Welcome to our blog. We will be doing frequent updates so please revisit to read the latest entry.
It’s staggering to realise that there are over one million people in the UK who have unclaimed pension benefits – these unclaimed benefits are estimated to be worth over £4,000,000,000!
There is a simple solution to that money being reunited with its owner and that’s to let any pension schemes you have belonged to know your current address!
Plumbing Pensions have a number of members for whom we don’t hold current addresses, so do please let us know if you move house - and indeed if any of your personal details change. Treat us the same as you would your milkman!
Plumbing Pensions, like other pension schemes, uses various methods, including tracing agencies, when members with whom we have lost contact get to their normal retirement age. However, we would prefer to keep in touch with our members during the years prior to retirement. If we have your current address it’s easier to keep in touch with you and send you your annual statement so that you can plan ahead for your retirement.
We have also recently joined forces with www.findmylostpension.com which is a relatively new website designed to reduce the huge number of pensions that are unclaimed. If you have previously been a member of other pension schemes then you may find this website useful if you don’t have the contact information to get in touch with them direct. In addition, www.gov.uk/find-lost-pension is a useful website.
If you have any queries about your benefits, then please contact our team on 08457 656565.
The staff at Plumbing Pensions have received many enquiries in recent months from members and pensioners who have had questions about the impact of a YES vote in the Scottish Independence Referendum.
As an occupational pension scheme operating in all four countries of the United Kingdom but based in Scotland, it is likely that the Scheme would have faced some changes in the event that Scotland had voted for independence. Although it was unlikely that these changes would have affected the pensions of members or pensioners, it was difficult for us to answer the concerns which were raised with us as there was no certainty about the impact independence would have had on the Scheme.
As the result of the Referendum is that Scotland will remain in the United Kingdom, Plumbing Pensions will continue to operate as it has done now for almost 40 years serving the pensions needs of its members and pensioners.
Yet again pensions are a hot topic in the news with all sorts of changes planned by the Government, affecting the options that some people will have when they come to retire.
Many of us put off making decisions and planning ahead and yet as we are all living longer and want more out of the non working years it's even more important to find out what sort of income we can expect to receive when we are no longer working.
Your annual statement from the Plumbing Pension Scheme will give you the amount of annual pension you will receive at 65 but you may have other pensions plus your entitlement to State Pension – we've prepared a factsheet with some useful website and contact information so that you can find out what you're likely to get.
As well as the financial side of retiring, there are plenty of social and volunteering opportunities and a vast amount of information is on the internet, or your local library will also be able to help.
> Download Approaching Retirement Guide
Chancellor of the Exchequer, George Osborne, surprised most people with his recent Budget announcements which effectively removed the requirement for members of certain pension schemes to purchase an annuity at retirement. There has been much criticism for many years of the poor amounts of pension provided by annuities and the high levels of charges which can be applied. The newspapers have been full of talk about this revolutionary change and there has been speculation that some people might well decide to spend their pension pots rather than using them to provide income throughout their period of retirement. Some of the headlines have even mentioned luxury cars and cruises.
What the press often fail to do is to make it clear that this change only affects members of what are called Defined Contribution (DC) (or money purchase) pension schemes. Large numbers of people in the UK participate in these schemes and the amount available to buy an annuity (or, after the Chancellor’s changes, to spend) has always depended on the value of the investments in their pensions “pot” at retirement. The Plumbing Industry Pension Scheme is not a Defined Contribution pension scheme and it operates on a basis which is called Defined Benefit (DB). This means that members of the Scheme are not affected by the announcements on annuities.
In many ways, members of schemes like Plumbing Pensions have not had to suffer the kind of problems which members of DC schemes have faced. Pensions payable by the Scheme are not dependent on the value of investments at the time of retirement. Once a member has been granted a pension credit (based on earnings and contributions paid), then that is the amount of pension (with bonuses) which are paid on retirement. There is far greater certainty about pension amounts in DB schemes. While annuity rates have fallen consistently for several years, resulting in small pension payments to DC pensioners, there has be no reduction in the amount of pension that a member of the Plumbing Industry Scheme receives. DB members do not have to purchase an annuity on retirement and Plumbing Pensions is responsible for paying the pensions of its retired members.
Although there were some other Budget announcements which might affect members of DB schemes with relatively small accrued pensions, the overwhelming message which needs to be understood is that the changes relating to annuities do not affect members of DB schemes- after all these were not the ones who were suffering the problems of the annuity market.
There has been quite a bit of debate in financial circles recently about whether the word "pension" is the appropriate word to be used to describe what employers and employees are contributing to in schemes such as the Plumbing Industry Pension Scheme. Part of the argument is that young people don't want to think about their future and the word "pension" is something that they associate with their grandparents. This is seen as discouraging younger people from joining their employer's pension scheme.
Some argue that a "pension" is simply saving now for income in retirement but that is a long way to explain what many people understand the existing word to mean.
The financial services industry itself has contributed to the confusion by developing a whole range of products which are described as "pensions" but are actually not about delivering a steady income for use in all the years when we are no longer working. There are lots of quite complicated financial products on the market which use the word "pensions" and get the tax advantages available to pensions but don't provide the type of certainty about long-term income after work which schemes like Plumbing Pensions provides. There are also individuals who fail to remember that their pension is intended to be used in retirement. They are not, and should not be seen as, savings schemes for a rainy day before retirement.
Plumbing Pensions takes pride in the fact that for nearly forty years it has offered the opportunity for employees to build-up significant pension benefits which become payable at the time of retirement. The ability to take some of these benefits as a tax-free lump sum at the time of retirement can be useful for many as a way of paying off mortgages or going on that post-retirement big holiday. The added knowledge of benefits in the event of unexpected death before retirement is another comfort provided by this type of scheme.
Whatever words are used elsewhere, Plumbing Pensions is determined that it will continue to offer good quality and meaningful pension arrangements so that previous, current and future generations working in the plumbing industry have a good source of income in retirement.
Each January many of us try to find time to take stock of the year just passed, and more importantly, to look forward to the year ahead.
We can set ourselves targets often referred to as “New Year resolutions”. In setting your resolutions do you ever include anything to do with pensions? If not maybe 2014 is the year to start. In this month’s blog we suggest a couple of New Year pensions resolutions for employers and employees.
If you are not already operating a qualifying pension scheme for your employees, this may be the year that you will have to make arrangements to rectify that. Recent changes in pensions legislation introduced automatic enrolment, an arrangement which should now make pensions pretty high on everyone’s agenda.
Initially in October 2012 automatic enrolment into a pension scheme was only for employers with at least 120,000 staff. However, from July 2014 it may surprise you to know that this figure will have reduced to employers with just 60 staff (and will continue to reduce further on a monthly basis).
There are many arrangements to choose from so please select wisely, look at all facts and choose what will be right for you and your employees. Plumbing Pensions is ready to help any employer looking for an automatic enrolment pensions solution for its employees.
There has been a growth in recent times of arrangements which lure employees with pension benefits to take cash from their pension before they reach age 55. Many of these arrangements are fraudulent scams and the Pensions Regulator has taken steps to warn employees of these scams.
The scam starts by contacting members and offering them the chance to transfer their pension savings to an arrangement that will allow access to cash benefits before the member attains age 55. Age 55 is now the earliest age at which pension scheme members can legally take pension benefits (unless they qualify for ill health benefits). Getting early access may sound appealing to some but the downside (which is conveniently not always mentioned) is that there are serious tax charges and penalties which may be applied which could amount to more than half the value of the employee’s pension savings.
We urge any employee who is tempted to participate in one of these schemes to be extremely careful. Plumbing Pensions has further information which it can provide to anyone who is considering such a transfer of their scheme benefits.
Automatic Enrolment and Pensions Liberation are only a couple of different reasons why you need to have all facts to hand before making any choices in relation to your pension. The good news is you don’t have to tackle these problems alone. At Plumbing Pensions we are always here to help- you only need to ask!
There can’t be too many people in the UK plumbing and heating industry who haven’t seen Penny Plumb somewhere over the last year. Used on this website and on promotional literature and adverts for the Plumbing Industry Pension Scheme for some time, Penny’s friendly face has appeared in many of the industry’s trade magazines at some time this year. She also popped up, for the first time, on the Certificates of Pension Credit which were issued to the Scheme’s active and deferred members this autumn.
As we approach the start of a new year, Penny has provided the following simple reminders to people working in the industry:
- Businesses which will be required to auto enrol their employees into a pension scheme over the coming year are reminded that Plumbing Pensions offers cost-effective defined benefit pension arrangements specifically created for the plumbing industry. Don’t leave it too late before speaking to the Scheme.
- Employees who are not currently in a pension scheme should ask their employers about their plans for auto enrolment (and suggest that they might want to talk to Plumbing Pensions).
- Employees who are currently contributing to the Plumbing Industry Pension Scheme should consider whether they would like to increase their pension provision through making Additional Voluntary Contributions.
- Members of the Industry Pension Scheme should remember to make sure that their Expression of Wish forms are up-to-date (and those who have not submitted such a form should consider doing so).
Penny Plumb’s colleagues at Bellevue House, Edinburgh would be delighted to hear from anyone wishing further information on any of the issues mentioned above (0131 556 0600 or email to firstname.lastname@example.org).
The Board of Directors and staff of the Plumbing Industry Pension Scheme extend their best wishes for a Happy Christmas and a Prosperous 2014. Our offices will close at 12:30pm on Christmas Eve and we re-open on Monday 6 January 2014.
As we approach the end of yet another year which seems to have flown by, it’s a good time to start to think about planning for 2014 and beyond.
Many businesses will be reaching their staging date for Auto Enrolment in 2014 and whilst it’s easy to put off making plans for introducing pensions to all your employees, it does need to be addressed sooner rather than later. Plumbing Pensions have produced a special guide and are ready to help at every step. My role in visiting firms is especially helpful when discussing how the Plumbing Pension scheme can provide quality pensions for employees whilst meeting all the auto enrolment requirements.
Taking responsibility for our own retirement income is important. We recently had our very first pensioner who reached the age of 100, that’s 35 years of retirement and as he said “I am sure that joining Plumbing Pensions was the best investment I ever made”. It’s thought provoking to think providing an income for retirement can be for this length of time!
There was a documentary on Channel 4 a few weeks ago and it was interesting to see how they reviewed what income a group of people were calculating they would need when they retired. Keeping an eye on any pension benefits you may have is really important to help with your future financial planning.
On a lighter note, on a recent visit to a small Scottish town I even learned how to fillet fish whilst at a plumbing firm - there’s never a dull day in pensions!
If you would like to find out more about our Scheme visit www.plumbingpensions.co.uk.
You can't seem to pick up a newspaper or turn on the television these days without the headlines referring to pensions, some good and some bad!
Of course we can look at all this coverage as publicity for the pensions industry, raising the general awareness of pensions and the ongoing Government introduction of Automatic Enrolment (and they do say that there is no such thing as bad publicity)!
This may be true but with years of bad press, pensions is still such a delicate subject. In the public eye some of these articles could very easily turn those who are not sure of what pensions can achieve very much off the subject for good.
The fact is, whether we like it or not, pensions are now becoming a large part of our future and we need to really understand just how important saving for a pension in later life is and the long-term security they can offer us and our families.
Concerned that there are too many employees who don't understand what pensions can offer and are reluctant to voluntarily contribute towards their own arrangement the UK Government has introduced "Automatic Enrolment", believing it to be the "new way to save". It is hoped that by introducing this saving method a higher proportion of employees can be encouraged to act thereby ensuring they have sufficient income at retirement.
Automatic Enrolment is a complex area that every employer will have to deal with in the coming months. The good news however is that they don't need to tackle this subject alone. We at Plumbing Pensions have staff who are well versed in the mechanics of auto enrolment so please feel free to give us a call on 0131 556 0600 or drop us an email at email@example.com. Although we are unable to give financial advice, we are certainly happy to assist with all automatic enrolment enquiries.
There has been considerable coverage in the media recently about an Office of Fair Trading (OFT) report on pension schemes. Much of the attention has been on the high level of charges applied by some schemes and the impact which such charges can have on a member's pension benefits.
The OFT is quite correct to challenge the scandal of high charges deducted both from contributions and members' accrued pensions pots. What is disappointing, however, is that many press stories have given the impression that this problem affects all occupational pension schemes. In fact, the report was only about schemes which are known as "Defined Contribution" schemes. This was often not made clear in the stories which have appeared in our newspapers.
The timing of this report is significant as many people are being (or will shortly be) automatically enrolled into Defined Contribution schemes and charges are an important consideration when such schemes are being selected (usually by employers).
The Plumbing Industry Pension Scheme is a "Defined Benefit" scheme. It is not affected by the OFT report. There are NO deductions made from members' contributions and NO annual management charges applied to members' accrued pension entitlement. The amount of pension credit which has been earned by a member while participating in the Scheme is not reduced as a result of charges. There are obviously costs of operating any pension scheme but in the case of the Industry Pension Scheme these are met by the fund itself. Allowances have been made for such costs when designing the scheme and its contributions and benefits levels.
Any members or pensioners of the Industry Pension Scheme who have been concerned when they have read the stories about the impact of charges on pensions benefits should be assured that this problem may apply to millions of others but not to them. This is one of the advantages of using the Plumbing Industry Pension Scheme for the purposes of auto enrolment.
Before the end of this year all Scheme members will receive their annual benefit statement – it might only be another piece of paper but actually it is an important piece of paper! The team have been working to improve the look of the statement to provide the information in as clear and concise way as we can. This is tricky as there is a lot of information that has to be included.
Because the Scheme is Defined Benefit this means that the statement will tell you how much annual pension you can expect to receive from the Scheme at Normal Retirement Age of 65. Most other pension schemes in existence will provide you with the current fund value, which is the amount that at your retirement age can be used to purchase a pension called an annuity. The Plumbing Pension Scheme pensions are paid from the Scheme direct and they don’t depend on annuity rates or stock markets at the time a member retires.
If you’re not currently contributing to the Scheme and would like to find out how you can start paying contributions to us to improve your benefits, then please contact 0131 556 0600 to find out more.
It’s a good time to take stock and to look at any other pensions you may have to determine what sort of income you can expect to receive in retirement. You may also want to look at your State Pension forecast and you can visit https://www.gov.uk/state-pension-statement to see what you may expect to receive.
On a lighter note, there seem to be a lot of books written on retirement appearing on bookseller lists, including a Haynes Retirement Manual. Together with more financial education taking place in schools hopefully the myths of pensions will soon be dispelled!
Should you have any questions arising from your statement or need more information on the Scheme then give us a call on 0131 556 0600.
It is almost 40 years since a group of plumbing employers came up with the idea of creating an occupational pension scheme which could be operated by a large number of plumbing businesses. The idea, which some believed was unworkable, led to the creation of the Plumbing & Mechanical Services (UK) Industry Pension Scheme which operates throughout the United Kingdom.
Plumbing Pensions (as the scheme is often referred to) has grown to become a major occupational pension scheme with assets of over £1.4 billion and records for some 38,000 individual members.
Those employers and employees who participate in the Scheme will be well aware of the quality pension arrangements of which they are part. There are, however, many businesses operating in the plumbing industry (and associated industries) which don’t participate in the Scheme. These businesses often don’t realise just how significant the Scheme could be to both themselves and their employees. Any individual retiring from the plumbing industry without the benefit of a plumbing pension is likely to be much worse off in retirement than the Scheme’s 10,000 pensioners.
In spite of all the positive recognition the Scheme has achieved, there are still many plumbing businesses which do not operate the only pension scheme designed specifically to meet the needs of firms and employees in the industry. The good news is that the Scheme is ready and waiting to engage these firms and enable them to meet their legal obligations by providing quality pensions which will deliver meaningful benefits to all employee members.
Auto-Enrolment for many employers may seem a long way off yet the Pensions Regulator is saying that from what they’ve seen so far, it has taken average large firms about 18 months to plan and get ready. This means that it really is a good idea to start to plan for auto enrolment sooner rather than later. As well as deciding which Scheme(s) to use for auto enrolling all eligible employees into, it’s really important to start to budget for the increase in costs and to plan on how you’re going to communicate to employees.
Communicating the pension changes to employees really is the key to success - it helps employees understand the value and benefits of contributing to a pension scheme.
The Plumbing Pensions team have been working hard to prepare a guide for employers to help them through the maze and logistics of auto enrolling members into our Scheme. In addition, we can arrange for a face to face meeting to explain how the Scheme operates so if this is something you’re interested in, please get in touch with firstname.lastname@example.org. We’ll also help with the communications to your employees and support you along the journey. The Government’s initiative to have all employees auto enrolled to a work place pension is underway. We all know that we need to save for when we’re no longer working and this really is nudging us all in that direction. Early planning and research is key to implementation – our website is fully up to date with all you need to know – www.plumbingpensions.co.uk.
Pensions can be a great subject used to sell newspapers, especially the horror stories that show the industry in a bad light.
Recently it has been easy to print negative stories involving pensions. Times are hard, money is tight and most of us can always relate in some way to a pensions story where someone appears to have suffered. The good news is that these incidents are very much in the minority. No one is saying that mistakes have not been made in pensions. There have been a fair number, but because of the bad press created a few journalists have taken licence to tar all pension schemes with the same brush.
We at Plumbing Pensions are very much trying to reverse the negative trend that has been created and hope that our members and potential members can see the positive side to the pensions industry through our Scheme.
You would read in last month’s blog how positive the funding position of our Scheme is, an unusual factor for a defined benefit arrangement but as mentioned above, we are trying to “reverse trends”.
Another recent development which we are immensely proud of as a Scheme is the fact that we have been nominated for a top award by one of the country’s leading financial journals, “Financial News”. The nomination is in the category of Pension Scheme of the Year and we are certainly up against some formidable opposition. However for a Scheme such as ours just to receive the nomination in such a prestigious category can be considered an achievement in itself.
We are very much seen as a caring Pension Scheme, looking after our members wherever possible. With the recent changes in legislation and the onset of Automatic Enrolment we are now in the process of issuing a comprehensive Scheme Guide to member employers to help them understand what Automatic Enrolment is all about and what future steps they may have to take.
Yes, the pensions industry may have had a considerable amount of bad press recently but we are fortunate, it is not actually as bad as some would have you believe. So we ask you to trust in us, as a Scheme we have been one of the best for almost 40 years and have every intention of continuing to be so for the next 40.
It is a legal requirement that defined benefit pension schemes, like the Plumbing Industry Pension Scheme, carry out a formal actuarial valuation at least every three years. In simple terms, this means the Scheme Actuary calculating whether the Scheme's assets are likely to meet the Scheme's liabilities over the projected years in which these liabilities are payable.
Although these are very technical calculations which have to take account of things like interest rates, yields on gilts and the life expectancy of members, the results of these valuations should be of interest to everyone involved in the Scheme.
There are various different types of valuation which have to be carried out but possibly the most relevant is one which assesses whether a scheme meets its "technical provisions" based on assumptions which have to be set by the trustee. In the case of the Plumbing Scheme, the trustee is Plumbing Pensions (UK) Ltd.
When we read in the newspapers that XYZ Pension Scheme is in deficit, this usually means that it did not meet its technical provisions at the date of the most recent valuation. The opposite of having a deficit is when a scheme is in surplus and very few occupational pension schemes in the UK have been able to report actuarial surpluses in recent years. When the 5 April 2009 actuarial valuation results for the Plumbing Industry Scheme were reported, it was encouraging to note that the Scheme met its technical provisions and had a very small surplus. The Directors of the trustee company of the Scheme met recently to receive the preliminary results of the 5 April 2012 valuation and were delighted to note that not only did the Scheme continue to be fully funded, but the position had strengthened since 2009- largely as a result of better than expected investment performance.
While there are still many challenges facing every defined benefit pension scheme, the Plumbing Industry Pension is proud to be able to report such a positive actuarial valuation result and looks forward to continue doing the job which it was set up to do almost 40 years ago. Members and pensioners of the Scheme should feel proud to be associated with a Scheme which is in a relatively strong position compared with many other occupational pension schemes.
There are currently over 10,000 individuals receiving pension benefits from the Plumbing and Mechanical Services (UK) Industry Pension Scheme. Although the amount of benefit they receive varies depending on their length of service and earnings on which contributions were made, the Scheme likes to think that the benefits which it provides can make a positive difference to the lives of former members.
Two separate phone calls to the Plumbing Pensions office in early January illustrate the high regard in which the Scheme is held by some of its pensioners. One pensioner, who had recently retired and was phoning the office on a completely different matter, commented that he was so pleased about the tax-free lump sum which he had received and the monthly benefit payments which he was receiving through his bank account. He mentioned that he had been encouraged by the former Managing Director of the company with which he worked to join the Scheme and had not regretted taking his former boss’s advice. He knew that this boss had himself been a member of the Scheme and reckoned that what was good enough for his employer was also good enough for him. Many years later, he realised just how sensible (and valuable) the advice had been.
The other caller had been retired from active business for well over 20 years and now, as he approached his 90s, he called to say how much he appreciated the regular payments which were made to him and which made all of the difference to his lifestyle.
The Plumbing Industry Pension Scheme was launched in 1975 and more and more members of the Scheme are coming to the stage of their lives where they can take their pension benefits and join the ranks of the existing 10,000+ pensioners. The Scheme’s goal is to continue to offer good quality and meaningful pensions benefits to the young people who join the Scheme now and might retire in 2063 and beyond.
Plumbing Pensions works hard to encourage more plumbing employers to operate the Scheme for their employees through advertisements, articles, telephone calls, letters and visits. In many ways, the message which it is promoting is strengthened when we hear of former employee members recognising the value of their Plumbing Pension.
The start of a New Year is a great time to take stock and think about some New Year’s Resolutions.
In addition to the usual resolutions, it’s an ideal opportunity to look at your finances and especially your income when you’re no longer working.
Putting off planning for retirement is all too easy but with the changes to the state pension provision, it’s worth taking some time to look at the sort of income you can expect.
If you have any frozen pensions, always make sure that the providers have your up to date address and if you have benefits in the Plumbing Pensions Scheme (frozen or active), make sure your Expression of Wish form is updated regularly Expression of Wish Form (download .doc) .
Just this week there have been articles in the press regarding the lower pensions that members of Defined Contribution schemes can expect to receive when they retire as the buying of annuities has been affected by market conditions. As the Plumbing Pension Scheme is a defined benefits scheme this means that members receive a pension direct from the Scheme.
For more information click www.plumbingpensions.co.uk or give Angela Smith our Business Development Executive a call on 01889 563654.
Have you noticed in the press recently, both national and trade, that the words “Automatic Enrolment” are surfacing more and more frequently? And depending on the journalist’s viewpoint, the story can tell you that pensions work or they don’t, it can talk about the good and the not so good or what is right with pensions or what is wrong!
Are you confused? If you said yes then this is not surprising as it’s a confusing subject, especially when you are about to make one of the most important decisions you may ever make. After all we are talking about your financial future and, if you are an employer, the financial futures of your employees.
What you have to ask yourself is what do you want from a pension, being realistic of course?
When most people ask that question the main word that seems to jump out is “security” and in a nutshell that is exactly what pensions can hopefully offer you. But that is not where the confusion stops. Some pension schemes can offer much more security from the day you start to contribute but for others you may have to wait until the day you retire. For example a pension scheme which defines the benefit you will receive at retirement from day one certainly offers greater security from the start than those which have the retirement benefits based specifically on how well the individual contributions are invested.
The Plumbing Industry Pension Scheme does offer that defined benefit and as such the value of pension benefits and tax free lump sums that members receive at retirement has always been a factor for which we have been extremely proud.
Although your company may not have to automatically enrol employees for a number of months yet, the question of “will you be ready in time” is there right now.
As an employer your question of “what one should I choose” is a minefield, but the earlier you start looking into what is available the more chance you will have of making the right choice. The Industry Scheme has staff that can help so why not give us a call..….at the very least you can then say you have made that start!
For some people, 1 October 2012 will be a momentous and historic day. It sees the start of the long-awaited Government scheme under which almost all employees will have to be automatically enrolled into a pension scheme to which their employer must contribute. You may have seen the TV and press adverts which have been appearing recently in which a group of “celebrities” are associated with the message- “I’m in- are you in?”.
Although auto enrolment only affects the very largest companies in the UK at this time, over the next 5 years, the requirement will filter down to companies of all sizes, including companies with only one employee.
While this change should see a revolution in the way in which large sections of the workforce save for their retirement (many have no pension provision other than the State Pension), it should have minimal impact on those operating in and employed in the plumbing and mechanical services industry. As is so often the case, plumbing was ahead of the game when it launched the Plumbing Industry Pension Scheme way back in 1975. Agreed as part of the standard terms and conditions of employment in the plumbing industry, the intention was that every plumbing employee and apprentice would be automatically enrolled in the Scheme (or an acceptable equivalent). Thousands were enrolled and are either already enjoying the benefits of that participation in retirement or wait to do so at some stage in the future. There were, however, many employees who were not given the opportunity to participate in a pension scheme (including, in some cases, the non-plumbing employees of participating employers). Auto enrolment should change that and the Plumbing Industry Pension Scheme, which meets all of the requirements of auto enrolment, is actively recruiting both new employers and new employees to the Scheme (which is likely to provide considerably better benefits than most of the new schemes which are being promoted to satisfy auto enrolment for those who have no private pension arrangements).
Those employers and employees who are already in the Industry Pension Scheme are “IN” in relation to the new requirements. They simply need to ensure that in future they automatically enrol all new employees into the Scheme. Those who are not already in the Scheme are encouraged to contact Plumbing Pensions (UK) Ltd on 0131 556 0600 or email email@example.com for further information.
As auto enrolment (AE) begins to take effect, the pensions (and other) press is full of stories and surveys on the subject. While some of the surveys make depressing reading (e.g. the surveys which show that most people are unaware of auto enrolment), there are occasional exceptions.
Plumbers and plumbing are easy targets for almost any press story. It was not a surprise therefore when we spotted an online story mentioning plumbers and builders as being amongst those most likely to benefit from AE. Considering the plumbing industry has had a form of auto enrolment pension scheme for nearly 40 years, we were ready to challenge the person behind the story. How dare they suggest that plumbers were among those most likely to benefit from the new arrangements! However, on further reading, the survey actually said that while builders might benefit from the new arrangements, plumbers were already amongst those who were some of the most active participants in pensions.
The Plumbing Industry Pension Scheme is fully compliant with the new AE regime. Employers currently operating the Scheme for all of their employees can be assured that their pension scheme is fit for purpose. As firms in the industry get closer to their staging dates for AE, then Plumbing Pensions will provide help and literature which will ensure that they comply with the new arrangements on issues like opting-out. Employees already in the Scheme need to do nothing and in fact they should be aware that this scheme offers benefits in excess of those which will typically be offered by new schemes designed to meet the requirements of AE. For firms not currently operating any pension scheme, the Plumbing Industry Scheme provides an excellent way to correct this.
The theme of good news continues. A recent visitor to the Plumbing Pensions offices had come in as he couldn’t believe that the benefit figures which had been quoted to him were correct. No- he wasn’t doing an Oliver Twist and looking for more. This member actually thought that we were offering him too much for the relatively short time he had participated in the Scheme. We were pleased to confirm that the quoted lump sum and monthly pension were in fact correct and would be paid to him within a few days. If anyone wondered about the breadth of the smile on this (soon-to-be) pensioner’s face as he left the office, the answer was simple. He had the good fortune to have been enrolled into the Scheme in 1975 and although he had not contributed since 1990, he will still retire with a comfortable pension and a nice tax free lump sum.
As we head towards October and the beginning of Auto Enrolment, I am sure we will start to see more coverage in the national press and hopefully this will emphasise the importance of making arrangements now to provide for our financial future.
In fact, the biggest challenge to everyone involved in the pensions industry is making sure that communication, in all forms, is simple, clear and understandable.
I always explain to employers and members that by using the Plumbing Pensions Scheme you are saving for when you are no longer working. And given that on average we are all living that bit longer it really is something that we all need to do, otherwise how will we fund all of the time we’re not earning a wage? It’s all too easy to put off making arrangements for the future but it really is time well spent and the comfort of knowing that you’re in control of your finances makes it worth it.
We will be attending the PHEX show at Old Trafford, Manchester in October – so if you’re visiting, do come along and say hello! It’s an ideal opportunity for those attending to take some time out to chat about pensions and how the Plumbing Pensions Scheme can help.
It is now less than 3 months until one of the biggest changes to pensions in recent times will be upon us. That change being the introduction of “Automatic Enrolment”.
With effect from 1st October 2012 Government legislation is being introduced which will require almost all employers in the UK to enrol their staff into a qualifying pension scheme. The concept of Auto Enrolment has been in the pipeline now for more than four years so you could be forgiven if you had forgotten about it at this stage. You might even have put it down as yet another policy which was just going to be talked about by the politicians for years to come with nothing ever being done about it.
All employers really must sit up and take notice this time though! It may be that, depending on the size of your company you don’t need to enrol your staff into a pension arrangement for a few years yet but that doesn’t mean you should forget about everything until your date comes around. If this is the position you are in, the opportunity that this offers you now is the time to enable a bit of research to be done. By speaking to the right people you may be able to gather enough information on many arrangements. The result being that you can really be confident of making the right choices to suit the needs of your staff when the time comes.
There are many employers who are looking at this as just another expense they could do without but why not try looking at this from a different angle? Start looking at this as a real opportunity. You could become known as one of the top employers in your field, an employer who really looks after their staff. As an employer this can of course be financially beneficial to you in the longer term as you would be able to attract a better, more reliable workforce. They won’t leave as readily and as such your recruitment costs would reduce. No more advertising for new staff. The recommendations from your customers to their friends then become greater – and you can’t get any cheaper, more effective advertising than that.
As you are no doubt aware Plumbing Pensions are one of the top pension arrangements looking after the industry. We don’t have pushy sales staff forcing you to make a quick decision so why don’t you give us a call and speak with our Business Development Executive for further Scheme information. What have you got to lose?
A number of pensioners of the Plumbing Industry Pension Scheme have contacted our offices recently asking why their monthly pension has not been increased for some time. There are a number of reasons for this.
Although legislation was introduced some years ago requiring occupational pension schemes to increase the amount of benefit paid to pensioners, this legislation was not retrospective and only affects pensioners who accrued pension benefit after April 1997. Many of the Scheme’s current pensioners had retired by that time and are therefore not affected by the legal requirement.
However, even where it is not legally required to do so, the scheme aims to provide increases to members providing the investment returns we achieve permit us to do so. Our history in this regard is exemplary and for many years pensioners found their benefits increasing in line with price inflation each year. The economic and investment conditions in the last few years have, as most people are aware, changed dramatically and it has been difficult for most pension schemes to generate the type of very positive returns which were previously possible. The principal funding objective of the Scheme is to meet the benefits which have been accrued by all members (both those who have retired and those who have not yet taken their benefits). This is checked every three years in a process known as an actuarial valuation. At the last valuation in April 2009, the scheme’s assets were calculated to be sufficient to meet its liabilities. There is a valuation due as at April 2012 (the results of which will not be known until early 2013). What we do know already, however, is that the general economic and investment situation which has to be taken into account in such calculations has not improved over the last 3 years. Government action to boost the economy such as Quantitative Easing has not helped as this has the effect of depressing the yields on bonds. This means that the ability of the Scheme’s Trustee to award additional increases (over and above those which it is required to provide by law) is extremely limited.
The Directors of the Scheme’s Trustee Company fully understand that with price inflation continuing to be high, pensioners receiving no increase in pension benefits are effectively worse off than they were in the previous year. The aim will continue to be to generate the type of returns which will give the Directors flexibility to award discretionary increases in future. This will, however, require a significant improvement in current conditions. Our pensioners should be assured however, that as soon as this is possible, increases in their pensions will be provided.
This month’s blog is written by Angela Smith who is the Business Development Executive of the Plumbing Pension Scheme.
Say the word “Pension” to a lot of people and their reaction can vary from a smile to a grimace! My role is to visit plumbing businesses throughout the UK to talk about the latest pensions legislation, how it will affect them and how a Scheme with 36 years experience, set up by the industry for the industry can help provide employees with a quality pension. It is therefore vital that I am able to talk about pensions in a way that the recipient can understand. So hopefully by the end of a meeting, the grimace has been replaced by a smile!
It’s quite understandable that most people don’t even want to think or talk about pensions, however it really is important that we all take responsibility for our future and how we are going to fund our every day needs when we are no longer working. The new legislation to ensure everyone is automatically enrolled into a workplace pension means that in future pensions will be easier to understand, more accessible and everyone will then be aware that they need to do something for when they retire. I personally believe that more should be done in schools so that when young people leave school or college they know what a pension is and how important it is that they are offered one.
Every day there seems to be something in the press about pensions and often complicated words are used to describe and over complicate a product which is essentially straightforward – so people are put off! With an increase in awareness and accurate press reporting this will hopefully become a thing of the past!
I have been to see people/firms from Aberdeen to Dorset, from firms employing just one to those employing 100+ and it’s a pleasure to meet and talk pensions with you all.
In life one of the biggest questions we ask when entering into a deal of any sort is “what will I get in return?”
I don’t think there is anything wrong with that, we work hard for what we earn so time and money are precious to us all and we certainly don’t want to throw any of it into a big black hole for no benefit in return.
From a financial point of view one of the most important (and possibly longest) outlays we have during our working lives can be pension contributions. We pay them over many years but in many cases we don’t really know what we are going to get in return and that must make us nervous!
If paying monthly pension contributions into a “defined contribution scheme” (also known as “money purchase”) the value of benefits that you will receive on retirement is not known. They are dependant on how well your money is invested throughout your working years and then the state of the investment markets at the time you come to retire - and who can predict that 30 years ahead?
One other point to note is that investments can go down as well as up.
If however, your scheme is a defined benefit arrangement such as the Plumbing Pension Scheme, there is not so much of an unknown factor. There is a much higher degree of certainty as to the benefits you will receive at retirement as a set pension amount will accrue each year based on your gross earnings. The pension will increase each year in line with inflation to ensure that it does not lose its value before retirement and depending how well the annual Scheme investment does, the Trustee may also authorise additional bonuses to be added.
We all want value for money and we all have different needs but one thing is for certain, pension saving in times ahead will become more and more important in securing the financial future we want. So before making that final choice don’t just look at the gross contribution costs. Make sure you look at the whole picture and investigate all options thoroughly before choosing what is right for you.
The average person will move house several times in their lifetime. When they do so, they will almost inevitably ensure that their milkman, the Post Office, their bank and their employer are all given their new contact details. Our experience here at Plumbing Pensions is that pension schemes tend not to be on the list of those notified of a change of address. This can lead to problems with the pension scheme updating members about their benefits and might even lead to the inability of the scheme to pay the benefits when they become due.
Plumbing Pensions has just been contacted by one such member, some 35 years after he moved from Northern Ireland to Australia. Shortly after he moved, our usual annual communications (which we sent to all members) were returned by the Post Office marked “Gone Away”. This happens all too often and is frustrating for the scheme as we like to be able to keep in touch with all of our members (even when they are no longer contributing). Thankfully, as he approached normal retirement age, this member remembered that he had contributed to the Scheme all those years ago and found the Scheme’s website address which he used to get in touch. We now know where he is, can update our records and we will be in a position to pay his pension when the time comes.
While the above example has a happy ending, there are many more examples of people who have left the industry (possibly also the country) and not thought to let us know. While we make every effort to keep up to date, this process can fail where members don’t tell us about their new address. Plumbing Pensions encourages all members of the Scheme to add us to their list of organisations to be advised when that next change of address comes along.
It is hard to find good news about pensions anywhere in our newspapers these days. Companies are closing their final salary schemes- it has just been reported that Royal Dutch Shell is the last FTSE 100 company to close such a scheme. That company, like so many others, plans to introduce a defined contribution (DC) scheme, under which the amount of pension available will depend on the state of investment markets when members retire.
Nearly 40 years ago, some people in the UK plumbing industry had incredible foresight when they introduced a revalued career average scheme for people working- in any capacity- in the plumbing and mechanical engineering services industry. Career average schemes (or CARE as they are sometimes referred to) avoid the open-ended commitment faced by employers operating final salary schemes. At the same time, they provide employee members with a level of certainty about their future pension which is just not possible with a defined contribution arrangement. It is no coincidence that career average is being seen as the solution to the country’s public sector pensions problems. It has worked well for plumbing over all of these years so there is no reason why it won’t work well for other sectors.
Speaking at a national pensions conference in September 2011, the Manager of Plumbing Pensions, Robert Burgon, showed delegates how CARE schemes are a viable alternative to defined contribution. The headlines in the pensions press after that event read “Plumbing scheme: CARE a legitimate alternative to DC”.
Plumbing Pensions is well and true open for business and steps are being taken to recruit new participating employers into this scheme. Employers, active members and pensioners of the Scheme should be proud that they are involved in such a pension scheme.