Pensions deficit 'down to £3bn' by Finance News Bulletin
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Published: 20/12/07
In March 2003, the biggest final pay style schemes had a combined deficit in their funds of more than £100bnThat shortfall has fallen to £3bn and almost half of the funds looked at by consultants AON are now in extraThe BBC's Richard Scott says the improvement is down to increasing stock markets and greater than before contributions from firmsBut it has warned that companies should be cautious about putting too much money into retirement fund funds
If that happens they could risk being accused of ripping off shareholders or employees, the consultants saypension reform Women 1 Women 2 Pension rights Divorce Work pensions bump sums Pension praise Frozen pensions Shortfalls Overseas pension Small pensions Tax and pensions Pension repair Made simpleState pension With-profits last
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Millions braced for mortgage rate leap - Published:12/11/07
POLL: How high will rates have to go before you create having to think hard about your mortgage repaymentsWhat will your home be worth if the marketplace returns to levels of 2001 or even 1995 House price crash calculatorMonthly expenditure agreed last month on two-year, £150,000 loans were almost £200 higher than in 2005It shows the combined effect of store of England bottom rate rises and aggressive increases in financial firms' lending rates next August's financial crisisThe trend in two-year fixed rates before this year had been downwards For instance, monthly repayments cut down by £32 between October 2004 and 2006, and by £47 between 2003 and 2005But the Bank of England lifted its main rate five times between imposing 2006 and July this year, send-off it at its highest level since 2001The standard rate on two-year fixed mortgages, some of the most well-liked products on the market, is now 613% compared with only 46% two existence agoThat amounts to a 33% trek in borrowing costs Yet family incomes have risen now over 8% in the same periodBanks are increasing borrowing costs to shore up their earnings, as the monetary industry buckles under the weight of defaulting American loansGeorge Buckley, an economist with Deutsche Bank, said: 'This is leaving to be the largest repayment shock on evidence When people come to refinance their mortgages they are leaving to have to pay a lot more than the last time they fixed their mortgage rates'This comes at a chiefly bad time for consumers Taxes have gone up, confidence has fallen, and populace are having to think about putting more money absent for their pensions Growth in incomes is also weak'It looks improbable that today's rates are leaving to fall quickly And even if the store cuts official interest rates, it may take some time for mortgage rates to go after'Lending between banks evaporated in the summer, most important to the crisis at Northern Rock - the first sprint on a UK bank since Victorian timesWhile the US central Reserve has since shaved three-quarters of a point off American interest rates to manage with the crisis, the store of England left base rates unchanged at 575% on ThursdayMeanwhile UK banks have been rising the rates they demand from clientele and reining in the supply of loans, as they attempt to improve their financesFor example, average tax charged on overdrafts have surged to 176% in October, the uppermost since August 2001The dramatic increases in the cost of borrowing could cripple the housing market and guide to declining principles, says Citigroup economist Michael SaundersHe said buy-to-let investors are particularly susceptible, pointing out that the number of mortgages on offer to them has shrunk by 40% since JulyHe added: 'The housing market will weaken piercingly, reflecting the toxic mix of far above the ground interest rates, very stretched values, far above the ground private debts, plus the continuing crisis in money and credit markets'Recent data suggests this weakness is pending through House price inflation is now tumbling - with more hints that prices are in fact falling'Growing numbers of consumers are having loan applications twisted down, while a number of providers are pulling out of the market altogetherindividual loan acceptances have fallen every month since April as lenders make tighter their lending criteriaIt said about 67% of applications were accepted in April Last month, that figure had fallen to 52%With credit cards, 17% more applicants were turned down between March and September than during the previous six monthsThe financial information collection Moneyfactscouk said three firms had quit the individual loans market during the past week, including Liverpool VictoriaIt was also reported that 32 loan providers had raised their rates since the bottom rate last went up in July, with lenders charging as much as 3% morechoose a loan word 12 months (1 year) 24 months (2 years) 36 months (3 existence 48 months (4 existence 60 months (5 existence 72 months (6 existence 84 months (7 existence 96 months (8 years) 108 months (9 years) 120 months (10 years)Please select a kind of insurance Life insurance Home and contents Car Breakdown armed forces Health - medical Health - dental Travel favorite - dog favorite - cat GOThinking about investing in possessions This is Money has the best buy-to-let.
Read More: Millions Braced For Mortgage Rate Leap >>Can you stop changes? - Published:09/03/07
Millions of workers may almost immediately find that their employers try to shut their pension schemes to current members and offer them a less generous alternativeThat is the situation opposite staff at firms similar to Rentokil, the Co-op group, Arcadia and the Yorkshire and Clydesdale banksThese companies have decided that the pensions they promised for many existence are now too expensive - and the staff will have to accept a new system that is rather less kindNick Eyre, group secretary at the pen, reckons that many more employers will be copying his example: "Hundreds of companies are leaving to do this It's going to become a very common feature over the next six months"If the staff do not similar to the proposals, the first obsession they should do is check their employment contractsSome may promise to offer membership of a traditional final pay pension scheme - not just whatever scheme the corporation happens to be offering at any one timeIvan hiker, head of pensions at the law solid Thompsons, which specialises in working for trade unions, says it does occur from time to time: "A company may have been taken over, or the pension scheme been merged in the past, with a assure to members of no alter to the pension scheme"Later the employer says they desire to cut back on benefits for future repair - and someone digs up the old promise"An attempt to force personnel to accept such a change might be a breach of the employment agreement and could expose the employer to a accuse of constructive dismissal at an employment tribunalThis would be a high danger strategy for an employee to take because they would actually require to resign from their job to sustain such a claimAnd they might be unsuccessful if the employer argued, successfully, that they simply had to shut the scheme because it was a commercial necessity, for instance as an alternative to leaving bustThat was the decision of an service Tribunal in London in September 2004 when some staff complained they had been unjustly dismissed by a large solid of solicitors for not agreeing to the closure of their final salary schemeIt is important to make sure that the employer does have the power to shut the system, and to check if the trustees have to agree as wellThis should be laid out in the rules of the scheme, usually be known as the "Deed and Rules"Most scheme members never bother to look at them And usually there is no reason why they shouldBut there is no such obsession as a standard set of rules They vary tremendously from scheme to schemeSome give employers absolute authority over sure changes; some changes may require the agreement of the trustees; other rules may even give the trustees more or less total power over changes"Some rules have entrenched provisions which stop changes for the future," points out Christopher Berkeley, head of pensions at the law firm Pinsent MasonsAs a matter of course, the full Deed and system should be available to all system members from their system's administratorsIt is possible an employer's choice to close the scheme to existing members might activate a decision of the trustees to wind up the scheme altogether, not just run it as a stopped up fundThat would almost certainly be horribly expensive and might deter the employer from venturing down this pathHowever, this did not discourage Rentokil from announcing it wanted to close its retirement fund scheme, even at the cost of making extra expenditure amounting to almost £400m over the coming yearsEven now, a levelheaded employer will consult staff over creation such a big change to its pension provision debatably, any employer has a duty of good faith to do soBut from this pending April, this obligation to ask the affected scheme members becomes enshrined in law as a result of the 2004 Pensions Actpotential members, such as workers who have not yet joined the scheme, should be consulted tooThat consultation might engage trade unions or other staff legislative body; asking scheme members to submit their opinions by e-mail or letter; and holding employees meetings, seminars and road shows to provide sufficient and accurate information and seek feedback from the staffThere is even the option of a ballot That is what is happening with the 9,000 staff of the Yorkshire and Clydesdale banks, who are being asked to support the substitute of their final salary scheme with one based on average salaryThis was welcomed by Jay Sheth, a senior rule officer for the employers' organisation, the CBI: "We have always supported the idea of discussion - but employers need the power to revamp schemes in line with the company's monetary position"That does not give employers carte blanche to embark on a sham discussion exercise, going through the motions with no intention of captivating on board any views they may get from the staff"Some consultations are a sham, some aren't A lot think discussion is just telling," according to Eleanor Lewington, pensions officer at the sell trade union UsdawIf employees think that is what is happening, they will have the right to complain to the Pensions Regulator who can well the employerHowever, a spokeswoman for the pensions regulator sharp out: "We don't have powers preventing employers making changes for future provision"Changes are in practice being made and decided in quite a few companies where the dynamics of the business and the danger have been explainedIf an employer has decided in advance it needs to close its pension fund to current members, it may be firm to persuade it to change its mind altogether, at least by logical argumentThe Pensions Management organization believes that quietly, behind the scenes, many pension schemes are being distorted by agreement, after consultation and negotiation"Changes are in practice being made and decided in quite a few companies where the dynamics of the business and the risk have been explained," said the organization's Penny GreenIf negotiation fails, then the next obvious lever for disgruntled personnel is the threat of going on strike or some other form of manufacturing actionAs a result, the company allowed 1,700 trainees and junior employees to join the scheme before it closed to new members and the corporation agreed to inject more cash into its fundWhatever approach hurt workers take, it seems certain they will form a swiftly growing categoryAnnuity improvement Women 1 Women 2 Pension rights separation Work pensions Lump sums Pension praise Frozen pensions Shortfalls Overseas pension Small pensions.
Read More: Can You Stop Changes? >>Age rules on pensions postponed - Published:21/12/06
The government has postponed part of new laws against era discrimination that tell to pension schemesRules outlawing ageism start on 1 October, but those affecting retirement fund schemes will now start on 1 DecemberThe government says it wants to give employers and their pension schemes more occasion to digest the changesOverall the novel laws will ban age discrimination in recruitment, employment and tuition and will stop most enforced retirement before 65James Purnell, the minister for pensions reform, supposed the delay to the parts affecting retirement fund schemes was to give them more time to adjust"We have listened cautiously to the concerns voiced by employers and decided to grasp off on implementing the pensions aspects of the legislation to allow more occasion for the industry in the direction of get in the direction of grips with the changes," he saidThere will now be further consultation with the pensions industry, which could lead to changes in the method they affect pension schemesThe CBI welcomed the hold-up to allow for more consultation on the matter, adding the government needs to put out any changes as soon as likely"We are pleased that the government has responded so completely to our concerns and look forward to considering the amended regulations soon," said CBI deputy director general John Cridland"The system were badly drafted, often contradictory, and would have been bad information for employers and employees alike"Shadow Work and Pensions Secretary, Philip Hammond, supposed: "This means people who thought that they would be secure from compulsory retirement before 65 may now find they will be out of work, as a consequence of these changes"Postponing seems very unfair and we will be asking the government, as a matter of urgency, to address the place of this group of persons"Many employers and pension schemes had made it clear they were not prepared to comply with the new laws, after dealing with considerable administrative changes brought about by the simplification of pension system tax rules (A-Day) earlier this yearSo the administration has already provided schemes with a long list of exemptions from the law so they can keep in force as normalBut, it has become clear the rules will still need careful scrutiny and following changes to comply with the new regulationsPension experts have also challenged the government's leadership, first in print in April, that suggested staff could demand to be paid their full pension if they chose to labour beyond a usual retirement age of 60The government says employers will have to have the same opinion to such requests; pension lawyers say pension schemes can choose to refuse such a request under the new systemOverall, the new laws against age discrimination will be some of the most profound law-making changes affecting the workplace since laws were brought in prohibition discrimination on grounds of sex and raceThe laws ban direct and indirect era bias unless it can be "objectively justified" and they also make it against the law to harass or victimise anyone because of their ageThe driving force for the changes has been the government's obligation to incorporate in UK rule the European Employment Directive of 2000 which has to be implemented by the end of this yearThe government also sees the novel laws as a lever to assist more older workers to stay in employment, thus plummeting the burden of paying pensions on.
Read More: Age Rules On Pensions Postponed >>