Brown /***** & Pension Funds

The pension funds had already been raped, pillaged and sacked over the preceding ten or so years prior to Brown's arrival by companies who on the crest of rising stock market valuations decided to take a pensions holiday and in so doing deprived the pension funds of capital while at the same time returning said capital to their share holders via dividend payments - short termism at it's best. Those with an axe to grind or short attention span seek to imho wrongly blame Brown for the total meltdown of the pension system and should stop moaning about the closure of final salary schemes or the chronic underfunding and should ask the question why in the past were such pension holidays so freely taken?

Well said Roy, well said. Sadly people will not let truth get in the way of political posturing.

quote:

then we'll see how his reputation as the most succsessful Chancellor of the last hundred years (?)

Says who? Only he I think.

Pensions, like any capital investment can only make profit from investment. The cummulative effect of re-invested income is a huge part of the fundamental growth in any economic model/product/business, whether a pension, a nation or Tesco. Tax on dividends is not to blame for failing pensions but they do make a dent in returns, just as they do in ISAs by the way (just in case you thought equities based ISAs were still tax free) and income generated by most other investments from savings accounts to endowments. For instance, the FTSE 100 index is still about 10% down from its peak of 7 years ago, a simple tracker fund with dividends re-invested would be about 17% up though (before costs and tax), about 12% after costs, 10% after dividend tax - the best UK Equity Growth fund over 7 years is 179% up, the worst 62% down, the best UK Equity Income fund though is 200% up and the worst just 10% down. Go figure.

I remember speaking to a number of employees in the nineties who reacted with glee when they were advised by their employer (Halifax was one of them) that they had announced payment holidays 'cos it meant they didn't have to contribute so much (if anything) for a while (and the Halifax employess contributions were only 2% anyway!!!). When I suggested that maybe they should make some additional voluntary contributions, e.g. to buy added years or save to something else or even reduce their mortgage or whatever, 'cos after all it wasn't costing them anything extra, take a wild guess how many agreed with me...

Of course employees could also have taken advantage of the usually very advantageous sharesave schemes offered by most firms with hugely discounted share prices (and thereby share in those very dividend payouts from those money hungry vultures, the employers) but many didn't/still don't bother. (Although some do, a lady I spoke to recently had to steady herself when I told her the Tesco shares she'd accrued as an employee were worth about £150,000).

How many folks with their freebie shares, use the divis to buy more shares? A hell of a lot less than those who spend them on an occasional take away or a few beers I bet.

As ever, most people are always looking for something for nothing and, just like HiFi and most things in life, usually if you pay cheap, you get cheap. However if you take a bit of time out to look at your options, apply some common sense or take advice and go for content over style you're more likley to end up with Naim than Bose or Tescos own brand (budget dependent).

Likewise, most people prefer to bury their head in the sand and worry about it later and make it someone else's problem when it's all gone pear shaped. How many folks out there would buy a computer, a telly, a house, some plumbing or a car and expect it to be perfect for 20 to 40 years without needing any money spending on it or have any outside/government legislation changing to effect it throughout all those years? None of you I suspect. So why any different for money? It ain't. Governments are mean to us. Things change. Sometimes for the better, sometimes for the worst. There is always an alternative.

That's not to take anything away from the employers' own shady shenanigans and although I'm sure some were actively looking to feather different nests, I'm equally sure some were just as naive as other staff and placed faith in their trustees (how better to justify your quality and the expense of using you, than to save your employer money?)

Either way, the sooner folks realise that a one box solution of any type is usually less than perfect, then the better.

quote:

Originally posted by Roy T:
The pension funds had already been raped, pillaged and sacked over the preceding ten or so years prior to Brown's arrival,...

So what did Mr Brown do? Try to reverse the situation? No! He announced an extra tax on Pensions that made things worse. Good on you, Gordon. NOT!

Actually I want to see Mr Brown as PM, as with luck the Labopur Party will become so unpopular after two years of him that it will be another ten or fifteen years before they get back in, by which time they might just be Socialists again, rather than a party of patronage, cronies, and selling peerages. I am no Socialist, and what galls me is that they are supposed to the Party of Labour, but what they have become [as New Labour] is a sort of watered down, pathetic nonsense which will spin and do anything to cling onto power, including increasing regressive taxation on what ought to be their core constituency, if this pleases the wet end of the Tory constiuency, which ought to have had more sense in my view - all too successfully managing to retain power so far in my view, but the advent of Brown as PM must be the best news for non-Socialists there could possibly be. The wet Tory voter will soon wake up, I suspect!

Of course I shall be voting at the next election, but I shall not declare until the campaign has been rolling a week or two! They will have to earn my vote.


Kindest regards from Fredrik

Gordon is no Baroness Castle of Blackburn but on the other hand New Labour is The Labour Party minus a measure of social consciousness. New Labour would have never been elected if they had published the fact that they would reestablish the pensions to earnings link severed by the Tories.

The truth is that if they were not such a pack of spinners and liars they would never have been elected, but that is democracy. If they are now seen as dissemblers, and spinners, then democrcracy is damaged. The electorate do not care to be made fools of, and the whole political edifice is damaged by this kind of thing.

Among the shameful results of this Gov'ts record is that Politicians have never been held in lower regard, our Civil Liberties have never eroded so fast, and I believe that democarcy has been severely damaged in UK as a result of the public's realisation of this.

Not bad for a party that once stood for the underdog in this country. Yes! I say Gordon Brown for PM. Only two year to finish off the job of making things worse and then no Labout PM for ten years. Brilliant!!

Kindest regards from Fredrik

Sorry Frederik but your last post is utter clap trap.
I remember the 18 years of the previous lying, cheating, warmongering, corrupt regime.
My utter disdain of politicians was well established by the time 1997 came along.

Dear Bob,

And the Brown/Blair administration has carried straight on where the Tories left off!

The thing is they carried on with a self-interested, self-perpetuating regime indistinguishable from the preceeding administration in so many ways. No wonder democracy is damaged when there is no chance of electing a Gov't that is particularly different or any less corupt. Hense the tragically low turn outs at elections.

I am all for a system of Proportional Representation, which would clip the wings of the Browns, Blairs and Thatchers of this world.

It would be nice to think the Gov't might be elected by more than the third [or even less] of the electorate, managed under the current First Part The Post system. This means that roughly two thirds of the electorate are not represented by a meaningful vote.

My choice currently would be a minority Tory Gov't working with the moderating influence of the Liberals. I think we should give the Labour Party long enough in the wilderness to completely renew its potential ministers and PM. Ten years minimum in my view...

Kindest regards from Fredrik

quote:

Originally posted by JamieWednesday:

Either way, the sooner folks realise that a one box solution of any type is usually less than perfect, then the better.

What could you be talking about, James?!!

quote:

quote:
Originally posted by JamieWednesday:

Either way, the sooner folks realise that a one box solution of any type is usually less than perfect, then the better.


What could you be talking about, James?!!

I think James is suggesting not putting all your eggs in one basket.

In the early nineties, the government and financial advisers encouraged people to do just that. Put all their eggs in one basket.
People with money purchase pensions where encouraged to contract out of SERPS and take out a stakeholder pension. The performance of both is dependent on share prices.

The financial losses incurred by the people who contracted out of SERPS will be enormous. They will be actual losses, incurred by actual pensioners/future pensioners.

I estimate, conservatively, that I will be £40.00 a week better off due to the fact I did not contract out. That is £2,000.00 per year.

If these figures apply to everybody who contracted out, one million of them would loose a total of 2 billion pounds a year.

I don’t know the figures, but if 5 million people contracted out and they draw a pension for 20 years, the total loss would be 200 billion.

Anybody remember who dreamt up the stakeholder pension scheme.

..

quote:

In the early nineties, the government and financial advisers encouraged people to do just that. Put all their eggs in one basket.
People with money purchase pensions where encouraged to contract out of SERPS and take out a stakeholder pension. The performance of both is dependent on share prices.

I think you might be getting confused.

Stakeholder's are a relatively recent invention for this century and frankly are not an investment in themselves, merely a cheap wrapper around cheap funds. And now, not so cheap either. Many of these funds are relatively poor performers, perhaps because they are cheap? Of course it f*cking is.

You should also be aware that Shares are one form of asset class, which can of course be sub divided further, whether Growth/Income, UK/Overseas, large/mid/small cap, opportunity or defensive and more besides. Then there are of course other assets. Cash. Property (whether bricks & mortar/equity holdings/reits), fixed income (gilts, bonds, high yield, overseas again?), commodities (gold/diamonds/wheat/blah). Come on, take your pick... Only if you choose a share based fund is your performance based on shares and that is not a good or a bad thing, it just is. Then of course you could use protected funds if you like or any possible combination and blend. Course, you could always take a SIPP and put actual physical real assets into it instead and borrow against it too. And don't get me started on SSAS's. Fed up with annuity rates, so try drawdown instead.

Certainly the Government were keen to encourage employees to contract out of SERPS. So much so that in those naughty nineties, their agencies, the regulatory bodies the PIA and Lautro preceeding them, set criteria by which an employee should or shouldn't contract out of SERPS based on age, sex and income. Bad luck any advisory firm who did not follow those guidelines and justify their reasoning. "'cos they don't want to" wasn't good enough. (I suspect most decent firms won't even touch it now 'cos they're scared to give advice because the criteria by which they are judged is forever changing. Me, I'll do a far better job of investing my money for my benefit than the Government, thank you).

Some companies with direct sales forces, Prudential, Scottish Widows, Pearl and others took advantage of this situation to make bigger profits for themselves. I cannot say whether the advice was good or bad of course. Nonetheless, it was an additional sales opportunity (that does not mean it was bad advice). I suspect some got better advice than others. If however, the NI system collapses in a few years (and don't think it can't) such that it can no longer sustain S2P payments then that of course will change things for those contracted in won't it? And those contracted out will be thanking the man from the PRU that they did.

I can also absolutely, categorically and without question tell you there are many, many people out there who are better off because they did contract out. The same message, again and again, whether an investment is from your own wallet, NI rebates or green bloody cheese, there are some fantastic funds out there and there are some miserable ones too. Do it properly if you're going to do it at all and don't get suckered in by 'advisers' whose advice is almost criminally restricted by their employer and their own lack of knowledge.

Oh but bollox you'll just hark on about vested interests and all that along the lines of "well he would say that wouldn't he?" Can't be arsed anymore.

Don't you find that people that worry about money all the time tend not to have a sufficiency of it...?

Deane, you could be right.

I still say, "Brown for PM!" It will finish New Labour for a decade, by which time we will all as an electorate understand what spin is, and be ready for it next time. Good Bye Mr Campbell! And may the Fates be with you...

ATB from Fredrik

quote:

Originally posted by JamieWednesday:

Deane, you could be right.

Jamie

I was trying to fill in for Parry. How did I do?

Deane

quote:

How did I do?

Well I think a little more humility would help...

quote:

Originally posted by JamieWednesday:

quote:

How did I do?

Well I think a little more humility would help...

Surely you mean a little less>

Regards,

Willy.

Chaps

I buy a Lottery ticket every week. It's a great pension fund, takes care of my retirement planning by weekly installments and best of all, only a tiny percentage of participants get rich while the rest suffer and die throwing money (and their hard work) at a system that really rewards only luck.

Regards
Deane

quote:

Surely you mean a little less>

That's your opinion

quote:

The pension funds had already been raped, pillaged and sacked over the preceding ten or so years prior to Brown's arrival by companies who on the crest of rising stock market valuations decided to take a pensions holiday and in so doing deprived the pension funds of capital while at the same time returning said capital to their share holders via dividend payments - short termism at it's best. Those with an axe to grind or short attention span seek to imho wrongly blame Brown for the total meltdown of the pension system and should stop moaning about the closure of final salary schemes or the chronic underfunding and should ask the question why in the past were such pension holidays so freely taken?

Well, one reason was that the government would tax any surpluses in the pension scheme above what the govt said they needed to keep in it - it wasn't (just?) the companies being "greedy", they were forced into holidays.

Gordon's moves were definitely a factor in the poor performance of pension funds and the closure of many - but it wasn't the sole reason. What irritates me is that he did the raid because he thought people wouldn't notice it and pretty much everything said by the givernment since then on the subject has just been spin.

quote:

Originally posted by Fredrik_Fiske:
My choice currently would be a minority Tory Gov't working with the moderating influence of the Liberals. I think we should give the Labour Party long enough in the wilderness to completely renew its potential ministers and PM.

I think nothing could be worse for the country than a government without any power to do anything. It would be about as productive as a Local Government office on a Friday afternoon.

Or anywhere forum contributors are working at on the day before Easter...