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Sterling Loss

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  1. If an employer increases salaries for some people just before retirement, it's either funded from surplus (lol) or the employer has to contribute more. Those whose salaries remain the same aren't adversely affected, they get what they were promised. It's unlikely a scheme surplus would be used to uplift benefits, the employer can take a refund, so no need for subterfuge here at least. Short termers have been much better protected for a long time, it's only people who've been in a scheme for a very short time who lose out and the justification is that their benefits would be trivial. Yep. All the complexity intended to protect people has resulted in employers ditching serious pension provision.
  2. No danger of that happening IMO. Defined benefit and defined contribution schemes are approved under different legislation and assets have to be kept separate. The main risks are investment performance, and charges/fees in defined contribution. Modern Bob Maxwells will steal pension assets if they can. 'Sir' Philip Green types will syphon off company assets for £100m yachts so a company has no resources to fund a scheme. There will always be some cross subsidy between generations in defined benefit schemes, because if you're fixing the benefits, the contributions will vary. If a DB scheme is underfunded and the employer isn't going to make it good, there's a hierarchy of who gets priority in the scheme rules, pensions in payment are at the top. Trustees are supposed to represent scheme members' interests at all times, but I wonder if DB schemes are vulnerable to abuse at a time when helping yourself to other people's money is just what everyone does if they can
  3. No-one has a handle on the income and outgoings of any FS scheme. It's a function of salary increases, inflation, deaths/leavers pre and post retirement, investment return, timing of contributions received....all over a period of many decades. Base rate isn't important when funds need to invest for decades. 15 year gilts are favoured by pension schemes as they are the best match available for post retirement income, while equities pre retirement are the closest match available for earnings growth. Yields have fallen from around 5% (I think) in 2007 to 1.5% now. The fall in expected annual return over decades has hugely increased the value of accrued and future liabilities, and if you haven't been fully funded, invested in the right assets, and have sufficent contributions to cover future pension accrual, you've been stuffed. But obviously you pay yourself £500k a year anyway.
  4. ZIRP or no ZIRP, you only truely know if a scheme is fully funded when the last pensioner, or other beneficiary, dies. Up until then all you can do is take a snapshot by estimating assets vs liabilities and try to steer in the right direction by increasing or reducing (lol) contributions. There's no matching asset for pension liabilities pre or post retirement, and never has been, but schemes can pay insurers to take the longevity risk post retirement by buying annuities, at a price of course. Fund managers can take a risk in the hope of greater returns and lower contributions, pay themselves £500k a year, then ask for more contributions when it all goes wrong as seems to have happened at USS.
  5. About 5800 schemes in £530bn deficit acccording to the FT recently; although you can choose your own deficit number (as long as it's large) because the deficit is the difference between 2 large numbers which each vary wildly according to the assumptions you use. https://www.ft.com/content/5c19882e-397f-11e7-ac89-b01cc67cfeec Sad thing is FS would be affordable for a high proportion of the population if we had a functioning economy, but instead of having a chance of this it's been fcked up by pumping up house prices, bailing out banks and Zirping.
  6. Suspect these will be too late, but Carney/Hammond will try to plug the gap as ar as they can. Thanks, that's very useful, I hope you keep posting as this situation isn't sustainable and you can see what's actually happening where you are. Every government 'helpful' measure has made housing worse, and the deliberate distortion of language into meaningless propaganda like 'affordable housing' suggests some awareness of this. There's unintended chaos too, the money saving and efficiency increasing efforts in public sector spending must be genuine but have had entirely the opposite effect. I can't see government sitting on the sidelines while this plays out because it would mean admitting they've been wrong for decades, but this time surely it's falling prices across the board at last?? Good suggestion for Corbyn, maybe he's reading....
  7. Not so random maybe, constuction and manufacturing are reported as shrinking recently. The service sector (of which I'm a part) now provides 80% ish of GDP and 80% of jobs, and although that's the norm for a developed economy at the moment, it seems bizarre. The jobs created are increasingly agency/zero hour based and depend on short term discretionary spending. If Crossrail was a prop it seems likely we'll be needing a further and bigger prop in the very near future.
  8. What sorts of things are you seeing? It looks as though we're going through a mass dysfunction event stemming from the various financial bubbles and props. I work for the NHS, lots of cost saving changes have led to high staff turnover with job agencies filling the gap. Unsurprisingly this increases costs beyond being fully staffed by employees .
  9. Spare a thought for the victims of May's tear: http://www.thedailymash.co.uk/politics/politics-headlines/may-shed-tear-that-burned-through-three-floors-and-an-intern-20170713131830
  10. Contains some truth IMO; focusing on house prices as part of a dysfunctional, unstable economy risks bias towards thinking what you want to happen will happen. The scale of problems from pumping up property for 20 years isn't going to be resolved by house prices falling to a sane level while leaving the rest of the economy intact. Someone has to pay a huge price. It does look harder now though for Govt to print to bail out the bankers again as sentiment has partly changed, people are more aware that high house prices are a disaster and QE is just free cash. Also, the cash support needed for property will keep increasing while the economy stagnates. There's no point owning property if it's valued in a worthless currency, unless King John is due a comeback. But the only alternative is a catastrophic recession. Short term, it seems likely we'll get more of the same, new housing props to keep the system going while the public sector crashes and private sector gets squeezed. Govt may have to accept falling prices rather than crash sterling, I hope, but the impact on economic activity/stability will be negative, barring a miracle. Longer term, we're in for a shock/system reset at some point. Meanwhile, last week Hammond said we're tantalisingly close to a high wage, high growth economy. He may not be around when there's some explaining to do.
  11. Lots of interesting arguments here why it's difficult to increase/maintain property prices. But the underlying assumption is that adjustments to policy will produce reasonably predictable outcomes, as has happened for most of the past in a post industrial economy, and that a transition can be made to a stable economy with lower property prices. This would be a happy outcome, but the level of debt, feebleness of the economy and level of corruption suggests to me that this is an unstable situation which cannot be sustained or corrected. Too much of the UK economy has been driven by house prices. Any attempt to address the fundamental problems this has caused, by increasing interest rates, reducing public sector debt/deficit or slowing down private sector debt will quickly trash the banks and the economy further. It's going to crash anyway, but any government will prefer to keep things going as they are for as long as possible instead. It could take a while, during which government will continue to hope for a recovery, while simultaneously undermining any possibility of recovery. Inflation, changes in political awareness, salary increases, credibility of policy, value of sterling, brexit, Lab or Con....all the usual considerations and tweaking won't stop it. Meanwhile we'll see more of the same props, printing and propaganda. HPI has taken us beyond the event horizon. We can build something more sensible on the other side, but the bit in between is going to be rough. Or then perhaps I'm prone to catastrophising!
  12. My workings are ((1.05^30-1)/0.05)*400*12*1.025= £329 k ish. Not sure how you get 612k. This assumes you've been paying £400 flat for 30 years into a final salary scheme, but member contributions are a % of salary and presumably £400 relates to current salary. It seems likely the compounded amount of actual £ contributions at 5% would be much, much lower, unless you've been paying AVCs at a hefty amount throughout (although you say it's bog standard, and virtually no-one does this). If you were able to take a transfer value of your accrued pension, it would almost certainly be much bigger than 600k with 15 year gilts yielding less than 1.5%. Compare that with the majority of the working population in money purchase schemes putting money into asset bubbles each month, who cannot hope to get anything like 600k. Also those on zero hours contracts and the self employed. You've got an asset the value of a current London property at a 1980s price.
  13. Nothing is completely unbiased, and TV/radio are infuriating, but I get the feeling that ZH are purely malicious and would welcome the destruction of western civilisation. Posting similar content, HPCers generally want fairness and somewhere decent to live, and this view even sometimes gets represented in the press or online. Unfortunately ZH is more likely to have its wishes come true.
  14. ZH takes a relentlessly anti-capitalist/western stance while flogging stuff (in this case useless investment tips) using capitalist methods. There may be the occasional article which illustrates something worthwhile, but mainstream media is better reading for me because it can take different viewpoints. RT is similarly unenlightening. Wanting to know when there'll be a crash & what the trigger will be doesn't often help understand what's happening because the focus is too narrow.
  15. The property managers seem to gave ignored common sense, rules, fires in similar properties they manage elsewhere and residents concerns: https://grenfellactiongroup.wordpress.com/2016/11/20/kctmo-playing-with-fire/ It's not just about an engineer missing a fault on his tenth job of the day. It's symptomatic of corruption in the UK property industry removing any meaningful responsibility from those in control. If the bankers can get money for nothing, why shouldn't we?
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