Could someone explain in detail why the pension plan failed in Britain.?

Question

Can you explain problems that the pension plan in Britain has encountered.

Answer 1

I assume you mean Company 'Final Salary' Pension Schemes ?

They have not 'failed' as a system (as far as employees are concerned)  - far from it - people who are lucky enough to be in one are virtually guaranteed a decent standard of living in retirement ..

HOWEVER the COST of these schemes has gone through the roof .. so (as far as Employers are concerned) they have indeed 'failed' .. (see first link)

I guess 3 main factors - (1) is changes to accounting practice (so Companies have to make full provision 'now' for all the pensions they have to pay out in the future, rather than counting on their investment returns to cover the pay outs as they used to do, (2) is Gorden Brown's decision to Tax dividends paid to company pension schemes .. this is costing company schemes about £5 billion every year .. finally (the 'biggie') (3) people are living (a lot) longer .. a Final Salary Pensions has to be paid until you die so people not dying as early as they used to is costing the schemes (a lot) extra ..

As a result, most companies are their closing Final Salary Schemes to new employees .. (some are closing Final Salary schemes full stop) ..

NB> You want to know which 'profession' has the BEST Final Salary Scheme of them all ???

Yep - MP's !! (and the civil service in general  - and the Government scheme monies are NOT invested anywhere .. instead the pension payments come straight out of the Taxpayer's pocket .. in some cases (Police / Fire Service)  almost HALF the money spent on that service is going straight out to retired Firemen / Policemen (it's only a matter of time before that reaches 100% :-) )

When Companies go bust there is often not enough in the scheme to meet the pensions of those entitled .. so some schemes have indeed failed .. so the Government set up a 'compensation' fund, and took contributions from all the 'solvent' Final Salary Schemes to bail out any that failed .. this  helped to put the final nail in the coffin of Company Final Salary Schemes - many Companies already reeling under the tipple whammy of cost accounting, Tax on the investments and Pensioner longevity took one look at yet another cost on top and decided to call it a day ..

The message from the Government really couldn't have been plainer - "scrap your Final Salary Scheme or we will make it so expensive that your Company will soon be insolvent" (this has actually (technically) worked already for (I believe) the likes of B.A and  Rolls Royce where their (future) Final Salary Scheme liabilities exceed their entire Company worth ..

Answer 2

We need more information here. As far as I know the pension plan has NOT failed. My beloved gets hers and the government will pay me mine next year.

But what do you really mean?