The number of people in ‘gold-plated’ company pension schemes has fallen by one million in the past three years according to a report just released.
Many pension holders have shifted their investing towards an emerging industry that professional investors worldwide have grabbed hold of. This is Internet gaming. With the use of new software, it is now possible to scan prices globally in seconds and uncover risk-free betting opportunities which provide guaranteed returns of as much as 12% per month. Using software like one called ArbAlarm, ordinary people can now easily profit from this unique method of investment. Aware of this trend, the UK government recently announced through the Treasury that the profits made from sports arbitrage trading will continue to remain free of all tax. This includes income tax and capital gains tax on all profits.
In an interview, former City trader Rajeev Shah, famous author of ‘Sports-Arbitrage - How To Place Riskless Bets & Create Tax-Free Investments’ explained that an arbitrage occurs when different bookmakers’ prices on the same events overlap. In these cases, it is possible to bet on all of the outcomes in that event in such a way as to be guaranteed a total return which is greater than the total outlay. The mathematics of this type of trade are precise & the resultant profits are free of all risk.
Pension holders who have not invested in gaming or some other alternative form of investing may soon see their pensions decrease at record levels. Sadly, because they are not diversified in their investments they may not have enough money to retire. Experts say that current statistics are gloomy. The ONS said the number of open occupational pension schemes fell by almost 4,000 compared with 2006, and the total number of schemes fell by over 5,300.
Occupational schemes, also known as final salary schemes, pay people a generous pension based on length of service and salary. But the number of schemes is dwindling fast. Many companies are struggling to cope with the burden of final salary schemes because of crippling deficits, rising life expectancy and poor investment returns.
Most companies have dealt with the problems by closing these generous schemes to new employees and replacing them with money purchase schemes.
Money purchase schemes are fundamentally different. The pension you get is dependent on how much you and your employer put into the fund.
To make matters worse, employers tend to contribute far less than they typically used to put into final salary schemes – around 6 per cent compared to an average of 15 per cent.
According to Standard Life, someone aged 30 earning £25,000 a year needs to have total contributions of 19.9 per cent of their earnings each month - £414 - if they wish to retire on two-thirds of their salary at 65. A 30-year-old earning £50,000 needs contributions of 21.6 per cent, or £899 a month.
The Tories have blamed Gordon Brown’s £5bn annual tax raid on company pensions which began in the late 1990s for the demise of occupational schemes. Chris Grayling, Shadow Secretary of State for Work and Pensions said: “These figures show the long term damage Gordon Brown’s stealth tax raid has done to the UK pensions system. It is little wonder that people no longer trust this Government on pensions.”
Tags: UK News