Thursday, Apr 11, 2013

Government appropriation jumps another 35bn

Telegraph: Final salary pension deficits jump by £35bn in a month

These companies are supposed to drive the economy.. anyway, so they now have to hand over ANOTHER 35 bn to the government ( one thousand pounds per UK worker) which will spend it immediately and give them an IOU. Possibly this is due to the astonishing level of Japan QE but even so. Next year Osbourne covered himself (not the UK) by dropping gilt requirements 8% due to transferring the interest payments back from the BoE(the cash supposed to cover future gilt losses..). 2015 who knows? Pensioners in the UK never seem to consider that in the future people might not want to support their grandiose self-signed pension agreements.

Posted by stillthinking @ 05:04 AM (2192 views)
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7 Comments

1. stillthinking said...

I would add.

At some point all of the companies involved in this are going to become unable to meet their requirements. They are unable to invest in new equipment and basically trade at a disadvantage to companies not dragged into the UK government funding net. When they actually go under being incapable of matching competitors on price, there will be a fire sale of their assets and their share price will collapse.

Thursday, April 11, 2013 05:08AM Report Comment
 

2. mark wadsworth said...

"Pensioners in the UK never seem to consider that in the future people might not want to support their grandiose self-signed pension agreements."

That's fighting talk!

Thursday, April 11, 2013 07:46AM Report Comment
 

3. libertas said...

If interest rates are allowed to rise, the deficits will turn to surplus in short procession, because most of pension income is in the form of bonds. We are seeing mass confiscation by the banksters of pension money with artificially low interest rate. Be under no illusion, it is theft.

Thursday, April 11, 2013 11:31AM Report Comment
 

4. quiet guy said...

@Libertas

"If interest rates are allowed to rise, the deficits will turn to surplus in short procession, because most of pension income is in the form of bonds."

Freshly purchased bonds would offer a higher yield but the value of existing bonds would drop. I suspect some pension funds already invested in bonds would have to deal with large losses which would negate the advantages of the higher yields caused by rising rates.

http://www.investopedia.com/ask/answers/04/031904.asp

Thursday, April 11, 2013 01:34PM Report Comment
 

5. stillthinking said...

I think he just typed that out wrong. We all know the losses that will happen.

Thursday, April 11, 2013 01:46PM Report Comment
 

6. mark wadsworth said...

QG: "Freshly purchased bonds would offer a higher yield but the value of existing bonds would drop. I suspect some pension funds already invested in bonds would have to deal with large losses which would negate the advantages of the higher yields caused by rising rates."

Thanks, you've saved me the bother of stating the bleeding obvious. By and large, assuming a pension fund is 100% asset backed with bonds, the fall in the NPV of future payments is equal to the fall in market value of the bonds.

Thursday, April 11, 2013 01:57PM Report Comment
 

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