Workers pensions in time of Brexit August 16, 2016
Posted by WorldbyStorm in Uncategorized.trackback
Nearly 100,000 workers at the Royal Mail and the Post Office are likely to be the victims of turmoil in markets as the companies plan big cuts to their “simply unaffordable” pension schemes.
And:
Currently, Royal Mail pays around £400m a year into its “defined benefit” scheme, which guarantees a pension based on a postal worker’s average salary over his or her lifetime, rather than what happens on the stock market.
And wait for the excuse:
But the company said financial market conditions had deteriorated so much that the cost of keeping the plan fully open would balloon to £900m over the next few years. Although the cuts were first mooted just before the EU referendum, historic lows in bond markets since the vote have made the pensions even less affordable to companies.
And:
The companies argue that the cost of maintaining the pension schemes has become unsustainable, in part because of big increases in longevity but also because of falls in gilt and bond yields, which mean they have to pay in more to keep them financially afloat. These gilt and bond yields have hit historic lows since Brexit, making the pension schemes even more expensive to maintain.
In a way it doesn’t matter whether they’re sincere or simply making excuses about Brexit and its place in this. The fact is that the left is uniquely unprepared to contest and combat these measures, that there is an open goal there for the right. And it will be seen again and again across other areas where workers rights will be whittled away.
None of this is to argue that all would be fine and dandy in the event of Bremain, but that change is change, that if a status quo is disrupted one had better be pretty damn sure that one has the means to combat whatever comes next.
The Cedar Lounge Revolution 
Brexit:
‘A lot of babies thrown out with very little bathwater’
(not mine)
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And there we were wondering why negative interest rates were now a thing.
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‘The fact is that the left is uniquely unprepared to contest and combat these measures, that there is an open goal there for the right.’ Direct and exactly to the point.
Here’s an observation of what happened here:
‘Consider the Government’s decision to move the pensionable age to 68 by 2028. This decision means that someone retiring after this will effectively lose three years worth of pension entitlements.
“It wiped out €36,000 overnight, yet no-body gave out about it.”‘ So says Gary Owens, the Managing Director of Willis Ireland, an insurance broker, pensions, actuarial and risk management consultancy.
And for proposals to see what’s coming down the line:
http://www.irishtimes.com/business/personal-finance/five-ways-pensions-need-to-change-in-ireland-1.2753183
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Those are two great links. The Willis guy is obviously compromised but is absolutely correct. The second article is amazing in that it refuses to note one basic fact, most people aren’t paid enough to fund pensions.
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Quite so.
“That means an income sufficient to meet basic physical, psychological and social needs. For a single person over 65 that currently means spending about €310 per week – or €16,120 per year – not including housing costs (budgeting.ie). This compares to the maximum contributory State pension of €233 per week or the means-tested non-contributory state pension of €219 per week.
Currently, generous tax breaks mostly benefit people who will have a retirement income well over the minimum essential level, while they do little for those who will rely exclusively on the State pension on retirement because they will not receive an occupational pension and cannot afford to save for an additional personal pension. Those wholly reliant on the State pension are also least likely to have inherited wealth.”
http://www.irishtimes.com/opinion/two-myths-about-our-unfair-pensions-system-1.2755983
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I was in a Defined Benefit scheme until a couple of years ago, was conscious that these things were like hens’ teeth nowadays and worth feeling grateful for, then the company said “This isn’t viable, we’re shutting it down.” Had no choice in the matter but to transfer to a Defined Contribution scheme, where you’re basically the wee ball bouncing around in the roulette wheel. Not fun.
The sickening part is going from “You’re guaranteed €X a year” to “You may or may not have anything to look forward to, we can’t tell you just yet,but trust us.” This, coming from the same people who didn’t see the 2008 crash coming.
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Incredible isn’t it? I’ve seen it happen to many mates. “A decision was made to wind up the company’s defined benefit scheme. A transfer value in respect of your entitlements from the defined benefit was paid to your retirement account in the defined contribution scheme …” which, as you say is ‘the wee ball bouncing around in the roulette wheel’.
Surely an individual, or better still, a trade union, should challenge this in the courts on the grounds of breach of contract or whatever.
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That’s the model isn’t it, once they realised they could wriggle away from commitments they did
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