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Compulsory Work based Pensions


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5 hours ago, shortstack said:

If it was compulsory it would be a form of tax there for illegal 

it's compulsory for the employer to offer its employees a pension scheme but no obligation on the employees part to join it

It is indeed a form of compulsory tax on business owners for every employee that takes them up on the offer. So effectively we have businesses and workers contributing towards pensions twice, once through NI and once again unless the worker opts out. 

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I recently got a letter from Aviva about my current work pension. It's actually been going up quite nicely. 

I logged into the portal today and noticed the fund was almost entirely invested in UK stocks and corporate bonds. I've just shifted this to cash, index linked gilts and 10% gold stocks until I figure out what to do with it. 

I've also just dug out my old pensions and opened a SIPP to transfer the balances into. These balances are pretty small so would like to run some higher risk plays to see if I can squeeze anything out of the cash whilst it's trapped in there.  Ideally I would like to get some direct physical gold exposure. 

If anyone has any ideas I'm all ears. :)

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On 28/12/2017 at 00:15, C12 said:

I recently got a letter from Aviva about my current work pension. It's actually been going up quite nicely. 

I logged into the portal today and noticed the fund was almost entirely invested in UK stocks and corporate bonds. I've just shifted this to cash, index linked gilts and 10% gold stocks until I figure out what to do with it. 

I've also just dug out my old pensions and opened a SIPP to transfer the balances into. These balances are pretty small so would like to run some higher risk plays to see if I can squeeze anything out of the cash whilst it's trapped in there.  Ideally I would like to get some direct physical gold exposure. 

If anyone has any ideas I'm all ears. :)

If you listen to most "experts" these days, buy bitcoin:P

PS Just joking;)

Profile picture with thanks to Carl Vernon

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27 minutes ago, sovereignsteve said:

If you listen to most "experts" these days, buy bitcoin:P

PS Just joking;)

It's already in the pipeline. I've just ordered one of those Nano Ledger S devices and waiting for delivery.

I've allocated £1k purely for crypto speculation. :) 

I'm still figuring out exactly what the plan will be but I'd need to see Bitcoin drop to at least $8k before any cash gets put to action. 

I know I've bashed the hell out of Crypo recently but I was complaining UK housing was a bubble in 2001 and stubbornly held out on buying a house until 2014... :ph34r:

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  • 1 year later...

What is obvious, but almost nobody sees it... ?

That Auto-enrollment is the beginning of the end of the State Pension as we know it.  

 

Everyone knows the SP is an unsustainable ponzi scheme. The Auto-enrollment rules have been put in place so that 25-30 years down the line the SP can just be phased out altogether and they can say that "you've had 35 years of contributing to a private scheme, you don't need a state pension."

 

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4 hours ago, vand said:

What is obvious, but almost nobody sees it... ?

That Auto-enrollment is the beginning of the end of the State Pension as we know it.  

 

Everyone knows the SP is an unsustainable ponzi scheme. The Auto-enrollment rules have been put in place so that 25-30 years down the line the SP can just be phased out altogether and they can say that "you've had 35 years of contributing to a private scheme, you don't need a state pension."

 

Glad someone else SEE's this! 👍

Just sheer demographics will destroy SP! - not enough taxpaying youngsters to sustain pensions being paid at the time!!

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If I had been "forced" to pay into a workplace pension, then instead of pissing all my money away on wine, women and football, I could have retired with an income of £30k a year a few years ago. Instead I'll be retiring in 8 years time with an income a fraction of that. 

I wish I was forced to pay into a pension pot all those years ago. 

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4 hours ago, vand said:

What is obvious, but almost nobody sees it... ?

That Auto-enrollment is the beginning of the end of the State Pension as we know it.  

 

Everyone knows the SP is an unsustainable ponzi scheme. The Auto-enrollment rules have been put in place so that 25-30 years down the line the SP can just be phased out altogether and they can say that "you've had 35 years of contributing to a private scheme, you don't need a state pension."

 

So it's a good thing then. Instead of relying on others to pay your pension, you rely on yourself to pay for it. I don't have a problem with that. The only people who will have a problem is the workshy lefties, who spend more time waving placards on pointless marches claiming benefits than actually earning a living. 

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With the nature of my job, I do a lot of contract agency work. And I always ALWAYS opt out of any of this compulsory enrollment scam nonsense. As far as I'm concerned, my retirement is my problem and it is not for others to pay my way and vice versa.

I also don't consider "tax avoidance" a crime and always congratulate those that have succeeded in keeping their hard earned wealth out of government hands.

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8 hours ago, tallyhojim said:

I also don't consider "tax avoidance" a crime and always congratulate those that have succeeded in keeping their hard earned wealth out of government hands.

"Avoidance" is LEGAL - - - "Evasion" IS NOT!

I love "AVOIDING" 😉

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When governments promised their citizens a retirement, it was still affordable to do so. When it turned out to be unaffordable, politicians asked companies to pay for retirements instead. When that turned out to be unaffordable too, politicians asked financial markets to pay for retirements instead.

And so now the new model is to save and invest for your retirement. Given the returns promised by financial markets, it’ll all work out nicely.😉

But the underlying maths has not changed. The money that is supposed to flow out of financial markets to fund retirements must come from somewhere. Retirees have to sell their assets to someone. Someone has to buy.

If there aren’t enough young taxpayers to fund government retirement promises, why would there be enough young investors to buy retirees’ stocks and bonds?

It’s the same bunch of people…

There won’t be enough. But don’t fret too much. Because someone else is standing ready to buy them instead. Central banks.😁

Just as central banks stand at the ready to rescue government spending via government bond markets, they now also stand ready to rescue retirements via financial markets.

This is just the latest fix to solve the same underlying problem – that there aren’t enough young people to fund retirement promises. 😞

If you tie the fate of pensions and retirements to financial markets, those financial markets become too important to fail. They must not crash, or else we’d see some serious political upheaval.

But if pensions and retirements place too much of a burden on financial markets, first by having huge demographic driven inflows from the baby boomers saving for retirement, followed by outflows as they retire, someone has to backstop the whole thing with money. A lot of money.

The only place the money can come from is central banks. And they’re conveniently tasked with financial stability and have a limitless budget.

In other words, they have a limitless budget and a mandate to rescue the system from any systemic threat. Including the threat of a demographics – mass selling of financial assets by people looking to retire. The same threat that made government retirement promises unfundable via taxes.

To be clear, this is just an increasingly indirect solution to an increasingly indirect problem. Making the promise of a retirement flow through financial markets obfuscates who owes what to whom. But in the end, the financial flows are the same.

Historically, we’ve seen how things go when central banks fund government spending. But what happens when they try to keep financial markets afloat?

What happens when the Bank of England becomes a retirement fund, pumping money into your retirement spending account via the stockmarket by buying your stocks?

Remember, central banks around the world are already buying plenty of financial assets off retirees. That part isn’t new.

But isn’t it outrageous for a central bank to fund retirements with fiat money creation? Illegal even?😲

Well, technically they’d just be rescuing the financial system from rapid outflows. Which is within their mandate, as long as the financial system is under threat.

Rescuing the retirement system would just be a suspiciously convenient side effect of rescuing the financial system…

But what would be the actual side effect?

It sounds inflationary, doesn’t it? A wave of new money to finance pensions and retirements.

But I’m not so sure. Because we’re talking about offsetting a deflationary shock. To explain, just look at Japan.🧐

Extraordinary monetary policy, including buying shares, hasn’t led to inflation. It hasn’t even managed to offset the deflationary shock built into the system.

When Japanese people became dramatically less wealthy as their financial market and other wealth tumbled, the central banks simply backed vast government debt and kept banks afloat.

As long as the central bankers don’t overdo it, inflation need not feature from their policies. The intensity of the policy shows the power of the deflationary shock being offset.

Retirees expect to sell their financial assets at a price far higher than they bought in. If the central bank simply delivers this price by buying assets at that price, it need not be inflationary. At least, not in terms of rising consumer prices.

Central banks are going to try and offset a large deflationary shock – the shock of a generation gambling their retirement savings on the stockmarket rising in the long run and being disappointed.

Problem solved? I doubt it. In my view, all of this makes financial markets very unstable.😲


 

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