Approximately Euro19BN in Greek government bonds, managed by the Greek central bank on behalf of pension funds and other state organisations, will be included in Greece's debt swap plan.
Thus shafting the pension of Greek public sector workers.
Showing posts with label pensions. Show all posts
Showing posts with label pensions. Show all posts
Wednesday, March 7, 2012
Greece Mortgages Its Future and Shafts Its Pensioners
Approximately Euro19BN in Greek government bonds, managed by the Greek central bank on behalf of pension funds and other state organisations, will be included in Greece's debt swap plan.
Thus shafting the pension of Greek public sector workers.
Tuesday, November 29, 2011
Busted Flushes
Eurozone finance ministers to meet in Brussels today to discuss ways to expand the European Financial Stability Facility (EFSF).
Given that it has been proven to be a busted flush, this meeting will be a remarkable waste of time.
Meanwhile, in the UK, George Osborne, will deliver his Autumn Statement.
This will be a "jam tomorrow" speech, in which he attempts to create the UK's mini version of the EFSF by using a £5BN cash injection from the government to leverage a further £20BN or so in finance from UK pension funds and the Chinese.
To give him credit, he may achieve more that the Eurozone has done with their busted flush!
Given that it has been proven to be a busted flush, this meeting will be a remarkable waste of time.
Meanwhile, in the UK, George Osborne, will deliver his Autumn Statement.
This will be a "jam tomorrow" speech, in which he attempts to create the UK's mini version of the EFSF by using a £5BN cash injection from the government to leverage a further £20BN or so in finance from UK pension funds and the Chinese.
To give him credit, he may achieve more that the Eurozone has done with their busted flush!
Thursday, October 27, 2011
The Eurozone Agreement
After much pantomime and farce, there has been agreement of sorts on a way forward to try to save the Eurozone from collapse.
The key points are:
- Banks will take a 50% "haircut" on Greek debt
- The bailout fund will be leveraged to Euro1Trillion
- Banks have 6 months to raise Euro106BN
So, will this work?
It has bought some time. However, the Eurozone (in its current) form will eventually implode because of its inherent internal contradictions (eg you cannot have one monetary policy when there is such a disparity of growth between the member states).
That being said, there are some "issues" that may well unravel this sooner than the "leaders" of the Eurozone would like:
1 The "haircut" is, despite the spin (seemingly, according to the Euro spin machine the "haircut" is voluntary, therefore it is not a default!), a default.
Does this matter?
Yes, it does matter.
By defining it as not a default, the Eurozone has null and voided sovereign hedging via CDS (this has not gone down well with those who hedged against default).
2 According to George Osborne, the IMF cannot contribute to the bailout fund.
Therefore where will the money come from?
Seemingly Sarkozy is on the phone to China (as I write this) trying to persuade them to put money in.
Good luck with that then!
3 Many commentators are of the view that the fund (even if money is found to beef it up) is not large enough to appease the markets.
4 A large part of the Greek debt being "haircut" is tied up with Greek pension funds, ie the value of Greek pensions has been halved. Quite what the views of the Greek people will be, when they realise that their financial future has been cut in half is anyone's guess!
Real people are being affected by the decisions made by the clowns "leading" the Eurozone, the clowns would do well to remember that they only remain in office under the sufferance of the people.
The key points are:
- Banks will take a 50% "haircut" on Greek debt
- The bailout fund will be leveraged to Euro1Trillion
- Banks have 6 months to raise Euro106BN
So, will this work?
It has bought some time. However, the Eurozone (in its current) form will eventually implode because of its inherent internal contradictions (eg you cannot have one monetary policy when there is such a disparity of growth between the member states).
That being said, there are some "issues" that may well unravel this sooner than the "leaders" of the Eurozone would like:
1 The "haircut" is, despite the spin (seemingly, according to the Euro spin machine the "haircut" is voluntary, therefore it is not a default!), a default.
Does this matter?
Yes, it does matter.
By defining it as not a default, the Eurozone has null and voided sovereign hedging via CDS (this has not gone down well with those who hedged against default).
2 According to George Osborne, the IMF cannot contribute to the bailout fund.
Therefore where will the money come from?
Seemingly Sarkozy is on the phone to China (as I write this) trying to persuade them to put money in.
Good luck with that then!
3 Many commentators are of the view that the fund (even if money is found to beef it up) is not large enough to appease the markets.
4 A large part of the Greek debt being "haircut" is tied up with Greek pension funds, ie the value of Greek pensions has been halved. Quite what the views of the Greek people will be, when they realise that their financial future has been cut in half is anyone's guess!
Real people are being affected by the decisions made by the clowns "leading" the Eurozone, the clowns would do well to remember that they only remain in office under the sufferance of the people.
Thursday, September 8, 2011
Pensions Crisis Looming
The Office for National Statistics (ONS) has released figures that show that the number of people contributing to personal pensions fell from 7.6M in 2008 to 6.4M in 2009 (a fall of 1.2M).
Contributions by savers into personal pensions fell by over £2BN between 2008 and 2010, from £20.9BN to £18.7BN.
For why?
People are skint, returns are abysmal and the financial services industry in the UK is despised.
The future is bleak indeed!
Thursday, March 10, 2011
Bust
Lord Hutton's proposals that public sector workers should be stripped of their final salary pensions and have schemes linked to average earnings, while paying more and working longer have unsurprisingly touched a raw nerve with the unions.
The GMB have warned of co-ordinated strike action.
Bringing the country to a halt will achieve nothing. Like it or not the country is broke (we have a debt of £4.8 Trillion), we cannot continue to pay ourselves salaries with money that we do not have.
These reforms have been needed for many years, it is only to be hoped that they are enacted and that they are not too late.
The GMB have warned of co-ordinated strike action.
Bringing the country to a halt will achieve nothing. Like it or not the country is broke (we have a debt of £4.8 Trillion), we cannot continue to pay ourselves salaries with money that we do not have.
These reforms have been needed for many years, it is only to be hoped that they are enacted and that they are not too late.
Friday, March 4, 2011
Don't Believe The Hype
Political spin doctors are hyping the story that the state pension will rise dramatically in the next budget.
Where, I wonder, will this money come from during a time of austerity and cuts?
Don't fall for the hype, and only believe it when you see the money going into the bank accounts of the elderly.
Where, I wonder, will this money come from during a time of austerity and cuts?
Don't fall for the hype, and only believe it when you see the money going into the bank accounts of the elderly.
Wednesday, December 15, 2010
The Country's Debt Burden
As the country faces cuts in government expenditure that are, "apparently", swingeing and ruthless it is worth putting a number of issues into context:
1 The overall debt burden of the country is a staggering £4.8 Trillion.
2 The cuts are cuts in planned inflationary increases in government expenditure, not cuts in actual amounts being spent.
3 The deficit in the Local Government Pension Scheme in England has more than doubled in the past three years to £100BN (7% of the UK's annual economic output).
Despite whatever the politicians might claim, the "cuts" when taken into context are but a pin prick in the backside of the shocking level of debt burden that is crippling the country.
As regards the pension black hole, the solution that the politicians will force on us is going to be increased taxes and increased contributions from members.
Neither of the above solutions will be popular, and will be delayed thus exacerbating the problem. The correct solution should be to change the pensions provided to the public sector to that of defined contribution (as per many in the private sector).
1 The overall debt burden of the country is a staggering £4.8 Trillion.
2 The cuts are cuts in planned inflationary increases in government expenditure, not cuts in actual amounts being spent.
3 The deficit in the Local Government Pension Scheme in England has more than doubled in the past three years to £100BN (7% of the UK's annual economic output).
Despite whatever the politicians might claim, the "cuts" when taken into context are but a pin prick in the backside of the shocking level of debt burden that is crippling the country.
As regards the pension black hole, the solution that the politicians will force on us is going to be increased taxes and increased contributions from members.
Neither of the above solutions will be popular, and will be delayed thus exacerbating the problem. The correct solution should be to change the pensions provided to the public sector to that of defined contribution (as per many in the private sector).
Thursday, October 7, 2010
Work Longer, Contribute More
Lord Hutton has published an initial recommendation from his ongoing review of final salary public sector pension schemes.
Simply put, public sector employees should work longer and contribute more to their pension schemes (thus taking the burden from the private sector). Lord Hutton wants the final schemes to be changed to a career average basis.
The unions are already "reacting" in a totally expected manner to this recommendation; ie they don't like it.
Lord Hutton's final report will be published before the 2011 Budget.
Simply put, public sector employees should work longer and contribute more to their pension schemes (thus taking the burden from the private sector). Lord Hutton wants the final schemes to be changed to a career average basis.
The unions are already "reacting" in a totally expected manner to this recommendation; ie they don't like it.
Lord Hutton's final report will be published before the 2011 Budget.
Friday, July 9, 2010
Level Playing Field
The government has announced that it will switch the index linking of private sector final salary pension schemes from the Retail Price Index (RPI) to the consumer price index (CPI).
This is in line with the similar measure announced in last month's emergency Budget relating to public sector pensions.
CPI excludes house prices and mortgage payments, is consistently lower than RPI. It is estimated that private pension incomes will fall between 10%-25% in retirement.
The CBI is pressing for legislation to allow those schemes who are specifically required to use RPI to be able to use CPI.
This is in line with the similar measure announced in last month's emergency Budget relating to public sector pensions.
CPI excludes house prices and mortgage payments, is consistently lower than RPI. It is estimated that private pension incomes will fall between 10%-25% in retirement.
The CBI is pressing for legislation to allow those schemes who are specifically required to use RPI to be able to use CPI.
Wednesday, July 7, 2010
Public Sector Pensions
Trouble is brewing in the public sector, the Institute of Directors (IOD) and the Institute of Economic Affairs (IEA) have (via a joint commission) called for a radical overhaul of public sector pensions in addition to the pay freeze that is to be implemented by the government for all but the lower paid.
As a starting point they have called for a 2% increase in contributions from public sector employees.
The commission also wants other major changes, as they argue that the true value of the main unfunded public service pension schemes is over 40%, yet the combined value of employer and employee contributions is approximately 20%.
Needless to say the unions representing the public sector do not buy into this argument. They point out that the pay levels of the majority of the public sector is so low, that the pension is the "reward" for accepting low levels of pay.
All very well, maybe, if the country can actually afford the cost.
As a starting point they have called for a 2% increase in contributions from public sector employees.
The commission also wants other major changes, as they argue that the true value of the main unfunded public service pension schemes is over 40%, yet the combined value of employer and employee contributions is approximately 20%.
Needless to say the unions representing the public sector do not buy into this argument. They point out that the pay levels of the majority of the public sector is so low, that the pension is the "reward" for accepting low levels of pay.
All very well, maybe, if the country can actually afford the cost.
Thursday, June 24, 2010
Pension Age Rises
As part of the plans to put the country's finances back in order, the government have announced that the state pension age for men will rise to 66 from 2016 (ten years earlier than originally planned).
Additionally, the default retirement age (when companies can force employees to retire at age 65) will also be scrapped.
These plans kill two birds with one stone:
1 Pension payments are deferred/lessened.
2 The longer people work, the earlier they die.
Additionally, the default retirement age (when companies can force employees to retire at age 65) will also be scrapped.
These plans kill two birds with one stone:
1 Pension payments are deferred/lessened.
2 The longer people work, the earlier they die.
Monday, June 7, 2010
There Are Bad Times Just Around The Corner II
David Cameron has warned that the cuts that the government envisages making are going to be deep and painful, and that they will dramatically affect the way that we live our lives.
The Tories have quite rightly blamed Labour for the mess, and are shrewdly using this mess as an opportunity to push forward their social/political agenda (eg revisions to benefits and pensions).
Tomorrow George Osborne will announce a "once-in-a-generation" revolution that will involve a public consultation exercise on what people expect from public services, and where they think the cuts should fall.
Tuesday, April 6, 2010
Public Sector Pensions
With a general election looming the CBI have entered the political fray and, quite correctly, pointed out that someone really needs to do something about public sector pensions.
The CBI state that the public sector final salary pension schemes (a burden of around £1 Trillion) are unsustainable and must be overhauled.
The CBI state that public sector pension benefits are now worth an average of 26% of annual salary, this is far beyond the norm in the private sector.
The CBI wants the next government to set up an independent commission to fully investigate pension costs.
All very well.
However, the politicians have a vested interest in retaining the current system, as when they retire they receive a public sector pension.
The CBI state that the public sector final salary pension schemes (a burden of around £1 Trillion) are unsustainable and must be overhauled.
The CBI state that public sector pension benefits are now worth an average of 26% of annual salary, this is far beyond the norm in the private sector.
The CBI wants the next government to set up an independent commission to fully investigate pension costs.
All very well.
However, the politicians have a vested interest in retaining the current system, as when they retire they receive a public sector pension.
Wednesday, March 10, 2010
The Big Freeze
As if the long and snow bound winter has not been enough, Gordon Brown (keen to show that he can make decisions) has decreed that another freeze is on its way.
This time it relates to a £3BN public sector pay freeze on the pay of top civil servants, judges, generals and doctors.
He seems to have forgotten that he is no longer Chancellor, and that the "privilege" of setting public sector budgets rest with the Chancellor.
Given the fact that Brown and his acolytes have bankrupted the country, £3BN is but a drop in the ocean
Were he really serious about saving public money, he would impose a heavy does of reality on councils and other members of the public sector who have defined benefit (final salary) pension schemes. The private sector has long since recognised that these are unsupportable.
However, Brown knows that he employs at least 5% of the electorate; to upset them before the election would be political folly.
Whoever wins the election will of course need to address the issue of public sector pensions, the pain will come later.
This time it relates to a £3BN public sector pay freeze on the pay of top civil servants, judges, generals and doctors.
He seems to have forgotten that he is no longer Chancellor, and that the "privilege" of setting public sector budgets rest with the Chancellor.
Given the fact that Brown and his acolytes have bankrupted the country, £3BN is but a drop in the ocean
Were he really serious about saving public money, he would impose a heavy does of reality on councils and other members of the public sector who have defined benefit (final salary) pension schemes. The private sector has long since recognised that these are unsupportable.
However, Brown knows that he employs at least 5% of the electorate; to upset them before the election would be political folly.
Whoever wins the election will of course need to address the issue of public sector pensions, the pain will come later.
Wednesday, August 26, 2009
Reality Bites
The government and councils are finally waking up to the burden that they have imposed on the taxpayer, wrt the burgeoning public sector and its defined benefit pension schemes.
It seems that millions of public sector workers will face having their pensions reduced, as politicians battle to save the public sector from financial meltdown and avoid a middle class tax revolt.
The Times reports that John Denham, the Communities Secretary, is drawing up plans to downsize the public sector pensions which face a shortfall of at least £60BN.
The Department for Communities and Local Government, keen to avoid a winter of strife, have said that it would ensure that council pensions were fair, solvent and affordable.
The reality is that whatever the promises made, the current level of pension benefits for the public sector is unsustainable and cuts will be made.
The public sector workers will not react well to the cuts, and the country will be in for a very rocky ride as the industrial action taken will doubtless mirror that of the dying days of the last Labour government in 1979.
Funny how history repeats itself!
It seems that millions of public sector workers will face having their pensions reduced, as politicians battle to save the public sector from financial meltdown and avoid a middle class tax revolt.
The Times reports that John Denham, the Communities Secretary, is drawing up plans to downsize the public sector pensions which face a shortfall of at least £60BN.
The Department for Communities and Local Government, keen to avoid a winter of strife, have said that it would ensure that council pensions were fair, solvent and affordable.
The reality is that whatever the promises made, the current level of pension benefits for the public sector is unsustainable and cuts will be made.
The public sector workers will not react well to the cuts, and the country will be in for a very rocky ride as the industrial action taken will doubtless mirror that of the dying days of the last Labour government in 1979.
Funny how history repeats itself!
Monday, August 24, 2009
FSA Award Themselves Payrise
The Financial Services Authority (FSA) has awarded itself, or rather 20% of its staff, a 10% pay rise.
Despite the fact that its expenditure exceeds its income, by around £23M, the FSA justifies this largess as "necessary" compensation for the closure of its final salary scheme to existing members.
This is the same FSA that, as an organ of the state, presided over the collapse of Northern Rock and the near collapse of the entire banking system.
This is also the same FSA that lectures banks etc against bonuses and unrealistic pay awards.
Given that they have less than two years before they are abolished by the Conservatives, they appear to be trying to make the most of their remaining time on earth.
Despite the fact that its expenditure exceeds its income, by around £23M, the FSA justifies this largess as "necessary" compensation for the closure of its final salary scheme to existing members.
This is the same FSA that, as an organ of the state, presided over the collapse of Northern Rock and the near collapse of the entire banking system.
This is also the same FSA that lectures banks etc against bonuses and unrealistic pay awards.
Given that they have less than two years before they are abolished by the Conservatives, they appear to be trying to make the most of their remaining time on earth.
Monday, August 17, 2009
RBS Under Investigation
The beleaguered Royal Bank of Scotland (RBS), having been destroyed by its previous board, now faces further humiliation and potential value destruction.
The Financial Services Authority (FSA) is investigating RBS's ill fated acquisition of ABN Amro, and the subsequent £12BN rights issue.
The FSA are looking at whether the management of RBS knew that the rights issue would not be enough to cover its debts.
Following the rights issue, RBS received a further £20BN injection courtesy of the hapless British taxpayers (who have been saddled with bailing out Brown's bankrupt Britain).
Sir Fred "The Shred" then left, in the mode of Ronnie Biggs, the company and the country having secured himself a hefty £16M pension pot.
Given the passive nature of the FSA, in the event they find fault with the management of RBS, we cannot expect much more than a fine to be levied on RBS; there most certainly won't be any jail sentences.
I would note that the timing of the FSA investigation is "interesting", to say the least, coming as it does hot on the heels of a class action by local government pension funds who are trying to sue RBS.
The case focuses on two key issues:
– whether RBS misrepresented its financial status, specifically its mortgage book
- the effectiveness of RBS's due diligence process when it bought ABN Amro.
Could it be that the FSA investigation is a whitewash?
The Financial Services Authority (FSA) is investigating RBS's ill fated acquisition of ABN Amro, and the subsequent £12BN rights issue.
The FSA are looking at whether the management of RBS knew that the rights issue would not be enough to cover its debts.
Following the rights issue, RBS received a further £20BN injection courtesy of the hapless British taxpayers (who have been saddled with bailing out Brown's bankrupt Britain).
Sir Fred "The Shred" then left, in the mode of Ronnie Biggs, the company and the country having secured himself a hefty £16M pension pot.
Given the passive nature of the FSA, in the event they find fault with the management of RBS, we cannot expect much more than a fine to be levied on RBS; there most certainly won't be any jail sentences.
I would note that the timing of the FSA investigation is "interesting", to say the least, coming as it does hot on the heels of a class action by local government pension funds who are trying to sue RBS.
The case focuses on two key issues:
– whether RBS misrepresented its financial status, specifically its mortgage book
- the effectiveness of RBS's due diligence process when it bought ABN Amro.
Could it be that the FSA investigation is a whitewash?
Friday, July 17, 2009
Strike
Barclays' 25,000 staff are to be balloted on strike action in response to the bank's plans to close its final salary pension scheme.
The staff union, Unite, claims that members are "incensed" at the plan to close the scheme and move members to a defined contribution scheme.
The ballot will be held in August, with any strike action taking place in September.
It is likely that the results of the ballot will be scrutinised by other unions and companies, as many are considering plans similar to Barclays.
Indeed, British Airways announced today that it will take back £300M pledged to its pension fund to pay retirement benefits if the company goes bust as part of a plan to boost its liquidity by £600M. BA's pension fund is estimated to have a deficit of around £3BN.
The staff union, Unite, claims that members are "incensed" at the plan to close the scheme and move members to a defined contribution scheme.
The ballot will be held in August, with any strike action taking place in September.
It is likely that the results of the ballot will be scrutinised by other unions and companies, as many are considering plans similar to Barclays.
Indeed, British Airways announced today that it will take back £300M pledged to its pension fund to pay retirement benefits if the company goes bust as part of a plan to boost its liquidity by £600M. BA's pension fund is estimated to have a deficit of around £3BN.
Friday, July 3, 2009
Pension Age Should Be Raised
Lord Adair Turner (Chairman of the FSA) has called for the state pension age to be raised to 70.
In 2005 he wrote a report on pensions that has led to the incremental rise in the pension age from 65 to 68 by 2044.
Turner now, belatedly, realises that this is too little too late.
Politically this will be rather "difficult" to push through. However, if one were to take the emotion out of the argument, given that the UK state pension is absolutely pathetic there is little money being given up by deferring retirement by a few years.
Aon reports that British pensioners are being paid just 17% of their average earnings as pension, compared to the European average of 57%.
Unsurprisingly the unions state that they will oppose this suggestion.
What precisely then is their solution to Britain's pension black hole?
In 2005 he wrote a report on pensions that has led to the incremental rise in the pension age from 65 to 68 by 2044.
Turner now, belatedly, realises that this is too little too late.
Politically this will be rather "difficult" to push through. However, if one were to take the emotion out of the argument, given that the UK state pension is absolutely pathetic there is little money being given up by deferring retirement by a few years.
Aon reports that British pensioners are being paid just 17% of their average earnings as pension, compared to the European average of 57%.
Unsurprisingly the unions state that they will oppose this suggestion.
What precisely then is their solution to Britain's pension black hole?
Tuesday, June 30, 2009
Brown's Bankrupt Britain
Revised figures from the Office for National Statistics (what use are stats if they have to be forever revised?) show that the the UK economy shrank by 2.4% in Q1 2009. This is the fastest rate in more than 50 years, and far worse than expected.
In related news Brown has published a "quasi manifesto" outlining his plans for his "relaunch". Unfortunately these plans will come to nothing:
1 They are uncosted, and Brown has not stated how he intends to pay for them.
2 The country is bankrupt.
3 He has been responsible (as Chancellor and latterly as PM) for the country's finances since ZaNulabour were elected in 1997. The fact that we are in this mess now is in no small part down to him.
4 Brown is not the man to rebuild/relaunch Britain, or its bankrupt economy.
5 Public sector pensions now stand at £1.2 Trillion (equivalent to 85% of Britain's GDP), this figure is unsustainable.
Brown has bankrupted Britain, yet now claims that his relaunch will save it.
Who is he trying to kid, us or himself?
