Re: Pension contribution holidays
"It's funny to remember that many pension funds in the 1980's were forced to take pension contribution holidays by law"
Add to that the change in how the funds' actuaries were forced to value the assets at 3yr valuation time
(ie market value at time of valuation, instead of purchase price) and we have reaped the perfect whirlwind.
Suddenly, a fund has millions in surplus to be spent on contribution holidays as the stock market peaks [and is deemed 'overfunded by HMRC] and as the market sinks suddenly has deficits below HMRC guidelines... add to that the promises of 'future' benefits for members, in order to soften the blow of the employer taking contribution holidays..well, those benefits needed to be properly funded by increased employer contributions going forward..not paid for out of a potential permanent surplus going forward.. no wonder the funds are 'too expensive' for the poor employer; he's just failed to pay the deferred wages and saved a fortune at the expense of the pension fund members...
Who will gain from all this? The employer got a free ride while the market was high and, when low, closed funds saving perhaps between 15-20% of payroll (depending on how generous they factored the inducements for contribution holidays) . Now they offer to pay maybe 5% towards your replacement insurance company run scheme?
What a lovely hidden pay cut we all got.....if you were the 'conspiracy' type you might think someone wanted to ease the wage burden for British industry and, at the same time, break the influence of the big pension funds on the market.....
I know, I know...never attribute ... when it's probably just incompetence (I forget the full quote and I'm tired of typing..)