New BHS Administrator Requested By Pensions Lifeboat

The Pension Protection Fund requests that the FRP Advisory be the new BHS Administrator along with Duff & Phelps after their meeting with creditors on thursday.

The FRP would work alongside Duff & Phelps in finding a buyer of the large retail chain. However, the two said the previous months saw attempts to find a buyer for BHS to be unsuccessful, which could mean a lay-off of 11,000 employees.

FRP is expected to play a lead role as it investigates the conduct of BHS former directors including Sir Philip who sold the chain to a racing superstar, which is a questionable action on part of the former owner.

Sir Philip said he would “likely have to write a cheque for several hundred million pounds.” but he said the precise structure of a rescue deal for pensioners would take about several months to finalise.

The following week, the meeting would discuss witnesses including Goldman Sachs bankers and Sir Philip’s stepson to help further improve the series of questions regarding the ownership of Sir Philip’s corporate empire.

Sir Philip had admitted his mistake in selling the BHS to Retail Acquisitions Limited the previous year. However, he further said that it was due to the failure of Dominic Chappell, a former racing superstar turned retail tycoon, to improve the condition of his former investments.

Brexit Can Threaten State Pensions

A vote to leave EU could leave UK State Pensions in very bad shape. British Prime Minister David Cameron argues that an ‘economic shock’ caused by a vote to leave the EU could mean the IFS and the NIESR could indicate a black hole in UK finances by 2020 up to £40 billion. With economic uncertainty, investors may opt out of the United Kingdom.

Cameron side it would threaten future funding for the NHS. Health spending could be affected as well.

Chancellor George Osborne said tax reductions could occur but it would mean the shrinking of the UK economy and a reduction in defence budgets by £1 billion.

Cameron added:

“If we leave the EU, independent and respected experts like the IFS and the NIESR say that by 2020 we will face a black hole in our public finances of up to £40 billion.

“In those circumstances, future funding for the NHS could be at risk. Our ability to ring-fence and protect spending on health could be at risk too.

“This is the cold reality of leaving the EU – that’s why doctors, nurses and the boss of the NHS all say we will be stronger, safer and better-off in the EU.”

Is Gold a Great Idea For Your SIPP?

The Royal Mint plans to sell gold bars for pensions. As gold’s prices continue to stabilise, buying 100g or even 1kg bars stored in the Royal Mint could prove a good investment.

SIPP or Self-Invested Personal Pensions considers gold as eligible for inclusion. However, the gold bars must be at 99.5% purity to qualify.

Meanwhile, the gold in the Royal Mint has about 99.9% purity.

Gold’s benefits include having a pension wrapper, saving it from CGT. However, your pensions, upon withdrawal are still subject to regular tax.

But gold isn’t always a safe bet.

“Investors need to understand investing in gold is by no means a one-way bet,” said Danny Cox of investment platform Hargreaves Lansdown.

“Gold is notoriously difficult to value, subject to seasonal demand, and unlike shares and bonds, it provides no income for investors.”

Between 2000 and 2011, the price of gold rose spectacularly, from $287 an ounce to $1,837.

Gold’s “umbrella” factor during rainy days in the stock market has since become a myth. Gold’s demand has slowed down and investors fail to see it as their protection from inflation in the economy.

Tata Steel Pension Malaise Could Place Hundreds of Fragile Pension Programmes At Risk

Tata Steel’s dilemma isn’t just its own. Any method Tata Steel finds to resolve its £700million pension fund deficit could mean an investigation on all occupational pensions in the United Kingdom.

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According to Work and Pensions Committee Chairman Frank Field, he would lead an investigation into the BHS scheme, which also earlier collapsed. Once Tata allows the PPF to take over its pension troubles, it would cost around £1.5 billion for  the fund to recover effectively.

Yearly, the PPF only receives about £574m paid by levies on company schemes.

According to Cass Business School Pension Institute Professor David Blake, an increase in levies would place pressures on other schemes, which could collapse them from their teetering positions.

He said: “You will get more and more bad schemes going in and the good companies saying they’ve had enough of it. It’s a Ponzi scheme and you can’t do anything about it.”

Labour MP Field’s inquiry comes as no surprise to observers. He told the Mail a fortnight ago that he hoped to launch a wider probe into how British pensions would fare over the next three decades.

Tom McPhail, head of retirement policy at Hargreaves Lansdown, said: “It is no longer possible to turn a blind eye to the yawning reality gap that has opened up.”