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http://www.telegraph.co.uk/finance/newsbys...s-on-funds.html

For Adam Crozier, things could be about to get a lot worse. The chief executive of Royal Mail saw 10,000 of his workers strike last week, but Britain's top postie knows that could be just the beginning.

While postal workers are up in arms about job cuts and working conditions, their anger could soon pale into insignificance under the cloud of a far greater threat. At stake for many of them is their future financial security. The postal giant is considering whether to close the company's retirement scheme to existing members, forcing them to join a new pension pot with less lucrative benefits.

Pension industry insiders believe such a move could spark widespread strikes at Royal Mail. More worrying for British industry, trouble will not be reserved to the postal service. Over the next few months companies are expected to highlight the scale of Britain's pension crisis by revealing deficits on an unprecedented scale. Strikes and corporate failures could follow.

Company executives will be in the firing line, but many will choose to point the finger elsewhere. For Jane Newell, the chairman of Royal Mail's pension trustees, and the 100,000 or so other trustees around the country, life could get very tough. Traditionally the silent power brokers of corporate Britain, pension trustees are about to find themselves dragged kicking and screaming into the limelight.

"Over the next few months we are going to see some horrific news on pension funds," says Ros Altmann, a former pensions adviser to the Government. "Around half the pension funds out there have a three-year valuation cycle that ended in March 2009. Trustees will face some awful deficit challenges as the new valuations come to light."

The crisis is moving experts to call for change, arguing that the trustee system is no longer suited to the post-credit crunch world. "We need a radical overhaul of the pension system," says Ms Altmann. "There are no easy answers, but times have changed and so has the job of trustees. The complexity of investment means you have to question whether they are equipped for the task."

The job of the trustee is to protect the future livelihood of a company's current and future pensioners by investing a pension scheme's assets for sustainable growth and negotiating with the company over contributions to make up for any short-fall. Trustees should be the independent protectors of Britain's pension assets but in the wake of the collapse of the financial system experts are questioning whether they are up to the job.

"The challenge has become a lot harder, particularly on the investment side, because there are so many tools to manage risk," says Glyn Jones, managing director at P-Solve, the pensions consultant. "Twenty years ago it was a choice of equities or gilts. Now it's about how you use interest-rate swaps or other derivatives to manage risk. That is a different level of sophistication."

In a world where some companies boast multi-billion pound profits and tens of thousands of employees, and others operate at a loss with a staff of just half a dozen, sophistication and financial expertise among trustees varies enormously.

Pension trustees are a mix of the professional and the amateur, many of whom work part-time and are from non-financial backgrounds. Training is encouraged but not mandatory and there is no formal review process of a trustee or board's performance.

Many experts believe that while non-professional trustees have a part to play, they should avoid involvement in the more sophisticated investment roles.

In March this year a survey from Punter Southall, an actuarial consultancy, suggested nearly 50pc of pension trustees were unsure of how the recession was impacting their scheme's funding position.

The consultancy, which generates fees by advising trustees, said: "Significant gaps remain in trustee knowledge and understanding, suggesting that many schemes do not have effective governance structures in place." That might be the ideal, but for many small schemes it remains prohibitively expensive to employ external advice or independent trustees. However, the risk is that the ultimate cost of inexperienced trustees making poor investment decisions could be far higher.

The Pensions Regulator launched a three-month review of the trustee system in October last year and is next week set to release its final recommendations. While there will be some tweaks around the edges, the regulator is likely to give the system a clean bill of health.

Many in the industry take a different view, and point out that the respondents to the regulator's review constitute many of the current system's chief beneficiaries. "Actuaries, consultants and lawyers earn millions of pounds each year advising Britain's pension funds – why would they want to change that?" points out one expert.

While some are calling for more formalised training and performance reviews or better use of external advisers, there are more radical suggestions on the table. Ms Altmann believes pensions schemes should be encouraged to work together, while John Ralfe, an independent pensions consultant, is calling for the UK to adopt a more US-style system where the law stipulates a level of minimum scheme contributions and companies take a wider role in asset allocation. Mr Ralfe believes the sponsoring company should recommend asset allocation to trustees, since it is responsible for funding pension plans. "If the company recommends a high risk equity weighting trustees should expect a cushion to absorb the risk" he says.

Ms Altmann is wary of such a system, arguing that companies could look to take advantage of their trustees, but she agrees change is needed. "Unquestionably we need greater investment expertise, but that is expensive," she says. "One way around that is to find a way to join schemes together and allow the larger ones to take responsibility, at least on the investment side, for the smaller ones. At the moment every fund is trying to find a liability-led investment strategy and paying its own advisers to do that. It's uneconomical."

Many experts argue that the regulator should also be taking a more activist role. By failing to act, they say, the Pension Protection Fund (PPF) – the government pension lifeboat scheme for companies that collapse – and healthy pension schemes will be left carrying the can. "The longer we leave this situation, the worse it will be," says Ms Altmann. "The number of companies failing over the next few months will accelerate. If the regulator believes they are going to fail anyway, it may decide the PPF is better protected if the company fails sooner rather than later."

Trustee boards will have a vested interest in allowing a parent company leeway because the longer they wait, the better it could be for their members. Ms Altmann argues that is the wrong approach for the wider market. "The regulator needs to take the view of what is best for the PPF and other pension schemes," she says. "The regulator might not be relishing this, but what choice does it have? Some schemes are simply not going to make it."

Whether the regulator is prepared to take those tough decisions seems unlikely, but one thing is certain – desperate times call for desperate measures, and trustees will be growing increasingly desperate in the coming months.

The pension system has been a very nice gravy train for all of those involved except for those paying into it.

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"The challenge has become a lot harder, particularly on the investment side, because there are so many tools to manage risk," says Glyn Jones, managing director at P-Solve, the pensions consultant. "Twenty years ago it was a choice of equities or gilts. Now it's about how you use interest-rate swaps or other derivatives to manage risk. That is a different level of sophistication."

I can only imagine how much money they would lose if they started using these strategies. I've argued for a long time the only thing pension funds should invest in is Gilts and senior bonds of companies with capital.

But even that only goes so far, if they promise extraordinarily generous benefits, it takes extraordinary returns to deliver on those promises.

Edited by aa3

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The simple fact is that most people don't contribute anywhere near enough to their pension. Paying in a couple of hundred quid a month for 30 or 40 years does not buy a comfortable retirement. Until people are forced to save properly then we will continue to see stories like this.

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The simple fact is that most people don't contribute anywhere near enough to their pension. Paying in a couple of hundred quid a month for 30 or 40 years does not buy a comfortable retirement. Until people are forced to save properly then we will continue to see stories like this.

What's money and forced saving got to do with it? It's all about resources and having enough people working to support those who aren't.

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What's money and forced saving got to do with it? It's all about resources and having enough people working to support those who aren't.

And under the current system you are quite correct. It needs to change though.

averge FSTE 100 divi over the last twenty years circa 3.5%,average management fees 1.5%,inflation over the last 20 years 2%+.

captial growth on Nikkei(cos 20 years Japan style deflation is where we're headed) = -75%

yeah,course they're gonna pay you 2/3 final salary!!! :ph34r:

Because employers used to pay that bit extra in to the pot. And for the lucky millions (mainly in the public sector) this will continue to be the case.

In reality pensions these days are tax exempt (or were) savings schemes. The more you save the more you get back in pension. Except means testing means that those who bothered to save then get screwed by those who didnt.

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What the bankers have done is bubble housing on purpose, so they can take control of a lot of assets through the magic of people defaulting on debts that aren't there. Why, do you think, have the bankers done this?

Well, to put it simply, the bankers are short on time. Two things are against them - the first being the rise of home computing/printing and the second being the massive debts they have run up via their proxy companies "the united states, the united kingdom" etc. They've promised pensions and universal healthcare and a playboy model for every 16 year old boy and a whole boatload of other stuff to keep the general citizenry passive which they haven't got a hope in hell of actually providing.

A nice economic crisis will solve that problem for them. No pension for you, grandad - "credit crunched", no medical care for you young 'un - "credit crunched" and no pay rises and lots more taxes and regulations for all the little folks who just go to work every day and are no harm to anyone. Or so the plan goes.......all hung on a simple slogan "credit crunch."

http://injinsalternativeuniverse.blogspot....fit-taking.html

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What the bankers have done is bubble housing on purpose, so they can take control of a lot of assets through the magic of people defaulting on debts that aren't there. Why, do you think, have the bankers done this?

Well, to put it simply, the bankers are short on time. Two things are against them - the first being the rise of home computing/printing and the second being the massive debts they have run up via their proxy companies "the united states, the united kingdom" etc. They've promised pensions and universal healthcare and a playboy model for every 16 year old boy and a whole boatload of other stuff to keep the general citizenry passive which they haven't got a hope in hell of actually providing.

A nice economic crisis will solve that problem for them. No pension for you, grandad - "credit crunched", no medical care for you young 'un - "credit crunched" and no pay rises and lots more taxes and regulations for all the little folks who just go to work every day and are no harm to anyone. Or so the plan goes.......all hung on a simple slogan "credit crunch."

http://injinsalternativeuniverse.blogspot....fit-taking.html

You have to admire them though - they have got away with it.

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this is round 2... of the great credit crunch...

pension funds... run out of funds...

any Pension Funds with 31st March year ends, Beware...

was a very bad time for a valuation and will have devastating effects for the company who provide the employers covenant, especially if they are not "profitable" as trustees will get very nervous.

VERY VERY BAD... some major reactions to be heard... IMO

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What the bankers have done is bubble housing on purpose, so they can take control of a lot of assets through the magic of people defaulting on debts that aren't there.

...

They've promised pensions and universal healthcare and a playboy model for every 16 year old boy and a whole boatload of other stuff to keep the general citizenry passive which they haven't got a hope in hell of actually providing.

I think sometimes you give the powers that be too much credit. Maybe there are a few clever people sat in darkened, smoke-filled rooms who do actually try and shape where things are headed, but I think most of the time bankers and politicians just flounder around like most other people, copying the latest trends and being surprised when the tulip bulbs turn out to be worthless.

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I think sometimes you give the powers that be too much credit. Maybe there are a few clever people sat in darkened, smoke-filled rooms who do actually try and shape where things are headed, but I think most of the time bankers and politicians just flounder around like most other people, copying the latest trends and being surprised when the tulip bulbs turn out to be worthless.

Like battery thinkers, count their thoughts on 1, 2, 3, 4, 5 fingers.

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I think sometimes you give the powers that be too much credit. Maybe there are a few clever people sat in darkened, smoke-filled rooms who do actually try and shape where things are headed, but I think most of the time bankers and politicians just flounder around like most other people, copying the latest trends and being surprised when the tulip bulbs turn out to be worthless.

That the government is incometent is one of the more enduring myths surrounding it.

In fact the state is brilliant at what it does - it just doesn't do what the PR says it's doing. When it comes to subjugation, theft, deceit, bullying, murder, genocide it's number 1 - best in class.

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I think sometimes you give the powers that be too much credit. Maybe there are a few clever people sat in darkened, smoke-filled rooms who do actually try and shape where things are headed, but I think most of the time bankers and politicians just flounder around like most other people, copying the latest trends and being surprised when the tulip bulbs turn out to be worthless.

I know a couple of senior bankers and your description suits them pretty well.

I really don't rthink that there is a master race of lizard people that wish to own all the property in the country. On the other hand, you could convince me that Labour want to own my thought processes and eat my brain.

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What's money and forced saving got to do with it? It's all about resources and having enough people working to support those who aren't.

Exactly, its all smoke and mirrors. If people double the amount they save for retirement do you think it will double the amount of physical resources available?

All that will happen is that the current distribution of those resources will change. I.e. those who are before retirement age will have to make do with substantially less, while those in retirement will have substantially more - less the increased cut of the financial services industry of course.

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I found myself a Trustee of a final salary scheme 5 years ago (not of my own company) that we needed to wind up two years ago. This coincided with a really bad valuation (or so we thought). As Trustees we fought the good fight and got it all funded up by the employer. Result: all employees got their annuities purchased and retired as happy people with the FS benefits intact.

I thought that was traumatic enough, but thank God it ended then; if this as still alive now (funds on tracker too) it would be meltdown and very uncomfortable.

Trustees can be totally unqualified for the job; I certainly was.

Another of the moments of extraordinarily good luck that have punctuated my life. :lol:

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That the government is incometent is one of the more enduring myths surrounding it.

In fact the state is brilliant at what it does - it just doesn't do what the PR says it's doing. When it comes to subjugation, theft, deceit, bullying, murder, genocide it's number 1 - best in class.

Agreed

And most incredible of all, it gets away with all of the above in varying degrees but the vast majority of dumb, bovine proles still believe they are free.

The UK is the most ingenious totalitarian state ever devised because it has sucessfully managed to get the vast majority of its citizenry to believe in myths that have no truthful foundation whatsoever without having to resort to open violence against the people. They can get away with the occassional 'kettling', the occassional beating to death, the occassional death via taser but mass violence against the people isn't necessary.............YET

So the myths live on.............

Like:

House prices only ever go up (possibly so, but the real value of property remains more or less constant and price denominated in an infinitely inflating fiat currency is meaningless.)

Paying into a pension scheme will pay dividends.

Public sector pensions are indestructible

Politicians are intrinsically honest people doing their best to serve the people (Yeah! Right!)

Our solidiers are dying in Afghanistan and Iraq to preserve our liberty and freedom and to fight the war on terror (Yeah! Right!

Etc etc etc......You get the drift huh folks?

It's all Bull$hit of course but the important thing to remember is that should the state ever feel threatened in the same manner as Ahmadinajhad and the Iranian state, it will respond with whatever means necessary to protect itself. Anyone who thinks otherwise is incredibly naive.

I'm sure Dr David Kelly, Robin Cook, John Smith, Diana and various other intransigents would agree wholeheartedly.........if they were still alive to voice an opinion.

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tell BA/BT staff....etc lots of pension funds are deep underwater,held afloat by the fact that it isn't yet October 2009.

as for public sector pensions,they won't be honoured in ten years time.

Have to agree on the means testing.Best solution under zanu labour is not to work and if you can get on incapacity benefit

What's the significance of October?

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What the bankers have done is bubble housing on purpose, so they can take control of a lot of assets through the magic of people defaulting on debts that aren't there. Why, do you think, have the bankers done this?

Well, to put it simply, the bankers are short on time. Two things are against them - the first being the rise of home computing/printing and the second being the massive debts they have run up via their proxy companies "the united states, the united kingdom" etc. They've promised pensions and universal healthcare and a playboy model for every 16 year old boy and a whole boatload of other stuff to keep the general citizenry passive which they haven't got a hope in hell of actually providing.

A nice economic crisis will solve that problem for them. No pension for you, grandad - "credit crunched", no medical care for you young 'un - "credit crunched" and no pay rises and lots more taxes and regulations for all the little folks who just go to work every day and are no harm to anyone. Or so the plan goes.......all hung on a simple slogan "credit crunch."

http://injinsalternativeuniverse.blogspot....fit-taking.html

Great post. To me its a sophisticated version of a very old scam. You give me a bunch of money now, and in like a few decades I will give you a huge amount of money. Of course when a few decades comes, the money is gone. But the people running the scam lived very well during the interim.

I see pension funds, insurance companies, the entire state doing the same game. They promise all these lavish returns if you give them money/power now. And they have actuaries with complex mathematical models and lots of schooling to prove it.

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Great post. To me its a sophisticated version of a very old scam. You give me a bunch of money now, and in like a few decades I will give you a huge amount of money. Of course when a few decades comes, the money is gone. But the people running the scam lived very well during the interim.

I see pension funds, insurance companies, the entire state doing the same game. They promise all these lavish returns if you give them money/power now. And they have actuaries with complex mathematical models and lots of schooling to prove it.

Just ask anyone out there, "By what mechanisms does the UK generate the wealth which will pay for all this stuff?"

They'll just look at you blankly like you're from another planet OR they just point blank deny there is a problem. The government will take care of things etc etc.

Pretty horrifying level of apathy, ignorance etc

Most shocking are the beliefs that politicians are there to represent the people

And.......

That the financial whizzkiddery we have seen in the City of London for the last 30 years benefits society via 'trickle down'

Yeah, That'll be the diarhoea running down your leg sir/madam.

In reality, most of these hedge fund managers, city traders and the like, create no real wealth whatsoever. They are bloodsuckers, leeches and parasites. Their wealth, weekend trips to expensive hotels and and as much cocaine and hookers as they can afford, is coming right out of your future pension, your savings, your asset wealth. They are there to asset strip the middle class and phuck all else frankly. Real wealth creation???? You gotta be $hitting me.......all over me in fact ;)

Edited by ddagmar64

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The simple fact is that most people don't contribute anywhere near enough to their pension. Paying in a couple of hundred quid a month for 30 or 40 years does not buy a comfortable retirement. Until people are forced to save properly then we will continue to see stories like this.

Thats why some chose to put their money into property, however precarious, it is longterm and at least you can see it, live in it, let it or sell it (at the right time.)

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What the bankers have done is bubble housing on purpose, so they can take control of a lot of assets through the magic of people defaulting on debts that aren't there. Why, do you think, have the bankers done this?

Well, to put it simply, the bankers are short on time. Two things are against them - the first being the rise of home computing/printing and the second being the massive debts they have run up via their proxy companies "the united states, the united kingdom" etc. They've promised pensions and universal healthcare and a playboy model for every 16 year old boy and a whole boatload of other stuff to keep the general citizenry passive which they haven't got a hope in hell of actually providing.

A nice economic crisis will solve that problem for them. No pension for you, grandad - "credit crunched", no medical care for you young 'un - "credit crunched" and no pay rises and lots more taxes and regulations for all the little folks who just go to work every day and are no harm to anyone. Or so the plan goes.......all hung on a simple slogan "credit crunch."

http://injinsalternativeuniverse.blogspot....fit-taking.html

Injin this by far your best & most accurate post ever. 100% bloody right

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The robbery of pension funds becoming public knowledge was predicted by that LEAP economics thingy. It was supposed to happen around May, so it's happening a few months later than they predicted.

Next thing that's supposed to happen according to them is the US and UK defaulting on their debt.

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The robbery of pension funds becoming public knowledge was predicted by that LEAP economics thingy. It was supposed to happen around May, so it's happening a few months later than they predicted.

Next thing that's supposed to happen according to them is the US and UK defaulting on their debt.

They have .. what else is printing money ? they have already started repaying debt with printed money .. why admit default when you can print ? thats the closest you will see the 'civilized west' defaulting ..

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I can only imagine how much money they would lose if they started using these strategies. I've argued for a long time the only thing pension funds should invest in is Gilts and senior bonds of companies with capital.

But even that only goes so far, if they promise extraordinarily generous benefits, it takes extraordinary returns to deliver on those promises.

I'm not sure about this. There is a guy (the one from Boots, can't remember his name) who goes around saying this, he normally gets a thread here each time. Which is fine but he was saying it quite a while ago and while some of the funds he was saying it to do have problems, they aren't anything like as bad as if they'd taken his advice seven or eight years ago (they'd have missed out on entering and then leaving the commercial property markets for example). Of course if they'd listened a year ago they'd be in better shape but surely all that is a fancy way of arriving at the conclusion that there are cycles in markets.

Its a sort of perma-bear argument isn't it (or am I wrong?).

Edited by Cogs

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