The Times - Labour Plans Pension Raid

Cyberman60

redux wrote: »

He has used the phrase paying down the debt.

That choice of phrase, as if the words deficit and debt are interchangeable, is misleading. This government has borrowed more money than all previous governments put together, as the total debt has doubled.

One doesn't have to be a Labour party member or even voter in order to point this out, or that high management charges can have had much greater effect on pension funds than the change of dividend taxation.

The UK Statistics Authority, which has rebuked Cameron on the first point more than once, is an official watchdog, not part of the Labour Party.

' However, the chairman of the UK Statistics Authority, Sir Andrew Dilnot, pointed out that, while the deficit has fallen since the coalition came to power in 2010, debt has risen.

Sir Andrew noted that he had to issue a similar clarification in February 2013 after Mr Cameron remarked in a party political broadcast that the Government was "paying down Britain's debts". '

http://www.dailymail.co.uk/wires/pa/article-2779516/Cameron-rebuked-debt-claims.html

It is one thing to mainly talk about the deficit reducing, relying on some people not distinguishing the total debt and its rate of change, but Cameron has said the debt is reducing. Despite being officially criticised on the point, he has repeated it. This is intentional.

Redux, Brown has taken 100-150 Billion compounded out of pension schemes by his raid over 18 years. To compare that in any way to management fees is clearly ridiculous.

Any long-running annual deficit adds to National Debt. Labour would have created even more debt if they were in power as 5 times 160 Billion a year = 800 Billion over 5 years as opposed to the Tories which has been 160 + 140 + 120 + 100 + 80 approx = 600 Billion. Thus the Tories/Coalition have kept National Debt around 200 Billion lower than Labour would have achieved, and will continue to add to that difference if returned to power. :T

Cyberman60

Linton wrote: »

The deficit is funded by debt so one is regarded as a measure of the other. See here for example. This graph appears to be in actual £bn, not allowing for inflation.

The cost of financing the National Debt is now around 50 Billion a year which is half of the money that goes into the NHS. That is why we must continue to reduce Labour's annual deficit !!! Labour has said that it will not tackle the deficit it created, and that means the cost of financing ND will continue at a faster pace under them.

coastline

Cyberman60 wrote: »

That's totally disingenuous. In 2007, Osborne was obviously unaware that the annual deficit would be 160 Billion in 2009. :rotfl:

They did know that labour had just borrowed £150bn over a 5 year period in a growing economy yet they were prepared to match Labours spending plans.
Why not cuts you may ask ??....well theres an election looming so you could say they wanted to bribe the general public....after all who would vote for a government preparing to cut when things were ticking along nicely.
Just to add I don't think Labour and the UK were the only country to borrow in a growing economy.

Linton

Cyberman60 wrote: »

Final Salary pensions seem ok for the Public Sector as they are funded mainly by the taxpayer !!! It was Private Sector Final salary pensions that Brown decimated in the main. Brown ruined perfectly good pensions. :mad:

Partisan nonsense. Company funded final salary pensions became unsupportable as increased life expectancy multiplied the number of years over which those pensions were expected to be paid. A far more significant effect than what is calculated to have been around 0.5%/year . Trustnet estimated that the effect on pension funds would be about 12% over the life of a pension - a moderate amount but certainly not enough to "ruin perfectly good pensions". It could have been negated by a 12% rise in contributions, perhaps 1% of salary.

Its all very well having these political knock abouts but this forum is the wrong place. There is the very great danger that irresponsible scare stories like the one started by the OP will frighten newbies who come here for enlightenment away from pensions completely to their very great loss.

redux

Cyberman60 wrote: »

Redux, Brown has taken 100-150 Billion compounded out of pension schemes by his raid over 18 years. To compare that in any way to management fees is clearly ridiculous.

I don't think so.

As I said, two scheme administrators predicted a likely reduction effect of a bit under 0.1% a year.

This implies a dividend yield of 1%, which was about right across the spread of investment trusts in the schemes.

Even if someone had chosen a portfolio of high yielding shares, they would be unlikely to have an average dividend rate much over 5%, so the effect of dividend taxation would be 0.5% a year at most. I suspect it would be an unlikely long term portfolio though.

Adding up across 25 years, the reduction due to dividend tax in my scheme would be about 2%, compared to as I said about a bit more due to management fees.

In the Money Management annual pension surveys I looked at back then, it is true that some managers had scheme charges which would reduce a fund as much as I said before. Indeed the worst 2 or 3 had a reduction due to charges down to under £40,000 from about £110,000, so about two-thirds. Fortunately those companies have restructured their schemes or been taken over.

As well as all that, I looked at actual measured fund performance, and it struck me that on average investment trusts were better than all unit trusts or all insurance company managed funds, presumably due to better methods or lower charges, or both. But that's just a personal decision.

Some people make their own selections nowadays in a SIPP, but even here the effect of charges can whittle things away. I looked at one this morning where the platform manager wants 0.75% per year from funds in OEICS not on its favourites list. That strikes me as fairly greedy seeing as most of their work is only an IT platform and less than the research effort of the actual fund managers who may charge in about the same range.

spartacus173500

All - thank you all for your responses, especially jamesd in post #26 who responded to my original question.

"I am 59 and, after being encouraged by many threads in this forum, planning to 'retire' end March 15 and was considering 25% cash free sum sometime later in year. Savings and maybe some part time working making access not an immediate priority.

Do I need to act now and before election to manage any risk"

I never realsied i would open up such a political debate.

Jamesd:
"Personally I'd go with starting capped income drawdown as soon as possible before 5 April 2015. "
Can you point me to a previous simple thread how to do?

Cyberman60

coastline wrote: »

They did know that labour had just borrowed £150bn over a 5 year period in a growing economy yet they were prepared to match Labours spending plans.
Why not cuts you may ask ??....well theres an election looming so you could say they wanted to bribe the general public....after all who would vote for a government preparing to cut when things were ticking along nicely.
Just to add I don't think Labour and the UK were the only country to borrow in a growing economy.

Borrowing 150 Billion at a time of boom is just incredible. Brown had openly stated that he had abolished boom and bust. See what would happen if Labour get in. BUST !!! :eek:

redux

spartacus173500 wrote: »

All - thank you all for your responses, especially jamesd in post #26 who responded to my original question.

"I am 59 and, after being encouraged by many threads in this forum, planning to 'retire' end March 15 and was considering 25% cash free sum sometime later in year. Savings and maybe some part time working making access not an immediate priority.

Do I need to act now and before election to manage any risk"

I never realsied i would open up such a political debate.

Jamesd:
"Personally I'd go with starting capped income drawdown as soon as possible before 5 April 2015. "
Can you point me to a previous simple thread how to do?

Ha ha, yes the neutral pragmatic answer, but the question was predicated on a political article.

To digress even more, but on a similar point of potentially hedging personal wealth against political risk ...

Imagine what people would have said just before the last election if someone had predicted this government would cancel a budget increase then freeze the zero rate allowance band for inheritance tax, despite George Osborne having promised significant increases.

It was increased almost every year previously, so this might have been hard to believe.

Cyberman60

Linton wrote: »

Partisan nonsense. Company funded final salary pensions became unsupportable as increased life expectancy multiplied the number of years over which those pensions were expected to be paid. A far more significant effect than what is calculated to have been around 0.5%/year . Trustnet estimated that the effect on pension funds would be about 12% over the life of a pension - a moderate amount but certainly not enough to "ruin perfectly good pensions". It could have been negated by a 12% rise in contributions, perhaps 1% of salary.

Its all very well having these political knock abouts but this forum is the wrong place. There is the very great danger that irresponsible scare stories like the one started by the OP will frighten newbies who come here for enlightenment away from pensions completely to their very great loss.

Longevity would obviously have made a difference in the long run but removing 20% of growth in pensions via dividends year on year from 1997 to today has played a devastating part. The estimate in 1997 was that it would raise between 5 and 7 Billion a year in tax revenue. Compounded over 18 years that is colossal. eg: 5 Billion times 18 years = 90 Billion uncompounded !!!!

I do hope you support the closure of public sector pensions as much as you support the unsustainability of private sector pensions.

Cyberman60

spartacus173500 wrote: »

All - thank you all for your responses, especially jamesd in post #26 who responded to my original question.

"I am 59 and, after being encouraged by many threads in this forum, planning to 'retire' end March 15 and was considering 25% cash free sum sometime later in year. Savings and maybe some part time working making access not an immediate priority.

Do I need to act now and before election to manage any risk"

I never realsied i would open up such a political debate.

Jamesd:
"Personally I'd go with starting capped income drawdown as soon as possible before 5 April 2015. "
Can you point me to a previous simple thread how to do?

You ARE naive...