Surprising news has been reported by the Pension Protection Fund (PPF) after the pension deficit rate fell. That might shock many especially as Gordon Brown’s actions fifteen years ago changed the way in which we receive our pensions. More on that in a moment. You can check out this blog The Slient News for further details.

Although minimal, the pension deficit had fallen by £3 billion to £280 billion last month. These figures were based on 6,432 schemes – 1,029 were in surplus whilst 5,403 were in deficit. However, this isn’t entirely good news because the pension deficit was recently far lower than what it is now. In fact, since August 2011, the pension deficit has increased by a staggering 45%. This rise has been blamed on the increase of estimated costs of providing pensions – a likely excuse yet the PPF has an answer for everything. “Over the month, scheme assets rose by 0.5% and over the year there was an increase of 9.9%” said the PPF.

Quantitative Easing (QE), which was introduced by the Bank of England to stimulate the UK economy, has been done on many different occasions. Billions of pounds which could have otherwise been spent on clearing the pensions deficit has been poured into the UK economy in order to get the country out of recession. The Bank of England has actually bought a staggering £375 billion of government bonds which is around a third of the total amount that can be purchased.

QE was meant to lessen the UK deficit but it has had disastrous consequences. The value of the remaining bonds has increased substantially and this has led to the estimated cost of providing pensions rising significantly. Although the reckless attitude of a few bankers in 2007 is one of the reasons to explain a high pension deficit, events which happened beforehand are to blame for the problems facing our most valuable members of society.

In 1997, the Labour Party were overwhelming winners in the UK General Election. Led by two-face Tony Blair, his fellow cronies were viewed as being saviours by the hapless electorate especially after eighteen years of Tory rule (eleven of which were under the leadership of the much-hated Margaret Thatcher). In hindsight, the Labour Party’s reckless borrowing has led to the deficit being as high as it is now. Although Blair was responsible for some successes, his government is regarded as being a failure. Tony Blair’s chancellor in 1997 was Gordon Brown and, not long after being elected, Brown was responsible for changing the finances of pensioners for generations to come

Brown decided, in his wisdom, that the 20% dividend tax credit which was collected on pensions would be removed; this figure is one of the major contributors to capital growth in pension funds. In other words, pension funds were unable to grow. In fact, it has been reported that Gordon Brown wanted to take more than £5 billion out of the pension fund and a whopping £8 billion was due to be deducted from pensions on an annual basis. Brown was not known for being calm and his point-of-view was overturned after an emotional meeting at Downing Street.

Documents released under the Freedoms of Information Act showed that Brown was fully aware of the impact which his decision would have on pensions but continued to do so anyway. Brown simply saw the £60 billion surplus in the company pensions fund and thought that this money could be used by the government. Another Gordon, whose surname was Gecko, once said ‘greed is good’ and it seems that Brown was no different than what this fictitious character believed in.

As many pensioners are now working when they should be enjoying their retirement, it would be far too easy to blame the actions of one man alone. Yet, as the pensions deficit shows no signs of stabilising, many economists continue to point the finger of blame at Gordon Brown. And, just like Blair who is continually accused for starting an illegal war, Gordon Brown hasn’t had to answer for his actions in a court of law and therefore not been punished. He can also still claim for his £92,125 pension as well. Karma in force? I don’t think so. For further details, please visit this blog Bumber.


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