Pensions

MFW_ASAP

CLAPTON wrote: »

However due the the heavy regulatory burden on pension funds it's very unclear to me that they invest in anything other than AAA rated products like gilts, ftse100 companies etc.

In addition one must ask if there is a lack of investment funds or do they merely fund government debt?

I think the issue here is the level of knowledge you have about investing. That isn't meant as a slight against you personally, but as a statement of fact. There are tens of thousands of different gilts, bonds, shares, funds and other investments you can put your pension savings into. These can be UK, EU, US, Japan, Global, Regional, Pacific Rim, Emerging markets. There are no restrictions on where you invest your pension.

There are restrictions on where your annuity is invested, but then you no longer need to buy an annuity with your pension.

CLAPTON wrote: »

However the very important point remains that the money in pension funds doesn't of itself reduce the burden on the employed people.

It depends what the 'burden' is. If the burden is taxation that is used to provide state pensions or to pay for unfunded public sector finances, then of course having 100% funded pension schemes will relieve this burden because zero taxation will be used. If you're not talking about this burden, then what burden are you talking about?

CLAPTON wrote: »

The demographics aren't going away because we have funded pension schemes.

Well no one said that.

MFW_ASAP

grizzly1911 wrote: »

Is that not your personal enlightened choice and a relative minority of switched on people?

Is every Tom !!!!!! and Flora going to invest in that way or are they simply going to be enrolled in an employer "scheme" where their 6% or whatever gets "invested".

No, only I am allowed to invest my pension. There is a bar against the rest of the population doing this. All other pensions are just invested in a mattress.

Deary me.

Loughton_Monkey

CLAPTON wrote: »

......The fact that during your own working working life you 'saved money ' (i.e. forgo consuming goods and services) to pay for the old and other non working people is very commendable and may morally entitle you to receive the equivalent in your retirement.

The facts of a booking keeping entry called 'pension' however doesn't nothing to reduce the demographics of an aging population

???????

During my own working life I invested money (i.e. forgo consuming extra services) in my own personal pension, I didn't need commending because this was nothing to do with other 'old' or 'non working' people. It was a simple common sense arrangement so that I could start consuming those services later with that same amount. There are no morals about it.

I have already agreed that State Pension, plus some elements of company FS schemes do have timing and generational issues with them. But I don't see what you have against the [now very prevalent] personal pension arrangements which somewhat avoid these generational issues?

grizzly1911

MFW_ASAP wrote: »

No, only I am allowed to invest my pension. There is a bar against the rest of the population doing this. All other pensions are just invested in a mattress.

Deary me.

I think you should allow other people to invest in your pension, just thimk with their tax relief too your pot could grow much more quickly.

What sort of profit do you get from the mattress or is it dependant on the rate of turnover?

MFW_ASAP

grizzly1911 wrote: »

I think you should allow other people to invest in your pension, just thimk with their tax relief too your pot could grow much more quickly.

What sort of profit do you get from the mattress or is it dependant on the rate of turnover?

Griz, for once we are having a decent discussion on here so please don't ruin it. I appreciate that you don't like me, but there are other people in here enjoying contributing to the thread.

If you're bored and want to have a go at me, why not resurrect the Interest Rate Gamble thread and have a pop at me in there?

Thanks:)

p.s. that request extends to your other usernames.

CLAPTON

MFW_ASAP wrote: »

I think the issue here is the level of knowledge you have about investing. That isn't meant as a slight against you personally, but as a statement of fact. There are tens of thousands of different gilts, bonds, shares, funds and other investments you can put your pension savings into. These can be UK, EU, US, Japan, Global, Regional, Pacific Rim, Emerging markets. There are no restrictions on where you invest your pension.

There are restrictions on where your annuity is invested, but then you no longer need to buy an annuity with your pension.



It depends what the 'burden' is. If the burden is taxation that is used to provide state pensions or to pay for unfunded public sector finances, then of course having 100% funded pension schemes will relieve this burden because zero taxation will be used. If you're not talking about this burden, then what burden are you talking about?



Well no one said that.

The first issue is the production of goods and services and what level of 'cake' we will have in the future when the proportion of employed people falls significantly.

The second issue is how the cake will be divided.


If we invest wisely now, to increase the size of the future cake in terms of the ability to produce goods and service then that will increase the size of the cake we can consume in the future.

Most pension funds do not specifically target such provision and most individuals 'investing' in pensions are concerned with monetary growth and security.

I've not heard a pension fund boasting of their contribution to UK productivity or future GDP ; they usually emphasis the fund size.

Investing in a wide variety of bonds gilts shares may or may not boost UK GDP or its productivity although it may be an accidental side effect.


The employed people produce the whole of the economic cake; they have to forgo part of that cake if pensioners are to have a slice.
The amount they forgo determines what the pensioners (and other non workers) get, whether via taxation or from 'savings' or from pensions.

From the employed peoples point of view (what I have called a 'burden') it makes no real difference.

So a 100% funded scheme imposes the exactly the same 'burden' as a 100% tax payer funded schemes if in both cases the pensioners enjoy the same standard of living (i.e. the goods and services) produced by the employed).

Such is the nature of the demographic time bomb.

lisyloo

I was reading an actuarial piece saying that a girl born in 2014 can expect to live until 2110. If she retires in 2074 she'll be a cost to that pension scheme for 36 years!

If people do live until 96 as an average then I doubt they can expect to retire at 60 !!

wotsthat

CLAPTON wrote: »

However the very important point remains that the money in pension funds doesn't of itself reduce the burden on the employed people.

Won't some of this burden be reduced by deferring spending from today until tomorrow?

I think Loughton Monkey likes Jags and G&T - he places a burden on the producers of these things because he can't make them himself - a transfer of cash deals with the problem in work or in retirement. Everybody's happy.

The demographic changes mean that the ratio of workers to non-workers changes. Doesn't the market simply adjust by making Jags and G&T's more expensive? The other adjustment, which many are going to be surprised about, is that if earning and spending aren't balanced over a lifetime they'll find themselves smoothing the demographic hump by working for longer than they'd hoped.

grizzly1911

MFW_ASAP wrote: »

Griz, for once we are having a decent discussion on here so please don't ruin it. I appreciate that you don't like me, but there are other people in here enjoying contributing to the thread.

If you're bored and want to have a go at me, why not resurrect the Interest Rate Gamble thread and have a pop at me in there?

Thanks:)

p.s. that request extends to your other usernames.

You started the dreary remarks not me Reno.

I only need one user name.

I don't dislike you not sure where you got that from.I actually (genuinely) praised your enlightenment this time round.

I take it you believe that every Tom !!!!!! and Flora will be able to show the same fortitude and foresight.

CLAPTON

Loughton_Monkey wrote: »

???????

During my own working life I invested money (i.e. forgo consuming extra services) in my own personal pension, I didn't need commending because this was nothing to do with other 'old' or 'non working' people. It was a simple common sense arrangement so that I could start consuming those services later with that same amount. There are no morals about it.

I have already agreed that State Pension, plus some elements of company FS schemes do have timing and generational issues with them. But I don't see what you have against the [now very prevalent] personal pension arrangements which somewhat avoid these generational issues?

Individual pensions are an excellent idea as they potentially allow the specific individual to have a high standard of living in retirement.


However if everyone has an excellent pension arrangement (whether via funded pension schemes or taxation) then the issue is what slice of the cake do all the pensioners take.

If the cake is relatively small and the pensioners are relatively numerous then this means the actual people working receive relatively little as a reward for their labours.

Such is the effect of a reduction in workforce relative to the population size.
Whether you have forgone consumption during your working years may not be rewarded if all your comtempories did the same and now demand the same high standard of living from a now much smaller work force.