Bull market, how long for?

iro

We do seem to be getting a little sidetracked!

reeac

BananaRepublic wrote: »

The state pension system is a mess since as you say, today’s payments simply pay today’s pensions. There is no investment. And we have an aging population which means we will be in trouble as there will not be enough money.

I've always thought that if it's possible to apply it then the system where current pensioners are paid using the pension contributions from current employees is simpler and more efficient than the SIPP/pension pot system where fees associated with the hefty capital sums involved will eat into those sums. Yes, we have an ageing population but then that will apply whichever system is used ....there's no "magic money tree" either way.

chucknorris

BananaRepublic wrote: »

The state pension system is a mess since as you say, today’s payments simply pay today’s pensions. There is no investment. And we have an aging population which means we will be in trouble as there will not be enough money.

I think that the recently introduced mandatory enrolment in employer's pension schemes and the extension of age when you can draw the state pension are probably the first moves of many from the Gov. I don't think that it will ever be abolished, but I can definitely see the inflation indexation disappearing at some point, which would give people plenty time/warning to prepare (but of course not everyone will) as well as solve the 'non sustainability' problem eventually.

A_T

UK state pension is one of the lowest in the developed world. Countries with smaller economies pay higher pensions.

The UK can well afford a good state pension - it's a question of whether the political will is there.

chucknorris

A_T wrote: »

UK state pension is one of the lowest in the developed world. Countries with smaller economies pay higher pensions.

The UK can well afford a good state pension - it's a question of whether the political will is there.

Afford? Is that the correct criteria to commit to expenditure? I could afford to buy many Aston Martins, but guess how many I actually have, correct: none. Why should rich people receive the state pension? My answer would be fairness, after all they paid for it, but you can't get away from the fact that if we all receive it, then it is not sustainable in the long run, for everyone.

redux

economic wrote: »

“Ordinary people who invest in rental real estate will also benefit.”

I said either left propaganda or headlines. In this case its headlines.

Its very convenient to have just one line saying ordinary people will also benefit. Where are all the numbers to suggest how much the ordinary average real estate investor will benefit? All i see is poor journalism only focusing on trump, because of course that gets all the headlines these days right?

There might be a slight difference between what is great for ordinary people who invest in real estate and what is great for ordinary people in general.

If ordinary people in general see a reduction in how much they can claim their mortgages against their tax bill, this might have certain effects. There are predictions of reductions in house prices or in the proportions owning their own home. Maybe it isn't a bad thing long term, but meanwhile this can affect Trump's supporters.

BananaRepublic

reeac wrote: »

I've always thought that if it's possible to apply it then the system where current pensioners are paid using the pension contributions from current employees is simpler and more efficient than the SIPP/pension pot system where fees associated with the hefty capital sums involved will eat into those sums. Yes, we have an ageing population but then that will apply whichever system is used ....there's no "magic money tree" either way.

The problem with paying today’s pensioners with today’s pension contributions is that we have an aging population, and there are not enough young people paying in. Bringing in young migrants from, oh, let’s say Poland as an example plucked from thin air, is one solution but it’s not sustainable unless you continually bring in more and more migrants.

The benefit from paying into a pension fund is that it grows for decades, and hence in the long term it is cheaper. However, a country cannot do that for obvious reasons. ChuckNorris is surely correct in his assertions. The housing crisis, whereby home ownership is dropping does not help, as more future retirees will need to pay rent in addition to other costs.

talexuser

BananaRepublic wrote: »

However, a country cannot do that for obvious reasons.

Norway had a jolly good go at it though with their North Sea Oil money, a trillion $ with global shares a good bung in there. If only we had not wasted ours in comparison.
https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Norway

BananaRepublic

talexuser wrote: »

Norway had a jolly good go at it though with their North Sea Oil money, a trillion $ with global shares a good bung in there. If only we had not wasted ours in comparison.
https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Norway

Indeed. And Norway has a much smaller population, so the money per head of population is much higher. And they have far more land per person, so housing is cheaper, and huge fisheries, hydro power etc.

talexuser

Still a country though.