fishtank wrote:That's actually a myth.Brain Fury wrote:The only problem with this is that the pension holiday was the law. They weren't allowed to keep putting money into the pension fund because it was overfunded at the time.
There was no law that stopped a pension fund building up a surplus or forced a pension contribution holiday.What actually happened was in 1988 because the markets were flying Nigel Lawson decided to introduce a tax on company pension fund “surpluses” above 105%.
To avoid paying the tax employers including Royal Mail took pension contribution holidays and increased their early retirement packages.
The pension was free to continue to build up a surplus for a rainy day as long as they paid tax on it but given the huge gains pension funds were making from stocks all they could see was sunshine on the horizon and the business and government were quite happy to be posting profits that were not really profits but our employer pension contributions.
Ah ok - didn't know that. Thanks. Even more justification for the Government taking over the pension obligations.