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Pensions need to be fair for all

It seems that someone with common sense has taken an effective role within the FSA, as I read with great pleasure of its decision to cease accruals to the FSA’s defined-benefit pension scheme – albeit this will not take place until March 31, 2010.

The surprising official reason for doing this is apparently that they want to move staff on to a common pay and reward platform rather than because of the uncapped increased expenditure exacerbated by the current global stockmarket depression.

Let us hope that Gordon Brown follows this example and stops pussyfooting around by announcing the closure of the MPs’ defined-benefit scheme from the same date.

It is grossly unfair that MPs and members of public sector defined-benefit (final-salary-related) pension schemes should have no risk as such schemes are underpinned by taxpayers through income tax and council tax.

This is particularly so as many of those taxpayers have to take out their own money-purchase/personal pensions to provide for their own retirement income and these carry not only investment risk but also the risk of fluctuating annuity rates and that the provider will remain solvent.

Those that take out money-purchase/personal pensions also have to negotiate their way through the “financial advisory jungle”, hopefully obtaining fair value for money – and we all know how precarious and costly that can be.

In fact, some advisers seem to do very little for the client after they have sold such money-purchase/personal pensions and, after implementing retirement plans and taking initial commission, sit back and take annual fund-based commission without providing ongoing hands-on proactive advice, with particular regard to drawdown.

Perhaps Money Marketing readers can start a campaign to help Gordon Brown truly create a fair pension structure in the UK by encouraging him either to extend the same level of security to money-purchase/personal pensions so that benefits are linked to final-salary, accrued on a yearly basis, or all defined-benefit final-salary pension schemes to be closed so that the risks involved are standardised for all UK citizens.

Also, I would be interested to know how the Government invests the personal contributions that are received from employees that pay into local authority pension schemes.

If it is left to the local authorities to invest these monies, I would expect a nationwide survey to reveal marked inconsistencies, as we have experienced with the refuse collection fiasco. How do local authorities make their investment decisions?

Some councils have lost millions of pounds due to “investing” in Icelandic banks, etc, so perhaps such investing should be controlled by central government as, at the very least, there should be less room for influences which have recently been exposed in certain government and MPs’ expense claims with regard to second properties.

Peter Amott



Beemer light

There is an alternative to Paul Lothian’s suggestion of a reduction in the level of protection to help the PPF balance its books (Money Marketing, February 12).

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