NEST is the new low-cost default pension scheme for employers who do not have alternative arrangements when the new duty on employers to auto-enrol their staff and make pensions contributions starts to roll out in 2012.

We already knew a lot about how it will work, but there has been one big gap. But today we have learnt what its charging structure will be. Read more »

   Filed under: Pensions | 1 Comment »

The National Audit Office today releases a report on the costs of public sector pensions. I write this before I can see whether it has provoked the usual barrage of hostile stories about the alleged gold-plating of public pensions, but if you actually read it, it tells a rather different story.

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Yes, you read that right.

If you are trying to achieve a given level of retirement benefits it is cheaper to do it through a Defined Benefit pension than through a Defined Contribution pension.

The evidence is here in this important report from the National Institute on Retirement Security – a US pensions think-tank. This has been in my reading pile for months, but it’s taken a day off to get round to reading it. Read more »

   Filed under: Pensions | 2 Comments »

Alex Brummer spent many years at the Guardian before moving to become city editor of the Daily Mail. He often writes good sense in a paper where I do not always look for it. His latest column for the New Statesman has some insight but is mainly pure essence of Daily Mail - perhaps not surprisingly as it is about pensions, and  public sector pensions in particular.

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   Filed under: Media, Pensions, Public spending | 1 Comment »

The TUC are big supporters of the new pensions settlement due to start in 2012. Ten years ago TUC policy that employers should have to contribute to the pensions of their staff was seen as a way-out demand. Now it constitutes a cross-party consensus backed by employers, unions and much of the pensions industry, thanks to Lord Turners’ Pensions Commission and some smart campaigning by unions and the wider consumer movement.

It is right therefore to mark two more milestones on the road to the implementation of the reform package. Read more »

   Filed under: Employers, Pensions, Politics | 1 Comment »

The DWP has today published three documents looking at the potential of collective DC pensions.

For those not up to speed with pensions jargon, DC pensions are those where the employer and/or employee make a defined contribution each month. The size of your eventual pension will depend on not just how much you save, but how well your investments perform and annuity rates when you turn your pension pot into a regular pension income.

In other words the individual saver bears all the risk, unlike salary related defined benefit pensions where the employer bears all the risk.

The idea behind collective DC is that while the risk is still all borne by employees they share that risk in some way. This not only smooths investment volatility, but can also produce a bigger pension as costs may be lower and the individual saver may be no longer have to give up so much return to reduce risk as they come up to retirement.    Read more »

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Phillip Inman has had a brave go at exploding public sector pensions myths in Saturday’s Guardian.

…there remain many often contradictory “facts” swirling around in the now heated debate about public sector pensions. Here, we examine the main ones. What are the true costs, and are politicians right to worry about soaring costs tomorrow?”

I am not entirely sure that he has got the top myths, though there are so many that may be a hard task. But here is my take on some of his points. I’ve ignored those where there is nothing much to add. Read more »

   Filed under: Pensions | 1 Comment »

There are some new interesting official stats about the distribution of wealth – even if they were collected before the recession bit. The top line is that the least wealthy half of the population earn just 9% of the nation’s wealth, while the top 20% own 62% of privately held wealth. The bottom ten per cent own negative wealth – i.e. they owe more than they own.

The top 10% of households were 2.4 times wealthier than the next richest 10%, and 4.8 times wealthier than the bottom 50%.

Perhaps the most surprising finding is that 5% of households own personalised number plates – perhaps the stand-out definition of having more money than sense. The report says “only five”. I’m surprised it’s that high, but perhaps they are big among statisticians (and I am sure there are some good jokes about what would make a good number plate for a stats geek). Read more »

   Filed under: Inequality, Middle Britain, Pensions | 2 Comments »

This is what I think has happened on the pensions front in today’s PBR.

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   Filed under: Pensions, Pre-Budget Report | 3 Comments »

There are rumours that the Chancellor is to take further action against higher rate pensions tax relief in the PBR on Wednesday. The commonest version seems to be that those earning more than £100,000 will only get tax relief at the basic rate.

As with any other proposal to raise more tax from top earners, there have already been howls of protest. Indeed if your read the personal finance pages of newspapers like the Telegraph, one would think that all their readers were in this income bracket.

But there is a particularly disingenuous argument doing the rounds against limiting higher rate pensions tax relief. (See here for an earlier post on how tax relief works.)  Read more »

   Filed under: Pensions, Pre-Budget Report, Tax | 1 Comment »