PENSIONS CRISIS
Our traditional pension model is no longer adequate.
The length of time we spend in retirement , is considerably longer than pension plans
were originally designed for.
We spend more money in retirement, i.e. travel, leisure,luxury goods, healthcare
and retirement accomodation.
The stock market underpins most of the pension plans .....
but every few years , the stock market collapses
Panorama BBC1 23rd March 2009 :
"Some pension fund values are down 60 % &
91 % of private sector pensions are in deficit."
Government " Green Paper " , announced 16th July 2009
This "discussion " document suggests three options for funding
of " care " for the elderly. Nothing will be implemented as a result of these
deliberations for FIVE years. I won't discuss the options here but
the fact that this process is being started, is evidence that the government
acknowledges the retirement funding problem.
The " Green paper " only really deals with the cost of Healthcare for the
elderly. It does not discuss living costs while you are still active and it does
not address the cost of a Residential Home.
So this discussion document only deals with a relatively small part of the
financial problem.
Spring / Summer 2010
The new coalition government have started to deal with the pensions crisis.
How much affect can they have, given that, the basic concept is flawed ?
They are trying to limit the damage that will be inflicted on taxpayers by the "gold
plated" public sector pensions.
Also :
From April 2011, they are planning to remove the requirement to buy an
annuity, for those in defined contribution schemes. They will also prevent the
pension companies from being the sole beneficiaries of those who die soon after
retirement.
The pension companies currently make millions from this unfortunate situation.
That's nice of them isn't it ?
August 2010
Figures from the Financial Services Authority ( FSA ) show some providers' annual charges can cut the growth of a pension fund in half. An example is :
A 25 year old putting £200 per month into HSBC's " World Selection Personal Pension" until they retire at 65, would be charged a total of £248,650, leaving them £248,453 to provide a retirement income, if typical growth expectations were met.
Also this month, consultants Pension Capital Stratigies, reported that the pension schemes of Britain's blue-chip companies, have a deficit of £73billion, and this represents a "material risk" , impacting corporate decision-making at board level.
So, why take the advice of a Pensions company - a totally biased, self-interested
corporation. ?
Is their judgement any better than the Banks or the politicians ?
Is a traditional pension plan now, just a long term gamble ?
Independent pensions "experts" are warning us every day, in
the national press , about the retirement funding problem that is
growing in this country.
Over 50 % of the adult population are not making provision for
their old age.
How many women do not have a pension fund in their own
name ? The high divorce rate needs to be considered.
The pensions providers, continue to market the traditional plans -
probably because that is their core business and .....
what else do they have to offer ?
So what has a Pension plan evolved into ?
It has become a gamble on thousands of pounds of contributions over many years.
The financial stake you place is MASSIVE ! !
What are the odds of making money ?
I would say, slightly better than "evens" that you will get your money back .
It is very unlikely that you will be able to generate enough growth in your plan, to
enjoy a comfortable 25 year retirement.
The plan may fail, due to stock market collapse, the pension company may even go bust.
Independent Experts are currently using the word " UNSUSTAINABLE " in
relation to many pension plans.
Large National Corporations have huge liabilities in their pension plans, that they
cannot cover.
A conventional stock market-linked Pension - is maybe not such a good idea !