The £7.6 Trillion Pension Liabilities Highlights the Need for Financial Planning Advice

Jun 1, 2018 | Retirement Planning


New figures have emerged that shows pension liabilities have reached £7.6 trillion. This vast sum is made up of both public and private sector pension pots. This is worrying news as it is quite possible that should your employer or one of your previous employers run into difficulties, your pension could be lost in a ‘black hole’.

This is an increase of £1 trillion over the period of 2010 to 2015. £5.3 trillion are the responsibility of central and local government. This figure represents 279% of gross domestic product (GDP). £4 trillion of this is unfunded state pensions.

If your pension was accumulated in the private sector using a workplace defined benefit scheme, then you may well be concerned that £2 trillion of liabilities exists here. This represents 124% of GDP.

Irwin Mitchell’s Martin Jenkins said,

“If the UK were a PLC the shareholders would be getting worried by now.

“The government is funding these schemes at a fairly low rate compared with their true costs. If you take the NHS pension scheme, the employer pays 16 percent whereas the actual funding costs of those benefits would be more like 20-30 percent.”

Hope for your Pension yet

These alarming, unfathomable figures make unpleasant reading but it is not all bad news. With good financial planning, you can move your pension to better performing funds, which negate the pension void that seems to plague both the public and private sectors.

Every day it seems clear that regardless of which sector you work in, your employer may have other plans for your pension pot than what you were led to believe. Click here and complete the Call Back Service form so we can help you put your funds in the right place.

A DWP spokesperson said, “These statistics are a snapshot in time, and do not take into account future National Insurance contributions and the recently announced timetable to increase the state pension age, which is reviewed each parliamentary term to ensure it remains fair and sustainable.

“The vast majority of private pension schemes are working well, and continuing to help in providing a secure retirement for millions of people.”

Nonetheless, it is my considered view that it is still a good idea to use an experienced financial planner, to ensure you have the peace of mind that your hard earned monthly pension payments are not being paid into a fund that may cease to exist.

Source: CityAM

For more information, please contact Michele Carby at Holborn Asset Management on +971 50 618 6463 and on e-mail at [email protected]


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