Is Your Pensions In Danger?
Alarming news from BHS and Tata Steel show the UK’s leading companies, with promises of golden benefits during one’s golden ages, have sent many employees thinking of their retirement and if their pensions would be enough or would still exist by the time they retire.
Defined benefit pensions schemes- the usual for most large companies – promise a defined value for your pensions. The problem is employees could never receive the guaranteed income. There will be income but not what you might expect it to be.
The PPF has found itself in trouble as it would deal with BHS and Tata Steel’s problems. In the process, it determined that both companies have added to the already-existing £800billion deficit for pensions.
Is your pensions in danger?
Possibly. The PPF, which helps the already-retired and protects the not-yet-retired, can introduce a cap on your pensions. Under the cap level, about 90 per cent of the pensions entitlement regardless of pension age. Anyone above the cap would receive 90 per cent of the cap level for their scheme’s age.
The trouble is there will be a cut and 10 per cent is huge. Also, only payments earned after April 15, 1997 would rise in line with inflation – which is still a huge deficit from what is promised.