What Are Pension Liabilities?

[Karamia]

Can anyone explain in simple terms what pension liabilities are please? I have been online to look at a FSAVC type second pension and there was a hefty negative number against the word liabilities which looks terrifying.

[ubasses]

In simple terms its the funds/reserves they have to fulfill the pensions they have to pay out.
The figure quoted will be at a specific date, people will be paying into the fund all the time including employers and it will change with the markets going up or down, and the sums they are paying out.

[Karamia]

But does this large negative amount mean that it is a sum of money which I personally owe? That is how I am reading it on my personal account.

[ubasses]

No it is the financial valuation of the pension fund.

[Buenchico]

The size of the deficit on its own doesn't matter, as it's simply an indication of how much the fund is committed to paying out. (So a pension fund that's operated for the benefit of a small number of future pensioners will have a relatively small deficit but a pension fund for the benefit of hundreds of thousands of future pensioners will have a massive deficit).

What matters is either the ratio of the fund's assets to its liabilities (called the 'funding level') or just the simple difference between the two (called the 'surplus' or 'deficit', as appropriate).

[Peter Pedant]

I have one of those, which I havent vested ( started drawing) and i dont have a column of Pension liabilities

where did you find the figure ( which will be large ) The NHS national one is £168 bn

there will be a negative number against liability - - - because it is a liability

[Karamia]

I haven't started drawing on this pension as yet either. I simply looked in to see how it was doing, but on the overview I have now got this new 'liabilities' figure on my personal account overview. Never seen it on there before and am quite terrified. Will probably ask for a phone call with them tomorrow. But thank you for all the answers.

[bobbinwales]

The value of your account fund should be stated. The overall scheme liabilities is tge schemes issue. All funds gave liabilities as its what they have to pay out at some stage to you and me

[Peter Pedant]

Are you trying to assess whether a fund is any good or not
by looking at its balance sheet?

You would be better off asking around your work ( for what they do for a second pension - which one is your first?)

Pension liability should have a date on it -
and it is the sum governed by EU law !
that if on that date, every possible pension became payable, even tho some are gonna be three years or five weeks rather than 35 y
and phe-dung - give the figure.

You will see that altho it is a figure regulated by law ( no really) it doesnt give much info

and so you can see that the NHS pension liability ( and deficit) is £168bn because - - - there is no pension pot. Zero - nichts. It is all paid for by current contribution.

I wanted to see what Ubasses and Buenchico had to say
I seem to be the only person to know that

sooooo....altho research is a good thing, assessing the viablity of a FSAVC pension scheme is difficult

Mine was Frenz Prov then bought by AXA - and of course you couldnt tell that when I entered ( 1990)

[Peter Pedant]

// pay out at some stage to you and me//

not quite..estimated pay out at the given date to you and me as if they all become payable on the valuation date

You will be unsurprised to hear this is a technical area

[Karamia]

When I log into my account for this second pension, which I still pay into and do not draw from as yet, there is my own overview page. It says investment portfolio value. There are 3 sections on my 'Porfolio breakdown' ...Assets (value of my home) pension (which is what I hope is the amount saved thus far) and then Liabilities a large negative amount. But my main 'total' definitely has this huge liability amount taken off my (house value + pension amount)

[Peter Pedant]

eek
non plussed
I really dont have one of those

I have fund value - - x
projected fund value at 75 when I hve to vest it - -- y
and it could be worf - - - z

[Karamia]

Just to update everyone who has helped- I have discovered the liabilities amount was because they think I still have an outstanding mortgage. I have just updated my information to show I have non and now the figure has been removed. I feel very foolish but very relieved right now! Thank you all again.