An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
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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.
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.
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...
I think you are missing key pieces from the orthodox economics, Matt.
ReplyDeleteHere is a refresher on how you are supposed to think about it.
The key issue is that private pensions are a con job.
ReplyDeleteThey 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.
This comment has been removed by the author.
ReplyDeleteHow do they do it over there Neil?
ReplyDeleteOver 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...