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Bear Goggles

Pensions Problem

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So. It seems company's pension deficits are still getting bigger. Why didn't they take advantage of the stock market crash in 2000?

Pension fund deficits grow again

Check this out:

Just as people have to pay more to trade up their house after a property boom, despite the value of their current home increasing, employers have to contribute larger cash sums to reduce their pension scheme deficits when all markets rise

I guess the moral of this story is that if you want to save for a pension you have to... err... save. It also seems that you can't trust your employer to do it for you.

Alternatively, you could buy a few BTL new build properties and rent them out, then you can get a pension for free. Property always goes up, don't you know?

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sorry BG, how do you mean?

The Mercer statement BG quotes is cobblers if applied to defined benefit schemes (unless there has been a significant increase in salaries but even then the requirement is a function of the salary increase rather than market performance).

I think BG is saying that funds with market-linked liabilities should have taken the opportunity to extinguish the deficit when the markets were at their lowest.

The basic problem is we have a situation where any company that can weasel out of paying their pension obligations gains a competitive advantage. This commercial logic has played out most brutally so far in the US, first with airlines and now in the automotive sector.

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Yes. Firms saw fit to take 'payment holidays' when the stock market was flying high. However they seem to have forgotten to make up for it when the stock market was lower.

No wonder people have lost faith in pensions. But then why would you expect a company primarily concerned with its end of year profits to be concerned with your retirement?

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