hooligan

Pension Apprehension

To me this article has all the hallmarks of manic depression. But then perhaps, that's where we are headed. Pensions represent an attainable outcome that continues to be thwarted by poor legislation. There is only a small amount of return required to deliver a pension pot that is sufficient to provide a comfortable retirement for all. Self funded also. It is grossly unfair ro charge consumers with the label of stupidity in allocating assets. To accuse consumers in this way reflects a callous assumption that consumers choose to lose money in the long term. This is patently false. What we are dealing with is the hiding place provided by "the long term" and a system that seeks to chip away at a sensible 3% real return with taxes, management fees, advisory fees and all the little costs hidden by the corruption we have seen in stock exchange charges, brokerage fees etc etc. I think it is offensive to posit that individuals do not deserve an economy that provides a 3% real return on a 5% savings rate. Think of this number. You cointribute the 40 year average savings rate of 5% of salary, to provide for 20 years of retirement. The numbers without any return or inflation adjustment, mean that an individual can save a pot of 200% of current salary. That pot can buy 200x5 = 10% of current salary per annum for 10 years. The economic system should be able to increase that number by 3% real, to quadruple that pot with investment returns (around that..rule of 72 says that 3% will compound todouble in 24 years, so poetic license here). This means that the pension will be 40% of salary. Starting salaries are small, but nonetheless, play with the savings rate, the investment return and then consider this. The system has delivered a massive fraud to all savers into 401k's and companies with defined benefit schemes equal to the shortfall in a "common sense" expectation of a reasonable pension with reasonable assumptions. The Fed has instituted a collosal political view by penalising those in age cohorts who have recently retired and who will retire in the next five years by adopting a zero interest rate policy. It is representing (without due democratic process) either by accident or design, a borrowing community of people who have demonstrated profligate behaviour and is punishing all those who have exhibited prudent behavior. The average consumer is not a masochist or stupid, the average consumer has been cheated and is being visited a collosal fraud by blinkered, ivory towered regulators and government officals.To