Pension holidays?
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Pension holidays?
As mentioned in a previous thread, it was suggested that NATS was taking a pension holiday and was using the surplus in the pension scheme to allow them to take this holiday.
Now I know that private eye is not exactly what you would call mainstream press, but if this is true I find it quite worrying.
After all, I thought that the pension scheme which we collectively have been paying into for years, was for OUR benefit, not so the company can use it as an overdraft facility.
I might be wrong on this, and if I am and someone can explain it to me I would appreciate it.
Does anybody else have any thoughts on the subject?
Now I know that private eye is not exactly what you would call mainstream press, but if this is true I find it quite worrying.
After all, I thought that the pension scheme which we collectively have been paying into for years, was for OUR benefit, not so the company can use it as an overdraft facility.
I might be wrong on this, and if I am and someone can explain it to me I would appreciate it.
Does anybody else have any thoughts on the subject?
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This is how I understand the pension business. Every (So many years as determined by the trustees for the scheme) the company pension is valued; its assets are weighed against its liabilities. If it is found that a scheme is doing rather well, the company or the employee’s contributions may be reduced for a set period, or the benefits as a whole can be improved without altering contributions. Actuaries advise the trustees and make sure the contributions will meet its liabilities under law.
If I operated a company that had a very strong pension scheme, it would be one area that I would consider examining in order to reduce costs temporarily. The law does not allow a ‘Maxwell’ raid of schemes anymore, so contributions are pretty safe without damaging returns.
Many companies legitimately operate ‘holidays’ so nothing to fear. The independent actuaries keep a sound check on pension performance and advise accordingly. Companies cannot any longer randomly reduce contributions unless approved by the trustees on advice from the actuaries/.
Hope this helps?
If I operated a company that had a very strong pension scheme, it would be one area that I would consider examining in order to reduce costs temporarily. The law does not allow a ‘Maxwell’ raid of schemes anymore, so contributions are pretty safe without damaging returns.
Many companies legitimately operate ‘holidays’ so nothing to fear. The independent actuaries keep a sound check on pension performance and advise accordingly. Companies cannot any longer randomly reduce contributions unless approved by the trustees on advice from the actuaries/.
Hope this helps?
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A pension holiday is OK, as long as it doesn't affect what I will get when I retire. That can't be increased dramatically anyway becaue of the Inland Revenue. It would also see more pay in my pocket. BUT, if the holiday is in lieu of a pay rise then it has to be a big fat NO. When the holiday ends I will need a pay rise to get back to where I was during the holiday. A holiday OK, but not as an excuse not to have a pay rise.
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Pension contributions holidays shouldn't have any effect on the pension you receive at retirement.
The pension holiday does not affect how much contributions you pay as an individual either - it means that the employer's contribution is stopped and money from the surplus is used instead.
The type of pension that we have means that any surplus is basically owned by the employer and they can do what they like with it.
The pension holiday does not affect how much contributions you pay as an individual either - it means that the employer's contribution is stopped and money from the surplus is used instead.
The type of pension that we have means that any surplus is basically owned by the employer and they can do what they like with it.
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WetFeet - If I understand what has been said above correctly, then it is not us, the employees, that will be taking a contributions holiday, but TAG.
When contributions were reduced from 15 and 7.5% for them and us respectively a few years back because of the surplus, this was OK because the reduction was proportionate and approved by the trustees.
If they will use this alleged holiday to fund a cash flow problem then that is a totally different ball game. If this is the case then what we need from TAG is the truth and soon. There are far too many rumours doing the rounds at the moment.
OrsonCart - Can there be a one-sided holiday? Doesn't seem very fair to me.
Hopefully the open meetings will be just that, open.
Edited to add...
Having read Undercover's post which arrived while I was posting, I guess one-sided holidays do happen, but still doesn't seem "equitable".
[ 05 November 2001: Message edited by: cossack ]
When contributions were reduced from 15 and 7.5% for them and us respectively a few years back because of the surplus, this was OK because the reduction was proportionate and approved by the trustees.
If they will use this alleged holiday to fund a cash flow problem then that is a totally different ball game. If this is the case then what we need from TAG is the truth and soon. There are far too many rumours doing the rounds at the moment.
OrsonCart - Can there be a one-sided holiday? Doesn't seem very fair to me.
Hopefully the open meetings will be just that, open.
Edited to add...
Having read Undercover's post which arrived while I was posting, I guess one-sided holidays do happen, but still doesn't seem "equitable".
[ 05 November 2001: Message edited by: cossack ]
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They do happen - and it's within the rights of the company to do so, unfortunately.
The justifications always tends to be that if the situation were reversed and there was a shortfall in the fund, it would be the company's responsibility to find the extra funds required. It's the old "we take the risk, so we get the benefit" routine.
The justifications always tends to be that if the situation were reversed and there was a shortfall in the fund, it would be the company's responsibility to find the extra funds required. It's the old "we take the risk, so we get the benefit" routine.
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Yep, you can have a one sided holiday, NATS are masters of thier scheme for their staff. You can have a holiday both ways in fact. Cannot think why the employees would be given a payment holiday in lieu of a pay rise.
As Orson said, companies can lawfully stop thier contributions into a scheme and I believe they can make up later any shortfall as agreed by actuaries and trustees, although I stand corrected.
If our new esteemed leaders are resorting to this, the plight of our company and our staff could be considered to be VERY serious.
Do not read too much into the holiday, but read that NATS has a (Huge) financial problem, either now, or looming! That worries me!
As Orson said, companies can lawfully stop thier contributions into a scheme and I believe they can make up later any shortfall as agreed by actuaries and trustees, although I stand corrected.
If our new esteemed leaders are resorting to this, the plight of our company and our staff could be considered to be VERY serious.
Do not read too much into the holiday, but read that NATS has a (Huge) financial problem, either now, or looming! That worries me!
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The company is certainly within its rights to take a payment holiday when there is a surplus, as now. The Trustees are not legally able to prevent it (as I understand it). And of course there is no risk to the staff, due to the Trust of Promise preventing NATS from replacing the scheme with an inferior one.
But how about this for a dark thought? Due to recent stock market falls, the surplus has shrunk from £500M to £300M. If NATS takes a payment holiday and the market continues to fall, the fund may become unviable - its assets too small to meet its projected liabilities. Then the Trustees would be obliged to close the fund. The Trust of Promise would no longer apply, and NATS could set up a cheaper, and inferior scheme.
Of course I am sure that is not what management would want. Is it?
But how about this for a dark thought? Due to recent stock market falls, the surplus has shrunk from £500M to £300M. If NATS takes a payment holiday and the market continues to fall, the fund may become unviable - its assets too small to meet its projected liabilities. Then the Trustees would be obliged to close the fund. The Trust of Promise would no longer apply, and NATS could set up a cheaper, and inferior scheme.
Of course I am sure that is not what management would want. Is it?
