Pensions
We recognise that you may have general comments on the pensions agenda that you wish to share with us. Below you can share views that we will feed into our wider policy agenda in this area. Please share your thoughts on Private Pensions and Pensions Protection on the relevant comment page.
We previously invited comments on regulations relating to State Pensions. These are out of scope of the Red Tape Challenge, and any comments made prior to closure on the comment page will be fed into DWP’s wider better regulation programme. Find the closed State Pension page here.
To comment on Private Pensions, or Pensions Protection – please click on the links below. Visit the main Pension landing page here.
You did ask . . . first a short summary, then the real thing if you want to read on . . .
Please:
- lighten the financial load on companies whose long standing final salary schemes have become much more expensive, retrospectively, and who currently have to carry that full load alone.
- pension schemes have more than enough troubles to keep them going for the foreseeable future. Please drop GMP equalisation – even drop GMPs all together.
- please turn back from going down the road towards de-natured, “gender neutral” annuity rates. Apart from flying in the face of everything we know to be true, it also seeks to change reality and that, as we have seen with Barber, leads to endless, unproductive distractions from and interference with the job in hand which is to provide income for pensioners. There are too many pitfalls.
With more explanation:
1. “COST OF PENSIONS”. People are living longer so Pensions are becoming more expensive. If you are building up a cash fund that will not now sustain the pension you had hoped for then you can plough more money in to your fund – if you can afford to and choose to do so. If you are an employer who, many years ago promised your employees a salary related pension and has seen the cost of that pension escalate, in effect retrospectively, you are given no choice but to plough money into the pension scheme you set up, providing not only for more expensive future new pensions but also making up the shortfall for all those past years when, with hindsight, you and your employees didn’t put enough in to cover the (now) higher cost. Oh, by the way, no, you can’t go back to the employees for their share of the shortfall, or to the Government for the cost of the retrospective benefit improvements they legislated on to your scheme. Tough on individuals, Much tougher on companies. Give them a break, don’t drive them to the wall or make them uncompetitive compared with their less enlightened competitors (who didn’t bother with a pension scheme) by insisting they make up the full 100% of the lost ground themselves.
2. “EQUALISATION MK I”. Among the legislation not listed by you is pensions “equality” legislation. That has cost this country (i.e. companies) billions. Partly through unanticipated benefit increases but also it is questionable whether the cost (i.e. the value to the recipients) of these benefit improvements comes anywhere near the wasted, unproductive cost of implementing the imposed changes in the face of regular revisions over the past twenty years arising from various courts’ interpretations of what the European Court even meant in the first place.
All of this was imposed on us by Governments who blithely carried on themselves in the meantime providing State Pensions from unequal ages and who are now trying to tell us how, in occupational schemes, we must now set about equalising Guaranteed Minimum Pensions. These are substitutes for unequal State Additional Pensions so are, by definition, incapable of equalisation. And all this is twenty years after the event . . . and the additional hiatus and unproductive costs so created are coming along hard on the heels of the abolition of Protected Rights, the alternative means by which people could Contract Out of exactly the same State Additional Pensions. Forget one, increase the burden of the other? Come on, please. Just convert GMP to ordinary scheme benefits in the same way as you have removed the Protected Rights shackles from money purchase schemes. Save huge amounts of unproductive cost.
3. “EQUALISATION MK II”. This and other equalisation costs are driven by European insistence that the facts of life are wrong and various normal manifestation of inequality between men and women must be legislated away. They are in the process of insisting that this be applied directly to the buying of a pension at retirement where the propensity of women to live longer than their male counterparts is to become no more than a figment of our imagination and must not be taken into account in any way in deciding how much pension you can afford to pay each year to a 65 year old woman compared to what you would pay each year to a 65 year old man with the same amount of money in his hand.
The original Barber requirements got completely out of hand and we’re still suffering the consequences today. PLEASE DON’T LET IT HAPPEN AGAIN WITH “GENDER NEUTRAL” ANNUITY RATES.
Thank you.Comment Tags: Annuity Rates, cost, Equalisation