Retirement planning, may your eyes glaze over

We release this report every year. And it scares me every year..I quote:

Our findings reveal that 39% of UK respondents who are retirees think that they failed to prepare adequately

In this report we can see how a new retirement landscape is slowly emerging. The desire to live a full life after work can be seen in the widely held aspirations for healthy and prosperous retirement. People also aspire to leave a positive financial legacy for their children and grandchildren, during retirement and through inheritances.

Yet such goals are being put at risk by a failure to prepare adequately. Indeed, many of those in retirement regret not having saved more when they were younger, or having retired too soon, and in this report they share the impact those decisions are having on achieving their retirement aspirations.

At present, large numbers of people in the UK are doing nothing about the potential shortfall in their retirement. But by taking the first steps, by planning for the future and getting financial advice, you can build towards the type of retirement you want.

You can click here to test how you did compared to your peers.

This worries me tremendously, so that’s why we have started a small pension pot for the kids now. Who knows what they will end up in 60 years but as the quote goes, I am planting an acorn now for my grandkids to play under the shade.

Retirement planning, may your eyes glaze over

We release this report every year. And it scares me every year..I quote:

Our findings reveal that 39% of UK respondents who are retirees think that they failed to prepare adequately

In this report we can see how a new retirement landscape is slowly emerging. The desire to live a full life after work can be seen in the widely held aspirations for healthy and prosperous retirement. People also aspire to leave a positive financial legacy for their children and grandchildren, during retirement and through inheritances.

Yet such goals are being put at risk by a failure to prepare adequately. Indeed, many of those in retirement regret not having saved more when they were younger, or having retired too soon, and in this report they share the impact those decisions are having on achieving their retirement aspirations.

At present, large numbers of people in the UK are doing nothing about the potential shortfall in their retirement. But by taking the first steps, by planning for the future and getting financial advice, you can build towards the type of retirement you want.

You can click here to test how you did compared to your peers.

This worries me tremendously, so that’s why we have started a small pension pot for the kids now. Who knows what they will end up in 60 years but as the quote goes, I am planting an acorn now for my grandkids to play under the shade.

If this doesn't scare the crap out of you…nothing will

When I read this entire report, it really scared the bejesus out of me. It happens every year. Some highlights

1. 48% have never saved for retirement. Never. Ever!

2. 43% of respondents would be more likely to prioritise saving for a holiday over saving for retirement. WTF? who will then pay for your retirement? the government? hahahahaha, the non-existent children given the falling birth rate? or the children who will be too busy paying off your debt that you have increased like an idiot?

3. 56% say they are not preparing adequately or at all for a comfortable retirement. No shit sherlock…

4. 52% of people are not  regular savers. Holy moly…then? where do you think the money is going to come from?

5. 24% of their retirement income to come from the state. hahahahahahahahahah

sighs, this is so extraordinary and frightening that one cannot really think straight. This is such a wide spread issue..the survey was carried out globally in 15 countries with about 15000 people. HOLY COW!!!

How Europe is seizing your pension assets

And this is happening all legally. Remember, you chaps, your money is not save from these grasping politicians who will rob the people who scrimp and save to give to the feckless and useless. Bloody thieves. Argentina did the same. And then these buggers want you to increase your pension contribution. Bah!, no wonder pensions are the furthest things from people’s minds.

I quote:

People’s retirement savings are a convenient source of revenue for governments that don’t want to reduce spending or make privatizations. As most pension schemes in Europe are organised by the state, European ministers of finance have a facilitated access to the savings accumulated there, and it is only logical that they try to get a hold of this money for their own ends. In recent weeks I have noted five such attempts: Three situations concern private personal savings; two others refer to national funds.

The most striking example is Hungary, where last month the government made the citizens an offer they could not refuse. They could either remit their individual retirement savings to the state, or lose the right to the basic state pension (but still have an obligation to pay contributions for it). In this extortionate way, the government wants to gain control over $14bn of individual retirement savings.

The Bulgarian government has come up with a similar idea. $300m of private early retirement savings was supposed to be transferred to the state pension scheme. The government gave way after trade unions protested and finally only about 20% of the original plans were implemented.

A slightly less drastic situation is developing in Poland. The government wants to transfer of 1/3 of future contributions from individual retirement accounts to the state-run social security system. Since this system does not back its liabilities with stocks or even bonds, the money taken away from the savers will go directly to the state treasury and savers will lose about $2.3bn a year. The Polish government is more generous than the Hungarian one, but only because it wants to seize just 1/3 of the future savings and also allows the citizens to keep the money accumulated so far.

The fourth example is Ireland. In 2001, the National Pension Reserve Fund was brought into existence for the purpose of supporting pensions of the Irish people in the years 2025-2050. The scheme was also supposed to provide for the pensions of some public sector employees (mainly university staff). However, in March 2009, the Irish government earmarked €4bn from this fund for rescuing banks. In November 2010, the remaining savings of €2.5bn was seized to support the bailout of the rest of the country.

The final example is France. In November, the French parliament decided to earmark €33bn from the national reserve pension fund FRR to reduce the short-term pension scheme deficit. In this way, the retirement savings intended for the years 2020-2040 will be used earlier, that is in the years 2011-2024, and the government will spend the saved up resources on other purposes.

It looks like although the governments are able to enforce general participation in pension schemes, they do not seem to be the best guardians of the money accumulated there. 

The pensions crisis in the UK

This struck me as pretty much fair. This Labour Government and potentially the incoming Conservative government wont say the truth that everybody knows, we are in a world of hurt and are living much beyond our means. We are busy disbursing money abroad, we are spending money like drunk sailors on the public sector (52% of UK economy is in public hands), subsidies and welfare spending out of control. See what happens:

"One of our state retirees, paid, over the course of his entire career, a total of $124,000 towards his pension and health benefits. What will we pay him? $3.3m in pension over his life and $500,000 healthcare benefits – a total of $3.8m on a $120,000 investment. Is that fair? "A retired teacher paid $62,000 towards her pension and nothing – nothing – for full family medical, dental and eye coverage over her entire career. What will we pay her? $1.4m in pensions and $215,000 in healthcare premiums over her lifetime. Is that fair for all of us and our children, to have to pay the excess?"

No, me and my son have to pay for all the promises made by successive idiot governments. Pay as you go. Not only do I have to pay for these buggers, I have to put aside money for my own pension. And to pay for my kids education and for their step on the property ladder and and and.  And because the damn government is hoovering up money like crazy to pay for the debt and removing tax relief on pensions, the returns on my pension are derisory.

Damn morons. Look at this. I quote:

Yet another of those pledges that politicians so cheerfully scatter about as an election approaches came at the weekend from David Cameron. "You have my word," he told a question and answer session organised by Saga Magazine, that pensioners' free bus passes, winter fuel payments and free television licences (over-75s only) will be "protected" by the Conservatives. So that's another £4.2bn that no party will cut, alongside the budgets for schools and the NHS.

A promise to "protect" something leaves wriggle room: fuel payments, for instance, might not be uprated in line with inflation, and Labour is already raising the age of eligibility for bus passes. But no party dare let itself be portrayed as the enemy of old folk who, in the British politician's mind, are all shivering in front of one-bar electric fires and subsisting on stale bread with a thin covering of rancid butter and cheap jam. That image might once have carried some rough approximation to reality. Not any more.When Labour came to power in 1997, poverty among pensioners was more common than among the rest of the population. Now pensioners are least likely to be poor. In 2007-08, 22.5% of us suffered relative poverty (below 60% of median income after housing costs), but only 18% of pensioners. Children were far more likely to be poor (31%) as were working-age parents (26%). When Labour was in office in the 1970s retired households accounted for the majority of those in the bottom fifth of income distribution; now they account for not much more than a third. This is only partly the result of Gordon Brown's pension credits. Owner occupation, house-price inflation and private and company pensions have done most to transform old age from a time of penury to one of affluence.

So what’s with the pensions here compared to the USA?

As shadow minister David Willetts points out in his recent book, The Pinch, social justice demands redistribution from the old to the young, not the other way around. The baby boomers who will draw their pensions over the next 10 years will be even richer than the present generation of pensioners, and they hold more than twice as much wealth as the generation after them, now in their late 40s and early 50s, who have suffered from the decline in occupational pensions. Yet the baby boomers are due to get far more out of the welfare state – possibly as much as 18% more – than they ever put into it. In the youngest age groups, millions struggle to enter the housing market, and have no prospect of building up anything like the pension entitlements of their elders. Collectively, those now aged 25 to 34 have less than a third of the wealth held by those in the same age group in the 1990s.

Go figure

Reader's Digest collapses into administration – the pensions time bomb

First the news.

Publishing company Reader's Digest, famed for its magazine of the same name, has gone into administration in the UK, putting 117 jobs at risk.

The decision comes after talks between the company's US parent group and the UK Pensions Regulator broke down.

The dispute centred on how to pay down a £125m deficit in its UK pension fund.

Administrators said the UK magazine, which has more than 540,000 subscribers and was founded in 1938, would continue to trade while a buyer was sought.

Reader's Digest had agreed a deal with the Pension Protection Fund to pay off a small part of the deficit, but the regulator vetoed the agreement.

As a deal could not be done, the UK publisher said it would not be able to meet its pension obligations and so could not sustain operations.

The independent says:

> The title's failure means its UK pension fund, which has > 1,600 members, may have to be bailed out by the Pension
> Protection Fund (PPF) lifeboat.
>
> The PPF pays out in full for members currently drawing a > pension from failed schemes, but caps payment for those who
> are yet to retire at 90%, with a ceiling of around £28,000.
>
> This limit is expected to leave around 32 members - 2% - out > of pocket.

I am not sure people realise the importance of this. More and more firms are going to head into administration because their pension obligations are way too much. Worst case scenario: the government will withdraw from the open ended promise to fund all existing pensions (and this has still got a high probability). So if I was still contributing to a pension and working, then I will make sure that my pension is diversified away from one company and under my control rather than others. But this is going to happen more and more. This kind of open ended commitment from the government or the PPF is simply not sustainable and will throw a very large number of Brits into pensions penury. You better be sure that the firm you belong to has good financials or you are able to handle the pension outside the firms financials. The pensions time bomb is the most worrisome for me, who will pay this giant amount of money? It is going to be you and I and our kids. Thanks Pops..

Less pensions, more children

My father's father ended up having 18 children, my father's mother belonged to a group of 12 siblings, my wife's grandpa punched out 14 odd kids and so on and so forth. At that time and age, children were considered to be god's gift, and a man's virility was considered to be measured by the number of children he had. Plus mix in the fact that there was no good birth control and no safety net, meant that there were tons of kids. But does this mean that this is the case this time and age?

Well, interestingly enough, there was this case in Italy where pensions were reformed. This reform meant that pension benefits were dramatically reduced. So if the theory holds right, then you will see a jump in the fertility of women and the number of children which are born will increase. And so this paper so determined. I quote:

simple comparison shows that unaffected individuals had on average 1.7 children, while affected individuals had on average 1.87 children. The magnitude of this difference is reduced once one controls for factors such as individuals’ age, but a difference of about 13% higher post-reform fertility remains. These empirical results are consistent with the “kids as investment good” rather than “consumption” motivation, even in modern societies. They are also consistent with the link between the expansion of pay-as-you-go pension systems and lower fertility – in this case the retrenchment of a pay-as-you-go pension system induces higher fertility.

Hmm, so when you reduce future benefits like pensions, you will see people punching out more kinds. Interesting or what? Perhaps I should try to float this idea to have more kids :).

Technorati Tags: pensions,economics,welfare state

Public sector pensions will cost £1 trillion

Now this is something for me to be very happy to be waking up to. When I look at my pension performance, I see a sea of red. My wife tells me that I have to simply suck it up for several years, keep on piling on more and more of my salary into my pension, without hope for a good return. Not only that, we have that idiot Gordon Brown, promising to spend his way out of recession. All this means that my taxes will be going up as well.

So I end up with rocketing prices, falling pensions, increased taxes and then stories like this. I quote:

The average public sector worker will be entitled to a pension worth £17,091 a year, according to data compiled by Ros Altmann, a former adviser to Tony Blair. By contrast, the average private sector pension annuity last year paid £1,086.

Hmmm, how nice of those Labour politicians to fund all their source of funding colleagues from my taxes. Isn't this cosy? three quarters of Labour Party funding comes from Trade Unions. Now if this is not unfair and stupid, what is? Needless to say, the local Labour MP ain't going to get my vote, that is for sure. Throw these bums out, I say. But the rot goes even further, check out this.

The Taxpayers’ Alliance has obtained figures showing that 17,150 public sector workers have already retired with pension pots worth more than £1m each. Nearly 10,500 NHS workers; 3,680 civil servants; 815 judges; 1,800 teachers, mainly former heads; and 167 Royal Mail staff have retired on seven-figure pension funds.

This is gobsmacking. You might say, hey, the public sector pensions have to be better because the salaries are lower. Oh! really? I further quote:

According to the Office for National Statistics, the average public sector worker earned £25,896 a year in 2007, compared to £22,828 in the private sector. Only the top 20% of private sector workers are paid more than public sector peers.

So where on earth is this stupid government taking us? down the bung hole, more like it. What a bunch of stupid morons. They will turn out and say, we are trying to control costs. Are you now?

In 2006 the government raised the retirement age of new entrants to public sector pensions schemes and made a series of other changes in a bid to reduce its pension costs by £13bn. These reforms will only cut its pension bill by 1% over the next 50 years.

I mean, even forget about ideological differences, just throw these bums out on the simple grounds that they are incompetent. No, not incompetent, they are simply stupid. And then they talk about high quality public sector workforce? On what basis, you stupid morons? Is quality of service improving? no. Are we getting better in our education or health care provision? no. As I said, these dunderheads are simply stupid.

Round VI in France

So they have gone on strike as I talked about here. This promises to be interesting as the public doesn't support the strike to any great extent and technology is changing the life of the public transport, the only line running in Paris was the one which was fully automated, something like the Docklands Light Railway in London.

Technorati Tags: France , Labour , Public Sector , Employment , Pensions , Strikes , Transportation