Latest news with #pensionschemes
Arabian Business
6 days ago
- Business
- Arabian Business
Rolls-Royce sells its UK Pension Fund in a $5.8bn deal with PIC
Rolls-Royce Holdings has said that the trustee of the Rolls-Royce UK Pension Fund has secured an agreement to sell its £4.3 billion (US$5.8 billion) bulk annuity insurance to an insurance company in what is the largest UK risk transfer so far this year. The deal with Pension Insurance Corporation (PIC), a specialist insurer of defined benefit pension schemes, will cover Rolls-Royce's entire outstanding liabilities to its workers, comprising the pensions of 36,000 people (15,000 pensioners and 21,000 deferred members), the two companies said in a statement. Rolls-Royce seals PIC pension agreement A key focus for the Trustee as part of the transaction was partnering with an insurance company with the same commitment to very high levels of customer care and support, which has been at the heart of the Trustee's strategy in running the Fund. The deal with PIC fully insures benefits payable from the Fund, providing certainty and security for the defined benefit scheme's members. They will have their benefits secured by one of the UK's largest regulated insurers, with a strong track record of high standards of customer service. Liz Airey, Chair of Trustees, Rolls-Royce Pension Fund, said: 'This is a landmark agreement that will result in increased certainty and security for Rolls-Royce pension scheme members. In PIC, we have found a partner who will also be able to maintain the high levels of customer service that our members deserve.' The sale is expected to bolster Rolls-Royce's efforts to simplify its business. The company's pension liabilities have weighed on its performance over recent years, and the disposal comes as Chief Executive Officer Tufan Erginbilgic seeks to streamline its business as demand for its engines surges. Helen McCabe, CFO, Rolls-Royce, added: 'This is a win-win for all our stakeholders. We are proud to have been able to fully fund and secure the pension promises made to colleagues, former colleagues and their families. This deal is also another step on our journey towards simplifying Rolls-Royce.' The deal involves the final defined benefit pension scheme backed by Rolls-Royce in the UK. The buy-in includes the transfer of assets in exchange for an insurance arrangement that offsets liabilities. It has been secured in anticipation of a full 'buy-out' – in which liabilities and management of benefits are transferred – of the scheme at a later date. In July this year, PIC was acquired by Athora Holding Limited for approximately £5.7 billion (US$7.67 billion). Athora is a leading pan-European savings and retirement services group with €76 billion (US$88.6 billion) of assets under management and administration. Mitul Magudia, Chief Origination Officer at PIC, said: 'It has been a pleasure working on this innovative transaction with the Trustees and their advisers. They have developed an excellent customer experience offering for their members over the past few years. 'Ultimately, the transaction hinged on who they felt would be best able to continue to provide the same levels of customer care and consideration. We were delighted to be selected and proud that the Trustees have entrusted us with helping to continue to deliver this service to the members. 'Following the announcement of our acquisition by Athora, which is subject to regulatory approval, we expect to have strong appetite to complete many more ground-breaking transactions like this in the future.' The transaction will be fully funded from existing pension plan assets and will result in a reduction in Group net assets of approximately £0.6 billion (US$807 million). A full transfer of liabilities is anticipated within the next 12 months, coincident with PIC assuming direct responsibility for delivering insured benefits.
Forbes
12-06-2025
- Business
- Forbes
Will Quantum Computing Kill Bitcoin?
Quantum computers could theoretically break Bitcoin's encryption and destroy the cryptocurrency ... More overnight, threatening the investments of 500 million global holders and trillions in market value. Bitcoin and other cryptocurrencies are now embedded in the global financial system. Countries are creating strategic reserves, and institutional investors, from hedge funds to pension schemes, are allocating capital to digital assets. Many individuals, businesses, and even governments are exposed to price fluctuations in this notoriously volatile market. But could it all collapse overnight if quantum computing renders the technology behind cryptocurrencies obsolete, potentially causing trillions of dollars in value to vanish? That's the risk some experts associate with quantum computing. These futuristic machines harness the strange properties of quantum mechanics to perform specific types of calculations exponentially faster than even the most powerful supercomputers. Given enough power, quantum computers could one day break the cryptographic foundations of blockchain systems like Bitcoin. So, how real is this threat? Could it mean the end of crypto or the start of a new chapter in the age of post-quantum security? At the start of 2024, an estimated 500 million people globally held Bitcoin or other cryptocurrencies, a 34% increase from the year before. The majority of holders reside in Asia and North America. In many cases, these assets represent a substantial portion of personal wealth or national reserves. If a technological advance were to render these assets insecure, the consequences could be severe. Cryptocurrencies function by ensuring that only authorized parties can modify the blockchain ledger. In Bitcoin's case, this means that only someone with the correct private key can spend a given amount of Bitcoin. Bitcoin currently uses cryptographic schemes such as the Elliptic Curve Digital Signature Algorithm (ECDSA) and Schnorr signatures to verify ownership and authorize transactions. These systems rely on the difficulty of deriving a private key from a public key, a task that is computationally infeasible for classical computers. This infeasibility is what makes "brute-force" attacks, trying every possible key, impractical. Classical computers must test each possibility one by one, which could take millions of years. Quantum computers, however, operate on different principles. Thanks to phenomena like superposition and entanglement, they can perform many calculations in parallel. In 1994, mathematician Peter Shor developed a quantum algorithm capable of factoring large numbers exponentially faster than classical methods. This algorithm, if run on a sufficiently powerful quantum computer, could undermine encryption systems like ECDSA. The core difference lies in how quantum and classical computers handle data. Classical computers process data as binary digits (bits), either 0s or 1s. Quantum computers use qubits, which can exist in multiple states simultaneously. As of 2024, the most advanced quantum computers can process around 1,000 qubits, but estimates suggest that breaking Bitcoin's ECDSA encryption would require a machine with 10 million to 300 million fault-tolerant qubits, a goal that remains years or even decades away. Nonetheless, technology often advances unpredictably, especially now that AI tools are accelerating research and development across fields, including quantum computing. This is why work on quantum-safe (or post-quantum) cryptography is already well underway. The U.S. National Institute of Standards and Technology (NIST) is leading efforts to standardize cryptographic algorithms that are secure against quantum attacks, not just to protect cryptocurrencies but to safeguard the entire digital ecosystem, from banking systems to classified government data. Once quantum-safe standards are finalized, Bitcoin and other blockchains could adapt accordingly. Bitcoin's open-source software is managed by a global community of developers with clear governance protocols for implementing updates. In other words, Bitcoin is not static; it can evolve to meet new threats. Could quantum computing kill Bitcoin? In theory, yes, if Bitcoin failed to adapt and quantum computers suddenly became powerful enough to break its encryption, its value would plummet. But this scenario assumes crypto stands still while quantum computing advances, which is highly unlikely. The cryptographic community is already preparing, and the financial incentives to preserve the integrity of Bitcoin are enormous. Moreover, if quantum computers become capable of breaking current encryption methods, the consequences would extend far beyond Bitcoin. Secure communications, financial transactions, digital identities, and national security all depend on encryption. In such a world, the collapse of Bitcoin would be just one of many crises. The quantum threat is real, but so is the work being done to prevent it. So, if you're among the millions with a bit of Bitcoin tucked away in the hope it will one day make you rich, well, I can't guarantee that will happen. But I don't think you need to worry that quantum computing is going to make it worthless any time soon.
Daily Mail
29-05-2025
- Business
- Daily Mail
Warning over pension clawback - could it hit YOU at state pension age?
'Pension clawback' means your final salary pension might be cut when you reach state pension age. The reason for this originates in rather arcane arrangements dating back to the dawn of the welfare state in the 1940s - and many pension schemes have since changed their rules or phased out the practice. But if you are due a final salary pension via a current or old employer it is worth paying close attention to all information on the paperwork you are sent - and any choices you are being asked to make – especially in the run-up to retirement. If you discover your scheme operates 'clawback' it's most important to fully grasp the rules, particularly if you retire before 66 and so will see a drop in your work pension after you start receiving your state pension. Be prepared in advance, and ask questions of your scheme about the impact on you personally, to avoid any nasty shocks to your budget later in retirement. Clawback has become controversial over the years, as we will explain below, because people are understandably exercised by a sudden loss of income when they don't expect it or haven't had an explanation. Here's what you need to know about pension clawback... What is 'pension clawback' and how does it work? Pension schemes use different names for this and it's worth knowing the financial jargon. In addition to clawback, you might hear references to integrated pensions, state pension offsets and bridging pensions. Arrangements for 'integrating' work and state pensions began back when the modern welfare state was created, which led to more people paying National Insurance from 1948. Final salary (also known as defined benefit) pension schemes, both private and public, wanted to take account of more staff now receiving a state pension. They sought to prevent schemes themselves or individual members overpaying contributions or doing so unnecessarily, just to duplicate benefits. The rules for doing this and the calculations involved varied, and changed over time (if you're interested in the history, the House of Commons Library published a briefing on pension clawback in 2020). Nowadays, most private sector final salary pension schemes are no longer linked to state pensions. Public sector pension schemes stopped taking them into account decades ago, except for service before 1980. But some work schemes are still designed around them, and the result is that payments may be cut when a member reaches state pension age, to adjust for lower contributions made earlier by the scheme itself and its members. The size of the reduction depends on the scheme, but it is a fixed amount and usually works out at a few thousands of pounds a year. This has a bigger impact on someone with a small pension than a larger one. Clawback is sometimes embedded in a scheme's rules and will kick in automatically. However, some schemes offer workers the option of taking a higher 'bridging' pension - just until they reach state pension age - or a lower 'level' one. They work out the cost to end up being the same either way, but people who get the choice can find it convenient to have a temporarily higher income while they wait to get a state pension. This is why you should read pension documents carefully in the run-up to retirement, so you know where you stand if you are affected by clawback (or a myriad other important matters). If you are not sure, or don't understand the information you are sent, ring up or email your scheme and ask if it is has clawback arrangements. Staff should be prepared to take the time to answer and explain any impact on you individually - better now than when you reach state pension age and are surprised by a sudden cut in your work pension. Controversy over pension clawback If you do not know beforehand that clawback is going to reduce your work pension when you reach state pension age, you will understandably feel aggrieved - and it causes hardship in some cases. Clawback was condemned by some MPs as outdated and punitive during an adjournment debate in the House of Commons in April. Several cited constituents who had seen cuts of several thousand pounds, amounting in some cases to 13 per cent or 16 per cent of a pension, and there were calls for abolition of clawback. Criticism was aimed in particular at a Midland Bank pension scheme, now run by HSBC, which is opposed by the Midland Clawback Campaign and the union Unite. See the box below for HSBC's stance on clawback. Those against clawback often point out that it is regressive, in that fixed reductions disproportionately affect people with smaller pensions, who are often women. What does HSBC say about clawback? HSBC's position on [an amendment to] the state deduction has been consistent; it would constitute a retrospective change to the scheme that would benefit a particular group of members and would be unfair to other scheme members. It would increase the risk of grievances being raised by other pension scheme members both in the UK and globally and would set a precedent for further challenges to pre-existing valid terms and conditions that could lead to significant unplanned and unintended costs. Pension firm PensionBee says: 'As pension clawback is a fixed cash amount deducted from your pension - unlike other charges which usually deduct a percentage of the pot - its impact on your pension can vary. 'Those with larger pensions will be less affected, whilst smaller pots can see a substantial loss.' It offers the following example: 'If you received £50,000 a year from your workplace pension scheme, then a fixed pension clawback of £2,500 a year would equal a 5 per cent deduction every year. 'However, if you received £10,000 a year from your workplace pension scheme, then that same fixed £2,500 clawback would equal a 25 per cent cut to your annual pension income.' On its website, PensionBee says: 'Whilst most schemes have capped or withdrawn clawback, it's worth checking if you could lose out on a chunk of your pension. 'Those most affected are the lowest income workers, often women, and those seeking to retire early. 'If you're enrolled in a pension clawback scheme, it's likely you aren't even aware yet. One of the issues is poor communication, with few people affected aware of its importance.' PensionBee suggests asking your workplace pension scheme directly or checking your company handbook, and considering making additional contributions to offset the future loss from pension clawback. Will the Government abolish clawback? Successive governments have declined to force pension schemes to end clawback arrangements. The Conservative former Pensions Minister Guy Opperman said in 2017: 'These schemes were designed to avoid additional contributions from sponsors and members by taking account of some or all of the state pension when calculating the amount of occupational pension payable. 'The arrangement is set out in scheme rules which would have been available to members when they joined the scheme. 'Such arrangements are not a requirement of Department for Work and Pensions legislation. It would not be right to compel schemes to withdraw this integration arrangement. 'That would amount to a retrospective change imposing significant additional unplanned costs. Pension scheme rules on the calculation of benefits are many and varied, and must remain a matter for employers and scheme trustees to decide.' At the House of Commons debate on clawback in April, the current Labour Pensions Minister Torsten Bell gave a lengthy response which you can read here. He said: 'I appreciate that that type of scheme can be controversial, thanks to the change in the private pension income involved. 'All of us sympathise with anyone who expected a straightforward income increase when their state pension kicked in, only to find that things were much more complicated than that. I have read and listened to representations on this issue myself.' He went on: 'Integrating an occupational pension scheme with the state pension was a core design of some schemes, and that has pros and cons. 'It used to be a common feature of final salary schemes, covering almost half of schemes, according to one survey from the early 2000s, although it is far less common today.' Bell said all pension schemes are required by law to provide every member with basic information, either before they join or very shortly afterwards. If someone has not received clear communication they can complain via an internal dispute procedure, and after that to the Pensions Ombudsman. He added: 'I owe it to this House to be clear that we cannot retrospectively change the benefits schemes offered to their members. Any legislative change would affect all integrated schemes, risking the future of some that are less well funded.' What do other pension experts say about clawback? Rosie Hooper, chartered financial planner at Quilter Cheviot, has dealt with clients whose pensions are reduced by clawback. She says: 'Pension clawback often trips people up simply because they don't understand it, and they haven't factored it into their budget. 'The reality is that the reduction isn't usually huge, but it's the surprise element that causes issues.' Hooper says she always explains clearly what a client who is affected should expect. 'It's not that the whole state pension gets deducted which is a common misconception. It's about how some schemes reduce the income they pay once the state pension kicks in. It's not a hidden charge, but it needs to be properly understood.' She says starting to receive the state pension allows people to reduce the income they need to take from other sources, but the step-down in cash flow has to be planned for and built into a retirement plan. 'It's also worth remembering that the state pension used to make up a much bigger share of someone's retirement income,' she adds: 'Today, it's a smaller piece of the puzzle, which makes planning around it even more important.' Simon Taylor, head of defined benefit at pension consultancy Barnett Waddingham, says clawback was typically part of the design of defined benefit (final salary) pensions that remained 'contracted in' to paying second state pensions (Serps or S2P). 'The design meant that both the company and the members paid higher National Insurance, and members generally built up full state pensions,' he explains. People in pension schemes which 'contracted out' of paying more NI usually get lower state pensions. 'Clawback' is essentially a way to integrate the scheme benefit with the state benefit - if it didn't exist, pensions would have cost the company and member more,' says Taylor 'As a result, members would have had lower take-home pay over the course of a career.' He says there are lots of ways for clawback to happen, but obviously if it comes as a surprise it can be poorly received - and communications to scheme members weren't always as thorough as they are today. 'For people hitting state pension age now, it is all likely long-forgotten, and so can feel like a harsh practice,' he says. 'In reality though, the process has its roots in a sensible cost/benefit balance - and the alternative is being in a contracted-out scheme and paying lower National Insurance so getting a lower state pension, or being in a defined contribution scheme and likely receiving far less in the long run. 'Defined benefit pensions remain impressively generous - however, the responsibility sits with the scheme to ensure members understand the realities of their benefits and if and when any deductions will be made.'
