Latest news with #pensionreform
Japan Times
3 days ago
- Business
- Japan Times
Japan's Lower House OKs revised pension reform bill
The House of Representatives on Friday approved a revised pension reform bill that calls for a measure to shore up basic pension benefits. The bill passed the lower chamber during a plenary meeting by a majority vote, with support from the ruling camp and the main opposition Constitutional Democratic Party of Japan. The bill is expected to be enacted during the current session of parliament ending in June after being sent to the House of Councilors. The level of basic pension benefits for all citizens is expected to decrease by about 30% in three decades due to the country's shrinking and aging population. The revised bill, submitted jointly by the ruling coalition of the Liberal Democratic Party and Komeito, plus the CDP, features a supplementary provision that calls for shoring up basic pension benefits through the use of reserve funds from the kōsei nenkin public pension program for corporate and government workers that pay additional benefits, if the 2029 review of public pension finances predicts a significant decrease in basic pension benefits. The government initially sought to include a basic pension improvement plan in the pension reform bill but eventually dropped it following criticism among some LDP members that the planned measure would be a misappropriation of kōsei nenkin funds. The government came under fire for the removal of the improvement plan. This led the LDP and Komeito to accept a CDP proposal to revise the bill to put back the plan.
BBC News
4 days ago
- Business
- BBC News
Reeves outlines plan for £25bn pension 'megafunds'
The government has fleshed out its plans for reforming the UK pension industry, including the creation of £25bn "megafunds" which will be instructed to make a portion of their investments locally to help fuel economic chancellor said the overhaul, designed to follow the example of Australia and Canada's huge pension investment funds, would also boost people's pension pots. "These reforms mean better returns for workers and billions more invested in clean energy and high-growth businesses," Rachel Reeves of the UK's largest pension firms already approved the gist of these reforms in a voluntary agreement earlier this month. However, the government is also including a legislative back-stop, which will allow it to push through the new rules, if insufficient progress is made by the end of the government has indicated it does not expect to use the new powers. Nevertheless, that element may draw criticism, with some in the industry opposed to any government mandate over how and where investments are Alexander, a director at the Pensions and Lifetime Savings Association, said the changes would have "significant implications" for how pension schemes she added: "Increased consolidation has the potential to improve retirement outcomes through improved governance, wider investment diversification and improved bargaining power." Miles Celic chief executive of The City UK, representing the financial services industry, backed the chancellor's assertion that the move could "help drive economic growth". A former Liberal Democrat pensions minister, Sir Steve Webb, who is now a partner at consultants LCP (Lane Clark & Peacock), described the news as "truly a red letter day for pension schemes, their members and the companies who stand behind them"."The Government has clearly been bold in this area and this opens up the potential for this surplus money to be used more productively to benefit scheme members, firms and the wider economy," he added. One of Labour's first moves after taking office last year was the announcement of a pension review. In November the chancellor floated her "megafunds" plan, which covers retirement savings for the majority of UK workers in two there are the 86 different local authority pension schemes, which provide for more than six million people in their retirement, the majority low-paid women. The £392bn in these defined benefit schemes will be merged in just six asset pools by March next a defined benefit scheme a worker pays into their pension and is paid a pre-determined amount based on their salary and length of investment targets will be agreed for local authority pension schemes for the first time, the Treasury defined contribution schemes currently worth £800bn, and covering millions of other private and public sector workers across the country, will also be defined contribution schemes workers are not guaranteed a specific amount. Instead their pension depends on the performance of the fund in the years before 2030 the government says there should be more than 20 pension funds worth more than £25bn, in contrast to the current part of the voluntary agreement, known as the Mansion House accord, agreed earlier in May, the 17 firms involved committed to investing 10% of their assets in things other than publicly traded shares, so that more money would flow into home-building, infrastructure projects and start-up businesses in fast-growing addition, 5% of investments will be earmarked to go into UK reforms will form part of the Pension Schemes Bill, about to go before Parliament. The new approach would mean over £50bn additional investment in UK infrastructure, new homes and businesses, the Treasury Thursday the government is publishing the final report from its Pensions Investment Review. It said the review found the reforms would drive higher returns for pension savers through cutting waste, economies of scale and improved investment a result workers on average earnings could see a £6,000 boost to their defined contribution pension pot, the Treasury said.
The Sun
4 days ago
- Business
- The Sun
Rachel Reeves' pension ‘megafund' reforms to bag retirees £6,000 extra each
MILLIONS of people are set to receive a £6,000 boost to their pension pots, new figures reveal. Chancellor Rachel Reeves previously announced plans to move billions of pounds of pension savings into larger "megafunds". The scheme is aimed at boosting savers' retirement pots as well as investment in the UK. Now Government data shows the move should boost the average earner's pension pot by £6,000 by the time they retire. This is based on the average earner who begins saving at 22 and continues to do so until they reach state pension age. Reeves said the pension reforms will "mean better returns for workers and billions more invested in clean energy and high-growth businesses". The plans are some of the biggest pension reforms in decades and the Treasury has described them as "radical". They will be introduced through a pensions schemes bill next year. As part of the plans, the Government will consolidate - or in other words, pool together - defined contribution schemes. Defined contribution pension schemes are a type of private pension you contribute to on a regular basis. There are currently about 60 different multi-employer schemes, which invest pension savers' money into funds. But the Government says that moving pension savings into bigger "megafunds" will mean they can be invested in assets that have higher growth potential. In turn that could mean pension savers have more in their pots by the time they retire. Australia and Canada have similar schemes that the UK is hoping to emulate. It's estimated that defined contribution pension schemes will manage £800billion worth of assets by 2030. The Government says the move could generate about £80billion worth of investment in new businesses and critical infrastructure. Separately, the Government is also planning to make changes to hundreds of billions of pounds worth of assets which are currently split across 86 local government pension scheme authorities. At the moment local government officials and councillors manage each fund. But under the plans, the Local Government Pension Scheme in England and Wales will manage assets worth around £500 billion by 2030. This means the pension assets will be pooled into a handful of funds run by professional fund managers. The Government says this will allow them to invest more in infrastructure, supporting economic growth and local investment. Jon Greer, head of retirement policy at wealth manager Quilter, previously said the consolidation could "open new doors" for UK pensions if managed carefully. But he said its success would depend "heavily" on the availability of new infrastructure projects to invest in. "Large funds need substantial, reliable projects to generate returns, but the market may struggle to offer enough of these opportunities, especially in the infrastructure sector," he said. "If too much money chases too few viable investments, the effectiveness of this consolidation could be diluted, with funds potentially forced into riskier or less impactful projects." Tom Selby, director of public policy at AJ Bell, said there is a danger as "risks are all taken with members' money". "There needs to be some caution in this push to use other people's money to drive economic growth. It needs to be made very clear to members what is happening with their money," he said. How do I consolidate my pension? IF you have several workplace pensions that you're no longer paying into, you might be better off consolidating them into a single pot. There are several advantages to this. The first is that by having your savings all in one place, you'll only pay one set of fees. You can also choose which pension provider you want to transfer the different savings to, so you can pick the best one for you. It also makes it easier to keep track of your money. You might want to move all your money to whichever of your existing pots has the best fees, or you could move it all to your current employer pension (if you have one). Alternatively, you may wish to move money to a private pension or use a consolidator service, such as Pension Bee, Aviva, or Wealthify. Make sure you compare and contrast your options carefully so that you're picking the best home for your savings. You'll need to look at fees but also might want to consider the investment options available. If any of your pots are over £30,000 you'll need to get independent financial advice, but even if you have lots of smaller pots you should consider speaking to an independent financial advisor (IFA). You can use Unbiased or VouchedFor to find a recommended advisor near you. Also ask whether you'll be charged a fee to exit your existing provider and to join your new provider, plus whether the age at which you can access your pension is different - for most people this is currently 55, but is set to rise to 57. You also need to ensure the pension you're leaving doesn't come with valuable added perks, or you could lose out. Stay alert for pension transfer scams as fraudsters often target people transferring their pension with promises of investments that are too good to be true.
Telegraph
5 days ago
- Business
- Telegraph
Reeves's pension ‘megafund' reforms to net retirees just £6,000 extra
Rachel Reeves's plans to combine smaller pension funds into a group of giant 'megafunds' will make workers just £6,000 better off by the time they retire, The Telegraph understands. In an announcement expected later this week, the Chancellor will lay out details of new rules to encourage consolidation in the pension industry. The aim is to emulate the success of nations, including Australia and Canada, which have a smaller number of very large pension funds. The scale means lower fees for members, saving an estimated £1bn a year across the industry, and allows fund managers to take greater risks that can deliver higher returns. Local authority schemes are expected to form part of the restructuring. There are currently around 1,000 defined contribution pension schemes in operation. After the changes, there are expected to be fewer than 20 megafunds. The shake-up forms part of Ms Reeves's 'big bang of reforms'. In November, the Chancellor said the pension plans would 'unlock tens of billions of pounds of investment in business and infrastructure, boost people's savings in retirement and drive economic growth so we can make every part of Britain better off'. However, it will take decades to feel some of the benefits of the changes. An average man aged 22, starting out in their career now, would currently expect to save £163,600 into his defined-contribution pension pot by the time he looks to retire in more than four decades' time. After the reforms, lower costs charged by the bigger pension funds – saving 0.06 percentage points – would mean the same man is estimated to save £2,500 by the time he seeks to live from the pot. As larger funds can diversify their investments and, hopefully, earn higher returns, he should gain another £3,300 over the decades, resulting in a total pot worth £169,500, a boost of close to £6,000, or a little under 4pc. This would come on top of the £11,000 boost which the Government expects the average pension saver will receive from other reforms, which seek to improve value for money and encourage funds to put more money into assets such as unlisted equities. The combination of policies means, if the estimates are correct, a typical worker would reach retirement with an extra £17,000 of savings. 'No guarantee' of better returns However, critics have argued that the reforms are not guaranteed to result in better returns for pension savers. Earlier this year, senior bank bosses on the practitioners' panel, convened under the auspices of the Financial Conduct Authority, warned there was a risk of creating a 'one-size-fits-all that does not meet the needs of individuals'. A letter from the panel, including the bosses of Nationwide and Scottish Widows, said: 'Clarification is needed on the primary objective of the proposals in order to achieve the desired outcomes. 'If long-term financial resilience is the aim, then a focus on suitability and engagement rather than scale and price cap would have the most significant impact.' Meanwhile, John Ralfe, a pensions expert, has warned that plans to push funds to invest more in UK-listed stocks are not expected to improve returns for savers, while investments in private assets can be expensive and opaque, which could pose risks for workers' cash over the decades. Guy Opperman, a pensions minister under the Conservatives, has argued that Labour's rhetoric on private investment in the water industry risks undermining pension funds' willingness to put their money into infrastructure, another goal of Ms Reeves's reforms.
Japan Times
6 days ago
- Business
- Japan Times
Coalition clears last hurdle of parliamentary session with pension bill
The ruling coalition struck an agreement on Tuesday with the opposition Constitutional Democratic Party of Japan on reforming the pension system — de facto clearing the last major hurdle of the ongoing parliamentary session that is slated to end on June 22. After the original bill's submission was postponed for over two months, the minority government of Prime Minister Shigeru Ishiba rushed to secure its approval in the Lower House, largely accommodating to the demands of the CDP. "It's a very meaningful agreement, and we're very happy about it," Ishiba, who also serves as head of the Liberal Democratic Party, said after a trilateral meeting with his Komeito and CDP counterparts Tuesday afternoon. Negotiations on the bill moved at an unusually swift pace, concluding in less than ten days after its submission to parliament. "It was important to address this issue without further delays," CDP leader Yoshihiko Noda told reporters after the meeting. "I see this as a milestone in the context of pension reform." The agreement largely revolves around a plan to boost funding for the basic pension program, called kiso nenkin, which provides coverage to all residents in Japan. The LDP-Komeito ruling coalition largely agreed to a CDP amendment proposing the usage of the kōsei nenkin employee pension program, funded by those with stable employment or working for larger companies, to shore up the kiso nenkin plan in four years through higher government spending. The kosei nenkin and the kiso nenkin are part of the same pension fund, but only those paying into the kosei nenkin program of that fund are eligible to then receive benefits from that program later on, along with the kiso nenkin. Therefore, moving funds from the kosei nenkin to the kiso nenkin will make that funding available to more people. Before the reform, workers earning less than ¥1.06 million ($7,300) yearly and those working for companies with fewer than 51 employees were only eligible for the kiso nenkin. How, however, they also will be able to receive the kosei nenkin. The kiso nenkin, funded through monthly contributions from anyone currently in the workforce, is expected to significantly shrink in the upcoming decades as a result of the widening imbalance between the working population and retirees. Similar measures didn't make it into the original coalition bill due to internal resistance from the LDP's Upper House caucus, who feared that a potential hike in government spending would result in a higher burden for working families. The CDP, on the other hand, prioritized more support for retirees and those in unstable employment. Constitutional Democratic Party of Japan head Yoshihiko Noda speaks to reporters in Tokyo on Tuesday. | JIJI The other two pillars of the original bill — an expansion of the kōsei nenkin, itself, to people working part-time or in small companies, and additional support for workers 65 or older — were kept intact. The reform is now expected to pass the Lower House before the end of May. While the negotiations showed a glimpse of the coalition's pragmatism in turning to the CDP — the largest opposition party — to get things done in parliament, they also demonstrate the hardships of a minority government forced to make considerable concessions to the opposition. Meanwhile, the CDP is expected to herald the agreement as a political achievement with voters in the upcoming Upper House election, where it faces an all-out confrontation with the coalition. The party's cooperative stance toward the coalition, however, raises questions about the party's handling of the most valued card in its deck — a no-confidence motion against the government. Should all opposition parties join forces and vote to oust the government, Ishiba would face two choices: resigning or dissolving the Lower House and calling a snap election. Noda has so far evaded any questions on the matter, affirming instead that cooperation in parliament should be kept separate from any no-confidence motion. "I'll make an appropriate judgement at the appropriate timing," Noda said Tuesday. "I'm not in a position to say anything about that right now."
