Friday funnies from the FT:
If that doesn't have you rolling about in the aisles, how about this:
People saving into a workplace pension have seen the value of their assets fall by a quarter since the start of the credit crunch. Defined contribution schemes have fallen by £140bn since September 2007, new figures from Aon Consulting show. They now have a value of just £410bn, as of the end of January. Older workers have been hit harder by the falls, as their pensions have less time to recover before they start drawing an income from them. Those approaching retirement and aged 55-65 will see a 30 to 36 per cent drop in their pension...
Seriously now, is there anybody out there who still believes that paying into a huge great slush fund that we laughingly refer to as 'a pension plan' is a sensible investment? How about using the £50 billion annual cost of the tax relief to scrap VAT; cut income tax by ten percent or raise the personal allowance by £5,000 or something? Y'know, leave people with higher after tax incomes so that they can make their own investment decisions?
Friday, 20 February 2009
Shabbat shalom
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13 comments:
Yup, it is only the 40% discount on cash paid in that attracts me to it at all as an invstment. But together with the appalling performance and the strings attached to geting your money back out, I'm beginning to wonder.
Krugerrands under the floorboards, where Brown can't touch them?
I had a Retirement Annuity Policy and really enjoyed managing it through the 90s - in and out of Far Eastern Equities, Index-linked Gilts etc etc. Eventually, of course, I gave up this highly successful active investment strategy and just popped into the safest, most boring fund they offered - With Profits. Alas, the firm was Equitable Life.
the 40% discount on cash
One of the greatest absurdities of the lot is that pension contributions made by the higher paid are subsidised by the taxes of the lower paid, who then depend on benefits in retirement.
Awww f-f-f-f-ishhooks, don't get me started. It's a Saturday morning and I want to stay calm......
But was there ever a better time than now to tell the public sector that the rest of us can't afford their defined benefit schemes any more?
FT, now would be an excellent time. So who's going to tell them?
The pension 'simplification rules' brought in by the current junta drive me to distraction. They did not replace 8 regimes with two, they added two more rgimes making 10.
All funded pensions are are regular investment plans with special rules. These rules are another bureaucratic wet dream.
In my ideal FS world we would scrap the state employees pension schemes as a first step, followed immediately by the scrapping of all the rules (that basically try and ring fence the tax relief) around funded pensions. In fact scrap pensions. Replace all of it with a sort of super ISA capable of accepting employer contributions that builds a fund for non-working income and health care or perhaps education.
In reality we already offer one of these through what are now termed wrap accounts.
All of the above would save a fortune, get rid of masses of useless regulators, quangos (the pensions regulator and a lot of the FSA) and other non jobs and free up shed loads of capital.
And I would....not I think I'll stop there. The sun is shining and I need to get outside and hit something hard with a hammer to work of my furies with Brown and his henchmen....
It would be remiss of me to not post
LVT => CD to replace state pensions.
scrap the state employees pension schemes as a first step, followed immediately by the scrapping of all the rules
Amen.
Citizen's Pension. If you can live on it, crack on. If you can't or don't want to, fine. Save. No rules, no restrictions, no bailouts, no maxima, no minima, no fecking interference at all in fact.
As many Krugerrands as your floor joists'll support, marksany, if that's your preference.
@MW - who's to tell the Public Sector? Aye, there's the rub. The only politician I can think of, offhand, who seemed to have anything at all like the balls even to contemplate it was Lady Thatcher. I wonder how Frank Field might do? I'm with The Great Simpleton on that topic.
Can you imagine, though, being the one to make the announcement. Standing at the Despatch Box, let's say, in a future Budget speech, and you drop That Bombshell. The deathly silence. Then the uproar. Then the demo's..... woohoo.
I suggest we start with MPs pensions, actually, as a test case.
what's the better alternative to a pension scheme? Serious question...
FT, Frank may have convictions, but he's far too authoritarian. The whole point about welfare (be that working age or old age) is that it is low and flat rate.
Frank, being a politician, goes for the age-old "people who have paid more tax get more benefits" which is bollocks if you think about it - surely it's better to have lower tax rates so that people can save up and self-insure, as a top up to a basic rate of welfare.
TA, anything is better than a pension scheme. If all else fails, pay off your mortgage first and then stick it into cash.
Share prices won't start to pick up until the Tories get in, and you might as well own the shares personally and bank 82% of the winnings than have all the tax breaks eroded by fees and commissions.
it is amazing how poorly my pension scheme is doing - 15 years of regular contributions seem to have produced a capital value of 90% of the total of the contributions I have made.
G, in the immortal words of Johnny Rotten, Do you ever feel you've been cheated?
Graeme - it's even more bonkers that one thinks isn't it? As you've had tax relief on your contributions the retrun should at least equal the compound return on those in excess of a comparable investment in the same assets, but it never seems to does it?
and since 1997, all growth in the fund was taxed, but no tax has been returned when there was a loss.
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