The economic news for pension savers is looking a little rosier, with the Pension Protection Fund announcing that the specific set of current economic circumstances means the pensions deficit for what are often known as final salary pensions has been drastically cut.
The Pension Protection Fund is a statutory body tasked with making up the shortfall in what pensioners are owed compared to what pension funds are actually able to pay out. Despite recent pension scares related to the likes of BHS and Carillion, the fund was able to deliver the good news that some £53bn has been removed from this deficit thanks to factors including rising interest rates and stock market behaviour, putting the shortfall in a better place than its been since early 2014.
The PPF has analysed the UK’s 6000 defined benefit pension schemes to arrive at this figure, which although represents a dramatic improvement may yet be undone by more recent stock market activity. In addition, a reduced shortfall is still a shortfall (of £51bn at the end of January 2018). At DPT Financial Services we would always advise to be prepared for all possible financial circumstances in the future – within reason – and would be happy to discuss these complex issues face-to-face with anyone either already in a pension scheme, retired or just starting out their working life. Our view is: it’s never to early – or too late – to start planning for retirement!