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Some Steel Pensions Could Be Largely Frozen, Steve Webb Says
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Pension arrangements should never be changed (except with the consent of all concerned). Folk have relied on them to provide for the future. It's not like a saving fund for a rainy day, it's insurance of an adequate income when, having done your bit for society, you need to pass responsibili
08:42 Sat 04th Jun 2016
One figure for the pensions fund "black hole" in the UK is £81 billion and no government, let alone a protection fund could afford to cover that. The protection fund currently pays 100% "generally" in cases where folk have already reached the scheme's retirement age and 90% in other circumstances but even that is subject to a cap.
Not all deficit will end up not being covered by the companies/schemes eventually.
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This must be the MB broadcast I guess. I'll listen later.
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This must be the MB broadcast I guess. I'll listen later.
Thanks Mush, but its not really germane to the issue under discussion.
The reason that the Tate scheme is in difficulties, is because Tata itself is in difficulties. We could start a debate about why we have reached this situation
if you like but it isn't because of Gordon Brown.
What the members of the Tata pension scheme are being faced with is not just a lower inflationary rise each year, but no rise at all.
Tata Steel may be in trouble, but Tata itself is not. Its a highly successful multi-million pound company.
It looks as if the BHS pension scheme will need to be bailed out by the Pension Protection Fund as well, and others will surely follow. The taxpayers are now faced with writing out a blank cheque for years to come.
The reason that the Tate scheme is in difficulties, is because Tata itself is in difficulties. We could start a debate about why we have reached this situation
if you like but it isn't because of Gordon Brown.
What the members of the Tata pension scheme are being faced with is not just a lower inflationary rise each year, but no rise at all.
Tata Steel may be in trouble, but Tata itself is not. Its a highly successful multi-million pound company.
It looks as if the BHS pension scheme will need to be bailed out by the Pension Protection Fund as well, and others will surely follow. The taxpayers are now faced with writing out a blank cheque for years to come.
// One figure for the pensions fund "black hole" in the UK is £81 billion//
ah we havent covered ( yet) the calculation / valuation of pensions deficits
( some of the rabid brexiters be staring at this thread with jaws slack thinking "whats with the news thread today ? ") and the current EU standard is that every one of the pension contributor retires on valuation day and draws a pension - how much would we have to pay ?
and on that valuation the NHS pension deficit is £163 bn.
Peanuts to the figure above - but great for arguing for reducing pensions
O and " the great secret about the NHS pension pot is that there is no NHS pension pot" Aneurin Bevan 1948. All the current NHS pension conts are pocketed by the govt and the pension paid form the public purse - at present the conts outweigh disbursements by 2 billion ( yes 2 billiion excess over pay outs) just in case any of you think you are paying my pension
So the black hole is big or small as you want
( good example of "in any accounts only the cash flow account cant be falsified" )
of course there are no circumstances where everyone takes their pension whatever on the same day in this world and in this reality
ah we havent covered ( yet) the calculation / valuation of pensions deficits
( some of the rabid brexiters be staring at this thread with jaws slack thinking "whats with the news thread today ? ") and the current EU standard is that every one of the pension contributor retires on valuation day and draws a pension - how much would we have to pay ?
and on that valuation the NHS pension deficit is £163 bn.
Peanuts to the figure above - but great for arguing for reducing pensions
O and " the great secret about the NHS pension pot is that there is no NHS pension pot" Aneurin Bevan 1948. All the current NHS pension conts are pocketed by the govt and the pension paid form the public purse - at present the conts outweigh disbursements by 2 billion ( yes 2 billiion excess over pay outs) just in case any of you think you are paying my pension
So the black hole is big or small as you want
( good example of "in any accounts only the cash flow account cant be falsified" )
of course there are no circumstances where everyone takes their pension whatever on the same day in this world and in this reality
If the government don't do the right thing and cover where needed, what happens when the lack of value falls below the value of the Additional State Pension ? Does government just laugh and say, "Tough, you tried to be prudent, do the right thing and opted out to pay into an employer's pension that proved to be a con, you can put up with your poverty ?" Or do all the recent changes to the State pension make that no longer an issue ? I suppose those affected could prove how poor their responsible behaviour had made them, and claim some kind of welfare top-up.
PP from The Times in December last year,
"In a report to the Treasury being submitted today, Edi Truell, the millionaire City financier who was appointed last month to advise the mayor of London on pensions and investments, said that the cost to the taxpayer of funding the retirement of 1.3 million former and present NHS staff was close to topping £500 billion.
The combination of an ageing workforce and lower-than-expected investment returns has more than doubled"
Is there any point in having a Pension Protection Fund? They might as well spend it on lottery tickets...
"In a report to the Treasury being submitted today, Edi Truell, the millionaire City financier who was appointed last month to advise the mayor of London on pensions and investments, said that the cost to the taxpayer of funding the retirement of 1.3 million former and present NHS staff was close to topping £500 billion.
The combination of an ageing workforce and lower-than-expected investment returns has more than doubled"
Is there any point in having a Pension Protection Fund? They might as well spend it on lottery tickets...
Taking over British Steel is not economically viable with the huge pension deficit. But the only options so far for 'sorting' it mean changing the rules on pension increases. If we do that it changes the rules for all pensions to allow a cheaper way of calculating increases, which means all pensioners may lose out. How will people feel in say 10 or 20 years time when they are told their pensions have been frozen because of rules introduced to save British Steel and it's jobs?
Changing pensions and thus duping all those with one is no way to save the industry. If it turns out that the government has to take over the pension deficit for the sake of it's citizens then the financial and social implications of investing in the rest of it would surely be a small delta on top ?
they can fiddle with the pension figures all they like. the fact is that the UK price for electricity far exceeds the cost of energy in other steel-producing countries, 10p per kwh as opposed to 7.5p in italy and germany, and a quarter of that in china. it is now just too expensive to make steel in the uk, and whoever buys port talbot will soon realise they have acquired a lemon of the highest order, unless the government are prepared to subsidise - which they won't because EU rules don't permit.
This is tricky.
Changing the basis of pensions is wrong and should be an absolute last resort.
But for those concerned it may be better to take frozen pensions than the reduced benefits payable under the compensation scheme.
I am not sure the government should step in and make up any deficit. That too sets a precedent and could lead to Austin Reed, BHS and any other scheme that doesn't look after itself properly.
Steve Webb, Ros Altmann and Frank Field would make a good team to try to resolve this.
The problem will keep cropping up as too many schemes misjudged the costs of paying generous pensions to retirees for 30 years, wrongly assuming that interest rates and stock markets would always come to their rescue and that new entrants would continue to fund the schemes.
Changing the basis of pensions is wrong and should be an absolute last resort.
But for those concerned it may be better to take frozen pensions than the reduced benefits payable under the compensation scheme.
I am not sure the government should step in and make up any deficit. That too sets a precedent and could lead to Austin Reed, BHS and any other scheme that doesn't look after itself properly.
Steve Webb, Ros Altmann and Frank Field would make a good team to try to resolve this.
The problem will keep cropping up as too many schemes misjudged the costs of paying generous pensions to retirees for 30 years, wrongly assuming that interest rates and stock markets would always come to their rescue and that new entrants would continue to fund the schemes.
mushroom 25, ALL Steel making blast furnaces are run on Natural Gas NOT electricity. Electricity is less than 9% of the total energy cost in Steel production.
The difference in electricity price between the UK and mainland Europe makes no significant difference. You are right in that it is too expensive to make steel in the UK, but the reason has nothing to do with the price of electricity. It is just that steel making is a low tech , dirty business. We can never hope to produce basic steel at anywhere near the price India and China can do it , because their labour costs are so much lower. Chinese steel workers earn less than 10% of the wages UK workers earn!
The way forward for the UK steel industry is to import the basic steel as cheaply as possible and concentrate on converting it to the high tech , high specification products we need.
Once again the EU being blamed for something that has nothing to do with being in or out of it.
The difference in electricity price between the UK and mainland Europe makes no significant difference. You are right in that it is too expensive to make steel in the UK, but the reason has nothing to do with the price of electricity. It is just that steel making is a low tech , dirty business. We can never hope to produce basic steel at anywhere near the price India and China can do it , because their labour costs are so much lower. Chinese steel workers earn less than 10% of the wages UK workers earn!
The way forward for the UK steel industry is to import the basic steel as cheaply as possible and concentrate on converting it to the high tech , high specification products we need.
Once again the EU being blamed for something that has nothing to do with being in or out of it.
History of British Steel from 1966 to 1999 here
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Tata takeover details here.
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