Pension crisis coming to UK....

jamesd

baby_boomer wrote: »

We don't need the FTSE to drop to 4,000. The crisis is already upon us at 5,600. Pension planning is done on the basis of 7-8% pa growth and the FTSE was 6,900 nine years ago.

Pension planning is not done on the basis of 7-8% growth in the FTSE100 index value. It's closer to being based on 7-8% total return, of which about 3% from FTSE 100 companies comes in the form of dividends that do not show up at all in the value of the index.

This chart illustrates the difference. Bottom in blue is the HSBC FTSE 100 index tracker fund which moves like the FTSE 100 index. Income units, so dividends not included in the valuation, up about 32% over the last five years. Next up in red is the same fund but the accumulation version, so the dividend value does show up in the value, up about 50% over the last five years.

And to illustrate why you might not want to focus on the FTSE 100, green is Invesco Perpetual Income income units and yellow the same fund accumulation units, up 71% and 98% over the last five years.

As for the ups and downs, that's where asset allocation, choosing what percentage of your money is in each type of investment, comes in. During boom times you cream off the top of the profits into less volatile investments to maintain the percentage and during bomb times you transfer some back, so you save some of the gains at high prices and buy during the down times at lower prices, again maintaining the percentage split of the mixture.

Rabiddog_2

If you know (or believe) that the ftse will be at 4000 or less in xx years , the you could make Billions, literally by buying options. No need for risky gold or silver and a far higher multiple if things go right. And no VAT, rodney.
Also £20 billion in the pensions game is less than chicken feed, £trillions are what they deal in. Pensions are a 30 year plus investment and have to be looked at as such.

dunstonh

You would be daft to invest 100% into the FTSE. (whether its FTSE100 or all share).

Montly payments benefit from drops like this as they buy cheaper units.

MrMalkin

TRUSt_NO_1 wrote: »

A bunch of rubbish

I really wish the mods would crack down on things like this. Some idiot who thinks he knows what he's talking about but doesn't.

You'll notice that his interest in the price of wheat hasn't taken into account the fact that the price has been falling of late, in fact it's only up about 4.5% on the year...

baby_boomer

jamesd wrote: »

Pension planning is not done on the basis of 7-8% growth in the FTSE100 index value.

I don't believe I said it was.

However it does help to have some capital growth

TRUSt_NO_1_2

Turnbull2000 wrote: »

Outside of the public sector, do many young people actually bother with pensions these days? I've asked around my department, and there's only two people under 30 (out of 16) who've joined the scheme.

My post of 01-06-2008

TRUSt_NO_1 wrote: »

The basics are .... pensions are a con,to keep the bankers and their hedge fund cronies,trading the stock exchanges of the world, in the lap of luxury.

Unless your employer made significant contributions they are a waste of money.
The Pension industry and regulators are the biggest load of bushlitters.
I've spoken to them on a few occasions recently.WASTE OF TIME.

You may get some crumbs.By the time you draw your pension,inflation will have eroded all of the benefits.

The RPI and CPI are garbage,so any indexation becomes a farce.

The days of good pensions have passed,unless your a politician, policeman or similar public sector who can retire after only 20 years on 2/3rds salary....which is one of the main reason why the governement is in debt over £1,000,000,000,000 in future liablities.(BROKE)

My final salary pension is going into a SIPP ,as soon as I can get fair valuation.I think I may have to take legal action to even get anything even fair.
Try and cash it in...you'll get F*** ALL.They want to keep your money in 'the pension industry pot'.

I advised my sons not to bother with a pension as they are a rip off

No guarantees...SO PLEASE NOBODY MENTION THE PPF (THAT IS GOING DOWN WITH THIS BANKRUPT GOVERNMENT SOON)

TRUSt_NO_1_2

MrMalkin wrote: »

I really wish the mods would crack down on things like this. Some idiot who thinks he knows what he's talking about but doesn't.

You'll notice that his interest in the price of wheat hasn't taken into account the fact that the price has been falling of late, in fact it's only up about 4.5% on the year...

I picked wheat as an example of 'true' inflation.
What's your prediction for 2008/2009 ?
2.5% 3% ??

Try gas,electricity,petrol/diesel,(wheat ...come back in 12/24 months...),rice,water rates...(10% last year,7.8% this)...,car tax etc

you prat.

TRUSt_NO_1_2

Rabiddog wrote: »

If you know (or believe) that the ftse will be at 4000 or less in xx years , the you could make Billions, literally by buying options. No need for risky gold or silver and a far higher multiple if things go right. And no VAT, rodney.
Also £20 billion in the pensions game is less than chicken feed, £trillions are what they deal in. Pensions are a 30 year plus investment and have to be looked at as such.

A quote from the PPF website

Across the sample of schemes, total scheme assets amounted to £798.4 billion in July (this is 85% of PPF schemes)
so 100 % is less than 1 trillion in assets.
20 billion is only a 2.5% deficit...but people are living longer (cancer cure just 'around the corner') and the economy, as even Alistair Dumpling admitted, is on a precipice.

MrMalkin

TRUSt_NO_1 wrote: »

I picked wheat as an example of 'true' inflation.
What's your prediction for 2008/2009 ?
2.5% 3% ??

I don't have one because I have no training in this field. So I don't make silly predictions with no evidence and no training to back it up.

TRUSt_NO_1 wrote: »

you prat.

Are you 12? Does your mummy know you're on the internet unsupervised?

TRUSt_NO_1_2

MrMalkin wrote: »

I really wish the mods would crack down on things like this. Some idiot who thinks he knows what he's talking about but doesn't.
.

Reply:
Posted by TRUSt_NO_1
.......you prat.

MrMalkin wrote: »

Are you 12? Does your mummy know you're on the internet unsupervised?.

I believe in child/child reactions..makes me feel young at heart.
My mum died a few years ago,but I had permission.