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Defined Contribution

The Weekly Wrap: January 3 edition

By Tom Dines | January 3, 2014

A round-up of the pensions and investment stories published across the FT Group you may have missed over the holiday period – from a condemnation of the proposed charge cap to Poland's pensions reform.  

Hint of generous pension top-up

Week in numbers 

  • Evidence supporting a 0.75% charge cap has been branded unfit for purpose.
  • Poland's pensions reform will shift 51.5% of private funds’ assets to the state-run system.
  • Illinois has an unfunded pension liability of £60.7bn.

FT: A Department for Work and Pensions survey released in late December gave the first indications of the price of extra state pension income for people who reach the state pension age before April 2016. The survey suggested buying additional income may be less expensive than previously thought.

Cap on pension fees given 'red card' by watchdog 

FT: The Regulatory Policy Committee gave a “red card” to the DWP's evidence behind a proposed charges cap for workplace pensions, in a report published in late December. The independent body branded the evidence supporting a 0.75 per cent cap on charges levied on workers “not fit for purpose”.

Poland's pensions law signed but is likely to face legal challenge

FT: Poland's president has signed into law a reform which will strip government bonds from privately run pension funds. The law is expected to run into questions of legality when it reaches constitutional tribunal. The comes into effect in February and will shift 51.5 per cent of the funds’ assets to the state-run, pay-as-you-go system.

UK pensions industry berates cap process

FT: The pensions industry accused the government of pressing ahead with the proposed cap on charges without following proper process. Industry experts warned the cap was being rushed through with little thought for the concerns raised. 

US public finance: Day of reckoning

FT: A pensions crisis in Illinois has led to the closure of around 50 elementary schools and the cutting of 3,000 school jobs. The state has an unfunded pension liability of $100bn (£60.7bn) and Chicago’s mayor Rahm Emanuel has said the school closures were necessary.

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