Consultants showed the Treasury evidence of a £67 billion-a-year hit. Advisers from a low cost investment provider laid their facts bare for officials, revealing how hard-hit retirees are sometimes left with less than they paid in once an average 3.2 per cent in fees is siphoned off each year.
With this sort of fees, it is no wonder that established private pensions are collapsing like flies. Sadly, the news gets even worse. Established to help support bankrupt funds, the UK Pension Protection Fund takes over the liabilities, mostly paying out a small fraction of the original commitments. There is now a high likelihood that even the PPF will need bailing out by tax payers. Via the BBC:
The deficit of the 6,533 final-salary schemes in the private sector deepened to £196 billion at the end of September from £117 billion n at the end of August.
That's a staggering increase of 67% on its liabilities, and with bonds yielding around 2% before inflation of five percent, it will only get bigger.
