Today I'm neither Angry nor Happy about....

[Abdoulaye's Twin]

Is it not also true that the bankers pissed away a large chunk of the money that would pay for some of these pensions? It seems to me that the policy makers and others at the top are the ones with bigger than ever pensions, whilst telling those lower down that they have to work longer for less money.

Rather than move the goal posts continually, how about they fix the problems that mean pensions are worth far less than they could be. The whole system is broke.

Well the main impact on pension funds was Gordon Brown's tax changes which raided the schmes by hundreds od £ billions and also made them less lucrative to invest in but by all means blame the banks if that suits you better.

So, my pensions dropping significantly in value was coincidental to the banks reckless behaviour then?

[Worthy4England]

Is it not also true that the bankers pissed away a large chunk of the money that would pay for some of these pensions? It seems to me that the policy makers and others at the top are the ones with bigger than ever pensions, whilst telling those lower down that they have to work longer for less money.

Rather than move the goal posts continually, how about they fix the problems that mean pensions are worth far less than they could be. The whole system is broke.

Well the main impact on pension funds was Gordon Brown's tax changes which raided the schmes by hundreds od £ billions and also made them less lucrative to invest in but by all means blame the banks if that suits you better.

So, my pensions dropping significantly in value was coincidental to the banks reckless behaviour then?

There are a number of factors.

Both Norman Lamont and Gordon Brown cut tax credits for pensions. Lamont reduced it from 25% to 20%, Brown removed it completely. I'm surprised Bobo forgot the Lamont bit.

So why did they both do some of this? The answer is fairly straightforward. Companies were actually banking the credits whilst taking pension plan holidays instead of continuing to invest the credits back into pension schemes, so the benefit wasn't going to pensions pots anyhow in many (not all) cases. Your pension credit was going to investors not you. Both Chancellors decided this wasn't on, so one cut and the other removed the credìt.

How did businesses respond? They'd also had a corporation tax cut to help compensate, so did they plough this in? Did they feck*, they just stopped final salary pensions schemes, and still paid the same or higher dividends.

For most people, they need to look little further than the profit motive of the company they work for, to see where the pension pot has gone. Let's be clear, neither Lamont nor Brown took anything out of pension funds.

[bobo the clown]

^^ The man's right. I did overlook Lamont. Not a difficult thing to do. Greasy, pungent (literally), confused little man that he was.

Facts are that pension inputs are generally invested in stocks & shares. Stock sky-rocketed from the mid 1980's to the late 1990's. Pension funds ESPECIALLY the late lamented, unless your in the public sector, Final Salary Plans boomed. The law dictated that Company inputs must match or better that of the employees. So, if you were inputting 3% (typical at the time) the Company had to at least put in 3%. This was usually greater than this ... 6% was typical.

There would be audits of a pension plan's health on an around 5-yearly basis. That focussed on whether the commitments of the funds could be met by the assets of the fund.

As share funds performed so well this was a gimme in those years. The surpluses were taxable and so not really the best way to spend money. The options were to collect less .... from both your 3% and the Companies 6% or so, or to improve benefits which would need a faith that the surplus was long term and anyway the benefits in those shemes were already pretty good.

So, as Worthy says, Companies saw the chance to take "payment holidays" ... often reducing inputs from both sides to zero. This benefitted both parties, but ... as the bigger inputters, it benefitted Companies more.

During this Lamont, but mostly Brown decided it would be a fun thing to do to affect these surpluses by taxing them further and, indeed, to remove any credit to them. That was a pretty scary thing even then, once the surpluses started to fall as share value rises cooled and then went into negative it proved to be very unwise.

So, Final Salary Plans began not just not to have such surpluses but started to go into negative. Company audits began to show that the Company inputs had to increase to meet the commitments. These rose from the 6%'ish though the teens and ... in my Company's case to 32% !! This was not a rare experience either.

The banker's biggest folly was to not forsee the share-market crash and to carry on partying in their own particular square mile while the funds they were managing were crashing around them.

This meant that, more or less invisible to the average scheme member, Company pension inputs had risen maybe 5 fold. This proved to be a sustained issue, not just to cover a poor couple of years. At this time we saw 3 Company reactions ....
1. increase of employee input ... often from 3% to 6%, then sometimes to 9%. To be fair to the Trustees & Unions in MOST cases this was taken on the chin as they could see the alternatives were far worse.
2. Suspend offering the scheme to new employees. Again, generally seen as sensible. New, usually younger employees had time to adjust and seek their own schemes if they didn't like what was offered.
3. To close schemes. Closure didn't mean the employees money was taken from them, but that it wasn't going to be added to. Not too bad if you were 60, a bit of a pisser if you were 40.

There are few FSP schemes operating untouched and ones permitting new entrants are as rare as hen's teeth .... except for the public sector who seem to see themselves as immune.

So yes, bankers were managing funds whose returns were no longer covering the guaranteed outcomes. Their actions exacerbated this and certainly their attitudes led to resentment.
Governments kick-started the demise and also made matters worse by their inaction.


Now, for further understanding of why the Government needed to raise money in this way, we maybe should talk about Gordon Brown choosing to sell half of Britain's Gold Reserves at a time when the price of Gold was bottomed-out. Good old Prudence !!

[Worthy4England]

See, that's a much more balanced view of what went on.

I see you've managed to add another stick at the bottom to beat Brown with (and not necessarily unreasonably so), but to contextualize he sold gold at around $8 an ounce lower than its trading figure, before the auctions were announced - so less than 3% lower than it's market price. This was to transfer money out of our gold asset reserves and into other reserves.

In July 1999 (the time of the first sales) out net reserves were at $13,108M, not once between then and Mar 2002 (end of sale) did they drop below that figure. In fact in April 02 they were at $14,001M. They then rose - and continued to rise through to Aug 2011 when they sat at $46,869M...They've since fallen to around $44,862M - wonder where that cash has gone and who's spent it.

As an aside, people forget that in the lead-up to the sale, the Government had added around 120 Tonnes - so just under a third of the amount that was sold.

[Bruce Rioja]

Didn't Prudence lose us more when he flogged our gold off for cheap than Lamont lost us on Black Wednesday?

[Worthy4England]

Didn't Prudence lose us more when he flogged our gold off for cheap than Lamont lost us on Black Wednesday?

Depends on how you're calculating loss - the gold sell off, was a move on reserves from gold to currency - people talk about the loss on the gold, but never the gain on the currencies. He sold approximately half the gold reserves so around $3Bn. In context, that's about 3% of our current total reserves. It was put into currencies - as I described in my previous post. Over the period of the sell-off our reserves didn't fall below the value they were at when the sell-off started. So he didn't actually "lose" anything per se - it went from one pot to another.

This problem is that he flogged it off when gold was at almost an historical low, which is why people are calculating a loss. I don't know whether anyone has calculated by how much the 3Bn of currency we invested it in, has increased since the switch in investment. It's almost certainly increased - but probably not as much as gold has recovered to. The problem is that gold was being exceeding volatile at the time in a decreasing sense - the Treasury calculated that we reduced our overall reserves portfolio risk by 30% switching out of gold, albeit 0/10 for timing.

The losses for Black Wednesday aren't actually much different - It's not actually money you're going to use for anything - the cost was in swapping one reserve currency for another (Sterling) - the total value of our reserves decreased at the time, but we were holding Sterling - which we'd had to intervene and buy, so over time it's probably more than recovered...it would only be a long term loss had it not recovered in value (I think)...

I could be on some shaky ground here, but that's as I understand it.

[thebish]

Didn't Prudence lose us more when he flogged our gold off for cheap than Lamont lost us on Black Wednesday?

Depends on how you're calculating loss - the gold sell off, was a move on reserves from gold to currency - people talk about the loss on the gold, but never the gain on the currencies. He sold approximately half the gold reserves so around $3Bn. In context, that's about 3% of our current total reserves. It was put into currencies - as I described in my previous post. Over the period of the sell-off our reserves didn't fall below the value they were at when the sell-off started. So he didn't actually "lose" anything per se - it went from one pot to another.

This problem is that he flogged it off when gold was at almost an historical low, which is why people are calculating a loss. I don't know whether anyone has calculated by how much the 3Bn of currency we invested it in, has increased since the switch in investment. It's almost certainly increased - but probably not as much as gold has recovered to. The problem is that gold was being exceeding volatile at the time in a decreasing sense - the Treasury calculated that we reduced our overall reserves portfolio risk by 30% switching out of gold, albeit 0/10 for timing.

The losses for Black Wednesday aren't actually much different - It's not actually money you're going to use for anything - the cost was in swapping one reserve currency for another (Sterling) - the total value of our reserves decreased at the time, but we were holding Sterling - which we'd had to intervene and buy, so over time it's probably more than recovered...it would only be a long term loss had it not recovered in value (I think)...

I could be on some shaky ground here, but that's as I understand it.

that sounds like pretty firm and solid-ground analysis to me... it doesn't make for great Sun/Mail-headlines, as with many of these complex issues..

the whole reduction of politics and the economic decisions taken as a consequence to simplistic campaigning slogans is part of the reason people are totally turned off the whole thing, I reckon...

[Bruce Rioja]

the whole reduction of politics and the economic decisions taken as a consequence to simplistic campaigning slogans is part of the reason people are totally turned off the whole thing, I reckon...

But I'd say that that's what our leading politicians on all sides have reduced it to, rather than simply the press.

Does Worthy's post make for better Guardian / Mirror headlines by the way?

[Prufrock]

Saw Josh Charnley in Adlington this eve.

It's safe to say Rugby League players share footballers' taste in cars. Range Rover in matt black? Good look.

[Bruce Rioja]

Saw Josh Charnley in Adlington this eve.

It's safe to say Rugby League players share footballers' taste in cars. Range Rover in matt black? Good look.

He's only about 20 isn't he?

[Prufrock]

A little older I think, but younger than me, the bastard (I want the money he has to buy the car, not the fecking car itself!)

Matt black with bright yellow brake callipers.

[Worthy4England]

the whole reduction of politics and the economic decisions taken as a consequence to simplistic campaigning slogans is part of the reason people are totally turned off the whole thing, I reckon...

But I'd say that that's what our leading politicians on all sides have reduced it to, rather than simply the press.

Does Worthy's post make for better Guardian / Mirror headlines by the way?

The Labour party were happy to milk the discomfort caused by the headlines in 97, the Tories were equally happy to see headlines about the Great Bullion Robbery in 2010. I don't read any of the above apart from when Hoboh points out today's major injustice in one of them, I'm more inclined to read the headline in the FT.

Britain was right to sell off its pile of gold

http://www.ft.com/cms/s/0/5788dbac-7680 ... z33JjZcIR1" onclick="window.open(this.href);return false;

[Bruce Rioja]

the whole reduction of politics and the economic decisions taken as a consequence to simplistic campaigning slogans is part of the reason people are totally turned off the whole thing, I reckon...

But I'd say that that's what our leading politicians on all sides have reduced it to, rather than simply the press.

Does Worthy's post make for better Guardian / Mirror headlines by the way?

The Labour party were happy to milk the discomfort caused by the headlines in 97, the Tories were equally happy to see headlines about the Great Bullion Robbery in 2010. I don't read any of the above apart from when Hoboh points out today's major injustice in one of them, I'm more inclined to read the headline in the FT.

Britain was right to sell off its pile of gold

http://www.ft.com/cms/s/0/5788dbac-7680 ... z33JjZcIR1" onclick="window.open(this.href);return false;

Oh I've no doubt. I can't remember the last time I bought a paper. My point being that papers on all sides are merely relaying the soundbites being churned out by the parties themselves.

[bobo the clown]

See, that's a much more balanced view of what went on.

I see you've managed to add another stick at the bottom to beat Brown with (and not necessarily unreasonably so).

See ... I can do it when I try, and pensions are a bit of a forte.

But I can't do that AND resist a dig at Prudence. That's asking too much.

[thebish]

the whole reduction of politics and the economic decisions taken as a consequence to simplistic campaigning slogans is part of the reason people are totally turned off the whole thing, I reckon...

But I'd say that that's what our leading politicians on all sides have reduced it to, rather than simply the press.

Does Worthy's post make for better Guardian / Mirror headlines by the way?

so would I.

no.

[Bruce Rioja]

Don't want clog up the Athletics thread with this so will move it over to here. My question is simple; Is there only me that couldn't give a flying feck about going bald/grey?

The most evident thing about any bloke that tries to disguise grey hair and baldness is the fact that they're trying to cover them up.

In the village pub where one of my mates lives, this bloke goes in whose wig couldn't be more obvious if it had a fecking chinstrap.

What goes on in these people's heads?

[Worthy4England]

Don't want clog up the Athletics thread with this so will move it over to here. My question is simple; Is there only me that couldn't give a flying feck about going bald/grey?

The most evident thing about any bloke that tries to disguise grey hair and baldness is the fact that they're trying to cover them up.

In the village pub where one of my mates lives, this bloke goes in whose wig couldn't be more obvious if it had a fecking chinstrap.

No, I don't give a flying, either.

I can recall the mother in law (ex Landlady) going across to some bloke in her Pub and saying "That's an Irish" as she gave it a tug, and it lifted off...

We were killing ourselves...

[thebish]

Don't want clog up the Athletics thread with this so will move it over to here. My question is simple; Is there only me that couldn't give a flying feck about going bald/grey?

The most evident thing about any bloke that tries to disguise grey hair and baldness is the fact that they're trying to cover them up.

In the village pub where one of my mates lives, this bloke goes in whose wig couldn't be more obvious if it had a fecking chinstrap.

What goes on in these people's heads?

it has never bothered me - which is just as well! (but you did write today in another thread that finding grey hairs had made your bad week worse!)

[bwfcdan94]

Don't want clog up the Athletics thread with this so will move it over to here. My question is simple; Is there only me that couldn't give a flying feck about going bald/grey?

The most evident thing about any bloke that tries to disguise grey hair and baldness is the fact that they're trying to cover them up.

In the village pub where one of my mates lives, this bloke goes in whose wig couldn't be more obvious if it had a fecking chinstrap.

What goes on in these people's heads?

TBH the day I realise I am going bald, I will switch to a grade 0 haircut at the barbers and be done with it, which in my family would mean I will probably be doing as such within the next 10 years.

[Bruce Rioja]

Don't want clog up the Athletics thread with this so will move it over to here. My question is simple; Is there only me that couldn't give a flying feck about going bald/grey?

The most evident thing about any bloke that tries to disguise grey hair and baldness is the fact that they're trying to cover them up.

In the village pub where one of my mates lives, this bloke goes in whose wig couldn't be more obvious if it had a fecking chinstrap.

What goes on in these people's heads?

it has never bothered me - which is just as well! (but you did write today in another thread that finding grey hairs had made your bad week worse!)

I know, but they didn't really. I was merely empathising with GtE.