{"id":13251,"date":"2011-12-19T09:45:21","date_gmt":"2011-12-19T09:45:21","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=13251"},"modified":"2011-12-19T09:45:21","modified_gmt":"2011-12-19T09:45:21","slug":"the-average-rate-of-return-on-shares-in-london-in-the-last-10-years-is-minus-0-1-so-why-are-pensions-invested-in-them","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2011\/12\/19\/the-average-rate-of-return-on-shares-in-london-in-the-last-10-years-is-minus-0-1-so-why-are-pensions-invested-in-them\/","title":{"rendered":"The average rate of return on shares in London in the last 10 years is MINUS 0.1% – so why are pensions invested in them?"},"content":{"rendered":"

The Observer noted yesterday that<\/a>:<\/p>\n

Highly paid City traders are depriving pensioners and savers of thousands of pounds through high management fees that are often hidden, according to leaked advice provided by consultants to the Treasury. The charges are spreading and are so steep that savers may find they get less back in retirement than they invested in\u00a0savings accounts and\u00a0pensions over their lifetimes.<\/p><\/blockquote>\n

This is just\u00a0about\u00a0inevitable. Referring to a City of London publication on the equities market<\/a>, produced in October 2011, shows that the average rates of return on equities have been as follows:<\/p>\n

\"\"<\/p>\n

Pension saving is long term. Over the long term the returns,\u00a0expect\u00a0in the\u00a0small\u00a0German market and even smaller Swiss market, have been negative. Globally they are 0.5%. Annual pension charges are at least 1.5% in most funds. After dealing costs absorb returns they rise well above that.<\/p>\n

As I have argued in People's Pensions in 2003<\/a> and more recently in Making Pensions Work<\/a>, investing pension money n equities did not in 2003 and still does not now make any sense at all. Losses are virtually guaranteed and the City\u00a0rakes\u00a0off billions - in my estimate up to \u00a330 billion a year from\u00a0pension\u00a0funds - for the\u00a0privilege\u00a0of losing it for the ordinary people of this country. This is blatantly capturing the\u00a0benefit\u00a0of the common good of pensions for the\u00a0benefit\u00a0of a few. No wonder, as I showed in Making Pensions\u00a0Work, that this industry is incapable of\u00a0generating\u00a0any returns at all to pay\u00a0pensions\u00a0- which is why all pensions in this country are currently effectively paid for by the state when the cost of\u00a0pension\u00a0tax\u00a0relief\u00a0is taken into account.<\/p>\n

The disaster is that in 2013 millions more people will be compelled to throw money at the City each month<\/a>. The National Employment Savings Trust - designed in 2006 in another economic era - is intended to force low paid\u00a0employees\u00a0to give 4% of their earnings to the\u00a0City\u00a0to lose for them month in and month out from 2013 onwards. This will be a disaster for the economy where\u00a0enforced\u00a0savings is currently\u00a0the\u00a0last thing we want, and it will be a\u00a0disaster\u00a0for these savers.<\/p>\n

I have met this fund and they refused to\u00a0consider\u00a0the alternative of a fund invested in\u00a0infrastructure\u00a0as I have\u00a0proposed. Conventional wisdom has to be followed they say. Which means that these people will be ripped off as are almost all pensioners now, and all to\u00a0benefit\u00a0the 1% in the City.<\/p>\n

When will we stop this pensions madness?<\/p>\n

Making Pensions Work<\/a> lays out the\u00a0alternatives.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Observer noted yesterday that: Highly paid City traders are depriving pensioners and savers of thousands of pounds through high management fees that are often
 Read the full article…<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35,29],"tags":[],"class_list":["post-13251","post","type-post","status-publish","format-standard","hentry","category-economics","category-pensions"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/13251","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=13251"}],"version-history":[{"count":0,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/13251\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=13251"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=13251"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=13251"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}