Julian Knight: Barnardo's pension plan closure will not be the last
The charity's decision to end a career average pension scheme, just a few years after ditching final salary, is a warning to us all
Sunday 20 January 2013
Barnardo's has announced it's closing its career average pension plan and shunting staff into a far less generous and much riskier money purchase scheme. Such an occurrence would normally not merit comment apart from the fact that this is the second time Barnardo's has cut its pensions.
In the past it closed its final salary scheme in favour of career average. With the introduction of auto-enrolment into workplace pensions – pushing up employer costs and potential liabilities – and the advent of the Nest pension, Barnardo's move could be part of a further levelling down of workplace pension provision.
This is something I have been warning about for the past couple of years. We had the flight away from final salary in the last decade (apart from the cossetted public sector) and in this one we could see the disintegration of the "middle way" schemes, such as career average and replacement with money purchase, where what you pay into a pension, combined with performance, dictates how much you get out.
Hot on the heels of Barnardo's announcement, the Office of Fair Trading has said it will investigate money purchase schemes. The problem is that many such schemes levy very high charges, have poor growth records and are not transparent.
Employers, weary of the issue, are just glad to have somewhere cheap to park their staff and this means not only are pension benefits in effect being cut but the replacement schemes people are not up to scratch. This is mis-selling on a grand scale.
I have experience of this. I was considering becoming a member of an employer money purchase pension to top up my final salary scheme. I was shocked to discover, in the small print, that the pension provided by one of the world's biggest fund management groups had an annual charge about three times the level I could expect to pay on a standard personal pension I could set up myself.
I went straight to the company's trustees and they were unaware of this discrepancy. A year later, the fund management group lost its contract to supply the pension but it had enjoyed, by my reckoning, a decade of rip-off fees. I'm glad that the OFT has finally decided to look at these schemes and their charges.
At last some good pension news
We Britons are a miserable bunch. The biggest single reform to the state pension in our lifetime, which will benefit millions, was greeted with the tired old "work longer, pay more" line.
For the past decade we have been on course to wait longer and pay more for the state pension, but what the white paper, see right, promises is some reward for this new reality. A beefed-up state pension replaces a miasma of credit and top-up pensions – cutting through the chaff and letting people know precisely where they stand now and in the future.
The previous system – much of it constructed in a rush by Gordon Brown – relied on pension credits to top up a very variable state pension. These credits were only claimed by around two-thirds of those eligible and also meant people with a small savings pot faced an effective marginal tax rate of 40p in the pound. Unfair and giving out totally the wrong message.
There has been some gnashing of teeth over the requirement to contribute national insurance for 35 years rather than 30 under the old scheme. But it should be remembered that the 30- year limit was only brought in a few years ago and prior to that contributions had to be made for 39 years.
Overall, the pensions white paper is good news – it sweeps away complexity, guarantees a higher basic pension, while at the same time sticking to the idea that to qualify you have to make a fair contribution. Now, finally, we can move on.
Confused by your self assessment form? You're not the only one it seems. I received a HM Revenue & Customs press release the other day outlining acceptable reasons for failing to file your return online. The bods at HMRC said not receiving the online activation code, ID or password is an acceptable reason for late filing but further down the page they state that it most definitely isn't.
Advice wasteland woes
My comment last week on how it's ridiculous that changes to the rules governing how financial advisers are paid means we now have a choice of either paying a fortune or taking pot luck through execution-only has caused quite a stir.
There were offers of help for my friend – who had 10 grand to invest but couldn't find an adviser who would touch such a "small" amount – and support for my argument. I'd love to hear more from readers, who like my friend, are being turned away when looking for advice.
Simon Read: I can’t repeat all that you say about Scottish Power - but it probably wouldn’t listen anyway
Money Insider: Borrowers can cry mortgage freedom
Buyers beware of new-build home headaches
Mark Dampier: 'Mayhem central - will anyone get out of the bond markets alive?'
Santander's new current account is not quite as easy as 1, 2, 3
- 1 Chelsea victory parade mocked on Twitter as 'tens of fans' pack the streets of London
- 2 Preston fan who appeared to snatch Jermaine Beckford's shirt from eight-year-old boy identified and says: 'the truth will come out'
- 3 Johnny Depp facing 10 years in jail for illegally bringing dogs to Australia
- 4 US warned by Chinese media to stop meddling or 'war will be inevitable'
- 5 Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
EU referendum: David Cameron's rules are a 'democratic disgrace', says French-born Scottish politician set to be denied a vote
The day that Britain resigned as a global power
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
A nation of inequality: How the UK is failing to feed its most vulnerable people
iJobs Money & Business
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...
£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...
£16 - 20k: Guru Careers: A Graduate Editor / Editorial Assistant is needed to ...
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
Day In a Page
This four-bedroom home offers a vaulted ceiling in a breakfast room that's ideal for summer entertaining with doors that open to the patio and garden.
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof