Tuesday, May 19, 2009
Well, they've been doing such a good job of managing the economy ...
Telegraph: Mervyn King's pension tops £5 million
"We didn't think it was going to be anything like as severe as it's turned out to be", "It would be very surprising if we weren't learning lessons from it and we are", "... it's because they didn't understand the market and the impact that some of these products were going to have. The reason for that is that they weren't good enough". Still. Look on the bright side - quids in, eh?
Posted by paul @ 08:52 AM (588 views) Add Comment
15 Comments
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1. inbreda said...
hang him alongside the thieving politicians
2. quiet guy said...
Questions are hanging in the air about the BoE's performance but at least King has shown some restraint w.r.t. renumeration in the past, unlike our MPs.
http://business.timesonline.co.uk/tol/business/economics/article4331728.ece
3. flashman said...
The sad thing is that an annuity only yields about 6K per annum for 100K invested. This means that a pensioner will have to have a spare 1 million pounds on retirement to have an enjoyable retirement (60K per annum income). Obviously a pensioner could get by on less than 60K, but they wouldn't have a fun retirement.
This means that Mervyn will have a pension income of about 300K per annum. I don't think that is an inappropriate amount for the head of a central bank.
The trouble is, that, at his age, a major stock market crash could decimate his pension pot and leave him with a small fraction of 300K pa. My point is that, if a central bank chief is not necessarily guaranteed to be wealthy in his old age, how well off can the average retiree expect to be? The answer is that the vast majority of baby boomers will live in penury. This demographic certainty is what will ultimately cause a serious HPC. Interest rates and unemployment can blow the froth off the housing market but old age penury is the only thing that can properly destroy house prices for good. I read recently that America's first baby boomer has just retired...so how long can it be before a previously wealthy middle England retires and ends up exchanging “rose cottage”for a trailer home?
4. happy mondays said...
inbreda said...hang him alongside the thieving politicians
That's to good and to quick, tar and feathered, stripped of any assets, thrown out of anything to do with the well being of the people or economy along with the bank rapist, high profile bankers and the weasel politicians we have in power...A complete overhaul of the system that has been forced upon us for centuries..
5. quiet guy said...
"tar and feathered, stripped of any assets, ..."
Inbreda, you seem to be fired up this morning!
6. flashman said...
happy mondays: I'm sure that you are just showing how committed you are to the cause but if you got your way, history would look back on you in the same light as it does Nazi death camp commanders and Idi Amin's henchmen . He has done very little wrong other than do his job to a standard that doesn't meet with your approval. In 30 years time Hollywood could make it into a move called 'Flashmans list' where I would have ex bankers working in my enamel factory while commandant happy and inbreda tried to trick them onto the death trains
7. happy mondays said...
@ flashman, No, even the Burmese and Tibetan monks took to the streets because of a system that is pushed upon them, something that i think even Oscar Schindler would agree with..Ex bankers working in enamel factories does sound good though and politicians doing a bit of community service...
8. refusetobuy said...
"The trouble is, that, at his age, a major stock market crash could decimate his pension pot and leave him with a small fraction of 300K pa"
True if Merve were in a defined contribution scheme. Civil servants get a final salary which will only change if the whole pension scheme goes down. There is a possibility that the government cuts the civil service pension benefits in some way. They are unaffordable at the moment, and can't be eroded by inflation because they are index and wage linked.
9. mountain goat said...
His greatest achievement will probably be that under his watch GBP got trashed 25% just as the world experienced its worst deflation scare in ages. Savers obviously hate him for it, but anyone participating in the economy should try to understand the benefits this has provided by avoiding an even more sudden slam on the brakes of our frothy economy. As an investor I thank him for this because my commodity investments, priced in USD, look 25% better than they should right now.
10. letthemfall said...
I don't know whether or not the Bank Governor has a final salary or funded scheme, but to attack civil service schemes just because they are decent pensions is to miss the real iniquities in this country, not least the outrageous sums netted by the bank bosses who broke their employers. So much for performance-related rewards. According to Channel 4 (last night) they are still getting huge payments. Typical civil servants will be on modest incomes and many will not have maximum service (40 years) when they retire. Many will be paid rather small pensions. Even the pensions of the top people are modest compared to industry equivalents.
11. flashman said...
Yes, it's true that bank bosses shouldn't get huge payments for failure. It's also true that it is a myth that civil servants get unfairly large pensions. I think all the sensationalism surrounding the pension arrangements of individual groups, is a manifestation of the terror felt by people of living their old age in poverty. The fact is, that the average UK pension is not remotely a match for the cost of living. I think people are too scared to address this issue, so we get all this finger pointing. It's like some sort of mass subconscious fear
Everyone knows that the health service budget will come under increasing strain and old age poverty will end up causing people to die before their grandchildren grow up. Obviously, the lucky few who can get private health care will have access to better detection and better treatment . As I said earlier, the demographics of an impoverished baby boomer generation will also be the real cause of a HPC
12. refusetobuy said...
@lettthemfall
I'm not attacking civil servants. The majority deserve what they've been promised.
Whether they will get it is a different matter. Public pensions are funded from taxes and are not linked to the stock market at all. The unfunded public pension liability in this country is enormous, and it's index linked so the government can't inflate it away. Their only option is to cut the pension benefits.
If you are a civil servant, be aware that your gold plated pension may just be covered in a thin layer of gold leaf.
13. letthemfall said...
refusetobuy:
Some public pensions are funded from taxes (as is the state pension) but others now are defined contribution - some of the civil service provision is, a change along with others (eg later retirement) in response to the problems you mention.
I'm not a civil servant, though I'm not immune to pension worries. I don't think public sector pensions are gold-plated - not compared to the individuals we've heard so much about lately - although they are decent schemes, and exemplars that all institutions should look to. How ironic, then, that banks are closing their final salary schemes while boosting their top earners. And how ironic that in our supposedly affluent society so many people should be enduring or facing hardship. Inequality has much to do with this, and stands as an indictment of all govts of the last few decades.
14. timmy t said...
Long-term-performance-related pay for all. Private and public sector. Poor performance - no bonus - simple. On current performance, most politicians and Merv would have no bonus. If they do well, they do the most influential jobs in the country so pay them accordingly.
15. shipbuilder said...
Hear, hear, letthemfall. Aren't people in the private sector meant to be against pulling everyone down to a low a level as possible? One has to ask - where did all the trillions of record profits in the last decade go? Why are our pensions so bad? Is the solution really for us to sacrifice more and work harder/longer, or is that someone else's solution? The same people that decided to bail out the banks with our cash, maybe? But sure, let's ignore that and attack the usual targets.