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June 2014

As we creep into, what we laughingly call, Summer I also find that we have hit peak ‘hay-fever season’. I, along with millions of others, are suffering itchy eyes, sneezing and myriad different symptoms as they carry out their pension duties. Speaking of pension duties, here are a few highlights from the last month…

Retire early, retire poorer

We are told that government research shows those who retire 10 years short of their ‘retirement age’ (which will probably be in the region of 90, by the time I get to call it a day!) could lose more than a third of their pension. Apparently, it may also affect someone’s mental health, through “boredom, loneliness and poverty”.

The comedian Dave Allen once said “We spend our lives on the run: we get up by the clock, eat and sleep by the clock, get up again, go to work – and then we retire. And what do they give us? A clock.”…if the government research is correct, the clock may be the only thing to keep us company in penury.

Comfort for £15,000

The National Employment Savings Trust (NEST) has stated that people planning their retirement should aim for at least £15,000 per annum to ‘feel comfortable and more financially secure’. It is claimed that 43% of those in the £15-£20k category felt financially comfortable, only 24% did so when receiving under the magic £15k mark.

To put saving this amount into perspective, we are given some handy figures for a 30 year old, saving until they are 68. For instance, cutting one takeaway coffee out per week, could generate £11,800. Ditching a weekend takeaway will bring around £50,900 and taking a packed lunch to work a whopping £63,700 – assuming one doesn’t pack beluga caviar and blinis.

It was noted, however, that there is no ‘happiness benefit’ above £40,000 a year…I am sure the majority of the Nation will breathe a collective sigh of relief…

Three more years

At the end of May, the Pension Protection Fund (PPF) issued its consultation on their Levy for the next three years. This encompasses the move from Dun & Bradstreet (D&B) to Experian, with a ‘PPF-specific model’ designed to help them predict insolvency risk more accurately, providing bespoke insolvency risk scores along the way.

It has been stressed that the new system is not designed to tinker with the aggregate levy raised, more to help redistribute it, with higher-risk schemes/employers paying more.

There is a greater focus on the figures, rather than the background information, to provide a more reliable picture of the chance an employer may fail. With the old system, a broadly irrelevant event e.g. an extra Director joining the Board, could have impacted on the levy calculation. Hopefully, this revised process will successfully avoid these anomalies.

As with any change, there will be some ‘winners’ and some ‘losers’, with levy payments falling or rising depending on risk. The new scores will not be used until October 2014, so that does give trustees the opportunity to investigate what will happen to their scheme.

I apologise if there have been any typos in this month’s missive, it isn’t easy to type when sneezing and rubbing my eyes…now, where did I put the Claritin?!

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Category : A month in the life of pensions — admin @ 12:09 pm June 17, 2014