Guest 696- Registered: 31 Mar 2010
- Posts: 8,115
According to a BBC report dated 14 April 2003, titled: "Government blamed for pension crisis":
"There is an estimated £27bn shortfall between what people have saved and what they expect to live on in retirement."
So since 2003, going by the BBC figures presented in posts 1 and 2, the UK pension deficit has ballooned by anything from 8 to 13 times!
Something appears to have gone ghastly wrong.
Will there be a State bailout of the private pension scheme?
Will the BoE do a massive QE to buy up the government bonds from the private pension funds in order to liquidate their pensions debt?
If this does happen...well then you saw it first here
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
You are mixing up different issues Alexander.
The failure of people to save enough for their retirement is one problem that has got worse and worse ever since 1997 when Brown started to de-incentivise saving. He taxed pension funds and introduced stakeholders that meant it was no longer financially viable for advisers to chase pension sales. That runs alongside reducing the levels of other tax free saving and taxing these too.
That is not the same as the pension deficits. This refers to funding shortfalls in defined benefit pension schemes. These shortfalls are driven by poor investment performance, regulatory issues, the taxation issues, demographic and actuarial factors including life expectancy and so on. These pension schemes need a certain amount of cash to cover current and future liabilities to deliver their guaranteed benefits. The companies themselves have to make up that shortfall and produce a plan to the Pension regulator to do so. For this reason these schemes have largely been closed with the employers adopting defined contributions pensions instead.
The public sector should do the same as private companies and turn to defined contribution pensions..
Incidentally - this is a well established problem, nothing new and the Pension Protection Fund has been established to take over bankrupt schemes or rather schemes where the employer has gone bust and can no longer fund the deficits. It adds to the burden of other such schemes.
Sorry - no-one has heard it first from you.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
I might add that the shortfall of individuals not putting enough into pensions is being tackled by auto-enrollment. This is another burden for struggling small businesses, or will be when their staging dates are hit and another cost on employing people. It will also be putting millions of people into a third rate pension.
Guest 696- Registered: 31 Mar 2010
- Posts: 8,115
"Sorry - no-one has heard it first from you."
I haven't said anyone heard all this from me what you wrote above, it came from you and not me.
But that there is a private-pension crisis that appears to require a bailout, that, and that alone, is what I wrote.
Possibly through QE.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
Private pensions do not need a bail-out. That is your poor understanding of the issues. I will not explain yet again as the facts are not your strong point.
Guest 696- Registered: 31 Mar 2010
- Posts: 8,115
I agree that the facts on this issue need research, Barry, but the latest BBC figures mentioned were from November 2012, which is quite recent.
But what is new to me, is that, apart from the National Debt, there is a private pension debt too, of which I was unaware.
And it's several hundred billions.
It also became clear that private pension funds are invested mainly in Gov. bonds, and to an extent in shares, and partly in property.
Now if property is already over-valued, that too is a high risk investment.
So it seems a speculative paper and property-bubble thing that people have invested in with these pension schemes.
But on the whole the topic is interesting.
Ross Miller
- Location: London Road, Dover
- Registered: 17 Sep 2008
- Posts: 3,707
No Alex there is not a "private pension debt", there is however a deficit between current funding levels and actuarial calculations of future liabilities.
Pension funds invest in a wide range of assets including but not limited to government bonds (gilts), Corporate bonds, shares & warrants, property, various derivatives including interest rate swaps, mortality swaps etc. The investment in property has little to do with capital values or the movement thereof but a lot to do with yield (rental income).
A good example of the sort of range of instruments and providers used by pension funds can be found here
http://www.pensionprotectionfund.org.uk/About-Us/Pages/Investment.aspx"Dream as if you'll live forever. Live as if you'll die today." - James Dean
"Being deeply loved by someone gives you strength,
While loving someone deeply gives you courage" - Laozi
Guest 696- Registered: 31 Mar 2010
- Posts: 8,115
From "The End of Britain":
"Since public pensions were first introduced, average life expectancy has grown from 48 to 80 - a 67% increase. But the age at which we retire has remained essentially the same.
This has resulted in an estimated £5 trillion worth of pension promises the state has made to its citizens - roughly five times what our entire economy is worth. No one has any idea how we'll pay these. The recent attempts by the government to change the retirement age don't go anywhere near solving the problem."
So were private pension funds a scam on the part of the government to transfer pension obligations to companies?
Have we seen in the Dover Harbour Board pension-pot dilemma a real-time example of this?
howard mcsweeney1- Location: Dover
- Registered: 12 Mar 2008
- Posts: 62,352
how long ago was our life expectancy only 48?
Guest 868- Registered: 25 Jan 2013
- Posts: 490
howard mcsweeney1 wrote:how long ago was our life expectancy only 48?
Only 100 years ago Howard !!
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
The answer Alexander #28 is no.
Guest 696- Registered: 31 Mar 2010
- Posts: 8,115
Barry, there are two questions at the foot of post 28. To which is the answer "no"?
And any explanations to your opinion?
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
No need - you will carry on misunderstanding and misrepresenting the situation regardless of what you are told the facts are. The first question posed is simply absurd with the second question being referenced to that absurdity making it equally wrong. Do your own research, you will need to go back 100 years or so.
Guest 868- Registered: 25 Jan 2013
- Posts: 490
A little (misunderstood) information is a dangerous thing.....
Guest 696- Registered: 31 Mar 2010
- Posts: 8,115
So, Paul, what is misunderstood?
Has the State made £5 trillion worth of pension promises to its citizens, and if yes, will the State be able to maintain these promises?
As for Barry, questions are not statements, so I haven't reached any conclusions, hence the words "misunderstanding" and "misrepresenting" is not appropriate here. As proof, the thread's title carries a question mark.
Furthermore, I've been quoting statements made in research done by others.
Can anyone confirm there is no pension crisis looming, either State or private pension?
Ross Miller- Location: London Road, Dover
- Registered: 17 Sep 2008
- Posts: 3,707
Alex this is old news
That is why past and present governments have been looking to increase progressively the age at which one can draw the state pension. The fundamental problem for the state pension is that it is paid from current revenue, therefore with growing numbers of pensioners, longer life expectancy and less people of working age... you can do the maths and see why there is a desire to raise retirement age.
Private pension provision is an entirely different matter and as I said in post #27 you appear to be confusing debt and deficit and that deficit is based on future not current liabilities. Even small changes in the markets could wipe huge chunks off the deficit (or add to them), so for most schemes it is only when they close that you get the true picture and even then there are a number of investment managers who run LDI schemes that look to over a 10 year period get closed schemes to the point where assets match liabilities.
"Dream as if you'll live forever. Live as if you'll die today." - James Dean
"Being deeply loved by someone gives you strength,
While loving someone deeply gives you courage" - Laozi
Guest 725- Registered: 7 Oct 2011
- Posts: 1,418
I think You're right to worry Alexander. There is a Worldwide pension problem not unique to the UK. As it stands major American companies will have trouble covering their pension liabilities. GM, for example, have an unfunded pension liability of over $100 billion. Ford said its pensions are now underfunded by $18.7 billion worldwide, up from $15.4 billion which is worrying. They are offering pension buyouts to 98,000 qualifying white-collar retirees and former workers.
I'm no expert on these matters, by any means, in fact it's shrouded in mystery and an issue where one has to tread very carefully.
The runes do seem to point to something rather nasty, no matter what the optimists tell you.
I'd advise anyone in these difficult times to find out as much about these and other financial matters and do one's best to plan accordingly.
This year and subsequent years is set to be dangerous. When you hear politicians tell you that the problems have been overcome that is the time to worry.
Guest 696- Registered: 31 Mar 2010
- Posts: 8,115
Well I did understand, Ross, that the 5 trillion quid on State-pensions is calculated protracted over both the present and the future.
And that pensions are spent in the economy and partly go back to the Treasury in the form of taxes, be it fuel tax, VAT or taxes paid on the profits of businesses such as shops, wherever pensions are spent.
But according to "The End of Britain", pension liabilities will snowball.
So is there a pension crisis looming, yes or no? Just one answer.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
Alexander - you have the answers in previous posts.
There is nothing at all new in this.
People living longer in retirement is one of the factors causing a problem and we knew back in the 80's that the numbers of people in work and paying the taxes to pay the pensions were shrinking relative to the increasing numbers of retirement age.
This is why Mrs T encouraged a massive boost in personal pensions and other private provision that led to Britain having the best funded private pensions in the world by the early 90's.
This is why defined benefit company pension schemes started to give way to defined contribution schemes in the 90's a process accelerated since 1997.
This is why taxing pension schemes the way Brown did was so crazy.
This is one of the reasons that boosting working age benefits by Brown was so mad creating an even bigger deficit to be funded by those in work.
This is why more people need to save and invest more for their retirement, first so they might have a chance to retire before state retirement age and secondly to help give them a decent lifestyle in retirement.
The issues around pensions are being addressed as previously explained.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
PhilipP - you are not regulated or authorised to provide any such advice and your doing so is a criminal act. It is also utterly stupid advice.