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.


in Pension Funds Insider

If you go to the doctor and get given a prescription, it's likely you'll take the medicine. If a qualified solicitor gave you legal advice, you'd probably follow it. But would you trust a financial adviser?

Maybe not. Why, since financial advisers belong, like doctors and solicitor, to a regulated profession? But that's not enough for most people. For a start, we're all too aware of the historical baggage for which the label 'mis-selling' was coined.

If our health is not so good, on the whole we tend to attribute it to misfortune, rather than feeling unfairly treated. By contrast, we're prone to compare our wealth (or lack of it) with that of others, and all too easily we find cause for complaint. "That's not fair" is a criticism to which everyone is sensitive.

For example, many women in their late fifties have been shocked to discover they would not be getting a state pension at age 60 as they had always expected; hence the WASPI and Backto60 campaigns. Over a million adults earning between £10,000 and £12,500 per year are not getting the tax relief they were led to expect on their pension contributions, because they've been enrolled into a scheme operating net pay. That doesn't seem fair either.

Then there is the gross disparity between members of Defined Benefit (DB) and Defined Contribution (DC) pension schemes when it comes to the Lifetime Allowance (LTA). The former can accrue an annual pension of £50,000, index-linked to boot, without becoming liable to an LTA tax charge. A DC pot of £1.055m (the current LTA) could barely buy a pension of half as much. . . .

11 June 2019   Read the full article


in Professional in Payroll, Pensions & Reward

Many employers in the education sector are facing huge cost increases from September this year, as a result of Government plans to force a 43% increase in their pension contributions.

The Teachers' Pension Scheme (TPS) is one of the largest unfunded public sector pension schemes, alongside those relating to the NHS, civil servants, and the armed forces. "Unfunded" means that although employers and employees pay contributions, these go directly to the government: crucially, the amount does not cover the full cost of paying pensions. Currently there is an annual shortfall of £4bn, which the government covers out of borrowing: in other words adding to the public sector net debt (ie the deficit) each year.

A furore was triggered last September by a Treasury announcement that to begin to plug this gap, employer contributions to the TPS would rise from the current 16.48% to 23.6% from 1 September 2019: a 43% increase, with only 12 months' notice. The basis for this is a reduction to the Superannuation Contributions Adjusted for Past Experience (SCAPE) discount rate, from CPI+3% to CPI+2.4%, to reflect a more realistic assessment of the future growth GDP growth rate. This is a case of government 'grasping the nettle', prompted by the Office for Budget Responsibility.

Employer contributions to the NHS and Civil Service schemes are also going to rise by similar (but slightly lower) amounts. However, less than 75% of TPS member teachers are employed by state-funded schools and colleges, and in any case the politically-charged academisation programme has taken away control of budgets from local authorities, . . .

June 2019   Read the full article


in Professional in Payroll, Pensions & Reward

Where a pension scheme member has been missing for a number of years, at what stage might it be possible for the member to be presumed dead?

Historically, this area has been a bit of a minefield. There has long been a common law provision that would allow a Court to assume a person to be dead when there has been no evidence of his or her continued existence for seven years.

It has also been possible to make an application under The Non-Contentious Probate Rules 1987 [SI 1987 / 2024] for leave to swear to the death of a person. Under this approach, there is no need to wait for seven years, however where such leave is granted, the Court is not making any presumption of death but merely giving the applicant the opportunity to swear to the death as a pre-condition for obtaining a grant of probate.

Then there was Section 19 of the Matrimonial Causes Act 1973 and Section 37 of the Civil Partnership Act 2004, which allowed a Court to dissolve a marriage or civil partnership on grounds that one of the parties is presumed to be dead.

Overall, then, this area had long been a hodgepodge of common law and statutory provisions with no single codified approach.

Fortunately, this changed for England and Wales from 1 October 2014 when the Presumption of Death Act 2013 ('the Act') came into force. This Act allows a missing person's spouse, civil partner, parent, child or sibling (or any other party with a sufficient interest) to apply to the High Court for the Court to make a Presumption of Death Order. . . .

Apr 2019   Read the full article

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