Ignored by most of 'our' media, British pension funds move back into surplus.

It’s now being reported (in just a few parts of the UK press....funny that huh?) that British pension funds are now in surplus.

So much so that some companies are planning a return of those infamous “pension holidays” (which IMO had a lot to do with creating the last mess in the first place).

After so many of our so-called 'newspapers (comment papers?) have spent years accusing Gordon Brown (and Tony Blair & this whole Labour Gov) of being “the man who stole your old age” you’d think some might have the decency to report this very welcome development (if not actually hold up their hands and say: “We got it wrong”).

Pension funds back in surplus as shares surge to six-year high
By Andrew Dewson
Published: 19 May 2007

The funding black holes in the UK's 200 largest pension funds have been wiped out, thanks to the bull run global equities have been on since March 2003, the insurance broker and pension adviser Aon said yesterday.

It came on the day that the FTSE 100closed 61.6 higher at6640.9 -a six and a half year high - as talk of consolidation in the oil sector and firming metal prices circled the market.

London equity markets peaked at 6950.6 in December 1999, but the subsequent collapse brought about by the bursting dot.com bubble created a crisis for UK pensions as tumbling asset values created huge deficits in pension schemes......

.......However, Aon said not only have the UK's largest pension funds wiped out their deficits, but FTSE 100 companies should have a total of about £1bn in pensions surplus.
Aon said rallying equity markets are not the only reason for the improving picture for pension funds. Most have a heavier weighting towards the bond market, and better corporate performance and increased investor confidence means that bond yields have improved substantially since the market reached its low point.

Marcus Hurd, at Aon Consulting, said: "This is a momentous day for UK pension schemes, because the average fund is now likely to be in surplus."

Independent

[edit on 4-6-2007 by sminkeypinkey]

mod edit: corrected bbcode for link and changed quote tags to external quote tags

Quote Reference (review link)


[edit on 5-6-2007 by UK Wizard]

I seem to remember reading this somewhere, though I don't recall where.

At any rate, it seems good news (if you're in one of the UK's 200 largest pensions funds anyway) but the press won't make a big deal of this because people prefer to read what governments (Regardless of party) got wrong as opposed to what they got right. We should introduce them to a concept called 'balance'

I heard this as well. I think it might has been via BBC Radio 4.

And this is good news and shows to a degree that pensions need to be considered over a 25 plus year period rather than just a snapshot view.

You would like to think the the trustees of these pensions will not fall in to the pension holiday trap again.

This is something that Government should take time to pass a law on.

Originally posted by Freedom ERP
This is something that Government should take time to pass a law on.

It might happen, actually, considering the amount of flak that Gordon Brown has had to put up with over the pensions issue. I'd be surprised if he didn't do something to keep pensions out of the red since it'd a potential weight around his neck when he becomes Prime Minister at the end of the month.

Originally posted by Freedom ERP
this is good news and shows to a degree that pensions need to be considered over a 25 plus year period rather than just a snapshot view.

- Couldn't agree more.

I think we're in for something similar regarding housing prices and a possible coming slow-down.
These things sometimes happen but using homes a short-term vehicle for making money instead of them just being your long-term home is asking for trouble in a not too dissimilar way.

You would like to think the the trustees of these pensions will not fall in to the pension holiday trap again.

- What's that old saying Freedom ERP?
No-one ever got poor over-estimating how greedy some people are?

There used to be a reasonable excuse for this kind of thing, well 2 actually.

1 was that the pension 'pot'/fund was so healthy that the membership voted to take a 'holiday' and share out some of the surplus as a kind of bonus to every member.
All very democratic and so long as the membership knew what they were doing and were properly informed then I have no problem with that approach
(but I bet after recent years very few would take the option too readily these days if offered).

The second way was the means Robert Maxwell exploited.

This allowed companies to dip into the pension fund - the thinking being that it would only happen if the company was in deep trouble & felt (ie the board of Directors felt) that raising funds in this manner could save it.
Your job or your pension?
There is a certain logic to the principle.
They were also supposed to pay back anything taken - although as the Maxwell saga showed only too clearly the law was (thankfully that is largely & very definitely past tense) extremely loose and 'open' - basically IMO cos no-one really thought anyone would try and rob the pension fund (cos they would have a hard time hiding it from the auditors and a board of directors would have to be loaded with family, cronies and others too out of their depth to know what was going on.......anyone spot the flaw in the 'thinking' there?
- except if you were a potential pensioner in the scheme that was bankrupted by the thieving ba*tard.).

This is something that Government should take time to pass a law on.

- I agree - although the tag of 'nanny state' seems to be something this Gov are becoming unnecessarily wary of, if ever there was an area where a little legal tightening up would be welcomed by most I'd agree that this is one of them.

So basically the government got saved the utter embarrassment of failing penions by a lucky run in the stock market? To me that isn't good managment by Gordon Brown.

Well as you said sminkey, lets hope they don't go back to the holiday thing. Maybe if the penions are managed better then a future catastrophy can be avoided and maybe even make our pensions stronger.

I agree that pensions need to be view3ed over a long time period, but to me it seems like simple luck that has helped the government.

I suppose at the end of the day this really comes down to whether you prefer to believe that the longest run of growth in living memory in the UK economy was just "luck" or not
(and all of that despite the political and media opposition here claiming 'there would be a massive and hugely damaging recession in the UK economy at any moment' from day 1 of this Gov in 1997 - wow, there's some 'economic competence' at work there, eh? Not. ).

It's a little funny how some want to slam this Gov for any little thing (cos there's been very little big things going badly wrong - which given our post-war economic history is quite something) that goes wrong in the economy but anything going right is nothing to do with them or the measures they have taken over the last 10yrs.

I'd also say it's pretty unfair to just dismiss the huge amount of solid work over the years that this Gov has done to reform pensions law in the UK.

There have, following exhaustive consultations, been several substantial legal changes made which have also helped safeguard pensions see here for 2006 changes and here for 2005 changes and here for 2004 changes for further details.

In fact since 1997 this Gov has worked long & hard on the subject.

So, to complement the Government’s reforms to tackle pensioner poverty, the 1998 Green Paper also set out reforms, implemented through the Welfare Reform and Pensions Act 1999 and Child Support, Pensions and Social Security Act 2000 such as replacing SERPS with the new State Second Pension to provide more generous pensions for those on low and moderate incomes, many carers and people with disabilities, and introducing stakeholder pensions to provide a secure, simple and flexible vehicle for saving in retirement.

Myners Report
In March 2001 following the publication of Sir Paul Myners' report 'Institutional Investment in the United Kingdom: a review' the Government announced proposals to replace the minimum funding requirement with a scheme specific approach (requiring primary legislation); and ruling out (at that stage) a discontinuance fund and insolvency insurance.

Find out more about the Myners Report on the HM Treasury website.
Simplicity, security and choice: Working and saving for retirement
In Spring 2002 the then Secretary of State for Social Security asked Alan Pickering to look at how the administration of occupational pension schemes could be simplified. Ron Sandler was jointly commissioned by the Chancellor of the Exchequer and the Secretary of State to review retail savings in the same period. A Quinquennial review of the Occupational Pensions Regulatory Authority (Opra) and an NAO Value for Money study into how Opra worked took place during 2002. The outcomes of all these separate reviews showed that major themes for pension reform were emerging.

In December 2002 the Government published a Green Paper entitled 'Simplicity, security and choice: Working and saving for retirement' [Cm 5677], and its proposals for simplification of the tax treatment of occupational and personal pensions.

www.dwp.gov.uk...

- Some people want to paint a fairer tax regime as Gordon Brown 'just taking money out of pensions (or robbing pensioners)'.
Of course this ignores the firstly the purpose for which the funds were taken (I'd say erradicating a large proportion of our unemployment numbers was in itself worthwhile for us as a society); secondly the fact that he merely closed at tax-break he did not create a new tax at all and thirdly it is usually just an opportunistic and politically loaded criticism - the tory party have done the exact same thing themselves previously.



[edit on 6-6-2007 by sminkeypinkey]

also

Even the NHS has gone back into surplus, but the media has turned a blind eye to it.

Aye, that's very true.

But saying stuff like that doesn't sell newspapers

It's pretty fashionable to criticise any government after it's been in power for a couple of terms or more. Just as it's happening to Labour now, it happened to the Conservatives before 1997. Their achievements become overshadowed by their failures, sadly.