PENSION SHOCK WARNING: Millions could miss out on FULL payout

chance of receiving their full payout
Despite employers pumping in £120billion over the
past 10 years to plug pension fund deficits, the
liabilities are still more than £400billion.
Not all of these smaller schemes will be able to pay
out as much as savers expect, the Pensions and
Lifetime Savings Association said.
But pooling their assets into a £1.5trillion “superfund”
would mean bigger returns for savers and offer them
the best chance of a full pension, according to the
trade body’s Task Force.
Pension WARNING:
Elderly could be
‘sleepwalking’ into
poverty
Millions of over-50s
face late retirement
after putting family
first.
Its chairman Ashok Gupta said: “The industry and
Government need to grasp this opportunity and tackle
serious flaws that threaten the security of people’s
retirement.”
He warned that without change there is a “real
possibility” of more highprofile company failures such
as the collapse of BHS.
As many as 27 million current and future pensioners
across the UK rely on defined benefit pensions for
some or all of their retirement income.
The generous plans, which promise savers a certain
level of income when they retire, have become rare in
recent years as firms have found them expensive to
run due to people living longer.
Not all smaller pension schemes will be able to pay
out as much as savers expect
There
are
6,000
such
schemes which manage tens of thousands of different
benefit structures.
But putting those schemes at risk into a new
“superfund” – after small companies paid a fee to do
so – would save £1.2billion annually in costs and offer
bigger investment opportunities.
The move could also improve efficiency by making it
easier to simplify costly-to-administer benefits, the
PLSA’s Defined Benefit Task Force suggested.
There are 6,000 such schemes which manage tens of
thousands of different benefit structures
These superfunds would aim to pay members the full
value of their benefits in more than 90 per cent of
cases.
Sir Steve Webb, a former pensions minister who is now
director of policy at Royal London, said high-profile
cases involving pensions “are only the tip of the
iceberg”.
27 million pensioners across the UK rely on defined
benefit pensions for retirement income
He said: “If schemes can be consolidated in a way
which provides better value for money, reduced
pressure on employers and an increased chance of
pensions being paid, this could be a real step forward.”
However, pensions consultant John Ralfe described
the superfund plan as “outrageous”.
He said there was “no crisis in defined benefit
pensions, so there is no need for crisis measures”
owing to a well-funded lifeboat system for collapsed
schemes.
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A spokesman for The Pensions Regulator said: “While
some defined benefit (DB) schemes are facing
significant challenges, as highlighted in the PLSA’s
report, over the longer term, most will be able to pay
members their promised benefits.”
They added: “While the majority of DB schemes
remain affordable, many should do more to tackle
increased deficits and reduce risk.”
A spokesman for the Department for Work and
Pensions said most pension schemes are “operating
well” and the vast majority of members “can expect to
receive their benefits in full”.

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