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laurejon

Will The Banks Be Able To Sustain The Huge Run On Pension Fund Withdrawels

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Will the Banks be able to sustain their business against a backdrop of people removing their pension funds and putting their money in safer investments such as commercial property in Baghdad ?

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Will the Banks be able to sustain their business against a backdrop of people removing their pension funds and putting their money in safer investments such as commercial property in Baghdad ?
You being naughty again! - There isn't a run on pension funds, at least not from the companies I know, and they are the big ones.

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how many people actually know anything about their pentions apart from they put in X amount per month?

there will be very few "withdrawels"

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Will the Banks be able to sustain their business against a backdrop of people removing their pension funds and putting their money in safer investments such as commercial property in Baghdad ?

Judging by their spectacular organisational skills coupled with the fantastically prudent business model....there is nothing to worry about.

If I had a pension I'd withdraw it

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If I had a pension I'd withdraw it

how?

you cant touch it until you retire.

you can move it from one pention fund to another or a SIPP and invest in other things but you cant "withdraw it"

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Ah ok,sorry I'm part of the generation whose only had access to shitty pension schemes. Our pattern is to take the money in our salary do what we can with it (a business on the side/ classic cars is my bag).

We make money while the job exists and have no loyalty to who we work (unlike the final salary fellows above) as we know as some point we will be done over on the share holders behalf. Although everyone is being shafted at the moment. Currently where I work I would say has about 2 years before the shareholders pull the plug. Probably allot less in the current economic climate.

Edited by Ipodjunky

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Ah ok,sorry I'm part of the generation whose only had access to shitty pension schemes. Our pattern is to take the money in our salary do what we can with it (a business on the side/ classic cars is my bag).

I sympathise to an extent - I just posted somewhere that someone buying an annuity now will get half what the equivalent fund would have bought 15 years ago - personally I have been well and truly screwed in recent years - high income = high taxes, and of course everyone feels i should pay even more - at the same time, people who have made a small fortune from the rise in price of their home don't feel they should have to pay any tax on it, even though the income is unearned - meanwhile, i can't buy a property because of ridiculous prices and lack of job security meaning I would be mad to even risk it - putting money into a pension is literally the only tax break i get

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Will the Banks be able to sustain their business against a backdrop of people removing their pension funds and putting their money in safer investments such as commercial property in Baghdad ?

What has it got to do with the Banks?

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you cant touch it until you retire.

Not strictly true. You can draw a pension before you retire. I think there's an age limit... and people tend not to draw on their pensions until after their salary has stopped... because it isn't tax efficient.

I'm aware that pension companies try to pressure people to delay drawing on their pension... the argument is that the pension will grow while it remains invested... the snag is that - typically - it is growing more slowly than other investments which they try to convince you to sell instead.

Edited by A.steve

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What has it got to do with the Banks?

If I were managing a pension fund, I'd invest in the highest yielding investments I could... and hope that the demand for drawings would be as small as possible. For example, I might have chosen to invest in illiquid bonds - like mortgage debt. If this is the case, and my customers want (and are allowed to) draw down - I will likely have to borrow against my illiquid assets. I suspect that this is why, while mortgage lending has fallen off a cliff, M4 is still growing at a frightening clip.

Edited by A.steve

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If I were managing a pension fund, I'd invest in the highest yielding investments I could... and hope that the demand for drawings would be as small as possible. For example, I might have chosen to invest in illiquid bonds - like mortgage debt. If this is the case, and my customers want (and are allowed to) draw down - I will likely have to borrow against my illiquid assets. I suspect that this is why, while mortgage lending has fallen off a cliff, M4 is still growing at a frightening clip.

It certainly might keep the capital markets shut due to lack of demand from fund buyers, but the banks aren't forced to lend, so it is hard to see why it would affect them directly, i.e. the banks don't need to "sustain" the "huge run on PF withdrawls".

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It certainly might keep the capital markets shut due to lack of demand from fund buyers, but the banks aren't forced to lend, so it is hard to see why it would affect them directly, i.e. the banks don't need to "sustain" the "huge run on PF withdrawls".

:) Point taken, but it would be another stress in the system when it comes to the credit crunch.

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Not strictly true. You can draw a pension before you retire. I think there's an age limit... and people tend not to draw on their pensions until after their salary has stopped... because it isn't tax efficient.

I'm aware that pension companies try to pressure people to delay drawing on their pension... the argument is that the pension will grow while it remains invested... the snag is that - typically - it is growing more slowly than other investments which they try to convince you to sell instead.

Most pension schemes let you start taking money from around 55 (there's a sliding age range depending on when you were born) although you'll inevitably get a lot less than if you wait for longer. Aside from any contribution via opting out of SERPS which you couldn't touch, you used to be able to take actual cash out whenever you wanted but you had to pay some enormous tax rate (50% I think) - that may have changed with the last lot of legislation.

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What has it got to do with the Banks?

The major shareholders in the banks are the representatives of those managing the pensions funds, individual shareholders are very few.

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The major shareholders in the banks are the representatives of those managing the pensions funds, individual shareholders are very few.

I guess you are saying that bank share prices will fall as pension funds are forced to sell their shareholdings to fund transfers?

I suppose there is some linkage IF pension fund transfers picked up AND those transfers were to other funds which had a lower proportion of shares, but it's pretty tenuous.

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  • 295 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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