Monday, April 20, 2009

Why your company pension might not be so safe

Why your company pension might not be so safe

"UK company pension funds are now in the red to the tune of over £240bn - the biggest shortfall ever recorded. And here's the irony. It's partly due to QE – quantitative easing, the Bank of England's cash printing press, which is supposed to be bailing Britain out."

Posted by damien @ 12:49 PM (921 views)
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5 thoughts on “Why your company pension might not be so safe

  • Most company pensions are little more than Ponzi schemes organized by soon-to-retire management to feather their beds at the expense of existing members.

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  • general congreve says:

    Pensions = Pyramid schemes

    Unless you’re retiring very soon I’d opt out of pension contributions and start organising your own retirement. Might take a little effort to build your own retirement portfolio, but it’s either that or hand your hard-earned over to for someone else to enjoy, only to find that there’s nothing in the pot for you when it’s your turn.

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  • And where did the Wall Street investment banks get their funding from during their speculative heyday? And who bought huge amounts of their securitised junk? Yep, fund managers were drawn into both the liability and asset sides of those banks’ balance sheets.

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  • Optimistic Cynic says:

    I think only the defined benefit schemes, which are blank cheques that nobody will ever be able to cash, are bad. Most new company pensions are defined contribution. A pension is just a tax wrapper like an ISA and you can put your own choice of investments in them.

    You know it’s strange that the press keep quoting £240bn as the deficit. That’s actually the deficit when you net off the deficits from the surplus in other schemes which are in surplus but in reality other schemes cannot contribute to the ones in deficit – nor would they want to. The total deficit of schemes in deficit is around £253bn. Also the Pension Protection Fund, which is the government’s “safety net” for pensions, is tiny and is already in deficit itself. It could easily be swamped if some more big schemes go down and 90% of DB schemes are in deficit now.

    I blogged about this last week but have not posted a link since I don’t want to look like an evil spammer (and this is my first post in this forum)

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  • Would some helpful soul explain how “funds now get less from their fixed-income assets than before”? And, if anything, shouldn’t pension funds’ assets have risen with falling gilt yields? Or have they just been switching from shares to bonds to minimise risk at the worst possible time?

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