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Monday, 25 February, 2002, 10:50 GMT
Does your pension feel safe?
Roger Lyons of the manufacturing and engineering union Amicus has called for new laws to protect employee pensions.

This comes as more employers are preparing to move away from final-salary schemes that provide a guaranteed level of pension.

The alternative pension scheme is a defined contribution plan, which transfers any risk to the individual away from the company.

The union wants the government to introduce legislation to prevent companies from ending or diluting final-salary schemes.

Do you feel that the government should do more to protect occupational pensions? Do you feel that your future retirement nest egg is secure.

This debate is now closed. Read a selection of your comments below.


Your reaction

I believe people are getting what they deserve. In many countries eg. Sweden and Norway the pensions paid out by the state are adequate for people to live out of when they retire. This pension is paid to you even if you get a company pension. This is financed by higher taxes while you work. So if people in Britain are so obsessed by paying a few per cent less in tax, and can't see it any other way, they should stop moaning about pensions disappearing.
Mary Sykes, UK


The biggest raid on pension funds was undertaken by Gordon Brown when he removed the tax credit

Catherine, USA
The biggest raid on pension funds was undertaken by Gordon Brown when he removed the tax credit. No wonder companies are reviewing their position and changing from final salary to defined benefit schemes. Ernst and Young amongst others have found the burden of the removal of the tax credit too great for the company to bear. At least Frank Field has the courage to speak out.
Catherine, USA

With the withdrawal of tax credits taking five billion pounds per annum out of pensions savings, the ill-considered stakeholder pensions and FRS17 penalising companies that run their own final salary schemes, the Government has brought the pensions industry to its knees. Doubtless they will look for other scapegoats though, just watch the spin machine go into action.
Brian W, U K

Invest in lots of children and then throw yourself on their mercy when you retire. It worked in the past - it could work in the future.
Philip, UK


Firms by law have to make up any deficiencies

Tony, England
Most private pension schemes are invested in British company shares. When firms such as British Airways or Railtrack have a bad time it is the pensioners that suffer not mythical 'Fat Cats'. Firms by law have to make up any deficiencies and with the Stock Exchange so low and profits declining they haven't got the money. So pensions have to be cut back in some way. Many big firms, charities and even churches lost a great deal of money from their pension funds when Railtrack was snaffled without compensation. The Post Office alone lost £4 million. So don't cheer so loudly next time a British company reports bad profits and be very pleased when they do.
Tony, England

When pension funds had larges surpluses in the 1990s many of the largest companies took pension holidays and put hundreds of millions of pounds into shareholder benefits. Now that leaner times have come they moan that they have to make up the deficit caused by their own greed.
John Lyon, UK

Well, of course, I've already got a block of pension money trapped in a liquidated pension firm so I'm hardly likely to feel that secure. For a pension to survive many decades without collapsing, or being embezzled is inevitably a chancy business. But then, in the face of increasing longevity sooner or later we're going to have to respond with a change to the whole retirement concept and I will be surprised if, by the time I reach current retirement age, the system will be anything like the same. We need to be working fewer hours and more years.
Malcolm McMahon, York, UK


New legislation is most certainly required to protect many employees who have saved through these schemes

Alisdair Morrison, UK
This is a serious concern to many final salary pension holders. At present our company is being acquired by a French organisation that so far has offered no assurance in the continuance of this scheme or retaining benefits for staff who are entitled through age and long service additional pension benefits. New legislation is most certainly required to protect many employees who have saved through these schemes.
Alisdair Morrison, UK

It's all very well for some correspondents to suggest that people look after their own pensions, but who has the additional disposable income to fund a private pension? I don't see employers offering wage increases to offset the required monthly payments that would produce the equivalent of current pension arrangements. Company directors may be an exception here. It would be nice to have one consistent place to invest pension payments no matter where you work. However the reality is that, most likely, you will be scalped by pension providers who cream off their 'fees' irrespective of their performance. It needs collective strength to extract decent terms from any company. Unfortunately a lot of the friendly societies have fallen victims to carpetbaggers and greedy managers. I don't expect much from Mr Blair and his cronies.
Bill, CA,USA

Has the government only just woken up to what's been happening with company pensions? I haven't been in a final salary scheme for 10 years and I have paid more into the latest pension plan scheme over the last 2 years than the plan is currently worth.
Norbert, USA (ex-UK)

Maybe final salary pensions are being reviewed, but please consider the self employed and those who are making their own retirement plans. Annuities from our personal pension funds have declined year on year since 1991 (any idea of early retirement has long gone). The annuity rate is little more than the interest the life assurance companies earn each year from our money, after our demise virtually all of the original fund reverts to the insurance companies coffers. Isn't it about time both employed and self-employed were allowed to manage their own pension funds from money that is ours anyway?
Colin Humphreys


Education in personal financial planning should be made a compulsory subject at school

Pete Morgan-Lucas, UK
I'm happy that my pension investments are safe - I'm making my own independent provisions in addition to those benefits I get via my employer. The problems I see are that people aren't taught personal financial management at school, so they don't realise the risks and benefits of different forms of investment. Education in personal financial planning should be made a compulsory subject at school - then we'd all be better off! Personally I also feel that the fixed retirement age should be scrapped; I don't intend to stop doing paid work when I reach 60, though I hope I'll be in a position to choose to do the interesting bits.
Pete Morgan-Lucas, Wiltshire, UK

A few years ago there were substantial surpluses in employers pension schemes funds and, encouraged by the Courts, the employers helped themselves to what was in effect their employees' money. One might say that was a form of legalised theft. Now that market conditions are adverse, the employers are trying to dodge their proper responsibilities to their staff. Will it affect boardroom pensions? Of course not. The men at the top will still get the best on the market!
Maurice Honeywell, England

Perhaps we should all be taught a bit of personal finance in schools. After all a large percentage of us never use the science we learn in school, but all of us need to work out details of pensions, tax, bank accounts and loans.
Tom, UK

The only way to defend decent pensions is the same way our grandparents won them; organising and campaigning for ourselves. The fat cats will steal the lot if we let them.
Ben Drake, York, UK


Anything as important as your financial well-being should not be left to rely on only one source.

Paul, Spain
While we are told the company schemes are good value, anything as important as your financial well-being should not be left to rely on only one source. Sure, if the scheme offered by a persons employer looks like good value then go for it, but don't exclude other investment options. Start paying into other investments (life ins, free standing private pension, shares, etc) as soon as you start to earn. If the pay is low and bills are high then only save a little, but starting early pays big rewards later. Also, Scrutinise how much commission is being charged by any company products you buy - they have to tell you and it can be a lot.
Paul, Spain

Neil Brindley is half right. You get up to half your salary as pension, but addtionally in Local Authority you get a lump sum equivalent to about twice your salary on retirement which can be invested. The days of retiring at 65 are over, you will retire when you can afford to, therefore youngsters get saving now. I've been saving the maximum I can for my in pension since I started work 12 years ago and have structured my mortgage so it is paid off in 10 years, rather than 25 to enable me to invest this money for my retirement. There will be no-one to bail me out in 30 years time when I should retire.
Dave, UK

On this evening's six o clock news you said that teachers retire on 2/3 salary. NOT SO. The maximum pension is 1/2 of final salary. The scheme is such that teachers get 1/80th of their salary for each year of service, with a maximum of 40 allowable years.
Neil Brindley, UK

In theory, it should be the responsibility of the employer to provide some kind of pension. But today people change jobs more regularly than before. This makes it hard for both parties. I'm no expert in all the spangly investment "opportunities" that are available, but it seems to me that the only realistic option is for the government to take control of the situation. Our recent governments seem to want to hand too much control over to companies or individuals who don't know what to do or don't care. I don't trust the stock market or big banks to take care of my twilight years, so I don't know what Iżm going to do, as Iżm a student at the moment. I hope things change for the better when I get working.
Edwin Lee, Great Britain

I have paid NI for 35 years - the State Pension is dwindling, I have to pay for some medical treatment (medical insurance was paid for out of taxed income AND I had to pay extra tax), all dental (there is no NHS dentist within 20 miles), all optical (same reason) - why am I paying NI? This should be scrapped! This year my wife and I are seriously looking at moving abroad. We've had enough...
John Twyman, UK

Mathew Illsley (below) has hit the nail on the head. I'm coming up to 42 and saw my final salary scheme disappear a few years ago.
What can you do? Either wallow in self pity, or try and do something about it. Some people approaching retirement are in no practical position to do anything, and for them I do feel a genuine sympathy, but for many of my age and younger I'm afraid it's just tough. Fair has got nothing to do with it.

I have my purchase scheme pension, and I'm not sure what it will be worth in 15 or 20 years so I am putting approximately 10% of my net pay into other investments. Would I prefer to spend that money on myself now? Damned right, but if I get to retirement without adequate provision, nobody will care and nobody will help. Those of the current generation who don't learn this lesson will have nobody to blame but themselves. Governments are just leeches and will be no use whatsoever.
Mark, UK


I feel well and truly ripped off

Russ, Merseyside, UK
In short no. In fact I think it's nothing short of a disgrace. Most people, myself included, do not have the technical knowledge of the financial world to make decisions concerning the long-term performance of pensions or mortgages. Therefore we put our futures in the hands of "experts". Now we find our mortgages won't be paid off and our pensions inadequate. On the bright side though, the sellers of these so-called pensions and mortgages have no trouble selling further policies to us cover the short falls. They may hide behind technical arguments but the fact is they're dealing with ordinary people's lives. After all, it's not like the economy has been in recession for years. Frankly I feel cheated, in fact I feel well and truly ripped off.
Russ, Merseyside, UK


Surely NI payments should be scrapped as we are getting nothing for our investments

Jim, UK
We were told by the government that state pensions could not be guaranteed to us when we retire. Now it looks like our company pensions are going the same way. If this is the case then surely NI payments should be scrapped as we are getting nothing for our investments. We could invest our money in anything we chose and this could pay for our pensions/health requirements. Otherwise, in a few years time we are potentially looking at OAPs with no means of support. We need support, not from the unions, but the government. Blair cannot wash his hands or is he happy to let the big businesses have their way - again?
Jim, UK

You're better off buying the biggest house you can get the mortgage for, and flogging it when you retire.
Phil, UK


Having all of your assets tied into one narrow field could either give great returns or nothing

Chris R, UK
A healthy combination of pensions that share risk (and control) between the employee and employer would be the best way to go. As the Enron employees are showing, having all of your assets tied into one narrow field could either give great returns or nothing.
Chris R, UK

What retirement nest egg?
Gwen, USA

Even if laws are introduced, the payouts 'guaranteed' by new style pensions will be so meagre that they won't be worth bothering about in the end anyway. I'm 22 and believe that I'll never see a state pension so it'll all be down to me. We can see that our system is tearing at the seams now but it appears iron-clad when compared to continental Europe's current shortfalls and the massive problems forecast for the future. With the furore over private pension provision, miniscule stock market returns and lengthening life spans, does anyone truly know how we in my generation will adequately fund our retirements?
Matthew R. Illsley, England

See also:

19 Feb 02 | Business
Union calls for pension protection
11 Feb 02 | Business
Workers face lean retirement
07 Feb 02 | Wales
Union fury over pension review
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