Pension costs and liabilities for UK-regulated utilities

2011 ◽  
Vol 11 (1) ◽  
pp. 89-117
Author(s):  
GORDON HUGHES
Keyword(s):  
Defined Benefit ◽  
Present Value ◽  
Real Rate ◽  
Goods And Services ◽  
Pension Schemes ◽  
Pension Costs ◽  
The Uk ◽  
The Cost ◽  
Pension Liabilities ◽  
Regulated Utilities

AbstractThis paper argues that a substantial portion of the risks associated with the defined benefit (DB) pension schemes operated by regulated utilities in the UK will, in practice, fall on customers via the tariffs that they pay for regulated goods and services. It examines the assumptions made by regulated companies in their FRS 17 valuations. These assumptions generate parameters that systematically understate both the present value of pension liabilities and current service costs. These are re-estimated using the risk-free real rate of discount and compatible assumptions. On this basis, the total pension deficit for the sample increased from £12.7 billion to £56.3 billion in 2009, equivalent to about 110% of regulated revenues. Further, the cost of current service for 2008–09 was 20% higher than total contributions in the year, despite large top-up contributions. If contributions were increased to cover current service costs and to eliminate pension deficits over a period of 10 years, the additional contributions would amount to 235% of actual contributions or 13% of regulated revenues implying a significant increase in regulated charges. Companies in the communications and transport sectors face the largest adjustments in addressing the problems of underfunded pension schemes.

23. Value Added Tax

2020 ◽  
pp. 231-234
Author(s):  
J. Scott Slorach ◽  
Jason Ellis
Keyword(s):  
Value Added ◽  
Value Added Tax ◽  
Goods And Services ◽  
One Year ◽  
The Uk ◽  
The Cost ◽  
Made In

This chapter discusses value added tax (VAT) in the UK. VAT is charged on supplies of goods and services made in the UK. Where a person makes taxable supplies in excess of a set limit in any one-year period, he must register with Her Majesty’s Revenue and Customs (HMRC). He must then account to HMRC for VAT on all taxable supplies made. The total amount payable may be reduced by the amount of VAT paid on certain taxable supplies made to him. The liability to pay VAT to HMRC rests on suppliers of goods and services. However, the cost of the tax is actually borne by suppliers’ customers who are charged VAT on the goods and services they purchase. VAT is charged in the UK under the Value Added Tax Act (VATA) 1994.

23. Value Added Tax

Business Law ◽  
2021 ◽  
pp. 230-234
Author(s):  
J. Scott Slorach ◽  
Jason Ellis
Keyword(s):  
Value Added ◽  
Value Added Tax ◽  
Goods And Services ◽  
One Year ◽  
The Uk ◽  
The Cost ◽  
Made In

This chapter discusses value added tax (VAT) in the UK. VAT is charged on supplies of goods and services made in the UK. Where a person makes taxable supplies in excess of a set limit in any one-year period, he must register with HMRC. He must then account to HMRC for VAT on all taxable supplies made. The total amount payable may be reduced by the amount of VAT paid on certain taxable supplies made to him. The liability to pay VAT to HMRC rests on suppliers of goods and services. However, the cost of the tax is actually borne by suppliers’ customers who are charged VAT on the goods and services they purchase. VAT is charged in the UK under the Value Added Tax Act (VATA) 1994.

Two-Dimensional Mortality Data: Patterns and Projections

2007 ◽  
Vol 13 (3) ◽  
pp. 479-536 ◽  
Author(s):  
S. J. Richards ◽  
J. R. Ellam ◽  
J. Hubbard ◽  
J. L. C. Lu ◽  
S. J. Makin ◽  
...  
Keyword(s):  
United Kingdom ◽  
Late Life ◽  
Mortality Data ◽  
Defined Benefit ◽  
Two Dimensional ◽  
Public And Private ◽  
The United Kingdom ◽  
Pension Schemes ◽  
Pension Liabilities

ABSTRACTPatterns and trends in late-life mortality are of growing financial importance. The growth in pension liabilities, both public and private, are of crucial interest to governments, insurers and companies with defined benefit pension schemes. This paper explores the patterns in international mortality data, and draws important lessons for actuaries in the United Kingdom.

scholarly journals Economic and financial approaches to valuing pension liabilities

2015 ◽  
Vol 14 (2) ◽  
pp. 144-150 ◽  
Author(s):  
ROBERT NOVY-MARX
Keyword(s):  
Decision Making ◽  
Discount Rate ◽  
Cash Flows ◽  
Point Of View ◽  
Investment Policy ◽  
Rate Of Return ◽  
Pension Benefit ◽  
Defined Benefit ◽  
Present Value ◽  
Pension Liabilities

AbstractFinancial economics holds that payment streams should be valued using discount rates that reflect the cash flows’ risks. In the case of pension liabilities, the appropriate discount rate for a pension fund's liabilities is the expected rate of return on a portfolio that would be held under a liability-driven investment policy. The valuation of defined benefit pension obligations involves choices revolving around deciding: (1) what future benefit payments to recognize today (i.e., which liability concept to use); and (2) from whose point of view to value the liabilities. Moving towards modeling, the distribution of future liabilities using a ‘risk-neutral’ framework, would allow for calculating the present value of the future liabilities more accurately. This would provide policymakers with information more relevant for the decision-making, and it would also permit easier communication of the risks facing the Pension Benefit Guaranty Corporation's PIMS model via a single univariate statistic.

23. Value Added Tax

2018 ◽  
Author(s):  
J. Scott Slorach ◽  
Jason Ellis
Keyword(s):  
Value Added ◽  
Value Added Tax ◽  
Goods And Services ◽  
One Year ◽  
The Uk ◽  
The Cost ◽  
Made In

This chapter discusses value added tax (VAT) in the UK. VAT is charged on supplies of goods and services made in the UK. Where a person makes taxable supplies in excess of a set limit in any one-year period, he must register with Her Majesty’s Revenue and Customs (HMRC). He must then account to HMRC for VAT on all taxable supplies made. The total amount payable may be reduced by the amount of VAT which he has paid on certain taxable supplies made to him. The liability to pay VAT to HMRC rests on suppliers of goods and services. However, the cost of the tax is actually borne by suppliers’ customers who are charged VAT on the goods and services they purchase. VAT is charged in the UK under the Value Added Tax Act (VATA) 1994.

The cost and value of UK defined benefit pension provision

2007 ◽  
Vol 7 (1) ◽  
pp. 3-36 ◽  
Author(s):  
PAUL SWEETING
Keyword(s):  
Interest Rates ◽  
Similar Pattern ◽  
Income Tax ◽  
Additional Cost ◽  
Defined Benefit ◽  
Pension Schemes ◽  
National Insurance ◽  
The Cost ◽  
Pension Benefits

SUMMARYThe purposes of this paper are to consider the effect on remuneration of defined benefit pension accrual and the factors that have resulted in changes to the cost and value of this accrual. In this paper, I look at the effect of the change in the cost to an employer of providing a defined benefit pension on the overall cost of remunerating an employee and compare that with the cost of remunerating an employee with no such pension benefits. I allow for the additional cost to the employer of national insurance contributions (‘NICs’). I also look at the change in value of an employee's remuneration, taking into account the value of defined benefit pension accrual and compare this with the change in remuneration for an employee with no such benefits. Here, I allow for employee national insurance contributions and income tax. These assessments look at the cost and value of pension accrual rather than any surplus or deficit relating to previously accrued pension entitlements. I find that costs of employment have risen significantly more for members of defined benefit pension schemes compared with other employees, and that this has largely been as a result of falling long-term interest rates and their effect on the cost of defined benefit pension accrual. The increase in the value of remuneration to employees has shown a similar pattern.

Financial Management of the UK Pension Protection Fund

2013 ◽  
Vol 18 (2) ◽  
pp. 345-393 ◽  
Author(s):  
J-P. Charmaille ◽  
M.G. Clarke ◽  
J. Harding ◽  
C. Hildebrand ◽  
I.W. Mckinlay ◽  
...  
Keyword(s):  
Risk Management ◽  
Financial Management ◽  
Enterprise Risk Management ◽  
Pension Scheme ◽  
Defined Benefit ◽  
Corporate Sponsor ◽  
Stakeholder Groups ◽  
Pension Schemes ◽  
Enterprise Risk ◽  
The Uk

AbstractThe UK Pension Protection Fund (PPF) was established in April 2005 to protect the pensions of members of UK private sector defined benefit pension schemes which have insufficient assets and whose corporate sponsor fails. The Fund takes over the pension scheme assets and assumes responsibility for the payment of compensation to the former members of the scheme. The PPF is funded by a levy on the population of eligible schemes. This paper discusses the application of Enterprise Risk Management principles and techniques to the unique situation of the PPF. The elements of the financial management of the Fund have been developed by reference to practice within proprietary insurance institutions and within pension funds. The paper will be of interest and, we hope, of some value to students, researchers and analysts and also to the PPF's own stakeholder groups that have a stake in an effective pension protection regime.

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