Saturday, December 3, 2011

Coming to these shores shortly. If you value your pension, cash it in.

Portugal raids pension funds to meet deficit targets

The cabinet agreed to transfer the assets from four of Portugal’s biggest banks to the state balance sheet. The assets will be used to bridge a gap needed to meet the fiscal deficit target of 5.9pc of GDP set by the terms of the country’s €78bn bail-out from around 10pc in 2010. "This measure is more than sufficient to meet the budget deficit goal in 2011," said Helder Rosalino, secretary of state for central administration, on Friday. Portugal said it had informed the EU and IMF and assured them it would be a “one-off”. However the 2010 budget was met by shifting three pension plans from Portugal Telecom on to the public social security system. The liabilities don’t count, yet.

Posted by general congreve @ 10:28 AM (2047 views)
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10 thoughts on “Coming to these shores shortly. If you value your pension, cash it in.

  • Haven’t they still got gold reserves they can plunder?

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  • It’s already beginning to happen here, with Gideon Osborne’s announcement pre the Autumn Statement that private pensions firms will be encouraged to ‘invest’ in public infrastructure projects, such as roads. Presumably they will be able to charge tolls on these roads, however, the toll part of the M6 near Birmingham hasn’t produced the expected revenues, so before the fund managers of these private pension holders get too excited pile in, I expect hope they’ll get explicit Government guarantees they’ll get their money back and more. However, the guarantees possibly won’t be worth the paper they are written on.

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  • For those that want evidence, re toll roads: http://www.bettertransport.org.uk/system/files/M6-Toll-Report-Aug-10.pdf
    The 2008 report states: “Five years after the toll opened, most of the claimed
    benefits have failed to materialise or have been wiped out
    by above-average increases in traffic. The M6 Toll has
    proven to be a costly way to provide congestion relief.
    Traffic on the M6 has returned to pre-toll levels and most
    journeys are only marginally quicker than in 2003. The cost
    of the toll has more than doubled and the company running
    the toll road is losing tens of millions of pounds a year.”
    Beware, pensions companies

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  • I remember chatting to a Londoner who said that his customers were reluctant to pay the congestion charge.
    He felt that car-using customers (his main customer base) dropped a lot when the congestion charge came in.

    So the authorities can pat themselves on their backs for reducing traffic flowing through an area but how can they have good predictive metrics about the companies which will go under as a result? Especially when a downturn in an economy happens and predicted revenues from happy-to-pay drivers shifts because they are, excuse the pun, tightening their belts. ?

    As long as people admit that it is a social experiment rather than an exact science then at least everyone knows where they stand.

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  • general congreve says:

    @1 – Luckily for them as a country they are under no obligation to sell to their gold to meet their debts. I bet Italy with 2800 tonnes is laughing, just go for broke then relaunch the Lira as a gold-backed currency. Free no obligation money followed by instant the instant launch of a super-currency (until the US bombs them like Iraq and Libya for undermining the dollar of course). Shame we’ve only got 300 tonnes left thanks to Culpability Brown.

    @2 – Good point. All going a bit Argentina here already.

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  • This won’t be a problem for most people outside of the public sector in the UK as they don’t save into pensions.

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  • @6 Some private pensions companies do manage public sector schemes, eg Schroders: “We have been building relationships with UK institutional clients for over 60 years.
    “With in excess of £28 billion in assets, managed on behalf of both defined benefit and defined contribution schemes in both the corporate and public sector, UK pension funds form a significant proportion of our global client base.”

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  • Apparently (senior banking source) something was missing in the pre-budget statement and had been pulled at the last minute, the reason being obvious when you ponder on it. It was planned to announce that tax relief on pension payments be capped to 20% and that a greater proportion of pension funds were going to be required to be invested in government debt (for safety apparently). Unsurprisingly it was thought to be unwise to pre-announce this and it is going to be left as a last minute thing in the budget to prevent a surge of payments into pensions before the end of this tax year.

    This will make private pensions even less attractive and show how ridiculous the FSA’s standard projection figures are for future fund values as yields will be even lower.

    On the flip side it will make public sector pensions look better even when the current changes to them are taken into account.

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  • @8 Then people wonder why BTL is the favoured investment of the moneyed… at least they have an element of control – at the moment, as opposed to little to no control, over their ‘investment’, even if it is falling in value in real terms.

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  • general congreve says:

    @9 – But just lining themselves up for a massive capital loss, or the risk of losing their entire investment when they’re not able to cover the mortgage when/if interest rates rise. Should have followed the yellow brick road. 😉

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