It has been estimated that there is around £103 billion over 3,700 UK pension schemes in deficit compared with 1,800 in surplus. There are close to 11 million Brits holding defined benefit pensions. Out of that number it is estimated that 3 million will encounter problems and potentially have only a 50% chance of receiving their promised pension.
The Guardian reported in January 2018 the impact of the failure of the Construction firm Carillion and the implications on the security of other UK Pension schemes.
Carillion’s liquidation has fuelled concern about the financial stability of other big companies. The sprawling construction and outsourcing firm had a pension deficit of £580m but is now likely to rise to at least £800m because it no longer has a solvent business standing alongside it. The company’s crash into liquidation has thrown the spotlight on other firms with huge pension scheme deficits such as IAG, BT and BAE
The Guardian article also discusses the lower returns that UK pension funds are now facing. Deficits have swollen because companies have to calculate their future pension liabilities using safe assets, such as gilts (government bonds).
The companies with the biggest deficits, according to a 2017 report from pension consultants LCP, are Royal Dutch Shell, BP, BT and BAE Systems. The four FTSE 100 companies each had a deficit of more than £6bn in 2016.
For Brits who were in UK occupational schemes instead of receiving the actual return of your pension investments, you may have only been credited with the lesser of 5%pa, or the Consumer Price Index (CPI). In the last few years CPI has averaged around 2%pa. Your former employer can legally keep any additional increase. For example, a well-managed pension fund could easily have earned 8-12%pa since 2015 and your pension account may have only grown by effectively 2-5%pa.
By moving your UK pension funds to New Zealand there are major benefits around control of your returns and security. Take action now.