THE PENSIONS DEBATE

Ian Neale, Aries Director, is a frequent contributor to the debate in the national pensions press.  Read Ian's incisive commentary, and share his unique insights into the problems and opportunities of pensions in the UK.  Here is a recent sample to get you copied in. Ian welcomes your response - just click here to send him an email.

  COMBINING PENSIONS AND SOCIAL CARE: WHY, WHEN, HOW?

in PMI Pensions Aspects

Everywhere in the public sector seems to be underfunded at the moment. Services are 'collapsing', 'in crisis' and 'cut to the bone'. Reduction of central government funding, notably to local authorities, is often the immediate cause. But there are also underlying societal trends which are more profound and less amenable to short-term correction.

The economically active percentage of the UK population is shrinking. The rising incidence of disabilities and infirmities, fuelled by obesity and manifested in illnesses such as diabetes, is one factor. Another is the growing number of people who survive into extreme old age. More and more people need help with everyday living. Help at the moment still, by and large, requires other people, and people are expensive.

Many retired, elderly or chronically infirm people have to manage on a fixed income, often a quite low income, that cannot stretch to paying someone to help for more than a short time each week. State benefits don't go far, as a rule, and local authorities adult social care budgets, even with the maximum extra 3% council tax precept, fall far short of meeting demand.

Inexorably, as public sector workers are pressed ever harder, standards compressed, and services outsourced on price, the individual needing help is being squeezed as well: to pay more, and often receiving less in return.

So far, so familiar you might say, but where will it all end? Without descending into arguments about allocation of taxes . . .

May 2018   Read the full article

 
 
  PENSION FREEDOMS: GREAT, BUT IS IT WORKING?

in Pension Funds Insider

Ian Neale debates the ideas proposed by the WPC when it comes to deciding what to do with your pension pot.

The House of Commons Work and Pensions Committee (WPC) thinks pension savers need more help to make a good choice. Flexible drawdown can be difficult and expensive to access, and advice is similarly costly. The key question remains, who's pulling it all together? In a potentially influential new report, the Committee has come up with three big core ideas to address these industry issues.

The WPC believes that when it comes to deciding what to do with your pension pot, there should be a viable alternative between cashing it out entirely and spending it all on an annuity. Flexible drawdown ticks the box, but not every DC provider offers it. Among those that do, a competitive market has yet to develop, so there is no incentive for pension savers seeking a drawdown solution to shop around. Many are also reluctant to pay for advice, and so they tend to stick with the name they know.

The solution proposed by the WPC is twofold: first, that NEST should be allowed to enter the drawdown market, and second, that every drawdown provider should be required to offer a default decumulation pathway suitable for their "core customer group" by April next year, with charges capped at 0.75% as for auto-enrolment.

Neither the WPC nor indeed the FCA has put forward any idea of what this default drawdown route might look like. As such, many commentators have been sceptical because individuals' circumstances in later life are so variable, so defining a "core customer group" can become challenging. That might be less difficult when workers are being auto-enrolled, many for the first time, . . .

04 May 2018   Read the full article

  SCRAP THE CAP? PPF RULES CHALLENGED AT CJEU

in Pensions Expert

Fewer than 400 PPF members are currently affected by the cap, and of those, very few are not receiving at least 50 per cent of their accrued pension

It will be interesting to see if the Pension Protection Fund compensation cap survives the impending Court of Justice of the European Union's decision in the case of Grenville Hampshire v The Board of the Pension Protection Fund. Mr Hampshire, a former senior employee of defunct manufacturing business Turner & Newall, is challenging the cap on the grounds that it fails to comply with Article 8 of the EU Insolvency Directive 2008/94.

That directive obliges member states to "ensure that the necessary measures are taken to protect the interests of employees and of persons having already left the employer's undertaking or business at the date of the onset of the employer's insolvency". It applies "in respect of rights conferring on them immediate or prospective entitlement to old-age benefits, including survivors' benefits" promised by any occupational or inter-occupational pension schemes that are not part of a country's state pension or national social security.

Following a referral from the UK Court of Appeal, the case was heard by the CJEU on March 8 2018.

Anti-cap precedent is mounting

The debate over the PPF cap stems from another CJEU decision, involving Allied Steel and Wire, sometimes known as the Robins case, back in 2007. That found that not ensuring every member received at least half the benefits to which they were entitled could contravene Article 8.

The interpretation cropped up again in the 2013 Hogan case, also known as Waterford . . .

25 Apr 2018   Read the full article

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Aries Insight Features
Aries House
29 Station Road, Desborough, Northants NN14 2RL
Tel 01536 763352
email: ian@ariesinsight.co.uk

 
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