Comments on: The future of pensions http://www.taxresearch.org.uk/Blog/2006/08/15/the-future-of-pensions/ Richard Murphy on tax and corporate accountability Tue, 06 Jan 2009 08:29:39 +0000 http://wordpress.org/?v=2.6 By: Tax Research LLP http://www.taxresearch.org.uk/Blog/2006/08/15/the-future-of-pensions/#comment-234 Tax Research LLP Sun, 20 Aug 2006 20:01:03 +0000 http://www.taxresearch.org.uk/Blog/2006/08/15/the-future-of-pensions/#comment-234 To Richard R Thanks for your comment. I note your data. I admit that which I used was older than that which you referred to - the article above was actually written in 2001 and republished to keep this blog going whilst I was on holiday becasue rthe arguments remain entirely true, in my opinion. In fact, when I enquired about the data I was advised of two things: 1) most of the 'foreign' holding is institutional i.e. pension or life money; 2) Pension funds managed by life companies are called life company money; 3) Most life money is in products like endowments which behave in largely similar fashion to pension funds. Added together these make 84% of the market. I call my comment materially correct in that case. Second, of course some liquidity is useful in the market. But is 'some liquidity' a market churning the entire holding in 7 months? No of course it isn't. Nor is it one where it is clear specualtion rather than underlying performace is key. And likewise, it's also clear that something explains steady rises followed by serious falls. What better explanation than the one I give? After all, it's clearly a systemic pattern and I am offering a sytemic explanation. have you got a better one? Richard M To Richard R

Thanks for your comment. I note your data. I admit that which I used was older than that which you referred to - the article above was actually written in 2001 and republished to keep this blog going whilst I was on holiday becasue rthe arguments remain entirely true, in my opinion.

In fact, when I enquired about the data I was advised of two things:

1) most of the ‘foreign’ holding is institutional i.e. pension or life money;
2) Pension funds managed by life companies are called life company money;
3) Most life money is in products like endowments which behave in largely similar fashion to pension funds.

Added together these make 84% of the market. I call my comment materially correct in that case.

Second, of course some liquidity is useful in the market. But is ’some liquidity’ a market churning the entire holding in 7 months? No of course it isn’t. Nor is it one where it is clear specualtion rather than underlying performace is key.

And likewise, it’s also clear that something explains steady rises followed by serious falls. What better explanation than the one I give? After all, it’s clearly a systemic pattern and I am offering a sytemic explanation. have you got a better one?

Richard M

]]> By: Richardr http://www.taxresearch.org.uk/Blog/2006/08/15/the-future-of-pensions/#comment-202 Richardr Tue, 15 Aug 2006 13:06:35 +0000 http://www.taxresearch.org.uk/Blog/2006/08/15/the-future-of-pensions/#comment-202 There are some strange comments in the above, but to pick on a couple: "About 85% of UKstock exchange investment is owned by life and pension institutions" - this is far from the fact. Pension funds now only own about 16% of the UK Stock market, and when insurers are added (not all of which are life), another 17% is added. See: http://www.statistics.gov.uk/downloads/theme_compendia/pensiontrends/Pension_Trends_ch12.pdf Given that the figure for pensions then is 16% of the stock exchange, and falling, then, if the level of pension payments approaches the new money into pension schemes, iot won't necessarily lead to the stock market crash you hope for. "Money invested in real businesses to let them do real things making real jobs for a real future might be of worth to a pensioner." In what way? The only way to realise the investment is to sell the shares in the company - which is what a stock exchange is assisting in. The original company sell their shares to an investor, in this case a pension scheme, in order to do something real with the cash. That investor only benefits either from the dividends receivable, or from the later selling of his shares. . There are some strange comments in the above, but to pick on a couple:

“About 85% of UKstock exchange investment is owned by life and pension institutions” - this is far from the fact. Pension funds now only own about 16% of the UK Stock market, and when insurers are added (not all of which are life), another 17% is added.

See: http://www.statistics.gov.uk/downloads/theme_compendia/pensiontrends/Pension_Trends_ch12.pdf

Given that the figure for pensions then is 16% of the stock exchange, and falling, then, if the level of pension payments approaches the new money into pension schemes, iot won’t necessarily lead to the stock market crash you hope for.

“Money invested in real businesses to let them do real things making real jobs for a real future might be of worth to a pensioner.”

In what way? The only way to realise the investment is to sell the shares in the company - which is what a stock exchange is assisting in. The original company sell their shares to an investor, in this case a pension scheme, in order to do something real with the cash. That investor only benefits either from the dividends receivable, or from the later selling of his shares.
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]]> By: Chris Steel http://www.taxresearch.org.uk/Blog/2006/08/15/the-future-of-pensions/#comment-200 Chris Steel Tue, 15 Aug 2006 08:42:57 +0000 http://www.taxresearch.org.uk/Blog/2006/08/15/the-future-of-pensions/#comment-200 The people I worry about, are those in there 50s, 60s, and 70s, who have worked all their lives in low paid jobs that were promissed a sustainable state pension by the post WW2 social democratic governments that are now falling deeper and deeper into relative poverty. Before New Labour won the 97 election they stated in the House of Commons that they would raise the state pension by £5 per week. In reality that £5 turned into 50 pence a week. If people pay into a state pension scheme all their working lives they should expect a sustainable state pension that keeps them out of relative poverty. The people I worry about, are those in there 50s, 60s, and 70s, who have worked all their lives in low paid jobs that were promissed a sustainable state pension by the post WW2 social democratic governments that are now falling deeper and deeper into relative poverty.

Before New Labour won the 97 election they stated in the House of Commons that they would raise the state pension by £5 per week. In reality that £5 turned into 50 pence a week.

If people pay into a state pension scheme all their working lives they should expect a sustainable state pension that keeps them out of relative poverty.

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