UK Employers Getting Shot of Pension Schemes

UK Employers Getting Shot of Pension SchemesExpensive staff pensions are falling by the wayside with regularity as companies see them as an expense they can ill-afford, according to research conducted by the Pension Protection Fund (PPF).

The PPF is the body which looks after pension holders in the UK, it compensates members of funds with companies which have gone into insolvency, and is paid for by a specific levy placed upon employers. Since August, however, the PPF has seen the number of companies approaching them claiming to be on the verge of insolvency increase dramatically. All suspicions however, lead to a very different tale.

In order to allow a certain company to place their fund under the responsibility of the PPF, the organisation must be 100% convinced that the company has run out of capital. Since August, the majority of the cases witnessed by the PPF have been rejected.

The economy is currently less volatile than at any time in the last six years, just about, so insolvency cases are falling annually nationally.

The vast majority of those looking to dump their pension schemes and have them bailed out by the PPF are overseas firms with English subsidiaries. The company may need streamlining and see the British arm as the target for cut-backs. This is a common occurrence, and one of the first things to come under the microscope is the pension scheme.

As the economy continues to improve, and interest rates (eventually) begin to rise, banks are expected to take a harder stance with their demands on businesses they have pulled from the edge. So as any loan or debt repayments increase to the banking world, pensions are again likely to be seen as a burden obstructing any chance of development.

The PPF has recently taken on one extremely high profile pension scheme from Monarch. The airline has been struggling for years now, and after extensive investigations into accounts, the PPF agreed to assume management of the pension scheme. While this may be good news for the company, it’s not the best for the employees. Pilots have claimed they are set to lose up to £10 million of the value of their pension pot in a restructuring deal which ends up in the hands of the PPF. Indeed, the annual pay-out for a pilot from Monarch through the PPF, is just £26,572, substantially less than promised.

The UK pension woes continue then it seems, and depending on the result of the general election in six months’ time, more degeneration into pension anarchy could be on the horizon. It is an unsettling and nervous scene at this time, and when unsettled; people, businesses and pension pots tend to be very much in a state of volatility….

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