F-B-F.org -

On a policy with premiums of £100 a year the annual bonuses are being cut by £26.93 to £654, and the terminal bonus by £147.10 to £261.88. Chief executive Nick Morrell said: “It’s been a grim year for investment returns, but when you take the average across the terms of the policies, you can see that they are good value.”
The cut in the payout on a 10-year policy by 8.5 per cent brings the annual yield on premiums down from 12.68 per cent to 11.1 per cent. Tunbridge Wells Equitable Friendly Society is cutting most of its payouts on with-profits endowment policies by more than 8 per cent. It still expects to retain its position among the top 10 as other life offices are also forced to reduce bonuses. However, executives can also put aside money for their retirement through unapproved schemes, such as those based in offshore tax havens or straightforward savings plans, which would, of course, be subject to normal taxation..

For a typical final salary plan, the maximum pension is limited to two-thirds of the earnings cap, a maximum of £52,400 from April. But increases in line with the rise in the retail prices index have raised it to the present £76,800. Following the announcement in last November’s Budget, it will rise further, to £78,600 from 6 April.Besides limiting contributions, the cap restricts benefits. However, the cap does not apply to those who joined before June 1989.When introduced, the level was £60,000. The idea is that high earners should not be excessively subsidised by less well-paid taxpayers. Even in the financial sector, nearly half of companies make no special provisions for earnings-capped executives and more than half make no provisions for life assurance above the cap.The pensions earnings cap was introduced in the 1989 Finance Act and limited the pensionable earnings that could be used for the calculation of benefits under an approved pension scheme. It is also questionable whether some of the currently evolved policies will be acceptable or sustainable as the number of capped executives and other high-earning employees increases.”For the moment, though, few companies outside the financial sector have more than 10 capped employees.

But this may expose them to large future liabilities, which – once they become material – will have to be provided for in the company’s report and accounts.
David Atkins, of Monks Partnership, editor of the report, Top Level Pension Practice, said: “From company comments, it is apparent that some have not explored all the possible alternatives before deciding on their policy towards the earnings cap. Executives who joined company pension plans after June 1989 and have pensionable earnings above the current cap of £76,800 may find they have less to live on in their retirement than they think, according to a report published today The study by Monks Partnership, the remuneration advisers, and Buck Consultants, the consulting actuaries and benefit consultants, suggests that many companies are dealing with the issue by giving executives unfunded pension promises, saying they will make a top-up payment later. The result has been a continued strong presence in Europe, but pressure on profitability.The threat of mass-produced American boats being dumped in Britain, on the back of a weak dollar, has receded and the competition from France has been contained, although Beneteau is doing well in the US from its American production plant.. Tony Beechey says the cycle of growth began in the final quarter of 1992, went well in 1993, then, after a good 1994 London Boat Show, flattened out onlyto recover again at the Southampton show last September.Sam Newington, of Fairline Boats, agrees. He has been spending heavily on new products and higher specifications. He says 1994 was the worst year for Japanese sales for many years, but it appears the country is gradually coming out of the recession.But it will be the glittering boats, especially the powerboats, that catch the casual visitor’s eye.

“Europe in general is very good and, as well as the first quarter of the new year expected to be strong again, profitability is also up.”Graham Allen, of Henri Lloyd, is not so sure, saying that Europe is still sluggish, particularly in Spain and Portugal, with Italy treading water.But he joins Musto in believing that it is Britain’s ability to produce top-quality foul-weather clothing, for sailing or country wear, that is helping it to do well.His company has also invested heavily in Japan. British-made clothes have been especially popular, breaking out of the specialist sailboat market into high street leisure outlets in Britain and abroad, notably Europe, the US and Japan.Liz Rushall, of Douglas Gill, reports growth of 278 per cent since 1988, 35 per cent since 1991, and a 76 per cent increase in exports since 1991, including 86 per cent in the US.Manufacturers have, she says, invested heavily in technology to compete with producers who make their goods in eastern Europe or the Far East.Nigel Musto, of Musto, based in Essex, says his company has 49 per cent of the British market, up from 45 per cent a year ago, with Gill at 24 per cent and Henri Lloyd at 14 per cent.”We have had a big year in Germany with sales up 32 per cent,” he says. Beechey can gaze with satisfaction on all the space in Earls Court and Earls Court II being sold, and at a glittering array of toys costing up to a million pounds, he knows that, in many ways, the industry is still operating in Britain from a small base, that the powerboat manufacturers have been leading the way in volume, value and product development within Europe, and that the annual value of second-hand sales far outstrips the value of new boat sales.Nevertheless, total sales in 1993, the last year for which any meaningful figures are available, were up 50 per cent on 1992, and exports nearly doubled in unit terms.Imports of sailboats over 7.5 metres were also up in unit terms, but value was barely maintained, indicating that the smaller boat end of the market had been their prey.In the clothing and equipment sector, home-manufactured sales far outstripped the imports and exports rose 60 per cent in value. The main concern expressed by Tony Beechey, executive director of the British Marine Industries Federation, was over further increases in interest rates when the housing market is still flat.
“Interest rates are the main factor and the Government must recognise manufacturing industry is the driving force behind Britain’s prosperity. Ignore that in favour of the institutions and the momentum could be halted.”But he was in buoyant mood over exports, the ability of home manufacturers to compete against importers and a belief that “there is basic optimism; this time it is not a bubble”.While Mr.