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Telegraph: This Pensions Bill Could Bankrupt Britain.

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'This pensions bill could bankrupt Britain':

http://www.telegraph.co.uk/opinion/main.jh...1/22/dl2201.xml

Standard & Poor, the organisation whose judgment on the credit worthiness of countries determines how easy or difficult it is for them to borrow money, has said that Britain's colossal public sector pensions liability may soon lead to a downgrading of the country's credit rating to "sub-investment grade".

That would make investing in Britain the equivalent of investing in a junk bond. Much higher interest rates would inevitably follow -- which would wreak havoc on the finances of anyone with a mortgage, and would almost certainly lead to a general economic slump in this country.

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Guest muttley
The public sector pension deficit is now more than £700 billion. That works out at a staggering £30,000 per household.
:o

Is the rest of Europe really worse than this?

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:o

Is the rest of Europe really worse than this?

I don't know if the rest of Europe is this bad but...in France we have a long held view that our national debt is 1 trillion euros, however, the finance minister Thiery Breton recently stated that this figure did not include pension liabilities for public sector workers; if this is included the debt would climb to somewhere between 2 and 3 trillion euros. At least there is the beginning of a discussion about the impending train wreck although among the general public there is no such realization or will to confront this.

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:o

Is the rest of Europe really worse than this?

Its way bad, at least we stuff away some money into private pensions in the uk....way more relatively than the europeans...

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Guest muttley

Thiery Breton recently stated that this figure did not include pension liabilities for public sector workers; if this is included the debt would climb to somewhere between 2 and 3 trillion euros.

That's a big window,but yes,it,s worse!!

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The pensions crisis underscores the reason why Gordon Brown's economic miracle is smoke and mirrors. Rather than producing wealth in terms of infrastructure, savings, government surpluses, restrained public spending we have a bankrupt nation. Brown's policy of ramping up house prices with cheap credit to demonstrate a miraculous economy is collapsing as the foundation built on debt says its payback time. The only miracle is that Gordon has got away with it for so long.

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Guest muttley

Its way bad, at least we stuff away some money into private pensions in the uk....way more relatively than the europeans...

And then along comes Robber Baron Brown........

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And then along comes Robber Baron Brown........

I do know that among the younger French, they realize that the system can not continue as it is and that they can not count on the government to provide what they currently promise.

An example: In ten years the pension supposedly guaranteed by the Dentists Union here has decreased by 30 per cent and the wave of baby boombers is just beginning to retire. This problem, as I see it, is just beginning to reveal itself.

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Its way bad, at least we stuff away some money into private pensions in the uk....way more relatively than the europeans...

Our private pension system along with the Dutch genuinely used to be the envy of Europe and there was the impression we got the balance right, you get a set amount from the government and then people had to rely on private provision for anything on top, for which tax incentives were given.

Of course things are rather different now, there are natural demographic changes with the population ageing and living longer, the boomers starting to retire, there are also made man problems that were entirely created by government, Brown decided to raid pension funds to the tune of £5b per year (not compounded!), he also gives you a distinct disincentive to save thanks to means testing, the more you do for yourself means the less you will get out, those who don't bother will be bailed out anyway, those who do will be punished.

Then the stockmarket crashed and there was misselling combined with the general enron style sleaze that comes with any down market.

Now we have the FSA and the PPF meddling, like forcing pension funds to dump their equity holdings at market lows in 2003 and forcing them to buy 'safe' government bonds (see Brown again), which means funds will yield a whopping 0.3% percent return above (official) inflation for a 50 year gilt, which means annuities have to be in the hundreds of thousands range just to provide a very modest pension.

Now the Pension Protection Fund is levying premiums on pension funds to pay for the failed schemes and the mess they've made of it all. Good companies are punished and are forced to bail out failed funds and duff companies, it's usually cheaper for them to dump their final salary schemes altogether than go along with this system. Premiums have risen nearly eight fold this year alone and will keep going on the same trajectory.

Now that there is pay parity between the private and public sectors (if not a little more towards the latter) it is felt that all the sacrifices are being made on one side, with private workers having to work into their 70's to obtain a state pension that doesn't even keep pace with the rigged inflation figures and with only a defined contribution scheme of indeterminate value. Whilst their cousins in the public sector will get a plush final salary 'superannuated' scheme at 60... or 55 if they go to the right GP, all backed by the government of course and without having to pay contributions out of their wages at market rates.

Then you have faith, people have lost faith in a system that they feel benefits commissioned salesmen, investment houses and the government more than it benefits them. This is partly the germ that drove the BTL madness, another problem with the pension system is the fact people aren't saving enough, many younger workers are so skint and in so much debt they think of a pension as a far off extravagance that will only be raided by politicians and bankers over many decades, anyway means testing gives them little incentive.

If there is a pot of money set aside then government will find it far too tempting, Brown has already proved this by 'doing a Maxwell' on a grand scale.

Edited by BuyingBear

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THIS IS SERRIOUSLY BAD NEWS...

and it makes me think you would have to be a blind fool to own Property in the UK

PROPERTY OWNERS ARE SITTING DUCKS...

sitduck2.jpg

They are likely to be targetted in a round of future tax increases.

Why?

Because this government is spending too much, and must find the money somewhere...

PROPERTY owned in this country "for the long term", cannot be moved.

Property is trapped here, and the tax burden will seek to attach itself to what it can find

I have noticed the same thing here in France. Those with property are subjected to increased property taxes way beyond official inflation figures. Headline tax rates on salaries are supposed to diminish under Chirac, but the burden to the local taxpayer never ceases to increase. It certainly is less interesting for the press to announce that property taxes have increased x percent in some french department than to cite increased taxes on salaries nationwide. This stealthtax strategy by governments is killing the average citizen but is so diffused that no general movement can coalesce around one theme.

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Precisely.

Why bury your life savings in an immoveable asset like property which will increasingly become the target of the taxman's shovel. Much better to hold liquid assets like equities and gold that you can move at the touch of a button.

Meanwhile enjoy the liberation of renting property at far less than the cost of owning this boring and unproductive asset.

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The whole thing is enough to make you cry....

The question is.. how much longer can he get away with it? sometimes I think this madness could carry on for years and years

The problem about pensions is that most people don't care less about saving as long as their house keeps going up they will be fine.

I think that eventually the markets will snap and force up interest rates but its like watching and waiting for a volcano to errupt. :(

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Guest Cletus VanDamme

Pensions, they worry me. Can't expect there will be a state pension when I retire, so I am putting as much as I can into a private pension. But this still makes me worry. Brown is raiding it, the pensions companies take their cut, everyone takes a cut and in the end, will it be worth anything when I retire?

The government should allow people to put their pensions allowance, pre-tax, into a cash ISA. OK so you might only get 4-5%, but at least it will be safe, and there's no commission to pay, and can't be raided by anyone except the person who owns it.

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Pensions, they worry me. Can't expect there will be a state pension when I retire, so I am putting as much as I can into a private pension. But this still makes me worry. Brown is raiding it, the pensions companies take their cut, everyone takes a cut and in the end, will it be worth anything when I retire?

Brown is the Jester in the Court of Chancery, which wild jest will he pull of next? Can he out do his previous feats? The costs dear boy, the fees, the expenses, the unexpected.

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I don't have a lot of sympathy with companies whining about pensions when so many took pensions holidays when the stock market was doing well. You put money aside during the good times to help out with the bad. Nor sympathy for companies who raided the company scheme or bankrupted it when the parent company went bust.

People (Peter Drucker) have been writing about the looming pension problem for 15+ years, so I don't have any sympathy with the Government (nor Thatcher who broke the link with earnings in 1979 or '80). The DWP website may say there is no crisis today, but since every financial advisor will tell you to start saving as early as possible this is total rubbish. And why should I pay taxes for today's OAPs and save for my own pension? i.e. PAY TWICE!

(Answer: because young people don't vote and kick this government in the balls)

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THIS IS SERRIOUSLY BAD NEWS...

and it makes me think you would have to be a blind fool to own Property in the UK

PROPERTY OWNERS ARE SITTING DUCKS...

sitduck2.jpg

They are likely to be targetted in a round of future tax increases.

Why?

Because this government is spending too much, and must find the money somewhere...

PROPERTY owned in this country "for the long term", cannot be moved.

Property is trapped here, and the tax burden will seek to attach itself to what it can find

As usual, posted to spook property investors. But you ignore the fact that higher council tax, SDLT & higher SD have already taxed property owners & transactions more than in the past. I know you would like to imply that property wealth will be attacked, but this would go against the grain of the property owning society & is therefore unworkable. Sweden has a wealth tax, that takes into account private property, but ignores property owned for business purposes (ie BTL).

I know you love to attack BTL, but this is probably the only safe investment with deferred taxes protecting it's compound returns. Stock market wealth (as in pension funds for example) can be easily liquidated and therefore easily taxed.

Pensions, they worry me. Can't expect there will be a state pension when I retire, so I am putting as much as I can into a private pension. But this still makes me worry. Brown is raiding it, the pensions companies take their cut, everyone takes a cut and in the end, will it be worth anything when I retire?

The government should allow people to put their pensions allowance, pre-tax, into a cash ISA. OK so you might only get 4-5%, but at least it will be safe, and there's no commission to pay, and can't be raided by anyone except the person who owns it.

Yes everyone takes a cut, a very apt explaination of why property is so highly regarded, because they only have a chance to take a cut in the beginning and at the end. And the end can be avoided by several methods.

Edited by Time to raise the rents.

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I know you would like to imply that property wealth will be attacked, but this would go against the grain of the property owning society & is therefore unworkable.

Indeed, nobody is ever a hypocrite when it comes to ideology, that's why you're now refusing to pay over the odds for property and why Brown has continiously increased stamp duty from 1% up to a maximum of 4% whilst also fiddling with the bands to capture ever more properties at higher rates.

Meanwhile stamp duty on share transactions has remained firmly at 0.5% and is already half way out of the door, soon to be a feature of the history books!

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I know you would like to imply that property wealth will be attacked, but this would go against the grain of the property owning society & is therefore unworkable.

This reminds me of a conversation I had with a contractor at work. He didn't understand that capital gains tax on his BTL was the difference between the buy and sell price and rather than the difference between his unmortgaged capital (of which he had almost none) and the sell price. His reaction was "the government wouldn't do that, would they?".

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BTL investors are sitting ducks, they have nowhere to run, nowhere to hide.

Share owners can sell their shares, and buy shares elsewhere. Where else will the government turn?

If they raise taxes on corporations, they will shift their operations and jobs offshore, as they are

doing already.

Indeed, and it will play well politically, they will highlight it as a matter of "fairness" (which is deadly), in that sense it's an easy sell to a electorate that may be renting or even to the majority of owner ocupiers who will not care about investors provided it is a means of keeping their council tax down. For most of the population it will simply be an arcane bit of tax law that they know nothing of, to others it will be pack your bags time, much like the freehold legislation a few years ago.

It seems that agency they're setting up to keep track of deposits and the incresing band of inspectors and licensing are more insidious beasts than simple consumer protection or health and safety, they're building up a nice bureaucracy and tax infrastructure that will nicely tie in the HMRC. Much like the former 'Securities and Investment Board' the meek and little known predecessor to the mighty FSA.

Update. I've just been looking at the legistation, it's all there, registration, licencing, inspection (the essentials of a tax base) and an organisation to keep track and hold deposits (a nice clearing infrastructure), which means they know what is let, when it is let, from whom, when someone moves out, when someone moves in, tied in with HMRC they will know whether you're been claiming voids when you shouldn't have or if you've been pocketing rent. The HMO's are the first line of cannon fodder, then it'll be the BTL'ers.

Edited by BuyingBear

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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