Should HM Gov' Bail Out Carillion?
Comments
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I think that the hit is two-fold: not only does the reduction in dividend yield hit the share price of stocks held by pension funds, but the reduced dividends also hit pension fund income.Surrey Commuter wrote:Rick Chasey wrote:Stevo 666 wrote:
Not sure what you are proposing.mamba80 wrote:Stevo 666 wrote:As SC says, it is more complex than that.
The concept of matching your expenses to the right period is a core accounting concept. That's why fixed assets are depreciated over to e and not written off in the P&L in year 1. As mentioned above, the deficit reduction payments go to P&L - these paymentsare also a cash hit and it is not usually possible for companies to pay cash up front for a scheme deficit (which usually arises from actuarial adjustments). In Carillions case it would have been around 500m.
Problem with your idea is that it would prevent many perfectly viable healthy companies from paying dividends form long periods because you would be putting potentially masive costs into the P&L when the right treatment is to spread the cost - as with many other items.
Surely though, its about balance? perhaps some companies need to redress this.
Paying 50m a year, it would take 10years to fund the scheme, yet for 16 years Carillion increased its dividend to shareholders.
Long term payments are only any good if the company stays in business.
there are reports circulating that the deficit is far larger?
fwiw i ve a few shares with a former company i worked for, i receive twice yearly dividend payments, yet the closed FS scheme is on its knees
Dividends may well have been going up, but when did the pension deficit arise? I suspect it was more recent, probably due to to the revised actuarial estimates for life spans etc. And if you stop companies paying dividends, that will have a major negative impact in share prices, which hits the value of pension funds...the very thing you want to protect.
As mentioned above these are major funding requirements and would not have prevented the current issue. Also as you note above, it is more important that the company stays in business and we can't legislate against bad business decisions, substandard management etc.
Why would a hit on the share price hit the pensions substantially?
I think the assumption is that some major parts of the FTSE would all cut dividends so lowering their share prices. The majority of these share are held by pension funds so you are locked in a vicious circle."I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
Surrey Commuter wrote:mamba80 wrote:Stevo 666 wrote:
Not sure what you are proposing.mamba80 wrote:Surely though, its about balance? perhaps some companies need to redress this.
Paying 50m a year, it would take 10years to fund the scheme, yet for 16 years Carillion increased its dividend to shareholders.
Long term payments are only any good if the company stays in business.
there are reports circulating that the deficit is far larger?
fwiw i ve a few shares with a former company i worked for, i receive twice yearly dividend payments, yet the closed FS scheme is on its knees
Dividends may well have been going up, but when did the pension deficit arise? I suspect it was more recent, probably due to to the revised actuarial estimates for life spans etc. And if you stop companies paying dividends, that will have a major negative impact in share prices, which hits the value of pension funds...the very thing you want to protect.
As mentioned above these are major funding requirements and would not have prevented the current issue. Also as you note above, it is more important that the company stays in business and we can't legislate against bad business decisions, substandard management etc.
...i said balance, so no, we dont stop all dividends but perhaps reduce them? in certain circumstances. didnt Carillion pay out almost a billion in dividends? so if they d paid out 500m instead....
its about priorities and spending choices as always.
Incidentally, the Tory party have pocketed 50k because of the Carillion collapse, you really couldnt make this stuff up.
Slowmart is correct, the Tories really do have no appetite to tackle this problem, why would they? they are hand in glove with business, to the detriment of everyone else.
I would keep Party politics out of it. It was el Gordo who effectively ended DB schemes in the private sector.
Personally I think it is a farking disgrace that MPs did not shut their own DB scheme so that they understood the issues facing the average man in the street.
Oh apart from those t0ssers in the public sector who want us to back their industrial action to keep their gold plated pension schemes.
Anybody who thinks public sector pension scheme deficits are not an issue should read up on US cities. Wait until your council tax is going through the roof because half of it is going on pension schemes that you can only dream of.
Good point on Brown, the issues were there then and Lab did nothing either, having not been from the outset a Corbynista, maybe this is why he is proving so popular.0 -
As I said above, it is likely that a large proportion of those dividends were paid out when there was no pension deficit. Hindsight is wonderful.mamba80 wrote:Stevo 666 wrote:
Not sure what you are proposing.mamba80 wrote:Surely though, its about balance? perhaps some companies need to redress this.
Paying 50m a year, it would take 10years to fund the scheme, yet for 16 years Carillion increased its dividend to shareholders.
Long term payments are only any good if the company stays in business.
there are reports circulating that the deficit is far larger?
fwiw i ve a few shares with a former company i worked for, i receive twice yearly dividend payments, yet the closed FS scheme is on its knees
Dividends may well have been going up, but when did the pension deficit arise? I suspect it was more recent, probably due to to the revised actuarial estimates for life spans etc. And if you stop companies paying dividends, that will have a major negative impact in share prices, which hits the value of pension funds...the very thing you want to protect.
As mentioned above these are major funding requirements and would not have prevented the current issue. Also as you note above, it is more important that the company stays in business and we can't legislate against bad business decisions, substandard management etc.
...i said balance, so no, we dont stop all dividends but perhaps reduce them? in certain circumstances. didnt Carillion pay out almost a billion in dividends? so if they d paid out 500m instead....
its about priorities and spending choices as always.
Incidentally, the Tory party have pocketed 50k because of the Carillion collapse, you really couldnt make this stuff up.
Slowmart is correct, the Tories really do have no appetite to tackle this problem, why would they? they are hand in glove with business, to the detriment of everyone else.
The issue here is that to solve a problem in a small minority of companies, ironically you will damage pension fund values far more widely if you restrict dividends as you propose.
Btw, SC clearly does know what he is talking about on this subject."I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
Stevo 666 wrote:
As I said above, it is likely that a large proportion of those dividends were paid out when there was no pension deficit. Hindsight is wonderful.mamba80 wrote:
...i said balance, so no, we dont stop all dividends but perhaps reduce them? in certain circumstances. didnt Carillion pay out almost a billion in dividends? so if they d paid out 500m instead....
its about priorities and spending choices as always.
Incidentally, the Tory party have pocketed 50k because of the Carillion collapse, you really couldnt make this stuff up.
Slowmart is correct, the Tories really do have no appetite to tackle this problem, why would they? they are hand in glove with business, to the detriment of everyone else.
The issue here is that to solve a problem in a small minority of companies, ironically you will damage pension fund values far more widely if you restrict dividends as you propose.
Btw, SC clearly does know what he is talking about on this subject.
they paid twice as much in dividends than into the PF, despite the deficit doubling in 2015/16.
May is now saying she will act on dividends, pay.bonuses and pension deficits, i just wonder how this will play with the Tory right, if it ever happens?
https://www.theguardian.com/politics/20 ... edy-bosses
Much like many other regulators, what exactly does the Pension do?0 -
mamba80 wrote:Stevo 666 wrote:
As I said above, it is likely that a large proportion of those dividends were paid out when there was no pension deficit. Hindsight is wonderful.mamba80 wrote:
...i said balance, so no, we dont stop all dividends but perhaps reduce them? in certain circumstances. didnt Carillion pay out almost a billion in dividends? so if they d paid out 500m instead....
its about priorities and spending choices as always.
Incidentally, the Tory party have pocketed 50k because of the Carillion collapse, you really couldnt make this stuff up.
Slowmart is correct, the Tories really do have no appetite to tackle this problem, why would they? they are hand in glove with business, to the detriment of everyone else.
The issue here is that to solve a problem in a small minority of companies, ironically you will damage pension fund values far more widely if you restrict dividends as you propose.
Btw, SC clearly does know what he is talking about on this subject.
they paid twice as much in dividends than into the PF, despite the deficit doubling in 2015/16.
May is now saying she will act on dividends, pay.bonuses and pension deficits, i just wonder how this will play with the Tory right, if it ever happens?
https://www.theguardian.com/politics/20 ... edy-bosses
Much like many other regulators, what exactly does the Pension do?
Does that mean she will act upon public sector pension deficits by cutting pay, increasing contributions, working longer, worse benefits oh and valuing the liabilities in the same manner as the private sector?0 -
the cutting pay bit is a bit of a red herring, the bonuses paid to the Carillion board would nt have dented their PF deficit but it works well with the electorate.
I guess the public sector dont pay dividends, so its not in the headlines, i know my sisters pension contributions have had to almost double, she is a teacher but the pension is still fantastic and she is retiring at 57....... still moans though.
My FS scheme was frozen and we went to a DB one, my pension dropped by 2/3rd's, my advice to anyone on low earnings is dont pay into a pension, its a scam.0 -
I certainly hope so. The bigger pensions issue is overly generous sector final salary schemes which we have to pay for.Surrey Commuter wrote:Does that mean she will act upon public sector pension deficits by cutting pay, increasing contributions, working longer, worse benefits oh and valuing the liabilities in the same manner as the private sector?"I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
Stevo 666 wrote:
I certainly hope so. The bigger pensions issue is overly generous sector final salary schemes which we have to pay for.Surrey Commuter wrote:Does that mean she will act upon public sector pension deficits by cutting pay, increasing contributions, working longer, worse benefits oh and valuing the liabilities in the same manner as the private sector?
yeah so lets give another reason for teachers, nurses and doctors to leave for the private sector/emigrate etc public sector workers have been on a 1% or zero pay rise for years now, one reason why we ve shortages in healthcare etc.
Existing workers have seen contribution increases, lower payouts and extended years.
New starters for several years now, dont get these schemes, so how you d be able to claw back from the older unsustainable schemes is something you ll have to explain.0 -
Stevo 666 wrote:
I certainly hope so. The bigger pensions issue is overly generous sector final salary schemes which we have to pay for.Surrey Commuter wrote:Does that mean she will act upon public sector pension deficits by cutting pay, increasing contributions, working longer, worse benefits oh and valuing the liabilities in the same manner as the private sector?
My mother in law is in one of these un-affordable FS schemes, she worked helping people live in their own homes before going into residential care, earned a pittance and eventually had to retire in her late 50s as her back was shot, not helped by lifting people in and out of bed and baths.
Her "overly generous sector final salary pension" is about £3k per year, all it really means is she isnt entitled to any state benefits, she is nt really better off at all.
Her situation was mirrored by my Great Aunt
The Public sector pension scheme is full of retired workers on very small FS pensions, because their wages were cr'p.
Its funny though that whilst you say we need to keep rewarding Directors and Shareholders, we also need to take from retired workers who have got relatively very little.0 -
“Give a man a fish and feed him for a day. Teach a man to fish and feed him for a lifetime. Teach a man to cycle and he will realize fishing is stupid and boring”
Desmond Tutu0 -
mamba80 wrote:the cutting pay bit is a bit of a red herring, the bonuses paid to the Carillion board would nt have dented their PF deficit but it works well with the electorate.
I guess the public sector dont pay dividends, so its not in the headlines, i know my sisters pension contributions have had to almost double, she is a teacher but the pension is still fantastic and she is retiring at 57....... still moans though.
My FS scheme was frozen and we went to a DB one, my pension dropped by 2/3rd's, my advice to anyone on low earnings is dont pay into a pension, its a scam.
This is a very confused sentence and for most people shockingly irresponsible advice0 -
Unfortunately we have been too generous in the past and the public sector has now come to regard these as entitlements. The cost of public sector pensions is as staggering as it is unaffordable: per National Audit Office figures it was around £1,500 billion in 2016.mamba80 wrote:Stevo 666 wrote:
I certainly hope so. The bigger pensions issue is overly generous sector final salary schemes which we have to pay for.Surrey Commuter wrote:Does that mean she will act upon public sector pension deficits by cutting pay, increasing contributions, working longer, worse benefits oh and valuing the liabilities in the same manner as the private sector?
yeah so lets give another reason for teachers, nurses and doctors to leave for the private sector/emigrate etc public sector workers have been on a 1% or zero pay rise for years now, one reason why we ve shortages in healthcare etc.
Existing workers have seen contribution increases, lower payouts and extended years.
New starters for several years now, dont get these schemes, so how you d be able to claw back from the older unsustainable schemes is something you ll have to explain.
http://www.pensionsage.com/pa/UK-public-sector-pension-liability-equivalent-to-81pc-of-GDP.php
That's pretty much the level of the national debt or over 80% of GDP put another way. Or more simply, £55,000 for every household in the country. Let that sink in for a minute...
Legally you cannot claw back previous benefits: it is a case of making changes going forwards.
How would you address this major issue?"I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
Lookyhere wrote:Stevo 666 wrote:
I certainly hope so. The bigger pensions issue is overly generous sector final salary schemes which we have to pay for.Surrey Commuter wrote:Does that mean she will act upon public sector pension deficits by cutting pay, increasing contributions, working longer, worse benefits oh and valuing the liabilities in the same manner as the private sector?
My mother in law is in one of these un-affordable FS schemes, she worked helping people live in their own homes before going into residential care, earned a pittance and eventually had to retire in her late 50s as her back was shot, not helped by lifting people in and out of bed and baths.
Her "overly generous sector final salary pension" is about £3k per year, all it really means is she isnt entitled to any state benefits, she is nt really better off at all.
Her situation was mirrored by my Great Aunt
The Public sector pension scheme is full of retired workers on very small FS pensions, because their wages were cr'p.
Its funny though that whilst you say we need to keep rewarding Directors and Shareholders, we also need to take from retired workers who have got relatively very little.
Now if we look on a macro level. UK public sector pension liabilities now stand at £1.8 trillion. That effectively doubles the public sector debt.
If we look at local Govt it is probably safe to assume that doubling council tax would be unacceptable so what are you going to cut so as to keep letting people accrue pensions at the current rate?0 -
Please point me to where I said we should keep on rewarding directors?Lookyhere wrote:Stevo 666 wrote:
I certainly hope so. The bigger pensions issue is overly generous sector final salary schemes which we have to pay for.Surrey Commuter wrote:Does that mean she will act upon public sector pension deficits by cutting pay, increasing contributions, working longer, worse benefits oh and valuing the liabilities in the same manner as the private sector?
My mother in law is in one of these un-affordable FS schemes, she worked helping people live in their own homes before going into residential care, earned a pittance and eventually had to retire in her late 50s as her back was shot, not helped by lifting people in and out of bed and baths.
Her "overly generous sector final salary pension" is about £3k per year, all it really means is she isnt entitled to any state benefits, she is nt really better off at all.
Her situation was mirrored by my Great Aunt
The Public sector pension scheme is full of retired workers on very small FS pensions, because their wages were cr'p.
Its funny though that whilst you say we need to keep rewarding Directors and Shareholders, we also need to take from retired workers who have got relatively very little.
Then have a look at the numbers that I and SC have given and tell us how to deal with it.
It's all very well being able to quote a worthy but poor former public sector worker but it doesn't address the wider issues."I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
I don't understand the point you are trying to make here - can you rephrase?mamba80 wrote:the cutting pay bit is a bit of a red herring, the bonuses paid to the Carillion board would nt have dented their PF deficit but it works well with the electorate.
I guess the public sector dont pay dividends, so its not in the headlines, i know my sisters pension contributions have had to almost double, she is a teacher but the pension is still fantastic and she is retiring at 57....... still moans though.
My FS scheme was frozen and we went to a DB one, my pension dropped by 2/3rd's, my advice to anyone on low earnings is dont pay into a pension, its a scam."I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0
