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The UK's Most Disturbing Number: Total Unfunded Pension Obligations = 321% Of GDP

Tyler Durden's picture





 

For all our UK readers, who hope some day to collect pension benefits, we have two messages: i) our condolences, and ii) you won't.   Why? The answer comes straight from the ONS:

The new supplementary table published by ONS in Levy (2012)10 includes the following headline figures for Government pension obligations as at end December 2010:

  • Social security pension schemes (i.e. unfunded state pension scheme obligations): £3.843 trillion, being 263 per cent of gross domestic product (GDP) (£3.497 trillion at end of December 2009)
  • Centrally – administered unfunded pension schemes for public sector employees (i.e. unfunded public service pension scheme obligations): £852 billion, being 58 per cent of GDP (£915 billion at end of December 2009)
  • Funded DB pension schemes for which government is responsible: £313 billion, being 21 per cent of GDP (£332 billion at end of December 2009).

In summary, the estimates in the new supplementary table indicate a total Government pension obligation, at the end of December 2010, of £5.01 trillion, or 342 per cent of GDP, of which around £4.7 trillion relates to unfunded obligations.

Or visually:

Of course, US-based readers should not get their hopes up too much either. With total underfunded liabilities - including SSN and healthcare, in the US well over $100 trillion (on under $16 trillion of GDP) it is only a matter of time before the entire welfare state ponzi scheme blows up.

Source: ONS

 


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Mon, 11/12/2012 - 12:32 | Link to Comment vast-dom
vast-dom's picture

PONZI PLANET

Mon, 11/12/2012 - 12:46 | Link to Comment Richard Chesler
Richard Chesler's picture

Ponzion Schemes

 

Mon, 11/12/2012 - 13:11 | Link to Comment TruthInSunshine
TruthInSunshine's picture

The Krugman solution = debase the pound sterling by 642% thusly.

Mon, 11/12/2012 - 13:15 | Link to Comment JPM Hater001
JPM Hater001's picture

Could someone pass the popcorn?

Mon, 11/12/2012 - 13:25 | Link to Comment old naughty
old naughty's picture

Watch LIQUID-ity flow thru strait and ocean...

Mon, 11/12/2012 - 13:43 | Link to Comment redpill
redpill's picture

Eventually it will occur to someone that there is a conflict of interest when you have government trying to run a national health service AND keep pensions solvent.

Mon, 11/12/2012 - 14:10 | Link to Comment francis_sawyer
francis_sawyer's picture

Wow!... I could have had a V-8...

Mon, 11/12/2012 - 14:14 | Link to Comment Harlequin001
Harlequin001's picture

I don't see what everybody's worried about, it'll soon be no more than the price of a dozen eggs, ok half a dozen eggs, ok one egg...

er, plastic bag anybody?

Mon, 11/12/2012 - 15:17 | Link to Comment economics9698
economics9698's picture

WTF are they bitching about?  321% is pretty good.

Mon, 11/12/2012 - 20:49 | Link to Comment BigJim
BigJim's picture

Someone help me out here.

We're comparing stocks and flow here, aren't we? The pension liability is a total spread out over many years, whereas GDP is an annual measurement of economic activity... so surely it's not as bad as it looks.

Or am I missing something?

 

Mon, 11/12/2012 - 16:19 | Link to Comment lasvegaspersona
lasvegaspersona's picture

redpill

do not forget the other conflict: suck as much off the top as possible to return to donors while pretending to care about those other past due items

Mon, 11/12/2012 - 22:24 | Link to Comment Pseudolus
Pseudolus's picture

They've been preparing this for years. Look up the IMF's recent pubs on longevity risk

In the UK's case, 

First they will test you and take you into their care 

(Don't resist - aggression and or conspiracy thinking is a sign of dementia don't you know)
http://www.telegraph.co.uk/health/healthnews/9662635/Doctors-to-test-all-pensioners-for-dementia.html

Next they can take the meagre post-tax savings you worked your life for to pay off Government debts 
"Elderly people face losing their wealth"

http://www.telegraph.co.uk/news/uknews/9652629/Care-bills-will-soak-up-most-of-our-savings.html

after they have already eroded your currencies purchasing power
http://www.telegraph.co.uk/finance/personalfinance/9649614/Pension-pots-to-plunge-under-new-rules.html

then they can cut down the pensions bill by putting you on their "dignified" Care pathway
http://www.telegraph.co.uk/health/healthnews/9659561/Doctors-defend-Liverpool-Care-Pathway-as-dignified-way-to-die.html

 

(yes, think Death Panels)

then reclaim the equity in your estate for the cost of your care
....and give your house to the Bankers to remortgage to the next generation of fools in the chain
No links for the last one - its my contention 

Mon, 11/12/2012 - 15:15 | Link to Comment Don Diego
Don Diego's picture

The UK Labor party solution = import 10 million paki/somali/jamaicans to increase the taxpayer base.

Tue, 11/13/2012 - 03:17 | Link to Comment Kobe Beef
Kobe Beef's picture

I believe they are increasing the welfare parasite base, but good Public Relations demands we call them "taxpayers."

Mon, 11/12/2012 - 13:02 | Link to Comment kaiten
kaiten's picture

What´s our national debt? One ponzillion.

Mon, 11/12/2012 - 14:08 | Link to Comment SheepDog-One
SheepDog-One's picture

No worries....next article states 'Investors optimistic of fiscal claff resolution'! HOORAY!

Mon, 11/12/2012 - 14:33 | Link to Comment HD
HD's picture

+1 for accuracy.

Mon, 11/12/2012 - 13:10 | Link to Comment jimijon
jimijon's picture

Exactly! So help me nominate him!

http://www.facebook.com/CharlesPonziForANobel?ref=hl

Mon, 11/12/2012 - 18:37 | Link to Comment AvoidingTaxation
AvoidingTaxation's picture

Done. Genio Italico!

Mon, 11/12/2012 - 13:36 | Link to Comment jal
jal's picture

With an increase of the death rate the problem will not get that big.

Mon, 11/12/2012 - 12:34 | Link to Comment buzzsaw99
buzzsaw99's picture

sucks to be them, er, us, er...

Mon, 11/12/2012 - 12:42 | Link to Comment francis_sawyer
francis_sawyer's picture

In this sweet ol country

Where I come from

Nobody ever works

& nothing gets done... WE HANG FIRE

~~~

http://www.youtube.com/watch?v=QLyx6jPHRfM

Mon, 11/12/2012 - 13:28 | Link to Comment Diplodicus Rex
Diplodicus Rex's picture

"This video contains content from UMG. It is not available in your country."

On a UK thread as well..........
Mon, 11/12/2012 - 12:35 | Link to Comment Dr. Engali
Dr. Engali's picture

The pound sterling is about to become once tungsten.

Mon, 11/12/2012 - 12:47 | Link to Comment Stock Tips Inve...
Stock Tips Investment's picture

These numbers are very important. Very simply, we plot the size of the problem of these countries like UK. As they let it come to this situation?. It's amazing, but no matter how this all started. What matters now are the consequences of these irresponsible and solutions that should be implemented. Unfortunately, any of these solutions originate a drastic drop in the quality of life of people used to live very well. Many poor people in rich countries. Internal problems? ... external problems?. Might be worth reading some history books.

Mon, 11/12/2012 - 12:48 | Link to Comment Winston Churchill
Winston Churchill's picture

Doc,

They are pretty straight up figures under GAAP.

Look at Uncle Sam's under the same conventions, and its at leat twice as

bad with optimistic projactions.Worst case ,five times.

Nobody is getting paid anywhere, except with coloured TP.

Mon, 11/12/2012 - 13:05 | Link to Comment Dr. Engali
Dr. Engali's picture

Believe me I know we are screwed. Try convincing the reds or the blue. They still believe it can be saved.

Mon, 11/12/2012 - 14:55 | Link to Comment NoDebt
NoDebt's picture

Agreed.  This thing "jumped the shark" more than a few years ago.

I recall my father telling me about how SS was a "ponzi scheme" back in the 80s, what that meant and how it was likely to turn out (badly).  Now he's old enough that he is collecting SS himself.  I reminded him of that 25 year old conversation recently.  He claims to have no recollection of it.  Surprised?

Tue, 11/13/2012 - 03:22 | Link to Comment Kobe Beef
Kobe Beef's picture

Not at all. Fucking boomers. Never think about the consequences.

"Me, me, me, now, now, now."

-The Baby Boomers

 

Mon, 11/12/2012 - 16:24 | Link to Comment philosophers bone
philosophers bone's picture

GAAP is a joke.

Mon, 11/12/2012 - 13:16 | Link to Comment JPM Hater001
JPM Hater001's picture

Well, they do have gold...albeit Germany's.

Mon, 11/12/2012 - 16:17 | Link to Comment viahj
viahj's picture

well, it's mostly gold

Mon, 11/12/2012 - 12:36 | Link to Comment Oxygen
Oxygen's picture

Should ask Ben to print some more

Mon, 11/12/2012 - 12:36 | Link to Comment EscapeKey
EscapeKey's picture

that's ok, there's probably some private sector pension funds they can raid... again.

thanks, gordon brown, for your 1997 private sector pension raid.

Mon, 11/12/2012 - 12:51 | Link to Comment Stock Tips Inve...
Stock Tips Investment's picture

The problem is not the private pension funds. These funds are safe. These figures refer to the pensions which are in charge of the government. As always, the government collects less resources than commit to spend. Irresponsible governments irresponsible thousand times.

Mon, 11/12/2012 - 12:56 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Unfortunately those private copmpanies are relying on the government as their only customer.  PONZI fucking planet, let it die, and let's find out the real value of everyone's labor on BOTH sides of that equation.  Fucking bring it.

Mon, 11/12/2012 - 13:01 | Link to Comment semperfi
semperfi's picture

GOP should step aside and let The Kenyan Thug and his Senate Army have their 100% way on fixing the "Fiscal Cliff".   100%

Mon, 11/12/2012 - 14:07 | Link to Comment OneTinSoldier66
OneTinSoldier66's picture

I agree. John Boehner should hand the gavel back over to Nancy Pelosi.

 

It should be obvious to all by now that the solution is to have more bills written by lobbyists, that we need to first pass before we can find out, uhhh, what is in it.

Mon, 11/12/2012 - 13:03 | Link to Comment Acet
Acet's picture

With ZIRP forever, those "safe" private pension funds will be returning to pensioners every month barelly enough money to cover their bread-buying needs.

Also given the local laws on pension funds (which make then not at all transparent, almost impossible to leave and allow for fee structures where you have to pay costs on every trade your Fund Manager does), most people have been finding out that the £X pounds they have been put in there for the last 20 year are now worth less that £X.

Self investment, preferably in physical Gold given the current race of competitive currency devaluation is at the moment the only way to have a pension in the future.

Mon, 11/12/2012 - 13:04 | Link to Comment GottaBKiddn
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Correction: They will be safe after the 50% devaluation of the Pound.

Mon, 11/12/2012 - 13:09 | Link to Comment AbbeBrel
AbbeBrel's picture

Governments are good at promising, and then struggle to deliver anything of value.   Give them NO QUARTER!!  OK OK I will settle for a nickel  - it is better than nothing!   Could be worse - the post office could be managing your money, like in Japan.

Mon, 11/12/2012 - 13:59 | Link to Comment Diplodicus Rex
Diplodicus Rex's picture

"These funds are safe"

Haha, ha, he, ho , ha  LOL

Which funds do you think pension companies have on their balance sheet? Triple A MBSs. MBSs which are backed by the houses on which the mortgages have been written. Those have declined 30% from the peak in 2007 and default rates are soaring. Those instruments are still valued on the balance sheets of the pension companies at 2007 Mark To Unicorn rates. Those pension companies are already insolvent.the only reason that they are still in business is the relaxation of the FASB rules and the use of Mark to Fantasy.

I started in September of 2011 to repatriate funds from four pension companies. By Feb 2012 I had two of them. It took until the end of Oct 2012 to get the final two out of the pension companies. They had no cash with which to pay out so they ere forced to sell one of their assets. They can't sell any MBSs because everyone else knows they are toxic. A sale of any one for true value (pennies on the Pound, cents on the Dollar) would trigger a revaluation on all of their balance sheets which they want to avoid at all costs. So they are forced to sell an asset which still has true value which in turn immediately reduces the value of their holdings.

the next tsunami of which people rarely make mention is the wholseale declaration of insolvency by the pension companies. This will happen and there will be no private pensions. The first to withdraw will get theirs. Everyone else......not so much.

Mon, 11/12/2012 - 18:57 | Link to Comment nofluer
nofluer's picture

"The problem is not the private pension funds. These funds are safe."

Tell it to the Argentinians!!! (Then DUCK!)

Mon, 11/12/2012 - 13:36 | Link to Comment Diplodicus Rex
Diplodicus Rex's picture

Its a lot worse than that. In 1997 Labour campaigned on a manifesto promise to lower the unemployement rate which the Tories had let climb to circa 2.5m. Sure enough, they were voted in and over the next three years transferred 1m people from the dole queue to being employees of the state. Now when they were on Social Security, that's just about how much they got (probably with some tax reliefs thrown in). However, once a state employee they then needed 10m2 of office space with a computer and all the licensed software that goes with it. Desk & chair, their share of the electricity and heating bill for their part of the office. Car parking space and a share of the canteen. "Training courses" and holiday entitlement, Health & Safety, Personal Protection Equipment, a manager to tell them all what to do with their own share of all of the above. And finally, the cherry on top of the icin gon the cake is the unfunded, index-linked fat cat gold plated pension that no-one in the private sector can afford.   Gordon Brown should be hanged drawn and quartered for treason.

Mon, 11/12/2012 - 12:38 | Link to Comment richard in norway
richard in norway's picture

no biggie, they dont all have to be paid on the same day, most of those folks will die before they get their pensions anyhow

Mon, 11/12/2012 - 12:42 | Link to Comment Rainman
Rainman's picture

except for the Queen, who will obviously live forever

Mon, 11/12/2012 - 12:45 | Link to Comment francis_sawyer
francis_sawyer's picture

Dynamite with a laser beam

Guaranteed to blow your mind... ANYTIME

~~~

http://www.youtube.com/watch?v=BAf2S6ij2gk

Mon, 11/12/2012 - 13:09 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

Thats no problem...........their obligations are in £sss yes ?

But how are they going to pay for imports ?

UK norwegian trade balance £ millions

Y2009 : - 13,368

Y2010 : - 17,937

Y2011 : - 21,791

 

The above is of course oil and gas.

 

balance of trade oil £ millions

Y2009 : -3,426

Y2010 : -4,719

Y2011 :-11,509

 

The closure of the railways in the 60s and the shutting down of their Nuclear energy industry will come to haunt them.

 

This is the legacy of petro heads that refused to pay labour and replaced this with massive oil burn so that they could eat the surplus............the surplus days are over yet the the rail network is now very small and most of the nuclear enginners are either dead or retired.

http://www.youtube.com/watch?v=Qe7HYkj03u4&feature=relmfu

 

Mon, 11/12/2012 - 12:41 | Link to Comment SheepDog-One
SheepDog-One's picture

Yea just wait till this headline appears informing the US pensioner theyre in the exact same boat! Isn't our 'unfunded liabilities' figure something like $600 trillion? Hey I know....lets tax the rich, that oughta fix it.

How can ya have any pudding when ya aint eat ya meat??

What meat, guv'nr??

Mon, 11/12/2012 - 12:42 | Link to Comment Dr. Engali
Dr. Engali's picture

Eat your damn peas!

Mon, 11/12/2012 - 12:39 | Link to Comment orangedrinkandchips
orangedrinkandchips's picture

like...no duh

 

(all due respect for author(s))

Mon, 11/12/2012 - 12:39 | Link to Comment falak pema
falak pema's picture

lol, this trillionisation of first world debt makes this look like chicken feed :

£48bn gap in next government spending review, says study | Politics | guardian.co.uk

Mon, 11/12/2012 - 12:48 | Link to Comment Orly
Orly's picture

Seems the USDJPY pair is trying to decouple from the risk trade.  It could get interesting...

Mon, 11/12/2012 - 13:47 | Link to Comment falak pema
falak pema's picture

is there any correlation in real time via 4x plays between the way EURUSD evolves and the pairs that u follow : USDJPY and USDAUD amongst all the others?

I am assuming that 4x players are a breed apart, who specialise their capital market day trades to this segment only. I may be wrong on that assumption. 

Here is an example of what I mean : Mexican Peso Short Positions Rise - Business Insider

Mon, 11/12/2012 - 13:05 | Link to Comment Acet
Acet's picture

If you resize that graphic to 20x20, the unfunded liabilities look much smaller.

Mon, 11/12/2012 - 14:13 | Link to Comment OneTinSoldier66
OneTinSoldier66's picture

Good idea, I like it! Works for me.

 

Just curious, got an electron microscope handy that I can borrow?

Mon, 11/12/2012 - 12:40 | Link to Comment booboo
booboo's picture

ol av a cup o tea and some Spotted Dick. The missus? Weil, she gets to watch.

Mon, 11/12/2012 - 12:40 | Link to Comment EmmittFitzhume
EmmittFitzhume's picture

I've wondered how the NY Yankees can pay so much out in costs each year. Similar model as this. Finance it out to oblivion and pray to god it never catches up to you.  This type of shit is deeply embedded in so many institutions it's simply a joke now

Mon, 11/12/2012 - 12:40 | Link to Comment otto skorzeny
otto skorzeny's picture

isn't GB basically just a huge welfare nanny state that masquerades as a country

Mon, 11/12/2012 - 12:42 | Link to Comment SheepDog-One
SheepDog-One's picture

And the 'U.S.' is any different how?

Mon, 11/12/2012 - 12:48 | Link to Comment mckee
mckee's picture

We don't know what "spotted dick" means?

Mon, 11/12/2012 - 13:06 | Link to Comment Acet
Acet's picture

I myself thought that "spotted dick" had something to do with John Holmes until I moved to London ...

Mon, 11/12/2012 - 12:49 | Link to Comment booboo
booboo's picture

We have Brwando the Thirst Mutilator, it's what the planet craves.

Mon, 11/12/2012 - 12:50 | Link to Comment otto skorzeny
otto skorzeny's picture

I thought the article was about the UK?

Mon, 11/12/2012 - 12:59 | Link to Comment LawsofPhysics
LawsofPhysics's picture

In a world where fraud is the status quo, you might want to consider the natural resources of each nanny state and who really has possession of those resources.  That and who can defend those resources.  The game remains about power and control, period.

Mon, 11/12/2012 - 13:41 | Link to Comment kito
kito's picture

sheepdog, the u.s. is going to be energy independent shortly!! lots of jobs for everyone!! growth will return!!! cnbc said so!!!!

sheepie lets sing together:

 

 

My country where everythings for free....

sweet department of homeland security....obamas the king......

land where the constitution died......

land of the bankers pride......

from every citizens bent-over backside, let corporatocracy ring..........

 

Mon, 11/12/2012 - 12:43 | Link to Comment ZeroPoint
ZeroPoint's picture

Jolly Good. I guess the Royal Family can always rely on its poppy fields in Afghanistan.

Mon, 11/12/2012 - 12:47 | Link to Comment francis_sawyer
francis_sawyer's picture

Something attractive to the eye... & soothing to the smell...

~~~

http://www.youtube.com/watch?v=RG2keYgBiZc

Mon, 11/12/2012 - 12:53 | Link to Comment otto skorzeny
otto skorzeny's picture

no way they're going to muscle in on the CIA's cash cow. I love that the US is now facing a huge heroin epidemic(at least here in the Chi burbs) and the MSM/ podunk cops/DAs can't figure out why.

Mon, 11/12/2012 - 13:00 | Link to Comment Orly
Orly's picture

Another Chi-town conspiracy?  Sounds like it's turning into Way North Dallas...

Mon, 11/12/2012 - 13:05 | Link to Comment francis_sawyer
francis_sawyer's picture

My favorite stories are the MENA airport operations & the CLINTON BODY COUNT...

~~~

http://www.theforbiddenknowledge.com/hardtruth/clintonbodycount.htm

http://www.apfn.org/apfn/snowjob1.htm

Mon, 11/12/2012 - 13:22 | Link to Comment pods
pods's picture

God bless Gary Webb, the only man with balls enough to shoot himself in the head, twice.

pods

Mon, 11/12/2012 - 14:13 | Link to Comment francis_sawyer
francis_sawyer's picture

That's hard to do... Especially if you're a lefty...

Mon, 11/12/2012 - 14:42 | Link to Comment ZeroPoint
ZeroPoint's picture

CIA has the cocaine market. The royals have a large stake in opium.

 

 

Mon, 11/12/2012 - 12:44 | Link to Comment pods
pods's picture

The whole world is circling the toilet.  Sooner or later a critical mass will wake up and realize it.

Let's hope that they figure out that it is the system that did it, instead of some idiot puppet politician.

pods

Mon, 11/12/2012 - 12:47 | Link to Comment Wakanda
Wakanda's picture

Yo UK!  We tried to throw those bastards out a couple of hundred years ago (with mixed results).

Let's get together and do it right this time - time to clean house, top to bottom, inside and out.

The Second American Revolution, getting rolling in a neighborhood near you.

Mon, 11/12/2012 - 12:48 | Link to Comment orangegeek
orangegeek's picture

And when these markets top and turn, there's going to be even less for these pensions to dole out.

 

http://bullandbearmash.com/chart/nasdaq100-weekly-closes-channel-support...

 

Have a niiiiiiiice day.

Mon, 11/12/2012 - 12:57 | Link to Comment otto skorzeny
otto skorzeny's picture

can't they rely on big returns from USTs? i love the 8% return projections that all of the state/local govt union pensions expect to get on their investments-on what- their meth lab profits?

Mon, 11/12/2012 - 12:54 | Link to Comment JustObserving
JustObserving's picture

Relax, Brits.  Kotlikoff has US unfunded liabilities at 1432% of GDP.  You have decades to go before you challenge the US, if ever.

http://www.bloomberg.com/news/2012-08-08/blink-u-s-debt-just-grew-by-11-...

Mon, 11/12/2012 - 13:32 | Link to Comment NorthPole
NorthPole's picture

Talk of 5 trillions of 'unfunded liabilities' is bullshit because there is no formula that one can apply to compute how much your pension is going to be. Your future pension does not really depend on your current contributions; it is going to depend on how much money is available in the common coffer by the time you retire (and nobody knows how much is that going to be, so yes, it can very well turn out that you'll have to plant your own carrots if you don't want to starve to death).

It's a pay-as-you-go Ponzi, remember? Essentially, the deal is as follows: now, you agree to give away a certain percentage of your monthly income in return for a promise that sometime in the future (it is 65 years now but that can be raised any day) you'll get a monthly pension of an unspecified amount. 

Mon, 11/12/2012 - 13:48 | Link to Comment Diplodicus Rex
Diplodicus Rex's picture

"Talk of 5 trillions of 'unfunded liabilities' is bullshit because there is no formula that one can apply to compute how much your pension is going to be."

What planet are you on? In the UK, the pension of a state employee is very easy to calculate and forecast.  The pension amount is a ratio of their years of service divided by 40 times their final salary. From there onwards it is increased in line with the CPI. What's not forecastable about that?

 However, where I do agree is that they have been made a promise which can't mathematically be kept. The fact that its not mathematically possible however, does not deter them from marching on the streets for more. They will indeed be planting carrots, they just don't know it yet.

"it is going to depend on how much money is available in the common coffer by the time you retire"

Yes and no. In the first instance, when there was not enough money in the coffers they borrowed the difference. This has been hapenning since 2001 in the UK. Eventually of course, this must come to an end and those promises will be broken. However, for the masses on state handouts, they will never know this is coming until the day they don't receive their first cheque.

Mon, 11/12/2012 - 13:59 | Link to Comment NorthPole
NorthPole's picture

While there may be formulas, the very fact that - as you observed - it is mathematically impossible to deliver means that the formulas have to change, so it is as if they did not exist.

And that's my point. There is no '5 trillion of unfunded liabilities'.  There are no liabilities. When SHTF, they will simply raise retirement age and lower your pension down to the carrot level.

Mon, 11/12/2012 - 14:01 | Link to Comment Diplodicus Rex
Diplodicus Rex's picture

I concur.

Mon, 11/12/2012 - 16:49 | Link to Comment fxrxexexdxoxmx
fxrxexexdxoxmx's picture

67 years and a permanet reduction to a lower rate if you want to get any earlier like many do/did at the age of 62. those born 1959 will pay more in than those before.. ponzi is as ponzi does

Mon, 11/12/2012 - 12:51 | Link to Comment kikk
kikk's picture

I just recieved a letter from HM Government telling me my pension age is going up anyway. I think they hope I'll die before they have to pay. And even if I don't, I just know the BoE will print enough to pay me.

 

Mon, 11/12/2012 - 12:52 | Link to Comment Silversinner
Silversinner's picture

To make things worse,most of the private pension funds

are loaded with gouvernment bonds(I.O.U).

Why people take private pension funds?

I use to think it was to be less dependant on the

state,so it makes perfect sense then to buy state

debt obligations<sarc>

 

Mon, 11/12/2012 - 12:52 | Link to Comment Dempster
Dempster's picture

They've already pushed my pension date back to 66.

Now Zero Hedge push it back another 14 (I've decided to throw off the mortal coil at or before 80)

Which rather suggests I'm going to work till I die.

I suppose if I get lucky the arthritis in my knees may cause an impromptu fall from a scaffold, and put me out of my misery.

I’m piss-malling sick of reading these articles, they're bloody depressing.

Mon, 11/12/2012 - 12:59 | Link to Comment otto skorzeny
otto skorzeny's picture

more good news for you - the off-putting of retirements only means that there are less jobs for the exciteable young-uns.

Mon, 11/12/2012 - 12:54 | Link to Comment semperfi
semperfi's picture

Producers need to step aside, go on holiday for a few months, become takers for awhile, demand more freebies from Govt for awhile, in order to speed up the implosion.  If you can't beat em, join em.

Mon, 11/12/2012 - 12:56 | Link to Comment Acet
Acet's picture

Not to worry, there's a plan to solve this!

First, they'll index any inflation indexed pensions to a well-known, independent and unbiased interest rate such as the Pound LIBOR.

Then Merving King will accelerate the printers to maximum speed.

In a couple of years those £5 trillion will be fully covered!

Mon, 11/12/2012 - 12:56 | Link to Comment King Solomon's mine
King Solomon&#039;s mine's picture

Scary but hardly news. Hence open-door immigration policies, which change the ratio of working age population to pensioners, plus immigrant familes tend to have higher birth rates which will increase the working population in the future. Now all that is needed is an economy which can employ them. Otherwise let's hope for a few cold winters. Climate change, anyone?

Mon, 11/12/2012 - 13:03 | Link to Comment ShrNfr
ShrNfr's picture

Bunch of small time guys. The total unfunded obligations of the US federal government is $220 trillion according to the CBO. That is 1,300%+ of the GNP. Good luck with that kids.

Mon, 11/12/2012 - 13:25 | Link to Comment pods
pods's picture

And they probably use the government propped up GDP number for the calculation too.

pods

Mon, 11/12/2012 - 13:04 | Link to Comment three chord sloth
three chord sloth's picture

The promises made during Spring and Summer, which seemed so easily afforded during times of real growth, are defaulted upon during the Winter. As they must be for Spring to come again. It is the nature of the long cycle.

Mon, 11/12/2012 - 13:08 | Link to Comment zilverreiger
zilverreiger's picture

so the unfunded part still has to be filled over the coming years? how much will they be short in the end, that's what counts

Mon, 11/12/2012 - 13:10 | Link to Comment kito
kito's picture

wow, and i thought their warm beer, ugly women, horrible accent, tasteless mushy food and crappy weather was bad enough............

Mon, 11/12/2012 - 13:14 | Link to Comment Tinky
Tinky's picture

Good racehorses, cheese and apples, to be fair.

Mon, 11/12/2012 - 13:25 | Link to Comment JustObserving
JustObserving's picture

And you get arrested for a photo of a burning poppy on facebook:

Man Arrested For 'Posting Image Of Burning Poppy On Facebook'

http://www.huffingtonpost.co.uk/2012/11/12/man-burning-poppy-arrest_n_21...

 

Mon, 11/12/2012 - 13:31 | Link to Comment pods
pods's picture

The UK is light years ahead of the rest of the world in the great Police State race.  

They have camera's taping every single aspect of your life over there.  
The only things they miss are when the cops happen to execute brown people or when there happens to be a coincidental tube bombing/security exercise.

But to burn a paper flower?  WTF?

In-fucking-credible!

pods 

Mon, 11/12/2012 - 15:08 | Link to Comment Overfed
Overfed's picture

"Comments Closed for Legal Reasons". Freedom! /s

Mon, 11/12/2012 - 13:27 | Link to Comment semperfi
semperfi's picture

tasteless mushy food

so you've tried their SPOTTED DICK have you ?

Mon, 11/12/2012 - 13:48 | Link to Comment kito
kito's picture

unless it was a secret ingredient in one of their numerous bland pot pies, i would say no.........

Mon, 11/12/2012 - 13:51 | Link to Comment JustObserving
JustObserving's picture

"SPOTTED DICK?"

If you are gay, you may relish that dish - nothing wrong with that.

Edith Cresson, Prime Minister of France, said that 25% of Englishmen are homosexual.

French women had this explanation:

"Too many years in all-male boarding schools," one Frenchwoman explained.

Unfortunately for British men, some Englishwomen agreed with Cresson:

"More disturbing to Englishmen is that some Englishwomen agree. "In an English street, you might as well have a paper bag over your head for all the notice any man takes of you," wrote Lesley Garner in The Daily Telegraph, adding that Mrs. Cresson had given a "hurtful, shocking and uncomfortably accurate view" of British men."

http://www.nytimes.com/1991/06/20/world/gallic-dart-distresses-british-m...


Mon, 11/12/2012 - 14:07 | Link to Comment kito
kito's picture

so that explains the ugly british women, must be some type of evolutionary thing where the pretty genes are eventually phased out by natural selection due to the lack of attention by those blokes.........

Mon, 11/12/2012 - 23:45 | Link to Comment Lore
Lore's picture

"so that explains the ugly british women"

It's the same everywhere. People in Western countries don't care about their appearance anymore.  Most can no longer afford to dress nicely.  Those who do stand out, are ostracized and become targets.  So it becomes normative.  Anything goes, and standards are lost.  The Wal-Martian is the trend-setter for the new century.

http://www.peopleofwalmart.com/

Mon, 11/12/2012 - 19:26 | Link to Comment I Feel a little...
I Feel a little Qeasy's picture

Ha ha ha! An American talking about others' accents presumably in his own droning monotonous nasal whine, what a cunt!

You've obviously never actually met an American woman, at least that's a positive you fat tea-total xenophobic sun-burnt fuck-pig.

Mon, 11/12/2012 - 13:25 | Link to Comment hooligan2009
hooligan2009's picture

great article..some facts on the table.

couple of points

1. the UK pays one of the lowest state pensions in the world.

2. germany, france, japan and the US are in a far worse position (err..that may not be a UK recommendation).

3. alternatives are to inflate, default or "extend and pretend" government debt. either way, state pensions will be pennies in the dollar/pound/euro. When (not if) this happens, elderly folk without private pensions will starve and die of disease. luckily the old will be to weak and frail to fight and there kids will all be addicted to i-pads.

4. expect taxes on 401 k's and other private pension plans to attract a 50% tax rate above the state pension.

Mon, 11/12/2012 - 13:26 | Link to Comment MiniCooper
MiniCooper's picture

Hey Tyler. I live in the UK.

Thats my unfunded pension you are talking about. No worries though - a few of us have figured out we are not going to get a pension anyway. No pension - no liability.

It really is that simple. Only problem is that the politicians still have to work out how they are going to tell the other 90% that haven't yet worked it out and still lthink they will get a pension after paying years of National Insurance (social security contributions).

Mon, 11/12/2012 - 13:37 | Link to Comment Bossuet
Bossuet's picture

Hello citoyens des USA, il vous suffit de patienter encore un peu, n'est-il pas ?

 

Pétrole  : Les Etats-Unis premier producteur vers 2020, selon l'AIE

http://www.lesechos.fr/entreprises-secteurs/energie-environnement/actu/0...

Qu'en pensez-vous ?

Mon, 11/12/2012 - 13:44 | Link to Comment Peter Pan
Peter Pan's picture

The huge divide between promises of government and the expectations of people on the one hand and the ability of the system to deliver on the other is so great that I am bewildered at the total BS spewed out by polticians and economists about the strength of all economies.

Up until now people have generally managed to keep mind and body together but it is clear that this luxury is fast running out.

Mon, 11/12/2012 - 13:45 | Link to Comment ItsDanger
ItsDanger's picture

Unfunded pension liability.  Estimate how much of that is tied to ZIRP.  Unintended consequences?  You havent seen anything yet.  Its a snowball rolling the mountain turning into an avalanche.  This hardly gets discussed anywhere yet is a MAJOR problem.  Cut out the political crap on TV and put an actuary on for once.  Sad thing is that many of these plans STILL have unrealistic expected rates of return.  Why?  To cover up the problem and keep funding low.

Mon, 11/12/2012 - 13:48 | Link to Comment SillySalesmanQu...
SillySalesmanQuestion's picture

Hmmmm...wonder how that happened...?

Mon, 11/12/2012 - 13:49 | Link to Comment northerngirl
northerngirl's picture

Oh, I'm not worried this problem will be passed to the next generation just as all others.

Mon, 11/12/2012 - 14:45 | Link to Comment reload
reload's picture

My 14 year old daughter came home from school (in the UK) a few months ago having been shown a chart like this by her ecconomics teacher who has a habit of going a bit `off script` - good for him.

The class discussion which followed concluded that there was no way their generation would feel remotely obliged to make good the governments unkeepable promises. So what do you think will happen? I asked -"they probably just print the money" ahe said. Will that work? I asked. "No" she said "The money will not be valuable" After a long pause she said "it might even be stupid saving money, is it better to have Gold?" This is not an area we had talked about previuously in any depth, she and her class were joining the dots for themselves.

So there is hope. This kid is also very good on a Horse, at the wheel of a tractor and gaining competance with a gun.

Do not assume the next generation will be so easily duped. They are not all nintendo addicted idiots, and some are being tought to think for themselves.

Mon, 11/12/2012 - 16:36 | Link to Comment Stuntgirl
Stuntgirl's picture

Good for your daughter!!

I had a history teacher in highschool who also went completely off script to make us do the math of pensions.

Everyone walked out having discovered Ponzi. We called it Pyramid Fraud back then.

Half of my classmates who studied with that teacher invest in real assets, including arable land and cattle, and are building their own self-sufficient houses.

Mon, 11/12/2012 - 15:50 | Link to Comment nofluer
nofluer's picture

Am I correct in assuming that Northerngirl is being facetious? Voting up on that basis... (Knew her on Newsvine - and she was pretty sharp over there...)

 

Mon, 11/12/2012 - 14:02 | Link to Comment Chuck Walla
Chuck Walla's picture

Though he was unaware, Charles Ponzi deserves a debt of gratitude for giving the state the germ of an idea for unfunded pension and social security plans. Vote buying on a massive scale and no taxpayer dollars used(for once). Its brilliant. Politicians have successfully handed out empty candy wrappers while convincing the dimwit class they are full of sugary goodness.

 

FORWARD KEYNESIAN HEAVEN!


Mon, 11/12/2012 - 14:04 | Link to Comment BattlegroundEur...
BattlegroundEurope2011's picture

Not to worry the UK govs. will (and already started) increase the Pension age.  So most likely ppl will be dead before they can retire.

 

Mon, 11/12/2012 - 14:06 | Link to Comment QuietCorday
QuietCorday's picture

I am British and my retirement age now stands at 68. I strongly suspect this will rise over the next twenty years to something more like 75, maybe even 80.

Britain is screwing its young like no tomorrow. No, strike that -- it is eating its young. Taxes have increased dramatically since 1997 to fund our joke of a government spend (council tax has doubled, VAT up, petrol is a joke due to the escalator, new taxes on utilities etc ...), and wages are pretty much stagnant, if you can find a job in the first place that is.

Not only that but we didn't have the housing crash the US had, so on top of all this ... house prices are still somewhere in the region of £200,000 ($318,000) for a tiny two-bed semi in a reasonable area (read: not heading towards slumsville) outside of the South East. The transfer of wealth from young to old is astonishing; you get old ladies selling houses 40 miles away from a urban centre, but demanding ten times the average local full time salary for about 700 square feet of living space in total (no joke, Americans would class some of the kitchens I have seen as cupboards).

I live in an area where there are no jobs. I commute for four hours round trip for a just above average wage, and then freelance on top of that. The average salary in this area is about £24K pa. The average family home (three bed with a garden and a drive) now stands at £250K in our area. No-one under 35 can afford pretty much anything at all, and we are being chipped more and more with every passing year.

Yet the sheer number of Porsche Cayennes and top of the range Mercs on our roads is extraordinary -- all driven by retired boomers who can also claim winter fuel allowance.

My generation and the two below me just cannot afford to keep this ludicrous state of affairs going. We just don't earn enough. We are being slowly impoverished.

 

 

Mon, 11/12/2012 - 14:58 | Link to Comment reload
reload's picture

Agree 100%. But most of those cars are either on finance, and if not the driver will be enjoying a solid gold government pension. Most of the retirees I know who are living on svings are beink killed by zirp. There are a small minority with fairly bullet proof `final salary` schemes from big firms like ICI, BT, BP etc, but nobody coming through the ranks below board level is going to be getting the likes of them again. Below top management its `buy your own` these days.

All the final salary schemes opperated by HMG are systematicaly abused by the arms of government that bestow them. Just prior to retirement - hey presto: automatic promotion - give the future tax payer the bill. Civil service, armed forces, police, local government they ALL do it and have dome for decades.

Mon, 11/12/2012 - 16:41 | Link to Comment Stuntgirl
Stuntgirl's picture

You have described Spain in 2007.

Mon, 11/12/2012 - 17:58 | Link to Comment Floodmaster
Floodmaster's picture

A generation born to a life of servitude.

Mon, 11/12/2012 - 14:07 | Link to Comment Lewshine
Lewshine's picture

Add a million zeros to the EU obligations...Means nothing! If it did, it would have already! The more ridiculous, the greater the fraud, the more jaw dropping the result of recovery...Be it fake or not! The abuse of law, coupled with propaganda, creates longevity!

Mon, 11/12/2012 - 14:20 | Link to Comment q99x2
q99x2's picture

That is soo Greek. Lie to the people then when they complain starve them. Ooooo I don't like banksters.

Mon, 11/12/2012 - 15:45 | Link to Comment nofluer
nofluer's picture

While Unions are being so supportive of the Liberal Left, and as a consequence negotiating record or near record pension promises, perhaps they should re-evaluate that political support as they consider that a promise is not a delivery. ie it's EASY for governments to promise pension payments for 20 or 50 years down the road... not so easy to deliver on the promises made 20 or 50 years ago!

At a certain point in the past, I was asked if a certain person (not me) should contribute to a 401k. My response was simple - "Does your employer provide matching amounts in excess of 50%? If yes, then you should participate. If no, forget it. And at that point in the future when you leave the company, you cash out and pay the tax penalty, and reap a 40%+ profit. It's like giving yourself a tax deferred raise!" It was really fun to see this person spend the money from a company that paid 200% matching!!!

Do *I* have a retirement fund? Nope. Given inflation and the direction I saw the economy going in as long as 30 years ago, I prefer the "I NEED my money NOW!" approach. (aka pay me as I go.) I worked for the US Postal Service for 11 years. When I left I took my money with me and paid off ALL of my debts with it!

Not being entirely stupid, yes... I have made inflation proof investments - ie we are really close to paying off the mortgage on the farm. As long as we can climb up on the tractor, poke a few seeds in the garden and pick up sticks for the wood stove, we'll get by.

In short - WE control our "retirement" provisions - not some corporation or bank or government. As my mother used to say, "You can't eat promises."

 

Mon, 11/12/2012 - 16:02 | Link to Comment El_Puerco
El_Puerco's picture

¿A ver aquí les va un acertijo? ayuden mee a resolverlo?.... ¿En qué país , la deuda es 1,000% del PIB ? Guess Which Country Has Debt Of Nearly 1000% Of GDP?...

 

:P

Mon, 11/12/2012 - 16:05 | Link to Comment nofluer
nofluer's picture

Just a wild guess... Argentina?

Mon, 11/12/2012 - 16:17 | Link to Comment ShrNfr
ShrNfr's picture

Nope, read my comment earlier. The US future obligations in present day dollars are 1,350% of the GDP according to the CBO. $220,000,000,000,000 and increasing at ~5% a year or $11,000,000,000,000. Good luck with that. This is including medicare, social security, the drug bene, and all the rest.

Mon, 11/12/2012 - 18:52 | Link to Comment giggler123
giggler123's picture

Nothing like a world war to trim that down to size.

Mon, 11/12/2012 - 18:56 | Link to Comment shovelhead
shovelhead's picture

I'm glad I live near a college town.

Them young uns are pretty tender except for their texting thumbs.

Long pig...the other white meat.

Mon, 11/12/2012 - 18:58 | Link to Comment dolph9
dolph9's picture

Well, look.  If you're modern national mythology is that you saved the world from those evil Germans, then don't be surprised if you eventually end up the slave of the Jewish banksters who run America.

Mon, 11/12/2012 - 22:26 | Link to Comment Pseudolus
Pseudolus's picture

At what point does an inter-generational transfer scheme become a Ponzi?

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