Wednesday, August 10, 2016

UK Pension Illustration

Not an endorsement of the tweet but this is an interesting graph none the less. More effects of the idiot zero risk free rate.





4 comments:

Ryan Harris said...

I think you are missing key pieces from the orthodox economics, Matt.

Here is a refresher on how you are supposed to think about it.

Neil Wilson said...

The key issue is that private pensions are a con job.

They are nothing more than a state pension in disguise. And the zero rate will point that out - at which point we can get rid of the middlemen creaming off their cut and just pay people directly.

Ignacio said...
This comment has been removed by the author.
Matt Franko said...

How do they do it over there Neil?

Over here the local govts put some $ in accounts assuming a minimum return and make up the shortfall using the USDs in the state/local tax revenues if necessary...

Private pensions put $ away too but most have converted over to defined contribution from the old defined benefit.... "creative destruction" ends up taking out the firms before the employees reach retirement age so this defined contribution is probably better anyway but either way is screwed by the ZIRP nowadays...