|
| Christian news worldwide |
 Home |
 Archives |
 Subscriptions |
 Adverts |
 Find a church |
 About us |
 Contact us |
 Site Map |
 PrintableVersion You're on your ownHow policy produced Britain's pension crisisPension povertyYOU'RE ON YOUR OWN There is undoubtedly a problem with pensions. You don't have to search very hard in your newspaper to find some reference to the difficulties the government is having in persuading its employees to accept less pension. In the private sector also, employers are closing their Defined Benefit schemes at an alarming rate. Defined Benefit schemes, like most state sector schemes, base the amount of pension you receive on the number of years you have been a member and your salary. In this book the authors argue that this is only part of the problem. They argue that Defined Benefit schemes are increasingly being replaced by ‘inferior’ Defined Contribution schemes where benefits are based on the value of your fund at retirement, resulting in considerably increased risk to the individual and a likelihood that the pension will be much less in retirement. They argue that this shift has largely been due to the actions of successive governments and the unbridled greed of the pensions industry. Unfortunately there is somewhat of a ‘perfect storm’ hitting pensions, very little of which can be attributed to what the authors suggest. The following factors, when combined, have made the provision of pensions very expensive indeed: * People are living longer, therefore pensions are paid for an increased period. None of these are a result of government policy, but simply a fact of life and, although the authors mention these, they are given only passing importance. The authors extol the virtues of Defined Benefit pension schemes and lay the blame for their demise on successive policy decisions by both government and accountancy regulation. They lay the blame for the increased take-up of inferior alternatives on the advice industry. There is certainly some truth in this, but the main reasons for the decline in Defined Benefit pension schemes are undoubtedly the three factors mentioned above and the difficulty employers have found in sharing increased cost with employees. There is no escaping that somebody has to make up the shortfall and employers have increasingly found that providing guaranteed pensions has become prohibitively expensive. Employers are therefore opting, almost en masse, for the controllable costs offered by Defined Contribution schemes rather than the ‘blank cheque’ of a Defined Benefit scheme. So what conclusions do the authors come to? They advocate relaxing some of the guarantees imposed by state and accountancy regulation on Defined Benefit pension schemes and adopting some kind of hybrid Defined Contribution/Defined Benefit scheme (no actual details given). They also advocate larger group pension schemes to reduce charges. Although the authors raise some valid points, they give little in the way of practical solutions and present a few of their arguments in such a sensationalist manner that it does little to add to their credibility. Sadly, when given the choice, our society has increasingly moved towards the view that spending now is better than saving for later. The wisdom found in Proverbs encourages us to plan and save carefully for the future, but not to put our hope in it. Proverbs 6.6-8 & 21.20 - see Biblical Financial Planning at http://www.christianfinancialadvisers.org.uk/downloads/ Charles Matthews, © Evangelicals Now - January 2012 |
|
