News & Insights

Do you have a Final Salary (Defined Benefit) UK pension scheme?

Thousands of companies – public and private, big and small –  are weighed down by the burden of growing pension scheme black holes, and for some the load is life-threatening. Final salary schemes were initially a good idea, however, factors such as medical developments, people living longer and deterioration of investment returns have created a ticking time bomb. Deficits have been building in the UK’s largest pension funds with the combined deficit of UK schemes close to 1 trillion pounds! 

How bad is the pension deficit problem in the UK?

According to the Pension Protection Fund, around 84 per cent of pension funds are in deficit.

Which UK pension funds have the largest pension deficits?

There are approximately 4,995 pension schemes in deficit. These are some of the biggest:

BHS, Royal Mail, British Steel, British Telecom, Lloyds Bank, RBS, British Airways, Babcock, ITV, BAE, Anglo American, AstraZeneca, Barclays BAT, Compass, Diageo, GlaxoSmithKline, Imperial Tobacco, National Grid, Rio Tinto, Shell, Tesco, Unilever and Vodafone.

British Airways, for example, currently has a deficit of £2.8 billion in its pension fund and Tesco has now reached a deficit of £5 billion, meaning that the assets in these companies’ schemes are insufficient to meet their commitments currently. This could spell disaster for people within this type of fund in the not too distant future.

Even if your final salary scheme is not in one of the companies mentioned above, you should review your existing arrangements to ensure peace of mind.

So, if you are living in Spain and are considering transferring your final salary scheme abroad, the valuation of your pension pot may be presently quite high now due to low gilt yields, meaning a larger pension pot to transfer. 

Expats who want to take control of their pension pot and eliminate the worry of these deficits and potential insolvency should consider the transfer to a QROPS scheme.


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By the peak of tulipmania in February 1637, a single tulip bulb was worth about ten times a craftsman’s annual income and a single Viceroy tulip bulb was allegedly exchanged for eight fat swine, twelve fat sheep or four tuns of beer.

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The issue has taken on a new urgency for expats, particularly in regards to property, in light of the new surcharge that the government plans to introduce alongside stamp duty on second home and buy-to-let purchases in England.

Although Prime Minister Theresa May says that the surcharge is for “foreign buyers” and is being introduced with a view to assisting UK taxpayers buy a property – especially first-time buyers – it may have some unintended consequences.

This is because it is not just foreign buyers who are likely to find their pockets hit by the tax. Returning expats – who could well be a prominent demographic over the next few years – may also find themselves liable for the surcharge, potentially setting them back significantly on their way to reaching their wealth management objectives.

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