Pensions News April 2009

June 25th, 2009 by JCB
Posted in Pensions News | No Comments »

PENSIONS NEWS

The Secretariat

February saw the end of Richard Williamson’s three year term as Chairman of the P.N.P.F. and I am sure he could not hand over the reins fast enough as it certainly had not been the easiest three years for the Fund.  Mrs. Heather McGuire took over as Chairman of the P.N.P.F. on 12 February and Richard Williamson is now the Deputy Chairman.

Benefit Statements 2008

We have delayed issuing the annual benefit statements to the active members of the Fund until we have all the 2008 pensionable earnings information confirmed.  At the time of writing this article there are still two districts outstanding but we hope to be sending them out this month.

Tax Code Changes

Some of you will have received notification of your 2009/10 tax code changes recently.  No matter what the notification says there is no need to ring the Secretariat to update us as we download the information direct from HMR&C’s website.  If you have a query on the calculation of your tax code the HMR&C telephone number to ring is 0845 300 0627, quoting reference 951 PI 74.

Deferred Pensions

From 6 April 2009 there will be a reduction in the rate of required revaluation of the deferred pensions of members who leave the scheme before reaching their normal retirement date.  The maximum inflation protection (LPI) for deferred pensions will be reduced from 5% to 2.5%.  This only applies to the portion of the deferred pension attributable to pensionable service accrued after 6 April 2009.

A.V.C.s Benefit Statements

The annual statements in respect of your A.V.C.s investments have been sent out to all members who have investments with either, Equitable Life, Clerical Medical or Norwich Union.  If youany queries Loretta is more than happy to deal with them.

Trustee Annual Report & Accounts 2008

As I write the 2008 annual accounts are being audited by PKF.  We hope that the final version will be signed off at the Trustees’ quarterly meeting in May and a printed copy sent out to all active members and pensioners during the month of June.

Equitable Life

In response to the publication of the Parliamentary Ombudsman’s report on the regulatory failure in respect of Equitable Life the Chief Secretary to the Treasury agreed that there had been maladministration in areas and that an ex gratia payment would be made to those who had suffered “disproportionally”.  A former Appeal Court judge is to advise the government on the payouts.  Unfortunately all celebrations are put on hold as the payment of compensation looks set to be delayed, possibly for years, as the process of getting data and assessing relative losses will be very slow, cumbersome and complex.  The resulting compensation payment may be miniscule.

The Public Sector GMP Error

In December 2008 the House of Commons were advised of an error in the payment of some public sector pension entitlements.  It appears that since 1978 inaccurate data resulted in higher annual pension increases being paid than should have been.   The five public sector schemes affected are the NHS, Teachers, Armed Forces, Judicial and Civil Service pension schemes.  An estimated 95,000 people are affected across the five schemes or 5% of the total number of pensioners within those schemes.  The overpayment is estimated at £126m.  The government has been advised that there is not a cost-effective method for recovering these monies, but correct pension payments will be effected from April 2009.  If this had happened in the private sector legislation requires scheme administrators to pursue any overpayment of more than £250 or face a minimum 40% unauthorised surcharge levied by HM Revenue & Customs on the member.

“Pension Apartheid”

The media coverage of the overpayment of public sector pensioners has succeeded in highlighting the disparity between public and private pensions.  In response to mounting pressure the three main parties came out in support of a review to look at ways of cutting down the costs of MPs pensions.

The Conservatives say they would move all new MPs into a defined contribution pension scheme if it won the next election as well as scrapping future accrual into the MPs’ final salary scheme.  It would also bring public sector schemes in line with cheaper arrangements in the private sector.  Why should judges who only contribute 2% of their salary to their pension be given overly generous pensions from the taxpayers’ pocket when private sector employees are being forced to buy annuities from pension ‘pots’ that have fallen in value as a result of the recession and falling stock markets?

Benefits of Deflation

Pundits are predicting that rapidly falling inflation risks tipping over into deflation, but this could prove beneficial to the country’s pensioners.  The latest Retail Price Index (RPI) inflation figures show headline inflation fell from 3% to 0.9% in December, thanks largely to falls in mortgage rates and the cut in VAT to 15%.  The high levels of inflation seen over the past year have had a negative impact on pensioners, but with deflation the falling food and energy prices could help increase pensioner spending power.

Debbie Marten