People assume pensions are “saved money” — a pot with their name on it, safely invested for the future. They aren't.
In this video, I explain how UK pensions actually work, why defined contribution pensions are inherently risky, and why most pension money fuels speculation rather than real investment.
I look at the state pension, defined benefit schemes, and defined contribution pensions and explain who really benefits from the current system, why it is unjust, and why reform is now unavoidable.
This is not pension advice. It is a political economy explanation of why pension insecurity is being built into the system by design.
This is the audio version:
This is the transcript:
In response to a recent video I made in which I discussed the nature of savings, a lot of people ask the question: "Is my pension safe?" And "Can I really depend on it in my old-age?" And I think those are really good questions at this moment because the question is what actually backs a pension? That is the issue I raised in the video in question, and this is a matter for this moment and not for later.
Many people believe that their pensions are 'saved money'. That there is a pot with a real asset somewhere with their name on it, and even that paying National Insurance guarantees that you will have security in your old-age, but none of this is as simple as it sounds.
Let's just stand back for a moment and talk about the three main types of pensions that exist in the UK at present, although there are variations on each, and I cannot possibly cover all the nuances.
The first type of pension is the state old-age pension, and even that comes in two forms.
Then there are defined benefit pensions, and I'll explain what they are in a moment.
And finally, there are defined-contribution pensions, and there are plenty of varieties of those.
Each depends, though, on other people's behaviour for their safety, and that is the critical point that I'm going to make in this video.
You cannot by yourself guarantee that you will ever get pension safety. All you can do is make the best possible choices and hope that others will deliver for you.
Let's talk about that state old-age pension first. This matters to people. I know. I have one. I'm now old enough to claim this pension, and it has existed for over a century; that's a surprise to most people. It was actually created before World War One, by a Liberal government. And the current full rates are £9,175 a year, if you were born before 1951, and rather bizarrely, £11,973 if you were born later. So, if you're older, you get less pension, which to me makes no sense at all. But in either case, the point is clear; this is well below the UK minimum wage. It's going to be very hard to survive by yourself on this income, and the provision for couples is, if anything, less generous still.
So there are real risks in simply thinking that the state old-age pension will provide for you, and there's another risk as well, and that is that you are going to have to rely on the goodwill of politicians if this pension is going to continue to increase. For the last 12 or more years, this pension has increased by the maximum of three things: that has been wage growth in the previous year, inflation in the previous year, or 2.5%. That's called the triple lock, and it has been the subject of a great deal of discussion over the last few years as austerity has really come home to bite.
So far, the triple lock has survived all attempts to cut it. But this inflation protection, which means that the state pension has, in fact, risen by a little more than the rate of inflation, is something where you are relying on government goodwill. That government goodwill could run out at any moment, and then your state old-age pension might not keep up with inflation. So, even this promise to pay is something that you cannot rely on, and just ask women over the age of 60 at present whether they can rely on the government's promises with regard to pensions, and I think you'll hear some very, very loud noises and comments. The government is not a reliable pension provider on all occasions, albeit that for many, it's absolutely critical to the way in which they survive in old-age.
Now, let's talk about private pensions. And again, as I mentioned earlier, there are two types. The first is the defined benefit pension; the type that everyone would like to have, but only a very few people now enjoy. It's a promise to pay you in retirement, a proportion of your final salary from the time when you were in employment, of course, based upon the number of years of service you had. You wouldn't get a full pension for one year of work before you retired. The actual outcome was normally that you got around two-thirds of your final salary, presuming that you'd worked around 35 to 40 years for the employer, and so not many people got a full defined benefit pension, but for those who did, it was a great scheme.
These were once common. They were normal in big business as well as in government, but business, as I will note in a moment, has now retreated from them. They are now almost only found in the state sector: the NHS, teachers, local government, and the civil service, plus the armed forces, all enjoy pensions of this sort. Now, these are generally safe. They're not entirely risk-free, and if you have a defined benefit pension from a private sector employer, that is definitely not risk-free because, of course, the employer could go bust and there might be funds owing to the pension fund at the time that they did so, and that can prejudice future payments as some people have found for their costs, albeit the government has set up a fund to try and help people in that situation. But the point is, this overall is a great pension arrangement, but fewer and fewer people are enjoying it.
So what are they getting instead? Well, because businesses realised how expensive defined benefit pensions were, they basically walked away from them. They've done so in this century. For the last 25 years or so, employers have shifted away from this type of defined benefit pension to a defined contribution pension, and the arrangement is fundamentally different.
You and your employer will be paying into a defined contribution pension scheme. Only you will be paying in if you're self-employed, of course. And that money will be invested on your behalf by a fund manager. There will be no guaranteed return. All the risk lies with you, and this is the fundamental difference between a defined benefit pension scheme and a defined contribution benefit scheme.
In a defined benefit pension scheme, the risk rests with the employer. They've given a guarantee.
In a defined contribution scheme you are dependent upon the vagaries and fortunes of the market to deliver you an outcome you desire. If there's a market crash, just at the moment you are about to retire, your pension could crash with it, and that's what's important. You have no recourse to your employer, or the pension manager, or anyone else. They will claim the decisions made were all by you, even though you will be remarkably uninformed to make them in many cases, because most people are not long-term pension managers.
There is a danger in this, and there's an immediate danger at this moment. We know we are facing an AI bubble. We know that there is a risk of banking instability as a result. We know there's a risk of a financial crisis; we're already seeing the signs of this. Gold is going through the roof in terms of value, and that's always an indicator that a recession might be coming. In this situation, defined contribution pension values could collapse, and the only mitigation is that you move your money to safer assets, but you would have to decide to do that.
But overall, the problem is actually one of what's underneath these pensions, and you need to understand that to make that decision about whether you want to reallocate funds.
What do pensions actually invest in? They buy shares. They buy property. Almost always secondhand property; in other words, not new ones. They buy corporate bonds, and they buy government bonds.
Now, government bonds are usually good value investments, but they can change in value quite considerably depending on the way in which interest rates go, so even they are not guaranteed to give a return inside a defined contribution pension fund.
Shares create no new value in the economy, almost invariably. Why? Because shares are issued either as part of merger and acquisition activity. In other words, one company buying another one, which does not create new value in terms of new jobs, usually it in fact destroys jobs, and it does not fund new investment.
I've already mentioned that the properties that most pension funds buy are already in existence; therefore, new jobs are not created.
And that's also true of corporate bonds. Most of the bonds issued by large companies, the AI sector at the moment is an exception, but most of the bonds issued by large companies are put into issue to pay for corporate takeovers. There is very little investment funded by corporate bonds; some, but not much.
And the point about this is that these investments do not therefore fund real investment. They do not create value in the economy. They don't create jobs. They don't do anything in terms of productive investment.
And new shares are, anyway, incredibly rare now; they usually only represent the original owners of a company bringing their venture to market and then selling out, whilst corporate bonds are usually about mergers.
And even in the case of government bonds, they don't fund anything either. And let's be clear about this. In the way in which the bonds that are issued at present are structured, they have no direct relationship with investment because that is funded by the Bank of England through the creation of new money. That could be changed. Bonds could be used as a pot of capital to fund new investment, but that is not the way things are done at present. In other words, your pension fund is just a financial charade.
Pension funds are just a mechanism for financial speculation, and you are relying on this form of gambling. Let's not pretend it's anything else. You are literally gambling your future by saving in a pension fund.
Values will only rise if more people join. That has been the perpetual story of pension funds. Our population in the UK has grown during my lifetime from something in the 40 million to something in the high 60 million now. That has created a continual stream of new entrants into pension funds. The consequence is, there's always been more money flowing in, the money flowing out. This is a system that has been totally dependent upon that flow.
This, however, is not sustainable. There are two reasons why that is not going to continue. One is the fact that there is going to be a fall in the working-age population. We know that because of a change in demographics, people in general in this country are getting older. The number of young people replacing these older people who are retiring is falling. There's also, and let's be clear about it; anti-immigration policy. That is also going to deny us the people we need to keep our pension system topped up. In purely practical terms, that has a massive consequence; it means that the current values of shares can't be sustained.
On top of this, there are other systemic problems. For example, half of all young people are now heavily taxed, more than the previous generation were, because they effectively pay a 9% extra tax as a student loan surcharge. They will therefore not be able to build up the large pension pots which were common in previous generations. And as a result, money flowing into pension schemes will again fall. What this means is that this model, which is dependent upon ever-increasing contributions, cannot survive.
So, is the pension system safe with regard to the state pension? Possibly. But it is inadequate.
With regard to defined benefit pensions? Probably, with caveats in the private sector.
With regard to defined contribution pensions? Clearly not. Despite the fact that the UK state spends more than £70 billion a year in tax subsidies to the pension industry, we cannot say that the pensions of the majority of people in the UK who are subsidised by that system are actually safe or even worthwhile in the long term, and this is staggering.
This subsidy is also deeply unjust. More of it goes to the wealthy than anyone else, of course. Why? Because they put more into their pensions than anyone else. That's glaringly obvious. In fact, the top few per cent of income earners in the UK might well get a benefit of £10,000 a year from these pension subsidies, way in excess of universal credit, by the way. That is because of the amount of subsidy they get in the way of income tax subsidies, National Insurance subsidies, corporation tax subsidies, and tax savings within the pension fund.
This whole system is indefensible. It's about a benefit system for the wealthy, but it doesn't provide pension security to most people. Instead, it just fuels speculation, and it enriches the City of London. The fact is that these pension subsidies are being used to fund the profits of today's pension funds, but not to guarantee the future of tomorrow's retirees.
So, we need reform, and we need it very badly. If you want a safe pension, we have to change the pension system, and bizarrely, one way to do that is to end excessive tax relief for the wealthy. If we stopped subsidising those who do not need a subsidy to save, we could release more than £20 billion, at least, a year for other uses.
What would I do with that? I would simply reallocate it to the basic state pension. I would guarantee that the floor on which people rely is increased so that everybody has a more secure income in old-age. Dignity requires that. We do not need to spend money the way we are now on a few; we need to spend it on everyone. And this is about collective provision and not market fantasy. That is my second reform, therefore, improve the state pension.
The third reform is quite simple, and it is that we need to make a new connection between pension fund contributions and productive investment. It is absurd that this link has been broken. Economists still think it's there. They still claim that savings fund investment. They don't in the way in which the UK savings system works. There is no link between savings and training, and in education and infrastructure investment, or the creation of new technology, or just about anything else at present in the UK. So, we need to create that, and if 25% of all new pension contributions - just new ones - were allocated to investment in productive activity a year, something like £35 to £40 billion at least of pension money a year would be available for this purpose. Enough to fund a Green New Deal; enough to transform the future of our economy.
And lastly, we need to make our pension funds accountable. I read recently about pension funds being the biggest obstacle to leasehold reform in the UK. If you're familiar with this issue, leasehold reform is essential because there are so many people who bought houses where the ground rent on the property goes up steadily over time, and the service charges are running out of the capacity of people to pay them. They're being basically captured and exploited by corporate landlords who are making their lives a misery, and that supposedly is being driven by pension funds who do not want to give up this right to profit.
This is absurd. The very same people who pension funds are meant to be servicing with a product - a pension on which they can rely - are exploiting those same people to ensure that they cannot make a contribution. Pension funds must therefore be made accountable. We cannot have pension funds harming people today for paper gains tomorrow; that has to end.
Is your pension safe? No, not in the way it's currently managed. Not at all. It's being managed for the benefit of the City of London, not you. It's not being managed with your well-being in mind. It's not delivering the prosperity that you and your community want. It's not providing investment for the benefit of those who will follow you, and who will look after you in old-age. It is fundamentally socially unjust, and that is politically indefensible.
Reform is needed now, but let me make one further last point, and this is not pension advice, it is just a suggestion that you need to think about where you are now. If you are worried about financial markets now, and I think there are good reasons to be worried about financial markets now - I've already mentioned them in this video - then you might want to go and ask your pension fund, your HR department, whoever it might be, or your personal pension advisor, whether there are safer options for savings available for you within your pension fund at this moment.
That is something you may want to do. I'm not saying you should do it. I'm saying you may want to do it. In these uncertain times, caution can be rational, and you need to explore that opportunity. The decision is yours, but if I were you, I would be doing it simply so you know what the options are. In an uncertain world and in a pension system which is frankly stacked against you in very many ways, trying to take as much control as you can makes sense, and at this moment it makes maximum sense. So have a think, go and take some action. Protect yourself.
What do you think? Do you believe in the current pension system? Do you think there could be something better? Do you believe that the state should be delivering for you? Do you actually want them to take over the supply of pensions for everyone? Let us know. There's a poll down below, and let us have your comments because those are valuable to us. They do shape our thinking and where we go with future videos.
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My local authority shire based pension fund had a huge black hole in it for the city council fund I am in because the ruling Labour group at the time voted to take one of the Tories pension contribution breaks – as a response to Tory cuts, but it does not feel very ‘labour’ to me.
For a long time, my LA pension fund did not allow us to make voluntary contributions but now it seems they are accepting them once again – in earnest. On top of this, the final salary pension was got rid by Blair’s Labour in 2003 as part of keeping to Tory pledges regarding the PSBR. That was the end of my relationship with the Labour party. See ya!
So, in the end we have begun to pay more for our pensions just like everything else.
What sticks in my craw is that it is obviously the economies scale of a state pension provision that has the capacity to provide safe pensions allied to its ability as the sovereign issuer of the currency the pension is paid out in.
What we have instead from Tory and Labour louses is huge tax breaks to the private pension industry to shift pension provision away from government. This is not just about private pensions making money out these pensions; it is about an increased exposure to risk for ordinary people that I find absolutely disgraceful and unjustifiable.
We have audit and company registration systems unable to help actuaries make informed decisions about investment (as you posted yesterday) and much more (fewer capital controls as well must help raids on pension pots).
Pensions – safe? Please tell me how? I don’t see it at all.
Thanks
I am very afraid of the pension crisis following the coming crash… both for the people who will be affected and for the pressure there will be for yet another bailout. State provision seems more stable, predictable and ethical.
Ordinary people can’t save much. They should be able to save a bit at low risk and low tax. I don’t have particular numbers in mind….. but over around median ability to save I think there should be two kinds of savings….. savings which can be shown with clear evidence to be playing a productive role in maintenance and repair of the country’s infrastructure, or new capacity in energy or other critical industries should have generous tax relief….. excess inactive savings need to be taxed a bit more. Short term stock market activity needs to be taxed more or less out of existence….am listening to Keynes’s general theory just now and in the introduction it says that Keynes made a remark that perhaps buying shares should be like getting married…. Till death do us part. The problem is certainly not new so why we allow this heated financial speculation to go on is a mystery to me. And the idea that banks are allowed to lend money for speculation and stock purchases as opposed to productive investment….. seems crazy.
I think there should be a decent state pension. My belief in the necessity of universal home ownership is related to this as well…. No one should need a high enough income in retirement to pay rent. Everyone has paid enough for housing after a lifetime of work ….. that’s why I believe the current home ownership versus rent system also needs reformed. If everyone owned a home at retirement the state could much more easily pay a good enough pension to live off to everyone.
These are themes I am working on.
[…] By Richard Murphy, Emeritus Professor of Accounting Practice at Sheffield University Management School and a director of Tax Research LLP. Originally published at Funding the Future […]
The comment on Ground Rents is interesting.
I am very surprised that those who ‘invested’ in ground rents, in particular the ones that escalated never saw any kind of political risk.
In which case what other risks have fund managers missed
Depends on perspective. I for one have been happy to have the freedom to choose where to I can invest my SIPP and what risk I want to take. Post the strong run in equities and commodities I am now moving into short dated gilts and index linked gilts. I like the responsibility of effectively managing my own fund. I think many people do.
You do know that 99% of people will never have a SIPP, don’t you? They are the people I am writing for. As part of the financial elite you are not my audience at this moment. The fact you are not aware of this is what is staggering.
15% of those working have a SIPP with the number rising very quickly.
Frankly, I am completely staggered. But even if true, they are the wealthy then. And you simply do not understand. Your ignorance and indifference are staggering.
My quick research also shows your figure is wrong. 5% would be surprising. The wealthy, then.
Taken from Claude
Based on the most recent data I found, approximately 6 million Britons now have SIPPs, with total assets of around £650 billion Campaignforamillion as of late 2025.
To put this in perspective with the working population:
The UK working-age population (16-64) is roughly 42-43 million people
The employed workforce is around 33 million people
This means that approximately 14-18% of the working-age population has a SIPP, depending on which denominator you use.
I got 1.7 million
Even that seems high
From Google:
According to figures shared in a December 2023 article by iPensions, there are now over 1.7 million SIPP investors in the UK, holding more than £205 billion in assets, with new SIPPs being opened at their fastest rate in over four years.
Youy are not just arrogant, you’re crap at research. Don’t call again.
The data is unclear.
I think (but don’t know) that the 6mm people of working age that you (David) refer to have some form of private pension where they, at least notionally, direct how the money is invested. I don’t think most of these have a SIPP.
So, SIPP or not, at least three quarters of workers don’t have a pension where they can call the shots…. and those that do, don’t (in practice) have the ability/knowledge to take control of things (in the way you have).
Access (to the right products …. and yes, I am accumulating index liked gilts, too) and financial education are key.
A self employed pension is not a SIPP
The establishment of a National Pension Fund is key to addressing the issues you have described. It is a means to restore earnings related 2nd pensions (DB). There are now some detailed proposals for how we could do this in an Independent Scotland. The NPF would also function as a People’s Weath Fund. Two draft booklets will be available on the Scottish Currency Group website shortly which set out the current thinking….”Pensions in an Independent Scotland” and “A People’s Wealth Fund-investing the NPF”
Thanks, Jim. I know you have put a lot of thought into this.
Thanks very much for this post; it needs saying, it needs repeating.
I have tried to explain it to my sons, who are quite financially literate, and it is difficult for them to appreciate the scale of the crisis that, I think, is approaching unless we reform the system.
You touched on the population issue. I think this key and cannot be overstated.
People are told they should save in stocks and shares because, over the long term, these increase in value faster than other forms of investment. They say it is impossible to time the market, which is true, and therefore you should invest steadily to achieve “cost price averaging”. There are caveats as you approach retirement age, but that is the overall message. It even comes from our beloved chancellor Rachel Reeves.
But that is very dangerous. Over the long term shares have increased in value because the population has increased and, in recent decades, because more people have paid into defined contribution pensions. But that will soon, over the next few decades, in a timescale relevant to young people starting work, stop.
Typical fertility rates in the developed world are about 1.5, well below replacement rate, and falling fast. The population will peak, perhaps as early as 2050 and much earlier in some countries (e.g. China). Then there will be more people trying to take pensions and many fewer paying in. This is well nigh inevitable barring a highly unlikely massive increase in fertility rates (which are still falling). When this happens the stock market will, inevitably, permanently, crash to a much lower value and large parts of defined contribution pensions will be wiped out. There is likely to be little warning of the crash (which is not necessarily the forthcoming crash). People are unlikely to avoid it unless they understand and take action well in advance.
We need pension reform urgently to avoid an otherwise inevitable crisis.
Thanks
Excellent, Richard. But what do you do if you don’t have a big SIPP or are a member of a DC pension scheme and are reaching the age when you might need to start taking benefits? One’s choice boils down to the industry’s favourite, the “Probabilities-Based Approach”, known as ‘Drawdown’, or the “Safety-First Approach” by using your fund to buy an actual guaranteed pension in the form of an annuity. If your pot is large enough, these approaches can be ‘blended’.
With drawdown, you remain invested and continue to face risk – I’d say a heightened level of risk – and ongoing fees. That is why this approach is ‘popular’, the fees angle. Whilst suitable for some, ‘sequence of returns risk’ can be a real problem – this is where the fund value falls in the early year, blowing the assumptions you have to make out of the water. Drawdown is therefore a serious commitment.
Annuities, in the right context, remain the optimal retirement income product and are very safe and offer good death benefits today which is an important consideration. There will be a one-off setting up charge and then there are no more fees or ongoing investment risk – ideal if you live a longer time than you imagined. We have a client who spent the astronomical sum of £775,000 on a pension annuity in 1993 aged 60. The annuity offered was £8,750 per month. She has not died and has been paid about £3,465,000 in pension payments! Nowadays, annuities are underwritten at outset and those, like me, with long-term medical conditions might be offered an ‘uplift’ over and above the standard annuity rate. It’s really important to shop around by using the “Open Market Option” which costs no more to do because the annuity market is competitive and the difference between the highest and lowest quotes can be significant.
There are, too, “Fixed Term Income Plans”. These are actually drawdown products, but operate similarly to annuities. I looked at a case yesterday. £500,000 paid into one of these products would pay a fixed monthly amount of £2,750 for 5 years and then offer a guaranteed maturity value of £438,378, a ‘total return’ of £603,378 (ignoring Income Tax). The maturity value can be used to ‘roll over’ into a new FTIP or be used to buy a conventional annuity or even ‘cashed out’.
Thanks, Mark.
I’m currently pulling out of a v small W Profits pension w Aviva 2 yrs early & taking a joint survivor 100% annuity rather than see it collapse in the next crash. But it was hard work, they really dont like you doing it.
My other similarly small 2yrs to go ReAssure policy has a guaranteed annuity element (like Equitable Life!) so Im stuck with that till maturity else I lose the guarantee.
Neither ReAssure nor Aviva were the companies I started the schemes with, as both got sold over my head to the big boys, whether I liked it or not.
Both policies were meant to provide an anti-inflationary boost to our income at 75. We’re doing fine, no thanks to the government, but the private pension industry is a racket and the recent de-regulation/flexibility rules on cashing in pensions are a crooks’ charter exploiting the vulnerable.
Much to agree with
Robert, GAR’s are not always very practical and often have little flexibility, so make sure you understand the terms being offered by ReAssure. I recently looked at a policy with, as it happens, Aviva. The GAR was 10% on the fund, but only if paid annually in arrears, fixed in payment, with no guarantee period or spouse’s pension payable. Some, however, do offer flexibility. Best check!
Thx for info about GAs.. ReAssure are not an easy company to deal with as a mere customer with a small fund.(recent experience with tiny fund of my late son’s DC pension plan).
The upside is that on a small fund the actual cash differences involved are small.
One comparison site rang me up after I went online, but wasn’t willing to share the details of all the annuity quotes they supposedly had for me, but only the “best” one THEY had chosen. No thanks, goodbye. It’s like going for a swim in a shark tank.
Your point on productive investment is critical and often lost in our overly “financialized” world.
Pensions only work on a macro scale and over an intergenerational timeframe if there is productive investment. “Productive” meaning “something we do today that will have use for those that follow us”. Gold will not help me in old age – I need people with time and inclination to care for me.
Time?. We need, now, to invest in stuff that the kids/grandkids will need so they don’t have to….. freeing up time to deliver care.
Inclination? Well, older folk need to treat the next generation fairly.
On a micro scale? As someone in their 60s I share your caution and invest accordingly. I can do that because I am wealthy and financially educated. Most people are not – some rely on advisors who are, at best, blinkered; at worst, only chasing commissions. (There are some honourable exceptions – one of whom contributes to your blog, occasionally). Most don’t have enough to make paying for advice worthwhile so opt for “standard” approaches….. which, of course, are decided “pension professionals”. (Foxes building the hen coop?)
There are quite a lot of overlapping themes here but all related to the obligations and rights of individuals versus what the State can and should do… and they are complex. (I might expand on this). However, there is one thing that should be done whatever you believe – offer better access to Government Guaranteed savings vehicles…. via NS&I.
Agreed, not least to the last
You can buy certain NS&I products through a private pension (SIPP), such as Income Bonds. Many of our clients have and do. Sure there will be an admin cost to have the SIPP (and not all SIPPs accept NS&I), but as the bonds are held within a pension wrapper the monthly payments into your SIPP bank account are tax-free.
A very valuable exposition – especially as to the uncomfortable scenarios ahead.
The powers that be have always been pretty good at exploiting the English language to give a false impression – ‘Defined Contributions’ sort of sounds as safe as ‘Defined Benefits’ – because after all they are ‘Defined’
You say the defined benefits pensions are/were ‘private’ but they were labelled as ‘State Earnings -Related ‘ pensions although the contributions did come from employers and employees.
DB and SERP are not the same..
Just a minor clarification. Many DC pensions will de risk as you get closer to retirement so that you have less growth but also less chance of loosing lots in a market correction. It’s worth getting advice about checking yours to see if it does this and that it knows what age you intend to retire.
They wull de-risk if you ask for that to happen
You cannot assume it
That was exactly what proved impossible for me to get info on. ReAssure guaranteed annuity/2yrs to go policy couldnt be changed or taken early w/out losing the guarantee &
Aviva’s w profit/2yr to go policy talked about built-in de-risking in the blurb but the staff wouldnt explain how or when, the investment profile 2 yrs out was still heavily based on stock market investments, and 2 years out from maturity said any de-risking wouldn’t be happening for another year anyway. Really unhelpful. The least costly/risky thing seemed to be for me to take the Aviva annuity early at the value stated. (This is not advice)
Both company’s website were a total pain to use and did not do the things they claimed could easily be done online.
Oh yes – taking the annuity cost about £700. It’s like flying Ryanair – an extra charge for everything
– soon there will be a charge for flying INSIDE the aircraft?
A slightly flippant warning – at one point you say “Reform is needed now”, which highlights the cunning nature of Farage, who could now show a clip from your youtube video of you saying those words, and say you are endorsing his company.
You can’t deny saying those words, just as Trump can’t deny saying the words that Panorama spliced together in the correct order, just with a large chunk elided that changed the context.
Corbyns new party “Your Party” is another cunning verbal trick, reminding me of a classic Abbot and Costello sketch about Baseball https://youtu.be/sYOUFGfK4bU?t=77
Oh come on…
Farage is not going to be lifting pieces from my videos
My worry about ‘automatic’ de-risking strategies adopted by many DC funds is that they can go wrong, badly wrong, just at the worst time in one’s life. Many switch to longer-dated gilts in the last couple of years before the chosen retirement age. That was a disaster after the notorious Truss/Kwarteng mini Budget when some people saw their fund value drop by 10%-20% almost overnight. What is forgotten, though, is that as gilt yields spiked up, so did annuity rates. Those choosing annuities were not so badly affected, unlike those choosing to remain invested. I rather like cash in the run-up to retirement, including NS&I, as this brings stability, excepting inflation.
Yoh share my view on these issues.
https://www.mansfieldbs.co.uk/saving/sipp-trust-accounts/
https://www.teachersbuildingsociety.co.uk/savings/sipp-ssas
For example.
Interesting
Thanks, Richard. Your analysis comes across as sound and clear. I have already altered the balance of government bonds in my portfolio in anticipation of a crash and your point about investments not actually being productive in themselves is well made.
I fear, though, that any kind of financial bulwark to provide for our non-earning years will be of little use when the inevitable collapse of global trade that relies on resources that become unavailable or too expensive happens. This will no doubt be uneven and accompanied by governmental protestations of its ‘temporary’ nature. The only pension that will truly be sustainable will be the provision of food, water and shelter at community level and even that, given the dramatic climate changes that are likely to ramp up, is not guaranteed.
As you have often pointed out, the fate of our economic life is going be dependent on physical resources, not money.
Agreed. I should do another video on that.