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Hoxton Wealth
November 12, 2022
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Retirement PlanningRetirement Income PlanningRetirement Savings Strategies401(k) and IRAsDefined BenefitDefined ContributionSIPPQROPSSuperannuationEstate Planning
Estate PlanningWealth Transfer and Legacy StrategiesBusiness Succession and Asset ProtectionRetirement Planning
Retirement PlanningRetirement Income PlanningRetirement Savings Strategies401(k) and IRAsDefined BenefitDefined ContributionSIPPQROPSSuperannuationEstate Planning
Estate PlanningWealth Transfer and Legacy StrategiesBusiness Succession and Asset ProtectionRetirement Planning
Retirement PlanningRetirement Income PlanningRetirement Savings Strategies401(k) and IRAsDefined BenefitDefined ContributionSIPPQROPSSuperannuationEstate Planning
Estate PlanningWealth Transfer and Legacy StrategiesBusiness Succession and Asset ProtectionRetirement Planning
Retirement PlanningRetirement Income PlanningRetirement Savings Strategies401(k) and IRAsDefined BenefitDefined ContributionSIPPQROPSSuperannuationEstate Planning
Estate PlanningWealth Transfer and Legacy StrategiesBusiness Succession and Asset ProtectionRetirement Planning
Retirement PlanningRetirement Income PlanningRetirement Savings Strategies401(k) and IRAsDefined BenefitDefined ContributionSIPPQROPSSuperannuationEstate Planning
Estate PlanningWealth Transfer and Legacy StrategiesBusiness Succession and Asset ProtectionGet started with the app today. Follow the links below to download directly on your device.
Hoxton Blog • DB Pension Deficit Rises by £2.1bn, Resulting in a £168bn Combined Deficit
Over the last 12 months, the overall Defined Benefit (DB) Pension scheme deficit has risen by £93.9 billion. In the last month alone, this included an increase in deficits by £2.1 billion. Importantly, yields on UK government gilts and annuity rates have remained consistently low which means that pensions are having to hold larger account balances to pay member incomes.
For example, an income of £3,000 requires a capital holding of £100,000 if the annuity rate is 3% to pay out the required income. If the annuity rate drops to 1.5%, then the capital holding required to pay an income of £3,000 becomes £200,000. This shows the deficit from small reductions in gilt rates having a large impact of the holding required of pension scheme assets and thus the increase in deficits across the board.
The Pension Protection Fund (PPF) is a government initiative (it is not government backed) to protect the members of DB pension schemes in the case of the pension being underfunded to meet their liabilities. PPF funding fell 0.2% from 91.4% to 91.2% recently. PPF scheme assets have also declined by 1% through the same period, with a total fall of 2.9% over the course of 2020. Generally, there has been a rise of DB pension schemes in deficit, now with a total of 3,617 (66.7%) underfunded schemes.
Unemployment and company disruptions have remarkably been less impacted than expected due to government initiatives such as furlough schemes and company capital aid, however, government initiatives are not permanent and funding reductions are a constant threat to members and trustees due to lower resources.
As markets remain volatile and uncertain due to Covid-19 and political turmoil, the importance of remaining active in one’s financial plans is highlighted. It is crucial for individuals to consider their pension scheme and get professional, reliable, financial advice to secure their financial future.
If you would like to speak to a financial adviser about your pension and take control of your financial journey, contact us today.
If you would like to speak to one of our advisers, please get in touch today.
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P Wood
22, April
“Since December 2024 I have been working with Hoxton’s, primarily with Ellie Gracie on 3 investment vehicles. I opted out of the first as I considered it too risky, the second one has been set up in March and we are currently trying to close on another in the next few days. Ellie has been great. She is always ready to listen to my concerns and is prompt with her email responses. I would say that we work well as a team and I certainly listen to her advice. Long may it continue!!”
R Permanand
21, April
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M Shaw
21, April
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C Field
25, March
Hoxton Wealth
November 12, 2022
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