Retirement.....

they make some contribution yes

peagreen


What's to stop the government stop contributing and/or to dip into the accumulating pot, like local councils have done?

There IS no pot.

Thats why its a Ponzi scheme.

The government just spends your pension money as it receives it, including paying it out to current pensioners. You simply have to hope that a future government, in 30 years time, will be able and willing to pay you some money back. This may or may not, in fact, be a realistic hope. Given economic predictions, and the increasing proportion of pensioners in the population it qute possibly isnt.

As said, if a private company did this it would be a criminal offence

The government just takes the money that it says is for your pension, spends it, and its gone. No 'pension pot'. Its 'dipped' in its entireity the moment its received.

I wonder how many people in the UK actually know this, and understand it? And what would happen if they did....

^^^ Hang on then, what was the big press uproar not so long ago then when the banks went belly up because it was suggested the pension funds had been put into Icelandic banks - or was that just the public sector funds?  It was also suggested that the local governments had been dipping into them, which had led to a shortfall - I don't understand?


Edit: just found a link - it is only the public sector fund The Guardian

Bollox to em, lol

peagreen


^^^ Hang on then, what was the big press uproar not so long ago then when the banks went belly up because it was suggested the pension funds had been put into Icelandic banks - or was that just the public sector funds?  It was also suggested that the local governments had been dipping into them, which had led to a shortfall - I don't understand?

Yeah, that was public sector funds, nothing to do with state pension. Local goverments also run their own final salary pension schemes (which do have a pot, which can be dipped) - again nothing to do with state pension.

But most people seem to think that their taxes/NI etc are going toward some kind of 'state pension pot', which in fact has never existed

tac

But most people seem to think that their taxes/NI etc are going toward some kind of 'state pension pot', which in fact has never existed

I seem to remember from my A Levels economics (aeons ago) that it was looked at as a theoretical money pot, now that I think about it.

One thing I learnt in one of my jobs was that the company pension scheme they offered was only any good if you stayed there.  If you left it was not transferable and was frozen at the point you left - a small detail the pension advisor was unaware of until I pointed this out!!

Frost


they make some contribution yes

Then it is almost likely the best option for you.

tac

peagreen


What's to stop the government stop contributing and/or to dip into the accumulating pot, like local councils have done?

There IS no pot.

Thats why its a Ponzi scheme.

The government just spends your pension money as it receives it, including paying it out to current pensioners. You simply have to hope that a future government, in 30 years time, will be able and willing to pay you some money back. This may or may not, in fact, be a realistic hope. Given economic predictions, and the increasing proportion of pensioners in the population it qute possibly isnt.

As said, if a private company did this it would be a criminal offence

The government just takes the money that it says is for your pension, spends it, and its gone. No 'pension pot'. Its 'dipped' in its entireity the moment its received.

I wonder how many people in the UK actually know this, and understand it? And what would happen if they did....

Many public sector schemes are still like this too. This is why the govt doesn't care about, it actually needs population increases. The idea being these babies become productive tax payers to fund our state pensions.

State pensions have been reformed about 3 or 4 times in the last 30 or so years. Each change means less money for the pensioner. It's a ticking time bomb. The socialist experiment is largely a failure.

Red Man


If i took out a private pension that was aimed to start at 65 and i died at 64, where does the money go?

If it was deffered to my wife and she died at the same time, what happens then?

Serious questions as i do not know the answer.

When you set the pension up, you assign beneficiaries. You can assign up to 4 normally. So that's a place to take care of it.


It's also pertinent to have your will sorted at the same time. Your wishes for the pension in the event of you and your partner passing can be covered there.

Does that help?

peagreen

I seem to remember from my A Levels economics (aeons ago) that it was looked at as a theoretical money pot, now that I think about it.

lol, I love the theoretical money pot.  Just like my neighbours new Lambo is theoretically mine, I can mug him for the keys after all rofl.

Wheels

Rosc0PColtrane

Regardless of quantitive easying. Bonds are lower on the risk/reward scale than equities. Nothing about being brave, it's just how it is.

You've been lied too.  Bonds are not less risky than shares, they are simply less volatile.  Many people confuse the two.  Risk in the context of a pension is a difficult topic because you need to judge it over the duration,which could be 50 years.  The risk of holding bonds over that timeframe is higher than for shares.

You cannot disregard printing money when you hold bonds, it represents a HUGE risk to bond holders.

I guess you really need to quanitfy what the risk is. ie inflationary, capital risk etc. Less volatile is therefore less risky in some respects. Though lower performance is a risk in itself. I've not been lied too, that's a very strong accusation. Quantitive easing will affect the value of money accross the board as it will have inflationery impact.

It's generally accepted, by the FSA, by regulated product providers, by approved sales aids, by qualified and competent advisors, by approved qualification providers; than gilts/bonds are lower on the risk/reward scale than equities. They're certainly not free from risk. Even your regular bank account is not free from risk. They are however perceived to be less risky than equities.

Wheels

peagreen

I seem to remember from my A Levels economics (aeons ago) that it was looked at as a theoretical money pot, now that I think about it.

lol, I love the theoretical money pot.  Just like my neighbours new Lambo is theoretically mine, I can mug him for the keys after all rofl.

How about theoretical girlfriends and wives. I like that concept, I'm not sure the women will. Though being free from nagging is tempting

Rosc0PColtrane

I guess you really need to quanitfy what the risk is. ie inflationary, capital risk etc. Less volatile is therefore less risky in some respects. Though lower performance is a risk in itself. I've not been lied too, that's a very strong accusation. Quantitive easing will affect the value of money accross the board as it will have inflationery impact.

It's generally accepted, by the FSA, by regulated product providers, by approved sales aids, by qualified and competent advisors, by approved qualification providers; than gilts/bonds are lower on the risk/reward scale than equities. They're certainly not free from risk. Even your regular bank account is not free from risk. They are however perceived to be less risky than equities.

Bonds can be many things with a huge spread of risk.  The simplistic risk/reward table you see everwhere is as worthwhile as the food pyramid.  Tell people who hold GM bonds they have a lower risk than the share holders.  Your quite right about QE affecting the value of money, bonds are money.  However, shares are assets and are much better insulated from the effects of inflation.

Before govts where able to print money bonds where the prefered investment for pensions, shares where much risker and paid a higher yield.  This is no longer the case.

It's generally accepted, by the FSA, by regulated product providers, by approved sales aids, by qualified and competent advisors, by approved qualification providers

What these people do or do not generally accept is not worth the time of day TBH.  The track record is not up to much now is it?

Rosc0PColtrane



State pensions have been reformed about 3 or 4 times in the last 30 or so years. Each change means less money for the pensioner. It's a ticking time bomb. The socialist experiment is largely a failure.

Thats one of my pet rants. Britain is not and has never been socialist. 

Real, meaningful socialism is an experiment that has never, so far, been attempted, either here or elsewhere. Neither the soviet block nor china are 'socialist' in anything other than name.

Most people that say 'socialism has failed' then go on to produce 'evidence' from such countries or schemes that were never socialist in the first place.

You cant look at the failure of ill-conceived, half-assed social welfare provisions within capitalist economies and say 'see! socialism doesnt work'. Nor can you look at beaurocratic leninist or Maoist dictatorships and reach the same conclusion.

tac

Thats one of my pet rants. Britain is not and has never been socialist. 

Real, meaningful socialism is an experiment that has never, so far, been attempted, either here or elsewhere. Neither the soviet block nor china are 'socialist' in anything other than name.

Most people that say 'socialism has failed' then go on to produce 'evidence' from such countries or schemes that were never socialist in the first place.

You cant look at the failure of ill-conceived, half-assed social welfare provisions within capitalist economies and say 'see! socialism doesnt work'. Nor can you look at beaurocratic leninist or Maoist dictatorships and reach the same conclusion.

You what?!  Don't be going around firing that shot across my bow without expecting a reaction.  A Russian girl I know who lives here thinks the USSR was more capitalist than the UK.  In Northern Ireland 80% of GDP is government activity.  That's more than any former east european state at the height of the Soviet era.

Whatever the UK is, it's nothing close to the standard terms of socialist or capitalist.  I can make a very good case that the UK is National Socialism without the nasty bits and snappy uniforms.  Of course, that wasn't really socialism either....

Wheels


You what?!  Don't be going around firing that shot across my bow without expecting a reaction.  A Russian girl I know who lives here thinks the USSR was more capitalist than the UK.  In Northern Ireland 80% of GDP is government activity.  That's more than any former east european state at the height of the Soviet era.

Whatever the UK is, it's nothing close to the standard terms of socialist or capitalist.  I can make a very good case that the UK is National Socialism without the nasty bits and snappy uniforms.  Of course, that wasn't really socialism either....

Lol - was expecting a reaction from you

Actually what you're saying isnt so different from what I was trying to say (badly). The USSR was NOT a socialist country (and incidently Id agree the UK isnt a truely capitalist country either).  Bear in mind I live half the time in a former soviet country.

What I was getting at is that it annoys me when people look at the NHS, or the British welfare state, or China, or the USSR and say 'see- socialism doesnt work', when none of those institutions or countries were socialist in the first place.

We're not a National Socialist country either BTW, as we lack the one-party state (and, until Speer took over the economic planning, Nazi Germany was far more of a decentralised free-market economy than Britain has ever been).

Technically Id say we're a Civil Service Beaurocracy, with a social-democratic welfare state economic system cobbled together with trappings and relics of a previous feudal system.

In other words a half-assed mish-mash

tac

Wheels


You what?!  Don't be going around firing that shot across my bow without expecting a reaction.  A Russian girl I know who lives here thinks the USSR was more capitalist than the UK.  In Northern Ireland 80% of GDP is government activity.  That's more than any former east european state at the height of the Soviet era.

Whatever the UK is, it's nothing close to the standard terms of socialist or capitalist.  I can make a very good case that the UK is National Socialism without the nasty bits and snappy uniforms.  Of course, that wasn't really socialism either....

Lol - was expecting a reaction from you

Actually what you're saying isnt so different from what I was trying to say (badly). The USSR was NOT a socialist country (and incidently Id agree the UK isnt a truely capitalist country either).  Bear in mind I live half the time in a former soviet country.

What I was getting at is that it annoys me when people look at the NHS, or the British welfare state, or China, or the USSR and say 'see- socialism doesnt work', when none of those institutions or countries were socialist in the first place.

We're not a National Socialist country either BTW, as we lack the one-party state (and, until Speer took over the economic planning, Nazi Germany was far more of a decentralised free-market economy than Britain has ever been).

Technically Id say we're a Civil Service Beaurocracy, with a social-democratic welfare state economic system cobbled together with trappings and relics of a previous feudal system.

In other words a half-assed mish-mash

In other words a half-assed mish-mash

Hahaha I liked that.

Wheels

Rosc0PColtrane

I guess you really need to quanitfy what the risk is. ie inflationary, capital risk etc. Less volatile is therefore less risky in some respects. Though lower performance is a risk in itself. I've not been lied too, that's a very strong accusation. Quantitive easing will affect the value of money accross the board as it will have inflationery impact.

It's generally accepted, by the FSA, by regulated product providers, by approved sales aids, by qualified and competent advisors, by approved qualification providers; than gilts/bonds are lower on the risk/reward scale than equities. They're certainly not free from risk. Even your regular bank account is not free from risk. They are however perceived to be less risky than equities.

Bonds can be many things with a huge spread of risk.  The simplistic risk/reward table you see everwhere is as worthwhile as the food pyramid.  Tell people who hold GM bonds they have a lower risk than the share holders.  Your quite right about QE affecting the value of money, bonds are money.  However, shares are assets and are much better insulated from the effects of inflation.

Before govts where able to print money bonds where the prefered investment for pensions, shares where much risker and paid a higher yield.  This is no longer the case.

It's generally accepted, by the FSA, by regulated product providers, by approved sales aids, by qualified and competent advisors, by approved qualification providers

What these people do or do not generally accept is not worth the time of day TBH.  The track record is not up to much now is it?

Using one company to make a point to categorise a general asset class isn't a fair representation really. Especially when GM shares are as vulnerable as the bonds to risk of company failure. It's not a good example of how bonds as an asset class are a higher risk than equities. I'd suggest it's being overly analytical. Afterall, I mentioned blue chip bonds and gilts, not more risky loans to smaller companies, tantamount to venture capital, which is a whole different can of worms.

In terms of audience, breaking asset classes down too much is irrelevant. Especially when the funds they're likely to invest in will not contain risky loans to smaller companies. Shares are potentially better insulated from inflation, you're right, hence why they sit higher on the risk/reward chart, which is a good tool for the majority of people here and entirely adequate.

You'd easily fall into the class of 'expert investor'. If you do have contacts with F.A.'s, it's likely to be on an execution only basis. It's important to consider that solutions discussed here are aimed at unsophisticated investors.

While this isn't exhaustive, it paints a fair picture of relevant asset classes over a very long term. Interesting to see how gilts perform against equites here:

http://scottishwidows.b...al%20History%20Chart.pdf

tac

Rosc0PColtrane



State pensions have been reformed about 3 or 4 times in the last 30 or so years. Each change means less money for the pensioner. It's a ticking time bomb. The socialist experiment is largely a failure.

Thats one of my pet rants. Britain is not and has never been socialist. 

Real, meaningful socialism is an experiment that has never, so far, been attempted, either here or elsewhere. Neither the soviet block nor china are 'socialist' in anything other than name.

Most people that say 'socialism has failed' then go on to produce 'evidence' from such countries or schemes that were never socialist in the first place.

You cant look at the failure of ill-conceived, half-assed social welfare provisions within capitalist economies and say 'see! socialism doesnt work'. Nor can you look at beaurocratic leninist or Maoist dictatorships and reach the same conclusion.

You're quite right and clearly better informed than I am on the subject. Perhaps I should have qualified the experiment as a 'dabble'. I never meant to tar us as a socialist state. We're far from it!

Rosc0PColtrane

tuc biscuit


I expect nothing by the time I reach retirement age from the government.

For myself I am making other arrangments, stockpiling of various assets to be offloaded at a later date.

In general I think as bad as pensions are now, they will get worse and people will get them later in future.

Can I ask what makes you think they are so bad? And why they will get worse? Or do you mean the state pension. A lot of people fail to differentiate between state and private schemes.

 
 
I meant state pensions.

Rosc0PColtrane

Using one company to make a point to categorise a general asset class isn't a fair representation really. Especially when GM shares are as vulnerable as the bonds to risk of company failure. It's not a good example of how bonds as an asset class are a higher risk than equities. I'd suggest it's being overly analytical. Afterall, I mentioned blue chip bonds and gilts, not more risky loans to smaller companies, tantamount to venture capital, which is a whole different can of worms.

In terms of audience, breaking asset classes down too much is irrelevant. Especially when the funds they're likely to invest in will not contain risky loans to smaller companies. Shares are potentially better insulated from inflation, you're right, hence why they sit higher on the risk/reward chart, which is a good tool for the majority of people here and entirely adequate.

You'd easily fall into the class of 'expert investor'. If you do have contacts with F.A.'s, it's likely to be on an execution only basis. It's important to consider that solutions discussed here are aimed at unsophisticated investors.

While this isn't exhaustive, it paints a fair picture of relevant asset classes over a very long term. Interesting to see how gilts perform against equites here:

http://scottishwidows.b...al%20History%20Chart.pdf

Of course GM is a single example, I can throw in whole periods where everyone holding bonds got wiped out.  Oddly, all of those also involved a central bank printing money  Funny that....

One of the things I hate about pension is the annuity requirement.  Everyone focuses of how you save for a pension, but few look at how it works when your actually retired.  You could be living on an annuity (which is a bond) for 30 years while inflation destroys it's value.

Now the next bit I have a bit of an issue with.  My postion is, and always will be that people need to take ownership of there own finances and that required them to educate themselves.  You don't much learning to do a decent job of looking after your finances, read a couple of books and ask the right questions.  Your bit here is that you don't want to educate people too much.  That is an old school sales trick, educate the client enough for them to buy your product, but never, ever any more than that.

Interesting chart.  Notice that gilts do not protect the value of your money from inflation.  That is until 1992, when gilts started returning more than RPI.   This is a very rare event, what do you think changed that means that gilts start performing so well?  After all, this is a period where interest rates where dropping to record low levels...