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American Express Suspends Payments Into Uk Stakeholder Pensions

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http://www.telegraph.co.uk/finance/newsbys...r-pensions.html

The financial services company, which has completed a consultation with employee representatives, said on Wednesday it will suspend contributions for up to 18 months from July 1 to maintain profitability during the economic downturn and will lift the suspension no later than January 1, 2011.

Amex is keeping employees informed about whether it will lift the suspension before 2011 should economic and business circumstances change. However it is unlikely to backdate payments once they are resumed.

Stakeholder pensions are low-cost pensions, either occupational or personal, that you can pay into whether you are in work or not. If you work for a company with more than five employees, your employer is obliged to offer you a stakeholder pension, unless an alternative scheme is available.

A spokesman for Amex confirmed it was reducing its contribution to the pension scheme and said the company was looking at "a range of other cost cutting measures". The story was first reported by Money Marketing newspaper on its website.

He added that most of Amex's employees were in the stakeholder scheme, with a small number in a separate final salary scheme that was closed to new entrants in 2006. The company has about 6,000 employees in the UK.

Amex is understood to have made a core contribution of 3pc to employee stakeholder pensions and would match contributions to a maximum of 6pc.

Clive Fortes, head of corporate consulting at Hymans Robertson, said suspending company contributions would effectively be a pay cut for Amex staff and warned the suspension could be repeated by other companies.

"Fundamentally this is part of the employees remuneration package and is no different than lowering a salary," he said.

"We have seen quite a few examples of companies cutting and freezing pay and this is another example - the type of cut that is easier to digest in the short term but will have long term effects. I wouldn't be surprised to see this happen again."

Duncan Howorth, President, the Society of Pension Consultants (SPC), added: “The suspension or variation of pension contributions has been an American practice but it is worrying to see it in the UK. It would certainly be a significant concern if this became commonplace in the UK pensions market.

"Employees and scheme members are already worried from loss of defined benefit pensions and lower contributions to defined contribution schemes. To start to worry about whether employee contributions will be maintained would only worsen what is already a painful cluster-headache.â€

Another pension story.

How long is this ponzi scam going to last for?

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a defined contribution scheme is not a ponzi scam.

You have money that is paid in and goes to your account for your benefit.

errm, not quite. About half seems to go to the benefit of the fund managers.....

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a defined contribution scheme is not a ponzi scam.

You have money that is paid in and goes to your account for your benefit.

But what ponzi scheme do they 'invest' the money in?

Edited by Minos

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But what ponzi scheme do they 'invest' the money in?

no ponzi scheme at all.

A high yielding fund run by one of the most renowned names on wall street.

:lol:

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errm, not quite. About half seems to go to the benefit of the fund managers.....

I think half is a bit harsh.

Unless of course you are talking over the lifetime of the fund, and said fund doesn't perform, in which case you are right.

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I think half is a bit harsh.

Unless of course you are talking over the lifetime of the fund, and said fund doesn't perform, in which case you are right.

The amount taken by the fund manager adds up to on average 40-45% of the value of the fund over a working persons life. Those few percent add up to a lot over 25 years.....

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The amount taken by the fund manager adds up to on average 40-45% of the value of the fund over a working persons life. Those few percent add up to a lot over 25 years.....

Deserves serious thought from anyone condsidering a pension.. However badly the fund does, the managers take their cut. Year after year after year....

And most funds are so badly 'managed' - that a computer-managed tracker would do better, at a lot less cost...

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Deserves serious thought from anyone condsidering a pension.. However badly the fund does, the managers take their cut. Year after year after year....

And most funds are so badly 'managed' - that a computer-managed tracker would do better, at a lot less cost...

The thing is since the market is made up of managed funds, it has to mean 50% of funds have to do worse than the average and 50% better than the average. Generally this means its a nobrainer to choose a tracker than a managed fund, since there is no consistent way to pick a better than average fund (if there was we'd all be doing it). The tracker fund will be the average with a 0.3% fee instead of a managed fund which will also statistically be the average but with a 1.5%+ fee.

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The thing is since the market is made up of managed funds, it has to mean 50% of funds have to do worse than the average and 50% better than the average. Generally this means its a nobrainer to choose a tracker than a managed fund, since there is no consistent way to pick a better than average fund (if there was we'd all be doing it). The tracker fund will be the average with a 0.3% fee instead of a managed fund which will also statistically be the average but with a 1.5%+ fee.

Exactly.

Only 50% of the fund managers can beat the index because the index essentially comprises the aggregate activity of all the fund managers (who carry out the vast majority of share trades).

So track the index to get the benefit of the fund managers' decisions without paying their fee.

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Exactly.

Only 50% of the fund managers can beat the index because the index essentially comprises the aggregate activity of all the fund managers (who carry out the vast majority of share trades).

So track the index to get the benefit of the fund managers' decisions without paying their fee.

not so. for a tracker to return as per the index, because of the fees, it has to do better than the index.

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The thing is since the market is made up of managed funds, it has to mean 50% of funds have to do worse than the average and 50% better than the average. Generally this means its a nobrainer to choose a tracker than a managed fund, since there is no consistent way to pick a better than average fund (if there was we'd all be doing it). The tracker fund will be the average with a 0.3% fee instead of a managed fund which will also statistically be the average but with a 1.5%+ fee.

I think you are thinking of the median rather than the average. It is possible for 60% of funds to perform better than the average, but 60% could underperform (normally the ones I invested in).

The real argument for a tracker is that not enough fund managers outperform the index, which is why passive fund management is so popular these days.

I would agree that if you want to invest in the Stock Market, a tracker is probably the best place to start.

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Exactly.

Only 50% of the fund managers can beat the index because the index essentially comprises the aggregate activity of all the fund managers (who carry out the vast majority of share trades).

So track the index to get the benefit of the fund managers' decisions without paying their fee.

unless of course there are an odd number of fund managers.

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Any effect on Brighton house prices?

of course not.

In fact it will be a positive effect as all the employees who will have a reduced pension will invest their own money in a real pension, and only with houses are you guaranteed not to lose money and provide a guaranteed income that is guaranteed*

*not an actual guarantee

Edited by bobthe~

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