Charge of 0.3% on deferred pensions

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wideawake01

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I note in today's Independent (Business:Move by Joan Burton will mean lower pensions for 400,000 workers), a ministerial order signed by Ms Burton advising trustees to apply a charge of 0.3% to the fund values of deferred pensions, retrospective to 2015.

My question; does this apply to Buy-out-bonds purchased with residuals of wound up DB schemes?
 
Isn't this just absolutely disgusting. I despair of hard working people who do the right thing and get their pensions raided. This affects us too as my DH has a very small DB pension due in a few years. So glad we have property as much and all as they've gone after that business it's backfiring on them with all the landlords leaving it.

This is the second time they did a raid. I'd say brokers must be in despair.
 
wideawake01 said:
My question; does this apply to Buy-out-bonds purchased with residuals of wound up DB schemes?
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No. The revaluation is designed to keep pension amounts (i.e. future annual entitlements e.g. €5,000 per annum) in line with inflation. It's a relatively recent thing (last 10/15 years?) - before that, pensions were fixed at the time an employee left/changed jobs. In times of high inflation or with many years to go to retirement, pension entitlements could lose a lot of real value by the time the ex-employee retired. So revaluation is a very fair process to have. I don't think anyone ever expected a negative adjustment though. In the crash/post-crash years, revaluation was still upwards even when generally wages were static/down so I don't have a big problem with this now - overall over the past 10 years, my deferred pension has probably increased more than salaries at my old workplace so I'm ahead of where I could reasonably expect to be despite the 0.3% negative adjustment.

This isn't a raid like the pension levy (and if it is, there have been reverse raids for many years...) This is a cost/saving for employers, not the government. I thought the Indo's headline was a bit sensationalist - they didn't have headlines in previous years saying that thousands of workers would see increases from Joan B signing the revaluation statutory instrument... She signs a revaluation order every year.

Just had a read again of the Indo - it's actually incorrect as well as sensationalist. It refers in several places to JB ordering a reduction in the value of funds (hence the OP's question) when it is a reduction in the value of the pension that has been ordered. The fund amount stays the same, she can't order a fund to be reduced - it will just have a slightly lower deficit than before (or higher surplus in the unlikely event it has a surplus).
 
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orka said:
No. The revaluation is designed to keep pension amounts (i.e. future annual entitlements e.g. €5,000 per annum) in line with inflation. It's a relatively recent thing (last 10/15 years?) - before that, pensions were fixed at the time an employee left/changed jobs. In times of high inflation or with many years to go to retirement, pension entitlements could lose a lot of real value by the time the ex-employee retired. So revaluation is a very fair process to have. I don't think anyone ever expected a negative adjustment though. In the crash/post-crash years, revaluation was still upwards even when generally wages were static/down so I don't have a big problem with this now - overall over the past 10 years, my deferred pension has probably increased more than salaries at my old workplace so I'm ahead of where I could reasonably expect to be despite the 0.3% negative adjustment.

This isn't a raid like the pension levy (and if it is, there have been reverse raids for many years...) This is a cost/saving for employers, not the government. I thought the Indo's headline was a bit sensationalist - they didn't have headlines in previous years saying that thousands of workers would see increases from Joan B signing the revaluation statutory instrument... She signs a revaluation order every year.

Just had a read again of the Indo - it's actually incorrect as well as sensationalist. It refers in several places to JB ordering a reduction in the value of funds (hence the OP's question) when it is a reduction in the value of the pension that has been ordered. The fund amount stays the same, she can't order a fund to be reduced - it will just have a slightly lower deficit than before (or higher surplus in the unlikely event it has a surplus).
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Thank you for the responses.
So I can hopefully consider the following underlined extract from the Indo inaccurate?
"These are people who were in a defined benefit pension, but left the scheme to get another job, the scheme has been closed down, or they took redundancy but have yet to retire."
I would hate to think that the money's "recovered" would go to the employer who short-funded the scheme causing its demise in the first instance.
 
wideawake01 said:
So I can hopefully consider the following underlined extract from the Indo inaccurate?
"These are people who were in a defined benefit pension, but left the scheme to get another job, the scheme has been closed down, or they took redundancy but have yet to retire."
Click to expand...
Yes. Unless the annual pension amount to be received is fixed/defined, there is no reduction.
 
Fully agree with orka.
Considering one of the Indo reporters is a member of a sub-board of the Pensions Authority it is a disappointing that they published such a poorly written article.

I see another article by Charlie Weston talks about the Minister introducing a "levy" . We had a levy previously whereby the State robbed a portion of all private pensions. But this revaluation is no levy. The State gets nothing. It simply allows Occupational Pension Schemes to reduce the amount of deferred pensions. But if inflation is positive next year (and in future years) then they will be revalued upwards.

Charlie, you can do better than this?
 
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A truly shameful article indeed.

As a matter of interest, are there any good personal finance journalists out there?
 
Thank you all, for your informative replies, I am somewhat comforted by them. I'll restrict myself to reading to reading the sports pages in future.
 
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