UK Pension Fund performances make for worrying reading. The evidence that there is a serious issue cannot be disputed. This evidence should not be ignored.
Through the course of my work, I meet many people who worry about their future. Many people are not prepared to take the risk of getting to retirement and finding they don’t have enough money to live from.
Conversely, there are some people who behave as if tomorrow will never come. They close their eyes to the issues that will one day envelope them. I am pleased when people approach me to seek guidance as to how they can secure an additional source of retirement income.
About the Author
Julianna Beavan is one of the world’s most respected Business Coaches and Network Marketers. With a proven track record in helping people to take better control of their financial and lifestyle circumstances, via exciting options that exist in the health & wellness sector. Julianna is often commended for her inspiring coaching style – never neglecting the important human aspects of being warm, supportive and humble towards all those who approach her with a serious business appetite and the discipline to succeed.
If you would like a totally free and no strings attached personal consultation with Julianna, please make direct contact via the link below. Julianna guarantees you will you have an opportunity to consider working directly and personally with her.