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Funded pension plans face equity threat

Diminishing equity returns could make the Conservatives&#39 proposal of

relying solely on privately funded pensions dangerous, according to a

leading thinktank.

The Institute for Fiscal Studies&#39 Election Briefing claims equity returns

have been high historically and it is not certain this will continue. It

says increased private pension saving worldwide could affect returns in the

same way as a decreasing workforce. It is recommending a mix of pay as you

go and funded provision.

Under the Tory election manifesto proposals, younger people would be

allowed to opt out of National Insurance contributions, investing instead

in totally private funded pensions.

IFS programme co-ordinator and author of the report Carl Emmerson says:

“As the world&#39s population ages and more people go into funded pensions, we

do not know what equity returns and annuity rates will be.”

Conservative Shadow Social Security Secretary David Willetts says: “All we

are doing is offering people an option. We are not forcing anyone into

this. I am not regulated by the FSA so I must be careful but if you had

invested your NI contributions in equities you would be much better off

now. The problem now is the amount of pensioners retiring on incomes much

lower than expected.”

Scottish Life head of pensions strategy Steve Bee says: “Depressed

conditions could affect the state pension as well as investments.

“I think the writing is already on the wall for the basic state pension.

The Conservatives&#39 proposals are just a reflection of this.”


EMI eligibility

Having enjoyed (I hope) our detour from my consideration of share schemesto look at the Child Trust Fund and Saving Gateway, I would now like toreturn to the Enterprise Management Incentives scheme, the latestGovernment tax-incentivised scheme to encourage wider share ownership. In previous articles, I have looked at, among other things, the nature andextent of […]

Scottish Life to be &#39more aggressive&#39

Scottish Life members voted overwhelmingly to demutualise and transferbusiness to Royal London at an extraordinary general meeting last week. Qualifying members will get £500 cash for loss of membership rightsand qualifying with-profits policyholders will receive additionalenhancement to existing reversionary and terminal bonuses. Around £960m will be distributed as enhanced benefits to qualifyingwith-profits policyholders. Windfalls have […]

Tories hold on to IFA lead

Most IFAs voted Conservative in the general election but younger IFAs are turning to Labour, according to an exclusive poll of IFA voting habits conducted by Money Marketing and Skandia. Thirty-five per cent voted Tory, 17 per cent Labour and 9 per centLibDem. The South-east has the strongest Tory support at 39 per cent compared […]

Royal & SunAlliance International Financial Services – Protection Plus

Wednesday, 6 June 2001.Type: Cafeteria-style protection product including whole life and critical illness cover.WHOLE LIFEMinimum sum assured/premium: £50,000/£67 a month, £670 a year.Minimum-maximum ages: 18-75.Allocation rates: 90-103 per cent.Fund links: 80 funds from Baring, Collins Stewart, Fidelity, Gartmore, Investec, Merrill Lynch, Perpetual, Royal & SunAlliance International Financial Services, Principal, Templeton, Mercury, Schroder, Vanguard, Deutsche, Invesco, […]

In Focus Ebola cover - thumbnail

White paper — In Focus: Ebola Virus Disease

Jelf Employee Benefits focuses on Ebola Virus Disease (EVD) and what this means for businesses with operations in West Africa. This will be of particular interest to those with employees either travelling to, or living within, West Africa, the area affected by the most catastrophic outbreak of Ebola to date.


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