Belfast Telegraph

Vote to have big impact on gold-plated pensions

By Vicky Shaw

Fresh fears have been raised over the impact of Brexit on the UK's "gold-plated" private sector pension system after figures showed schemes' liabilities have surged to a record high.

Data from the Pension Protection Fund (PPF) showed the aggregate deficit of 5,945 schemes is estimated to have increased by £89bn since the end of May to £383.6bn by the end of June.

There were 4,995 schemes in deficit and 950 schemes in surplus, with total liabilities standing at £1,747bn - the highest level since the PPF's records started in March 2006.

The figures relate to defined benefit pension schemes, such as final salary schemes, which have become increasingly rare as firms have found them more and more expensive to run.

They are often described as "gold-plated" because they promise savers a certain level of guaranteed income in retirement.

Such schemes have increasingly been replaced with defined contribution (DC) schemes in recent years, which put the risk of how much income someone will end up with in retirement instead on to the saver.

Tom McPhail, head of retirement policy at Hargreaves Lansdown, said the figures show how the UK's pension system has been hit by the Brexit vote.

He said plunging gilt yields following the referendum result had caused pension scheme liabilities to soar.

Mr McPhail said: "The UK's gold-plated pension system is starting to look tarnished. Deficits are soaring, employers are reneging on their promises and still more money is needed.

"Companies are having to divert profits into schemes to make good on their promises, which means less investment capital to help businesses grow, and less money available to invest in the pensions of younger workers.

"Accrued pension rights have to be respected."

Belfast Telegraph