I’ve been presenting to charities on pension issues at the Gathering Event at the SECC on 27th and 28th February 2013. The session is part of a current issues presentation by Adrienne Airlie of Martin Aitken & Co. A copy of my presentation is available to download here: David Davison – Presentation and the Martin Aitken presentation available here: Martin Aitken – Presentation
Posts by David
The winding up of People Can, which provided homelessness support services on behalf of several English local authorities, has shocked the voluntary sector and led it’s former Chief Executive, Maff Potts, to issue an impassioned plea for change . There is a concern that the People Can scenario could be replicated across the sector with hundreds of organisations being driven in to administration by their pension liabilities.
This is an issue I’ve raised consistently over the last number of years and have made some comments on the potential impact in an article by Patrick Butler in the Guardian.
A major new research paper produced by Michael Johnson for the Centre for Policy Studies has highlighted that, despite reassurances from the Government to the contrary, the current round of public sector pension reform (even though still not completed) may not see time called on the issue for very long.
As has been suspected by many, myself included, the major concessions won by the trade unions from the government will mean that the changes will do little to improve the public finances, will merely further divide our public and private sector and will commit us to a cashflow deficit of over £15bn by 2016/17. That’s a 77-fold increase in only 11 years and will mean that the annual burden on tax payers will rise to £32bn – the equivalent of £1,230 for every household in the country. It also means that £4 out of every £5 paid in pensions to former public sector workers is paid by the tax payer. Read more »
Finance Directors of charities not disclosing their multi-employer pension liabilities on their balance sheet may be sleeping just a little uncomfortably at the moment following a consultation document issued by the Financial Reporting Council.
If the proposals are accepted charities will need to recognise any agreement to fund a deficit in a multi-employer scheme on their balance sheet. Read more »
Organisations participating in the Social Housing Pension Scheme (“SHPS”) will no doubt be experiencing that sinking feeling, perhaps mixed in with a little déjà vu, as the results of the 2011 scheme valuation hit their desks this month.
The communication will have brought the unwelcome news that the ‘on-going’ funding deficit has increased from £663m to £1,035m as at 30 September 2011 (having increased from £283m in 2005). Read more »
Raithatha v Williamson  EWHC 909 (Ch) (4 April 2012)
In an amendment to the Reform and Pensions Act 1999 (WRPA 1999), the High Court has ruled on the issue of income payments orders (IPO’s) in a decision that will impact upon bankrupts who have a pension and are over the age of 55. Until now an individual yet to draw their pension was protected from an IPO, which may now no longer be the case. As a result of this amendment, trustees in bankruptcy will have a significantly enhanced ability to influence an individual’s pension rights while, equally, individuals in bankruptcy face losing control of their own pension pot. Read more »
The problems 3rd Sector employers are facing with their defined benefit pension schemes it would seem are at last getting the attention they deserve and momentum for change is building.
My wife kindly bought me a great stocking filler book for Christmas called “Universally Challenged” which lists some of the most bizarre answers people give when competing on TV quiz shows.
A few examples were:-
Q: In books written in English each line is printed and read starting at which side of the page?
A: The right
Q: What ‘T’ are people who live in a house paying rent to a landlord?
Q: What was Ghandhi’s first name?
Now there’s little doubt that the incentive of all that cash, the pressure of being under the studio lights and the inquisitorial gaze of the likes of Anne Robinson and Jeremy Paxton, not to mention Vernon Kaye, Bradley Walsh and Jamie Theakston induces a high level of panic, not to mention complete brain freeze in some cases.
I’m not sure however what excuse some people have for giving the answers they have when they’ve had lots of time to think about them.
Nearly 30 pension funds have filed claims at the High Court seeking damages from Henderson Global Investors over claims it took too much risk with one of its funds, the Henderson PFI Secondary Fund II, when it used the majority of the fund’s assets to buy John Laing, a firm with a large pension deficit.
The fund subsequently lost 2/3rds of its value, not least because of the pension scheme deficit. Now I’m not seeking to comment on this case specifically and indeed Henderson’s have signalled they “will vigorously defend these proceedings” but more on some wider pension related implications.
I would have expected that at least when conducting due diligence on the investment Henderson would at least have been aware of the existence of a defined benefit pension liability Read more »
Many leading charities will be reeling from the recent announcement from The Pensions Trust that they face significant shortfalls in a pension scheme which they had originally believed to be a defined contribution arrangement. The Growth Plan 3 (“GP3”), which for many charities was seen as a safe haven for fixed contributions and the provision of members AVC savings has now allegedly been impacted by the high court judgement recently handed down on the Bridge Trustees case and resulting legislation expected to be forthcoming from the Department of Work & Pensions (“DWP”).
This will undoubtedly be unwelcome news and cause major problems for around 500-600 organisations participating in GP3. Read more »