DIY Pension Management

bostonerimus

zagfles said:

bostonerimus said:

zagfles said:

bostonerimus said:

zagfles said:

bostonerimus said:

Thrugelmir said:

bostonerimus said:

Albermarle said:

Maureen43 said:

Thank you all for your generous help. I have bought the book and will read the associated threads.

I'm 52, would ideally like to retire at 60 and am risk averse! I am also horrified by how unlikely it is that I will actually be able to retire at 60, based on my fund value. I started paying into my pension at 22 as well!

Probably being too risk averse has negatively affected the fund value . By being too cautious with investments you can actually  increase the risk of not generating a big enough fund. So the risk works both ways.

The replacement of the DB pension with DC pensions was sold to employees as giving them choice and flexibility, when it really was employers transferring risk, cost and responsibility to their workers. 

A former Chancellor has a lot to answer for.  A one tax raid fundamentally changed the landscape permanently.  Many employers had little choice.

Yes Brown is culpable, but I put him and Blair squarely along side the employers and financial industry all looking to implement neo-liberal policy at the expense of workers and their long term financial benefit. New Labour must answer for a lot, they really put the icing on a cake that Maggie started baking.

What, you mean "neo-liberal" policy like preventing pension funds being "dipped into", mandating inflation increases, the pension protection fund etc? Policies which added massive cost to DB pensions, and when combined with stuff like tax changes, life expectancy, and decreasing gilt returns made DB pensions massively more expensive than in the 70's and 80's?

Are those the "neo-liberal" policies you're talking about? Starting with Maggie adding inflation linking to DB pensions in the mid 80's. How neo-liberal!

Certainly taxing inside the pension wrapper was not neo-liberal and broke the "only tax once" rule, but New Labour was neo-liberal in its faith in markets and the DC model to solve the pension issue. The idea of pooled investments or strict rules on pension funds was out and ‘a new welfare era where collective provision is achieved through individualised ownership and effort’ as Frank Field said, was in and so the UK got Stakeholder pensions.

Except for public sector workers. Why do you think that was, if govt believed in DC?

It was nothing to do with "neo-liberal" policies. It was reaction to stuff like Maxwell, stuff like companies using pensions as golden handcuffs by basically making them worthless if you left early (no index linking - after 70's and 80's inflation rates!), demands that "something must be done", so making indexation compulsory, insurance premiums to the "lifeboat", rules about not "dipping " into the pension fund etc etc. More like socialist policies, stuff that supposedly "improved" and "protected" DB pensions added to their cost, and eventually killed them off in the private sector.

Public sector was the union opposition, in the private sector the death of the DB pension was engineered so that the costs and responsibility could be transferred to the workers.

So nothing whatsoever to do with increased cost then? Caused by both taxes and increase in regulation? You really believe that? DB pensions of the 80's gave companies a hold over their workers. they liked them. Our company forced us to join their DB scheme, and when the govt changed the rules such that they couldn't force people to stay in, they made us go to meetings where HR practically begged us to stay in the DB scheme!

Cost changed. Regulation changed. That's what killed DB. It wasn't some govt led neo-liberal conspiracy to screw the poor downtrodden workers and transfer cost. It was attempts by the govt to improve DB that killed them off. It was the people who insisted on better protection for DB pensions, indexation, lifeboat etc, that killed them off in the private sector.

My company now makes a higher contribution to my DC pension than it did to my DB in the 80's, in terms of % of salary.

It wasn't government led, they followed along with the drive started in the US to divest risk from employers and place it onto workers and increase the fees and profits that the financiers could take. Blair et al all loved The City and Wall Street and drank the cool aid. When the repeal of the dividend tax credit combined with the pension contribution holidays employers had made to boost profits and the value of their stock options along with mismanagement which strikes me as criminal then the financiers swooped and the DB pension was dead in private industry. The result is a large number of people who cannot afford to retire or end up "dropping out" as in the new film Nomadland. It's not as easy to drop out in the UK and live in a van, but the aging poor will become a bigger issue than ever.

Thrugelmir

zagfles said:

Thrugelmir said:

bostonerimus said:

zagfles said:

bostonerimus said:

zagfles said:

bostonerimus said:

Thrugelmir said:

bostonerimus said:

Albermarle said:

Maureen43 said:

Thank you all for your generous help. I have bought the book and will read the associated threads.

I'm 52, would ideally like to retire at 60 and am risk averse! I am also horrified by how unlikely it is that I will actually be able to retire at 60, based on my fund value. I started paying into my pension at 22 as well!

Probably being too risk averse has negatively affected the fund value . By being too cautious with investments you can actually  increase the risk of not generating a big enough fund. So the risk works both ways.

The replacement of the DB pension with DC pensions was sold to employees as giving them choice and flexibility, when it really was employers transferring risk, cost and responsibility to their workers. 

A former Chancellor has a lot to answer for.  A one tax raid fundamentally changed the landscape permanently.  Many employers had little choice.

Yes Brown is culpable, but I put him and Blair squarely along side the employers and financial industry all looking to implement neo-liberal policy at the expense of workers and their long term financial benefit. New Labour must answer for a lot, they really put the icing on a cake that Maggie started baking.

What, you mean "neo-liberal" policy like preventing pension funds being "dipped into", mandating inflation increases, the pension protection fund etc? Policies which added massive cost to DB pensions, and when combined with stuff like tax changes, life expectancy, and decreasing gilt returns made DB pensions massively more expensive than in the 70's and 80's?

Are those the "neo-liberal" policies you're talking about? Starting with Maggie adding inflation linking to DB pensions in the mid 80's. How neo-liberal!

Certainly taxing inside the pension wrapper was not neo-liberal and broke the "only tax once" rule, but New Labour was neo-liberal in its faith in markets and the DC model to solve the pension issue. The idea of pooled investments or strict rules on pension funds was out and ‘a new welfare era where collective provision is achieved through individualised ownership and effort’ as Frank Field said, was in and so the UK got Stakeholder pensions.

Except for public sector workers. Why do you think that was, if govt believed in DC?

It was nothing to do with "neo-liberal" policies. It was reaction to stuff like Maxwell, stuff like companies using pensions as golden handcuffs by basically making them worthless if you left early (no index linking - after 70's and 80's inflation rates!), demands that "something must be done", so making indexation compulsory, insurance premiums to the "lifeboat", rules about not "dipping " into the pension fund etc etc. More like socialist policies, stuff that supposedly "improved" and "protected" DB pensions added to their cost, and eventually killed them off in the private sector.

Public sector was the union opposition, in the private sector the death of the DB pension was engineered so that the costs and responsibility could be transferred to the workers.

Brown removed the reclaim of tax relief on dividends for pension funds. Overnight changed the funding landscape. Shortly followed by the Dot Com crash era and the continuing decline of Gilt yields. For those involved financially at the time nothing was engineered. Unlike the public sector unions the private sector lives in the real world where magic money trees aren't to be found. 

There's schemes in the public sector which are potentially unsustainable in their current form. 

Indeed. I'm no fan of Labour but it's blatently obvious they didn't engineer the demise of DB in the private sector. They helped cause it, but not deliberately. The blame lies more with them (and the Tories) listening to those calling for more protection for DB pensions, ie inflation, lifeboat, dipping etc. People seem to look at DB pensions of the 80's with rose tinted spectacles. There was a lot wrong with them, and attempts to correct what was wrong eventually helped kill them off, together with other factors like taxes, yields, longevity etc.

Tin foil hat wearing conspiracy theorists no doubt disagree

Was the 80's the last time you lived in the UK?  

zagfles

Thrugelmir said:

zagfles said:

Thrugelmir said:

bostonerimus said:

zagfles said:

bostonerimus said:

zagfles said:

bostonerimus said:

Thrugelmir said:

bostonerimus said:

Albermarle said:

Maureen43 said:

Thank you all for your generous help. I have bought the book and will read the associated threads.

I'm 52, would ideally like to retire at 60 and am risk averse! I am also horrified by how unlikely it is that I will actually be able to retire at 60, based on my fund value. I started paying into my pension at 22 as well!

Probably being too risk averse has negatively affected the fund value . By being too cautious with investments you can actually  increase the risk of not generating a big enough fund. So the risk works both ways.

The replacement of the DB pension with DC pensions was sold to employees as giving them choice and flexibility, when it really was employers transferring risk, cost and responsibility to their workers. 

A former Chancellor has a lot to answer for.  A one tax raid fundamentally changed the landscape permanently.  Many employers had little choice.

Yes Brown is culpable, but I put him and Blair squarely along side the employers and financial industry all looking to implement neo-liberal policy at the expense of workers and their long term financial benefit. New Labour must answer for a lot, they really put the icing on a cake that Maggie started baking.

What, you mean "neo-liberal" policy like preventing pension funds being "dipped into", mandating inflation increases, the pension protection fund etc? Policies which added massive cost to DB pensions, and when combined with stuff like tax changes, life expectancy, and decreasing gilt returns made DB pensions massively more expensive than in the 70's and 80's?

Are those the "neo-liberal" policies you're talking about? Starting with Maggie adding inflation linking to DB pensions in the mid 80's. How neo-liberal!

Certainly taxing inside the pension wrapper was not neo-liberal and broke the "only tax once" rule, but New Labour was neo-liberal in its faith in markets and the DC model to solve the pension issue. The idea of pooled investments or strict rules on pension funds was out and ‘a new welfare era where collective provision is achieved through individualised ownership and effort’ as Frank Field said, was in and so the UK got Stakeholder pensions.

Except for public sector workers. Why do you think that was, if govt believed in DC?

It was nothing to do with "neo-liberal" policies. It was reaction to stuff like Maxwell, stuff like companies using pensions as golden handcuffs by basically making them worthless if you left early (no index linking - after 70's and 80's inflation rates!), demands that "something must be done", so making indexation compulsory, insurance premiums to the "lifeboat", rules about not "dipping " into the pension fund etc etc. More like socialist policies, stuff that supposedly "improved" and "protected" DB pensions added to their cost, and eventually killed them off in the private sector.

Public sector was the union opposition, in the private sector the death of the DB pension was engineered so that the costs and responsibility could be transferred to the workers.

Brown removed the reclaim of tax relief on dividends for pension funds. Overnight changed the funding landscape. Shortly followed by the Dot Com crash era and the continuing decline of Gilt yields. For those involved financially at the time nothing was engineered. Unlike the public sector unions the private sector lives in the real world where magic money trees aren't to be found. 

There's schemes in the public sector which are potentially unsustainable in their current form. 

Indeed. I'm no fan of Labour but it's blatently obvious they didn't engineer the demise of DB in the private sector. They helped cause it, but not deliberately. The blame lies more with them (and the Tories) listening to those calling for more protection for DB pensions, ie inflation, lifeboat, dipping etc. People seem to look at DB pensions of the 80's with rose tinted spectacles. There was a lot wrong with them, and attempts to correct what was wrong eventually helped kill them off, together with other factors like taxes, yields, longevity etc.

Tin foil hat wearing conspiracy theorists no doubt disagree

Was the 80's the last time you lived in the UK?  

Don't think it's me you're asking! (I've always lived in the UK).