tag:blogger.com,1999:blog-1141932539860553199.post6866112707724904900..comments2024-03-05T10:52:24.691+00:00Comments on Mark Wadsworth: Economic Myths: Pensions (various myths)Mark Wadsworthhttp://www.blogger.com/profile/07733511175178098449noreply@blogger.comBlogger17125tag:blogger.com,1999:blog-1141932539860553199.post-37190263205715910742014-06-11T08:46:16.949+01:002014-06-11T08:46:16.949+01:00Possibly relevant: http://bastiat.mises.org/2014/0...Possibly relevant: <a href="http://bastiat.mises.org/2014/06/negative-interest-rates-only-the-start/" rel="nofollow">http://bastiat.mises.org/2014/06/negative-interest-rates-only-the-start/</a><br /><br />"<i>As Ryan McMaken noted on June 5, the European Central Bank has instituted negative interest rates for member banks. This could soon spread to the US and also to consumer accounts. If so, you would find money taken out of your bank account each quarter unless you spend it. Some observers think that in the US at least it will start with higher account fees, which will be stealth negative interest rates, and then move to overtly negative rates.<br /><br />The idea is that if low rates are not yet persuading you to spend, then why not punish you even more for saving. To make this more effective, there would also be a push for all electronic money, to keep you from stashing any away from the confiscation agents.</i>"PJHhttps://www.blogger.com/profile/11331948749785269728noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-566832439734615802014-06-09T20:18:04.452+01:002014-06-09T20:18:04.452+01:00L, the government and regulators and courts might ...L, the government and regulators and courts might be a bit stupid, but the banks are guilty as Hell of mis-selling. You can blame government etc for quite a bit, but how much would the banks get away with without them? <br /><br />B, excellent wheezes, that's the sort of thing I do all day long.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-32061712717621365542014-06-09T19:22:43.746+01:002014-06-09T19:22:43.746+01:00viii) The wizard wheeze now is to persuade your em...viii) The wizard wheeze now is to persuade your employer to knock you down to minimum wage in the run up to retirement and put all the remainder of your salary into your pension pot. This way you don't get to pay any NI, whilst subsisting on withdrawing from your pension pot early, as the rules now allow and only paying income tax.<br /><br />ix) Wasn't that the whole point of the change?Bayardhttps://www.blogger.com/profile/15211150959757982948noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-19234042122183417752014-06-09T19:13:56.803+01:002014-06-09T19:13:56.803+01:00Oh, and just to add, being on the inside and all, ...Oh, and just to add, being on the inside and all, nearly all 'mis-selling' I have ever seen was in some way either triggered or as a result of some stupid government/bureaucratic failed intervention.<br /><br />And a lot of 'mis-selling' just wasn't. It was a vehicle for bureaucratic expansionism, what I call bureaucratic marketing. They simply concentrated the benefits and distributed the costs.Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-1339284955078330162014-06-09T19:10:54.745+01:002014-06-09T19:10:54.745+01:00MW - careful. No such thing as 'mis-selling&...MW - careful. No such thing as 'mis-selling', that's just weasel words. You are either conned or you are not. There is and can never be coercion in selling - especially where cancellation rights exist. 'Mis-selling' is a manufactured Fabian Gradualists wet dream.<br /><br />Although I grant you most stuff sold by banks who allegedly 'gave advice' were, well crap. But who in their right minds ever trusted a bank?Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-19394964639801433192014-06-09T16:59:30.514+01:002014-06-09T16:59:30.514+01:00Din, see subsequent post for the answer to that.
...Din, see subsequent post for the answer to that. <br /><br />L, I once saw a list of financial sector misselling scandals, and it included dozens and dozens of things, some of which we have forgotten about. <br /><br />PJH, excellent point, I'd forgotten about Bean. <br /><br />RT< I don't know in detail, but can you not get your employer to make the "compulsory" 3% contribution to your SIPP? If you have a bit of flexibility, you should be able to wangle a 4% relative pay rise anyway, which you could then salary sacrifice into your SIPP. Or something, ask Lola.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-31016607572112510592014-06-09T14:19:50.935+01:002014-06-09T14:19:50.935+01:00I like your attitude MW. My SIPP is far more flex...I like your attitude MW. My SIPP is far more flexible than my AE pension.<br /><br />Dinero, there is a good argument for delaying paying into a pension until you have bought and paid for a house. This is because if you don't own a property when you retire you will pay rent out of your pension. But if you own a property outright you can live in it rent free so your pension may be smaller but you get to keep more of it for yourself.Rich Teehttps://www.blogger.com/profile/14037296506942507747noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-59061573162588234192014-06-09T13:30:29.534+01:002014-06-09T13:30:29.534+01:00"BRITONS don’t save enough. The fact that we ..."<i>BRITONS don’t save enough. The fact that we don’t put enough money aside for a rainy day, for our retirement or to finance long-term care, is one of our great weaknesses</i>"<br /><br />Well it doesn't help when we have the likes of Mr Bean <a href="http://www.theguardian.com/business/2010/sep/28/spend-save-economy-bank-england-chief" rel="nofollow">telling us to spend our savings</a><br /><br />"<i>In unusually unguarded comments for a banker, Charlie Bean yesterday discouraged people from building up cash savings which generate little income due to historically low interest rates.</i>"<br /><br />Ok - that was 2010, but the sentiment is still there.PJHhttps://www.blogger.com/profile/11331948749785269728noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-10354235819053344532014-06-09T11:21:18.908+01:002014-06-09T11:21:18.908+01:00MW. Stakeholder was the invention of the Blair go...MW. Stakeholder was the invention of the Blair government. Interest rate swaps, although invented by the private sector are driven by central banking failure. Endowment mortgages 'worked' for a certain class of buyers. They did not work for the vast majority of buyers. I think endowment sales were driven off the back of mortgage credit expansion by the gummint. The gummint and the regulators told us to sell PPI - another gummint failure. (FWIW we have sold about three PPI plans and one was successfully claimed on - they do work if you do it properly.) And so it goes on.<br />Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-39300492255414689392014-06-09T10:51:48.600+01:002014-06-09T10:51:48.600+01:00are you saying it is a financial error for anyone ...are you saying it is a financial error for anyone paying interest on a mortgage to simmultaneously pay into a pension. That seems a bit of a radical statement, not heard that before. Dinerohttps://www.blogger.com/profile/14632385731642361211noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-44409369446064430872014-06-09T07:57:16.934+01:002014-06-09T07:57:16.934+01:00L, just like stakeholder pensions, interest rate s...L, just like stakeholder pensions, interest rate swaps, endowment mortgages, PPI etc. Most things which the financial sector dream up fail, apart from the mechanical stuff like debit cards and cash machines, which work incredibly well.<br /><br />G, <br />1. The ACT went towards cuts on the rate of corporation tax. Overall, corporation tax receipts minus refunds before the change were = corporation tax receipts after the change. People conveniently overlook.<br /><br />2. I think so, but <a href="http://en.wikipedia.org/wiki/Superannuation_in_Australia#Criticism" rel="nofollow">make up your own mind</a>. <br /><br />3. Some are more in gilts, so what? They can still invest in shares or corporate bonds if they want to.<br /><br />4. Saving is the opposite of dis-saving or borrowing. Taking out a mortgage is borrowing therefore paying it off is saving, end of.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-2162421425157271422014-06-09T07:48:22.048+01:002014-06-09T07:48:22.048+01:00Graeme, the AE pension offered to me offers a choi...Graeme, the AE pension offered to me offers a choice of funds, most of them invested in shares. The default fund is basically a FTSE 100 tracker.<br /><br />Lola: "it is compulsion, which is fundamentally wrong in a free society". Completely agree. Although pensions are compulsory in other countries like Australia, the money is put into a non-profit public fund, not scooped up by private, profit-making insurance companies like in Britain. It is compulsion to enter into a contract which is a violation of my individual rights as far as I'm concerned.<br /><br />I am furious about it. I have a SIPP which I am perfectly happy with so I was already doing what the government wants but the legislation makes no allowance for that. I have opted out but in doing that I forfeit the employer contribution. I have written to my MP Rachel Reeves who is a keen supporter of AE but after 4 months still no reply.<br /><br />I am glad that people here are raising these points as nobody else will talk sensibly about this, it is just treated as automatically a "good thing".Rich Teehttps://www.blogger.com/profile/14037296506942507747noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-56146329949181814382014-06-08T23:34:13.412+01:002014-06-08T23:34:13.412+01:00sorry for a few randon quesions:
1/ does anyone k...sorry for a few randon quesions:<br /><br />1/ does anyone know whatever happened to the irrecoverable ACT that disappeared in the "Brown" changes?<br /><br />2/"viii) We know for a fact that if people know they are going to get a pot of cash at a certain age, they will save less in the run-up period; so for example it will become quite common for people to underpay their mortgages or take out interest only mortgages and hope to pay them off with their lump sum. This is just another one of those stupid gambles which go as horribly wrong as endowment mortgages"<br /><br />isn't this how the system works in Australia? if that is correct (and I hasten to say that I do not really know the facts), are there many destitute Australian pensioners?<br /><br />3/"pension funds are largely invested in shares " is this still the case? I thought that they were mostly invested in gilts, since the Brown treatment in 2000-2003, which, when things got rough in 2008, encouraged the govt to go in for the QE treatment. Maybe some facts are needed. Certainly the BT and BA funds - which are truly ginormous - are mostly in gilts these days, or were when I last looked a year or 2 ago.<br /><br />4/ "paying off a mortgage more quickly is truly "household saving"" you will have DBC on your back for this. He really hates the idea of households saving at the expense of some other entitiy yet to be established.Graemehttps://www.blogger.com/profile/11007306140530173428noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-22771075838674260652014-06-08T21:09:10.957+01:002014-06-08T21:09:10.957+01:00MW. We have been looking at this as a new busines...MW. We have been looking at this as a new business stream. Now, that's all very well for us, but it is clearly another overhead cost for employers. Small companies do not have the HR resources to do it in house, and although they can go straight to NEST, they still need to obey all the rules, which NEST won't necessarily help with. And if the employer gets it wrong, they'll be 'fined'. On top of that it is complusion, which is fundamentally wrong in a free society. Also, pension funds may not be the best method for a particular person to use for 'long term savings'. Furthermore you and I both know that most of any tax relief given goes straight through the system into the hands of rent seekers in the heirarchy of the pensions industry and / or government taxation on pension income payments.<br /><br />You may also know that the FCA and others are using the alleged new insights of 'behavioural economics' to justify these interventions. BH basically says that people make irrational decisions. The gummint and the regulators take this as an invitation to intervene, conviently forgetting that if BH is true then their interventions are also irrational (which is self evident if you spend any time reading any history at all).<br /><br />Given the history of all previous pensions interventions, I am supremely confident that AE will fail.Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-30805102996848554142014-06-08T20:31:19.482+01:002014-06-08T20:31:19.482+01:00Rt exactly!
L, either way it's more than 1,00...Rt exactly!<br /><br />L, either way it's more than 1,000!<br />Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-9813820596256179012014-06-08T18:45:40.695+01:002014-06-08T18:45:40.695+01:00About auto-enrollment. It's a Very Bad Idea. ...About auto-enrollment. It's a Very Bad Idea. As a clue there are 254 pages of official words you need to know with new 800 rules. Or the other way about. I forget.Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-64817538522710465132014-06-08T17:41:54.300+01:002014-06-08T17:41:54.300+01:00What strikes me about auto-enrolment is that it re...What strikes me about auto-enrolment is that it remove a chunk of people's disposable income, which may affect economic activity. Labour want to extend it to the low paid, who are more income sensitive and will curtail their spending more than the well-off, who might have saved it anyway. With my employer's scheme it will eventually be 5 per cent directly, but my employer has said that their 5 per cent contribution will be coming out of the "pay pot" so there will be fewer, lower pay rises. So that is effectively 10 per cent of disposable income being removed from the economy.<br /><br />So we may end up with lots of pension investment money sloshing around, but declining economic activity in which it can be invested.Rich Teehttps://www.blogger.com/profile/14037296506942507747noreply@blogger.com