This page has been archived and commenting is disabled.
RPI or R.I.P. British Pensioners?
Macer
Hall of the Express reports, Millions
facing 25% Cut in Their Pension:
A revolt was growing last night
over a swingeing “stealth cut” in private pensions that could cost
savers about £800 a year in retirement.
Up to 12 million members of
final-salary pension schemes face up to 25 per cent lower incomes as
a result.
Ministers insisted the switch in the way annual
pension increases are calculated was a technical change that would
have little impact on incomes.
But a backlash was
spreading among pensioners, savers and experts yesterday, who said it
was another covert raid on the savings of Middle Britain.
Dot Gibson, general secretary of the
National Pensioners’ Convention pressure group, said the change would
force more people to rely on state support, and accused ministers of
lacking a “clear and coherent pension policy”.
She said: “Private and public sector workers are
seeing their pensions under threat – yet they have paid into these
schemes for years and have a right to expect back what they were
promised.
“Pensions in this
country remain among some of the worst in Europe and the Government
doesn’t seem to have any idea how to improve the situation apart from
making people work longer and giving them less.”
Dr Ros Altmann, a
pensions expert and former Government adviser, said: “Ministers claim
this is just a technical change, but it is going to have a negative
impact on incomes.
“How much misery can pensioners have piled on them?”
And TUC general
secretary Brendan Barber savaged the “stealth cut”. He said that over
an entire retirement, “this will add up to a significant
loss”.Whitehall sources dismissed the furore as “scaremongering”.
One claimed the most it is likely to cost pensioners
is “a few pence a year”.Liberal
Democrat pensions minister Steve Webb slipped out the change in a
Parliamentary written statement on Thursday. From next January
increases in private pensions will be linked to the Consumer Price
Index instead of the Retail Prices Index.
Both are measures of
inflation but CPI figures are generally lower than the RPI’s because
they do not include housing costs like mortgage payments.
Laith Khalaf, a pensions expert at
Hargreaves Lansdown, calculated that if someone started drawing a
pension at 60 and lived to be 80, they would receive 25 per cent less
in all.
On current levels
of RPI at 5.1 per cent and CPI at 3.4 per cent, the average
occupational pension of £1,600 a year would be worth £4,043 after 20
years if uprated in line with RPI, but only £3,020 if uprated in line
with CPI.
It means that
pensioners would have lost out on £8,120 over 20 years.
Actuarial
consultants Towers Watson calculated that by 2016 a pensioner now
receiving £10,000 a year would be more than £800 a year worse off.
Accountants KPMG said the
change could reduce UK private sector pension liabilities by 10 per
cent, or about £100billion.
The
move follows the decision in George Osborne’s emergency Budget last
month to link annual benefit rises to CPI rather than RPI.
Some pensions
experts believe the switch could save final-salary schemes from
extinction.
Bob
Bullivant, chief executive of Annuity Direct, said: “It will help their
deficits.
“They will be
more likely to be able to fulfill their liabilities and less likely to
fail and fall on the Pension Protection Fund.”
Norma Cohen of the FT
reports, Experts
relieved on pension indexing:
A change to the way pension
promises are protected against inflation is likely to be far less
sweeping, and hit the savings of employees far less drastically than
many retirement experts initially assumed, pensions experts said on
Friday.
On Thursday, Steve Webb,
pensions minister, said from next April, statutory rises to pensions
being paid out and deferred benefits in occupational schemes would
switch to moving in line with the Consumer Price Index, rather than the
Retail Price Index.
The announcement prompted advisers to plug
in their own numbers. Hargreaves Lansdown, the pension experts,
estimated that, if the gap between the CPI and RPI remained at its
current 1.7 per cent rate, 25 per cent would be wiped off retirement
savings. According to KPMG, the effect would be to wipe about £100bn
off the nation’s occupational liabilities, which stand at £1,000bn.
But on Friday the Department for Work and
Pensions was at pains to explain the limits of its new rules. Most
significantly, they do not affect most private sector occupational
schemes, which offer inflation protection above the statutory minimum.
They also apply only to benefits that accrue from next April; anything
earned to date is protected.
Robin Simmons, partner at Sackers, a
law practice specialising in pensions, noted that there were two key
pieces of legislation that required employers to write
inflation-proofing into their schemes. First was the 1993 Pensions Act,
which required that deferred benefits – pension pots of former
employees who were too young to retire – had to be increased in line
with inflation.
Second, the 1995 Pensions Act required employers
to raise pensions in payment in line with inflation up to a ceiling of 5
per cent.
But the catch, Mr Simmons
said, was that the legislation did not specify the use of either RPI or
CPI. Instead, it referred to “the general level of prices” – a level
that successive secretaries of state have interpreted as RPI. Mr Webb
did not even need to introduce legislation in order to make the change,
he pointed out.
“If you are out there
looking for a good austerity wheeze, this is it,” Mr Simmons said.
The
act’s silence on the inflation benchmark probably has its roots in
history. According to the Office for National Statistics, CPI was not
introduced until 1996, after the ink on the relevant Pensions Act was
dry. However, for purposes of backdating, the ONS does produce data
based on the assumption that the CPI had existed earlier.
Moreover,
the shift from RPI to CPI cannot apply to benefits already accrued.
Section 67 of the 1995 act says employers cannot reduce accrued
benefits without the permission of the scheme member. “There are a lot
of schemes out there with more generous uplifts than the statutory
minimum,” Mr Simmons said. “This stuff won’t change. I’d be gobsmacked
if it did.”
Mr Simmons noted that the
reason so many schemes had inflation proofing went back to the 1990s
when companies were recording large surpluses. Employers wanted to take
contributions holidays but boards of trustees could not allow the
surplus to be used by them entirely. In the interest of fairness to
employees, they often improved benefits, linking pensions in payment to
inflation.
The CBI, the employers’ group, welcomed the change but
acknowledged that it was not going to be the cost saver for the
private sector that some had assumed. “The changes announced on Friday
only apply to schemes indexed at the statutory minimum,” said Neil
Carberry, CBI director of policy. He noted the majority of schemes
offered better than minimum indexation.
Joanne Segars, chief
executive at the National Association of Pension Funds, said the full
implications of the changes had not yet been made clear. “The exact
implication depends on what the individual scheme rules say,” she said.
Indeed,
the exact implications remain to be determined but this technical
switch will make future pensioners worse off because their pensions will
be indexed to CPI, which not as comprehensive as the RPI in measuring
inflation.
Let's say we get a deflationary episode, and CPI is
falling but RPI is still rising. Pensioners will get screwed. Worse
still, if all the quantitative easing sparks a major inflationary
episode, then expect the gap between RPI and CPI to widen, and again
pensioners will feel the pain.
Of course, the effects of these
policy changes are typically exaggerated in the media, but what's truly
amazing is how policymakers are trying to curb benefits by quietly
cutting into pension savings. I guess they thought nobody would notice,
but when austerity hits tight pocketbooks of retirees, they notice and
are right to feel concerned. They didn't work hard all their lives to
have some government bureaucrat conjure up sneaky ways to cut into their
retirement savings.
And it's not just private pensions that are
feeling the squeeze. Louisa Peacock of the Telegraph reports, Pension
reform must be accepted by public sector unions and workers:
A report by the Public
Sector Pensions Commission yesterday urged the Government to raise
employee
and employer contributions to pay for the size of public sector
pensions
liabilities, estimated by independent actuaries to be £1.2
trillion –
far higher than the Government’s £770bn figure.
Other employers’ groups, including the CBI, raised fresh concerns that
the
private sector should not have to pick up the slack for the public
sector
pensions shortfall.Other employers’ groups, including the CBI, raised fresh concerns that
the private sector should not have to pick up the slack for the
public sector pensions shortfall.
Other proposals include increasing the retirement age from 60 to 65,
closing
the scheme to future accrual, and more radical plans such as switching
to
career-average or hybrid schemes.
Gillian Hibberd, former president of the Public Sector People Managers’
Association, said the currentfinal salary scheme was no longer viable and warned crucial
front-line
services and jobs would be adversely affected if the costs were not
brought
down.
“In its current form, workers must accept the final salary scheme is no
longer
affordable. Closing it to future accrual, or creating a hybrid or
career-average scheme, are all serious considerations. Without
changes, in
the current economic climate, the squeeze on budgets will inevitably
lead to
service cuts or job cuts, and that shouldn’t happen. We need pensions
reform.”
The recommendations
by the Commission, made up of experts from leading bodies
including the
Institute of Directors and Institute of Economic Affairs, come ahead
of the
Coalition’s newly created pension reform body, chaired by former
Labour
minister John Hutton and due to report in October.
Unions, already reeling from cuts
to redundancy pay which were announced on Tuesday, immediately
warned
they would fight changes to public sector pay, jobs and pensions.
Mark Serwotka, general secretary at PCS, said: “The coalition Government
has
wasted no time in setting about dismantling the public sector piece bypiece, so we’re wasting no time in planning how to fight back. We have
always said we are willing to negotiate and reach agreement, but when
jobs,
pay, pensions and now civil servants’ contracts are under attack, we
will
have to plan for industrial, political and community campaigns on a
scale
not seen for decades.”
Ms Hibberd pointed out that local government workers had already
accepted
changes to their pensions, with contributions rising from 6pc to 7.5pc
two
years ago. However, the scheme is unfunded, which means it is paid for
out
of the employer’s current income, putting less burden on the taxpayer,
she
said. For organisations offering funded schemes, including the NHS,
teachers
and the civil service, unions had to accept the need for pensions
reform to
save jobs, she added.
Charles Cotton, pensions adviser at the Chartered Institute of Personnel
and
Development, agreed radical reform over state workers’ pensions was
justifiable.
Pension tension is a recurring theme on my blog. People should take
notice of what's going on in the UK, Greece
and elsewhere. If they think it can't happen here, they're only deluding
themselves. I tell everyone to work as long as they can, and to save as
much as they can.But beyond that, the G-20 needs to take action
on pensions. not just reforms and cuts, but they need to sit down and
figure out how they will tackle the global retirement crisis and make
sure they'll provide pensioners a safety net which is properly funded,
well administered and will never be jeopardized every time a financial
crisis erupts on Wall Street.
Employers needed to think radically about how they rewarded their
employees,
he added, as it was unlikely that pensions alone attracted the best
staff.
“The way that public sector workers are currently rewarded and
recognised
needs to change. Employers could give staff an additional sum of money
that
they could then spend on the benefits that best meet their needs and
wants,
which could include a contribution to a pension scheme,” he said.
Pension tension is a recurring theme on my blog. People should take
notice of what's going on in the UK, Greece
and elsewhere. If they think it can't happen here, they're only deluding
themselves. I tell everyone to work as long as they can, and to save as
much as they can.
But beyond that, the G-20 needs to take action on pensions. It's not
just about reforms and cuts. They need to sit down and figure out how
they will tackle the global retirement crisis and make sure they'll
provide pensioners a safety net which is properly funded, well
administered and will never be jeopardized every time a financial crisis
erupts on Wall Street.
»
- advertisements -
I have a simple rule when assessing anyone's demands for funding: do they want taxpayers' money or not? If not, you can proceed.
I am not interested in personally paying for government's mistakes and swindles, no matter who feels aggrieved.
Interesting.. you lot wot comment above are above average smart. Baltic index is down. State finances need Treasury help. Unemployment is in a vicious loop. Interest rates are 'lready at zero and yet Banks are unwilling to lend, why... because everyone else is on overdraft, too. ...even if money is injected directly into pensions obligations, the Demand effect will show up in basic neccessities. That's a useless component of Consumer-driven demand. And QE wouldn't be efficiently disbursed, it will go into a short Tr/long equity spread that will buoy the market with an attendant draw down in pension holdings to cover the shortfalls, with still no new funding finding sufficient return till.... it's like pumping a dead body with blood, at tremendous pressure at the point of entry, somehow hoping that stimulating a bp will get the heart pumping. And it's not as if the problems faced by pensioners are markedly different han those faced by the remaining two billon (or more) -inflation, deflation w. Unemp., taxes... the economy is broken, 1% own 40 of the resources, the whole point of capitalism is that incentive makes one work effectively. Right now, the Governors of the States ought to see that the Federal government can offer little in the way of investment. Food, shelter, power, transportation, communications - these are things that in most cases simply aren't a problem yet.
I'm just waiting for the day when pension pressure groups rally to protest math.
"How long will we put up with math?" asked a leading pensioners' rights activist at a rally in Athens today. "How long will we allow ourselves to be enslaved by this tool of the rich and powerful? If our pensioners believed they'd be able to get thirty times what they put into the system plus an adamatium-plated unicorn when they retired at age 45, then that's what they should get."
Can't wait to see that in the papers.
They'll pry my grade school math book from my cold dead hand.
First rule of warfare divide the enemy. Gentlemen, WE ARE THE ENEMY and it really didn't take much to divide us. A little whisper here and there. A distraction there and we are willing to turn on our parents.
Most readers here came to the conclusion that we would have to provide for our own retirement. Is it the current pensioners fault they didn't read zerohedge 30 or 40 years ago? They were sold a dream and a promise and it could have worked if the politicians and bankers hadn't fucked with it for their own short term gains by looting the pension funds.
Any civilized society should be willing to stand up for the rights of those who cannot defend themselves. Who is going to defend you guys when they marginalise you?
If this makes me a bleeding heart liberal. Well then I am a bleeding heart lib. A commie. A socialist.
I will leave you with one last thought. When Thatcher rose to power she was worshipped from afar. Reagan rode her myth into the whitehouse and used her little corner of the world as a prime example of fiscal conservatism. Except it wasn't and it all blew up. Prepare for more of the same here.
The answer is pretty simple though. Look to Spain and the Mondragon experiment or we can all continue down this boom bust cycle until it's just boom.
Beastie, Leo..............
Amen!
Look, this was talked about in news papers for the last 75 years. It's basic math. The input contributed over a lifetime doesn't add up up to the out used by someone in retirement. 75 years ago it was the "what if" scenario if the baby boomers didn't have enough kids, that happened in spades. 40 years ago the stats on demographics showed a huge swing in the human population in develop countries going from a pyramid, with a large working base to a tiny old people base. Now it looks like a turnip. Tiny youth population (not working) and a large older population just about to retire or retired.
I'm not saying that we should get these people out there again after a lifetime of working, people deserve their rest. It's the fact it was a pyramid scheme to begin with and like all pyramid schemes, they collapse regardless of the intent of the ponzi operator. The system needs money and blood to continue to fuel it. Since there is no money left, all that is left is blood.
The game is over, I wish I could give handshakes and a comfortable smile about it but the math isn't working in favor of anything to do with fiat currency systems right now. The only real hope is deflation kicks in and everything falls a solid 70%
While people are going to be hurt because of debt on this, they should not have borrowed against their own futures to begin with for consumer goods and McMansions, then mistaking the debt they have for wealth. Wealth is something owned and working. Doesn't matter if it's a house or friendships, the goal to wealth is to keep everything on the plus side.
I could go further into how government has failed or succeeded as an abstract and a binding force, but there is no point arguing about people's individual religions. The fact is the pyramid has collapsed and nothing can belay that."
CPL,
Has the thought ever crossed your mind that 98% of these folks are just IN need of what THEY paid for?.
McMansions, my ass................Try getting by with a husband $ wife, (who both worked) 25-35yrs, and were FORCED by these vampires to pay into a system, that THEY instituted.Maybe get $2k/$2500.00 a month to live off of............If it's all they could/manage to accumulate.
It's not UP to the people to do Without, it's up to the thieving bastards that SHOULD have invested these funds, at ever 2-3% interest over that period, and LEFT them the FK alone............
As in the USA, if Gv't had left the S Trust Fund ALONE, invested in any secure 2-4% Bonds/Treasuries, over their lifetimes, their would be TRILLIONS of dollars of reserves there.
(But, no they did not,they gave it away to folks who could but would not work, and they gave it/give it to illegal aliens, along with SO much more, it's a CRIME..............they should tried,and HUNG.) I am sick and tired of hard working, decent people getting fkd out of what rightfully belongs to them.
There are TONS of Gv't Progs, that do nothing, produce nothing, that could be done away with, that would produce multiple billions of dollars savings each year, foreign aid, TIME to take care of OUR own....................esp on their DIMES.
Since these scumsucking pigs did not..............matters not.
It's up to the Gv't they represent/ed, to make good on GOOD FAITH programs. Regardless of their incomes over their lives, they were FORCED into a system, LIKE we were, to pay for a portion of retirement.
Therefore, MOST people, set up plans, to use these monies, as part of their expenses in old age.
Bottom line, if they are going to cut the amounts(STEAL), then cut a check for the total amounts paid in by each worker, back to them...............
IF they screwed up, and did nothing else, tough shit.............their families or charities will help out.
The Govenments are responsible...........PERIOD.
Rant off.
I understand that, but sometimes when the deal goes bad it's time to walk away. In this case, I agree, every last one of the crooks need to be lined up against the wall and finished. Not just them, but their children too. If the tree is rotten, the fruit is usual poison as well. I figure three generations should do it.
And yes, they do need it. My parents are retired and in their mid 70's, my wife's parents are just hitting 70 and also retired. Between my brother and I we've done our best to provide for our parents and my wife and I for her's. There are some months when that 970 a month doesn't quite make it for them and as their kids were break open the checkbook. Then we have 4 kids, in college in Engineering like his old man, the next one in line for college (although he's dumb as a bag of hammers so he's going to work in the trades), the last two are young enough that we don't have to worry too much...yet.
Plus I ran a business for a loooong time until recently when the changes to pensions and taxes and payroll, all the horseshit that comes with employing around 10 people takes. Basic nonsense and Canadian government bullshit. So sold the company to the employees with INCREDIBLE difficultity trying to arrange bridge loans with them to take it over. My favorite part was when I had the books open to them and they gasped on how little it costs to run the business and how much are grabbed in the taxes.
Literally if you have an employee, that employee makes 70k a year, you have to have at least, minimum on hand around 45-50k each on top of the their salary to be safe and keep a business running. The majority of that is tax, government horsehit, lawyers to deal with government horseshit and if there is some money left over a crappy medical plan. Basically after 14 years of keeping it running for 50k a year (my salary) I just sayd fuck it. Me selling the business was backpay owed to me. Only person in the company that made less than me, was my admin assistant.
Last I heard after selling out 7 months ago, they are running into trouble with the government on some bullshit on tax changes that are retroactive.
At this time I say, fuck them, they all deserve to be put against the wall and shot at dawn. Pensions and pension responsiblities are only one piece of the problem. In mountain it's one face of the mountain. There are bigger things going on right now and if people didn't save enough for retirement, then they have my sympathy but each of us have their own concerns. Someone else's parent's financial situation isn't mine and shouldn't be yours.
And from the looks of things, it's no longer the governments either. IF the governments of the world no longer want the responsiblity of funding a ponzi scheme anymore, then what good is the government at that point? It's not and they will end up forcing the hand of someone deseperate sooner or later, then it'll be civil, civic and national wars.
Wars have been started over so much less, fucking with people in civil society and expecting to walk away alive from the mob is extremely naive of these cocksuckers.
CPL,
Hats off to you man.................luckily my/spouses parents lived through the Depression Era.
They knew the value of a dollar, and they saved.............
So when their 80's hit them, and they were no longer able to care for themselves safely, they were able to go into assisted living......
With their interest off savings, and SS/MC, they were able to live out the last 2.5yrs of their lives very comfotably(with a lot of help from we kids), mostly doing REAL things.............
But it did not come without a realization that lifes full of curves, and fastballs, and damned sure not fair.
Had they been told what we are being told, about the SS/MC system it would have been hell to pay, just from the standpoint of a broken contract.
Now that was the Greatest Generation..........and WE had OUR SS/MC taxes used to care for them.............
Now, the buckets empty, and the criminals are making out like bandits, and still becoming Uber wealthy, all the while telling US, we're screwed (just in softer tones).
.
wait a minute, confess
i was a pathological liar
to my parents my whole life.
so yes, i lie as well, as all humans do.
R.I.P.
mom and dad, : < ))
"Any civilized society should be willing to stand up for the rights of those who cannot defend themselves. Who is going to defend you guys when they marginalise you?"
Amen brother, amen! The best way to steal from people is to tell them everything is fine, go to sleep, when you wake up in 30 years there will be a pension there for you to retire on. But after the banksters take their cut, only thing left will be pension crumbs. People are getting financially raped with outrageous fees or some government bureaucrat figuring out ways to cut their benefits. Biggest problem our capitalist system faces is wealth distribution. More for the financial oligarchs, less for the rest. If you are unemployed, old, sick, poor or handicapped, nobody is looking out for your best interests. It's truly shameful how we treat our most vulnerable and it says a lot about the moral fabric of our society where everyone values people by how much money they make.
Leo just sent you an email
Leo......according to Mish, the UK is now going through wage deflation across the board. Also interesting, about 50% of UK pension fund assets are invested in equities, the highest level in Europe.
I smell something burning.
http://globaleconomicanalysis.blogspot.com/
This will cut the level of future pension increases by roughly 25%. What this will not do is save final salary schemes, because other factors, like out of control increases in assumptions for mortality improvements are making it prohibitively expensive to continue to operate these plans given the huge open ended liability they pose to a firm.
The DOW daily chart is looking bullish now ...
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
That's nice. Care to elaborate?
Nice guys, really fucking nice. I wonder if you guys would have the same attitude if you had to personally make up the shortfall directly out of your pockets.No you would be kicking and screaming.
You guys are the types donning dresses in order to get onto the life rafts. Have you guys thought about a career in banking or politics?
These people paid into the system (involountarily) and through no fault of their own are getting reamed. Sorry Widows no sympathy here. Orphans, you guys are up next and you have a week to get your affairs in order and find a family to live with.
The problem is the input is far less than the output. While the average contributor to (I'm using the Canadian pension system) the pension system over 35 years of work is around 100k (that's the 1700 kicked in by both employer and worker).
The fact is people are living a lot longer past their due date and getting back roughly 218k in just pension, not including the medical cost/attention it requires to unnaturally extend a human life.(this is another discussion altogether)
So how does mapping the real costs to the received pension? The Pension system was a socialist invention to spread the wealth around using a pyramid scheme to continue it's supplement of fresh money. Unfortunately when demographics look like a turnip, skinny on the bottom and fat on top, the scheme collapses.
People should understand at that point it was their own individual choices to not have 6 kids, NOT develop private industry and expand government services that lead them here over 75 years. 75 years, this isn't new and it's been talked about for 74.
The game is over and it's broken.
CPL,
True,but you must honor the comittment.
As stated, add 35yrs of interest in to the deal.............
Change the system for younger folks, so they are not trapped,extend the age when they can start recieving.
They still have time left to SAVE a lot more, and know the score.
Fair?.no, but no less fair than offering a man a meal, and then giving him one bite.
This whole conversation hugs the big one.............ALL the answers/replies, mine included.
No one of SOUND mind, believes this BITCH will live another 18-48 mos at best..
Then we're all screwed..............pure semantics.
A beastie comment...+100000000!
Beastly fairness at the point of a gun.
You want the taxpayers to make up the shortfall, don't you? That's called, politely, redistributing some people's money to more 'needy' others. Or, less politely, socialism or, at the root of it, theft.
Kred,
What,pray tell do you think has been done TO THEM all these years?,they have supported others.
So, since they /we are in a system WE did not get an option on.....then turn about is fair play.
Call it what you will...........FDR set it up(and yes, it's Socialist.)
Taxpayers have been subsidizing Corporate America for years. Stop blowing smoke here. I am not a leftist "socialist" (far from it), nor a right-wing loony who thinks government is to blame for all our social & economic ills. These pensioners had no idea that one day their pensions would be at risk. Don't blame them for this crisis.
Of course taxpayers have been both subsidizing and bailing out corporate America for years - and it has always been evil, thieving and WRONG. I agree potential retirees had no idea their pensions were at risk or that underfunding had been going on for years - or that their payouts were predicated on expected unrealistic returns.
The question is why innocent taxpayers, whether or not they are collectively legally responsible for the (mis)actions of their governments, should be made to pay up to rectify ANY of this, private or public sector.
And corporate executives have often fully funded their own pensions while under funding their employees' pensions.
Just one early link from 2003:
http://online.wsj.com/article/0,,SB105113544510795200,00.html
This type of action is to be expected. Social security has already been changed to cause some of the SS payments to be taxable. Expect more changes.
I am altering the deal. Pray I don't alter it any further.
Is that a movie quote? Seriously, a gangster movie... because that would amplify the irony/humor. At least for me.
Darth Vader in "The Empire Strikes Back".
Thanks. I knew it was from a gangster movie.
Future pensioners should take losses just like the rest of us.
This pervasive myth that somehow governments are, through their austerity plans, taking hard-earned money from the common people is nonsense. The high standards of living that today's workers and tomorrows pensioners are counting on are UNEARNED. With sub-zero to 2 or 3% returns now the norm, why should anyone be 'entitled' to more?
Not to mention that the sum total of UK pension funds and annuities, life insurance and national insurance contributions are very likely all invested in the same or similar areas...how anyone can expect outperformance given that they effectively ARE the market is beyond me...
Kred,
"Future pensioners should take losses just like the rest of us. "
Trust me, they will...................And it won't be pretty.
Story(True),Mid 50's guy, said he had wk'd his whole life, spent all his money on his kids, and grandkids(wanted to see them enjoy it,while he was in decent health).
When asked what he was going to do,when he got older, no longer working since he had spent his meager lifes earnings a week to weeker, he answered, well................since I KNOW the Gv't is going to screw me out of my SS/Medicare, I have decided to let them take care of me until I die.
When asked, How SO?...............he said he was going to go to a FRB with a pistol(empty), and demand X's dollars.
He was then going to take his time,and the cash, and allow the PoPo's to arrive, enter, and at which time with cash in hand, he would drop the weapon, and would immediately do so.
Be arrested.............Felony.( We know how much they penalize FRN thieves).
He figured he would get 15-20yrs for that, and he would get 3 squares,cable, and AC/Heat/Med Care............and he would die in prison of old age.
He had decided by that time, he would have done everything he wanted in life,was single,spent his earnings on his children/families,health declining, and this would be his way of getting even with the System, that screwed him.
Not the way I would want to go out, but.....it seemed to be his way.
Benefit cuts Leo. That is the only credible reform that is coming. The mathematics dictate this.
That's what QE/inflation is for.
There's no other way. The pension system is build on a economy that allows these funds to reap a 10% to 20% growth a year with a ever rising inflation. We were able to do this during 2002 and 2007 and the system overheated and imploded.
So the longer the benefits aren't cut the more indangered the funds will become and no action will be taken untill at least 1 or 2 of these funds default.
BP was also a large contributor for the pension funds and now that they won't be paying out div.'s they'll have to liquidate some positions to make their payments making matters worse.
And as most pension funds have a government guarentee in Euro (don't know about America) this will create yet again mayor deficit growths.
Sudden Debt,
"BP was also a large contributor for the pension funds and now that they won't be paying out div.'s they'll have to liquidate some positions to make their payments making matters worse."
BP won't lose a dime, they will be BOUGHT OUT before this happens.
Already several MAJOR contries chomping at the bit.