The Government estimates that over the next 10 years approximately 600,000 people will cease smoking as a result of the new ban on smoking in public places. However, there is an unexpected cost to this improvement in the nations’ health as the resulting reduction in smoking related deaths will distort mortality tables used to calculate pensions. This will mean a reduction in the annuity available for those with money purchase pension pots and an increase in the cost of providing pensions for those providing final salary pension benefits. Read more »
Archive for March 2006
There’s been a lot of press comment recently about companies offering staff what have been called ‘sweeteners’ to give up all or part of the final salary promise from their pension scheme.
Given the extent of the final salary pension problem, its potential impact on business and the likely timescale over which scheme deficits now need to be addressed I think that it’s hardly surprising that companies are seeking solutions which help them to manage their final salary liabilities more proactively. Read more »
The Board of the Pension Protection Fund (PPF) has published its final proposals for the calculation of the PPF levy. The levy comprises two elements, a scheme based levy, calculated as a percentage of the scheme’s liabilities on a basis prescribed by the PPF, and a risk based levy calculated by reference to the risk of insolvency of the scheme sponsor and the underfunding risk in the scheme. The risk based element makes up 80% of the levy and is based on failure scores provided by Dun & Bradstreet which reflect the likely risk of insolvency of a business in the next 12 months. Read more »