Let’s talk pensions…
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- Опубліковано 13 вер 2024
- Pensions are in the news because they very obviously are not working for people in the UK. The trouble is, the solutions assume a bit of financial engineering, and pouring some more money into the bottomless pit of the City of London will solve the problems. As I explain in this video, that’s definitely not true.
#uk #politics #pension #money #economics
ABOUT RICHARD MURPHY
Richard Murphy is Professor of Accounting Practice at Sheffield University Management School. He is director of Tax Research LLP and the author of the Funding the Future blog. His best known book is ‘The Joy of Tax’.
This video was edited by Thomas Murphy.
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Prof Murphy, please keep these coming. So refreshing to have a sense making channel. Thank you so much.
Always expected they would be scrapped in my life time.
Fully expected to be working into my 90's.
"... we should be talking about pensions ..." Yes Richard, as an academic who benefits from an extraordinary comfortable pension, let's discuss why Public Sector have such well padded pensions but the ordinary workers, not so much.
Universities are not public services. They are private institutions. Go to the bottom if the class.
2 questions for Reeves: 1. Will she feel comfortable claiming fuel expenses for her second home? 2. Does she think MPs' expenses should be means tested?
Very true observation of our economy in general, being inward looking and recycling old assets. We don't invest in ourselves as a country.
Wait until the Friday when they pull the carpet out from under all financial investment.....UBI incoming
I'm learning a lot from this channel... and I'm even older than Richard.
Very illuminating explanation. So pension money could be used to create a national Wealth Fund, that invests in a broad range of British companies, and which also has a "venture capital" division.
So how about a bit of evidence. For example, we take an "investment" and we get the full set of accounts for that. That's income generated, cost of running it, cost of the debt servicing etc.
For example, HS2. Lets have the full set of accounts.
If the government simply raised the tax threshold to £20.000. I personally wouldn't need a state pension..
It's certain that this year will bring more challenges. Looking back, I realized that I spent the entire previous year making expensive financial blunders because I was so consumed with worrying about my portfolio. I was forced to decide between raising my investments and purchasing a home. I discovered that the property I had bought needed more work than I had anticipated after deciding to sell my investments. It's becoming more difficult to determine how much longer I can take this
Take things easy, we've all made mistakes
Invest in companies that provide current cash flows to diversify your portfolio. I hired a planner at the end of 2022 to enhance my portfolio, and in the last ten months, I've made profits in over fifty thousand different marketplaces. Should 2023 teach us anything, it's that luck doesn't last forever. Even in times of abundance, we should put in more effort to prepare for the worst case scenario.
How can one find a verifiable financial planner? I would not mind looking up the professional that helped you. I will be retiring in two years and I might need some management on my much larger portfolio. Don't want to take any chances.
Leah Foster Alderman. You'll undoubtedly find out more if you look her up online.
She appears to be well educated and well read. I ran an online search on her name and came across her website, thank you for sharing.
The low state pensions here in the UK, results in us being more reliant on personal pensions, which in turn results in more fees for London city. Our low state pensions are due to our proximity to city.
Not just that - our state pensions are low are because successive UK governments have not wanted to take responsibility for pensions. The state pension has only been designed as a 'top up' instead of being the main pension. This puts a massive burden on the individual to invest his own money to build up a pension fund. It's a purely political and ideological decision.
Meet the New Boss
Same as the Old Boss
When Brown sold off our Gold Reserves ( without asking us) to whom did he sell it to?
Far too fundamentally sensible for politicians and a definite no-no for The City of London state within a state.
Velocity (of money) is a vector quantity with scale and direction.
No one except Richard is prepared to talk about the direction and distribution of money, wealth and assets.
I was educated recently that a lot of countries are broke,spending more than they are making..
So new future technologies could be nationalised,funded by pensions..
Don’t forget Gordon Brown's raid on dividends paid to pension funds. Until 1997, pension funds got a tax credit - a company had already paid corporation tax and for pensioners at least there should be a rebate. The impact was huge as not only did pensioners lose income, they lost the growth in funds that would have accrued from reinvested dividends. The total loss has been put at £ 250 billion over the following 20 years. And of course, now it raises no money because pension funds hold hardly any British shares
Where would be a better place to put your retirement money if pension funds are crap?
here in australia we have some pension funds that are known as "industry funds" and they charge far, far lower fees than funds that are not 'industry' AND they perform better !...partly as a result of not taking our money and putting into the pockets of their overpaid/wealthy employees, but into our pension investments instead...who knew ?
Also 11.5% of our pretax income is compulsorily paid into our nominated 'superannuation' fund.
Also, the state pension, as highlighted by Richard, is approx 100 pounds a week higher than the UK's truly pathetic offering.
moral of this story: LEAVE that tory hell hole ...or help someone who can.
How about looking at the totally unfounded civil service’s gold plated pensions = to our annual GDP?
2.6 Trillion public pension liabilities but it's funny isnt it how these are never unsustainable.
@@stuartregan1627 Absolutely, and this is where Liz Truss was right on the money. Her problem was lack of political nous to deliver ‘low tax - small state’ it is simply unsustainable 🤷♂️
@@aardvarkrevolution5764 100% Do you remember yes minister ? Civil service wants to save money by cutting everybody's pension which we know is peanuts to pay their hugemongous gold plated pensions. Absolutely disgusting.
@@stuartregan1627 Yes, sadly we’re not allowed this level of satire for fear of offending someone. So many topics they covered were to prove to be too close to the truth - very clever scripts.
Another superlative video here Richard 👏🏻👏🏻👏🏻👏🏻👏🏻 Once again, an enormous amount of content, which could easily be stretched out over a day or even a WEEK of interactive teaching. I remember vaguely that there was a “Citizenship” subject created in secondary schools once - is this still a thing? I suspect not - but it should be - and this is exactly the kind of thing that could and should be at least touched on in such classes 😀
the enormous amount of British pension funds' capital, compared to public debt, after Brexit and therefore end of banning national-favouring should allow complusory issuing of loans from pension funds to counties in order to build council houses, doing infrastructural work including hospitals' improvement, etc. This is much more feasible than taxing
in the super rich. I also find unfair that inheritance British inheritance tax is So high 40% and the exemption threshold is so low=300k.
From the day I started working until I retired I had 11% of my disposable income taken at source as pension contribution. Those who don't pay from day one are deluding themselves.
Why should every Financial Advisor expect to drive a BMW ? Pension charges are a scandal.
Hi Richard, just want to understand your thinking on stocks and shares. I want to invest in 'Human Ingenuity' around the whole world. If I buy a global index tracker with the lowest fees (0.3%) am I not doing that. I also do not want to pay capital gains taxes on that growth so I use a financial vehicle called a SIPP (in the UK). What else could I use to do that in the UK if wanted to invest in the above described?
State pension is low as we don’t pay anything like the social security contributions the rest of Europe pays (tbh I would like an individual account like the US or Germany so you get back what you pay in)
Sorry, but you don't necessarily get back what you pay in at all. Definitely not the case in the US with exit fees and management fees. Investments entail risk, and if you don't know what your contributions are invested in, how do you know you'll get anything near what you put in back, especially as it would still be a poorly performing pension fund if you did. Inflation, erodes the purchasing power of the nominal amount invested, and you have to pay the fund managers a cut each year. So your returns have to beat inflation to stand still, nevermind grow
I mean this may be true for Self Invested Pensions like SIPPS but if we look at large pension/life companies like Aviva in the UK, CalPers in the US, APG in the Netherlands, these all invest directly in infrastructure, real estate, private equity etc. These people are not buying 'secondhand' assets but are creating new capital assets.
Also when I started my first personal pension in the 90's I was paying 1.5% annual fee plus 5% spread when buying units, now with competition within the 'city' I am paying 0.12%
The tax raid by Gordon Brown basically effed up people who were born in the 60's chances of building wealth in their highest earning years, it also destroyed defined benefit schemes overnight except I note for university lecturers....
I don't agree. Developers of apartment buildings do so, in part, to eventually sell them to pension funds. It's the classic exit strategy so developers can get their capital back out of the project so they can build their next building. People would buy a lot fewer cars if there were no secondary market for them. And I'm not sure what my appetite for investing in stocks or bonds would be if I couldn't sell them to someone else. A robust secondary market that fetches a good price for things creates the imputus to make those assets in the first place. If all pension fund money were directed a forming new companies and building new buildings, I guess that could work too, but they would only do so if someone else was in the secondary market buying all those assets from the pension funds so they could meet their cash needs to fund pension payouts. So yeah, someone has to make new assets, and someone else has to buy second-hand assets. I'm not sure it really matters who, except that those with expertise in building new buildings and starting new companies should probably be the ones doing it. And seeing as my pension fund has never built a building before, they are probably better off buying one from someone who does it all the time.
Hmm.. I agree on the difference between investment and savings. BUT investors like angels/VCs want an exit. Hence they do need to sell on to someone! Very few startups pay dividends for a very long time!
The UK in real terms is not the six wealthiest country in the world. It is smoke and mirrors - we really don't produce and export much these days. Creating capital assets ...now that would be a good idea instead of graft etc..
That really depends on how you describe wealth, the City of London is full of very smart, motivated, morally questionable, 'barrow boys' who will take a cut on every tax dodge, 'asset hiding', 'capital flight', 'currency manipulation' to enrich themselves and their 'incorporation'. The UK is just wrapper around this undertaking.
@johndinsdale1707 de-industrialised. Today, it's all about limiting resources to human beings with sustainable measures and that includes the UK economy.
Very interesting and I find it hard to disagree with much of what you have said, but solutions exist, pay more in to your pension, or pay in to your own SIP.
I’d be interested in a video on the solutions to them problems you raised. My solutions are incredibly simplistic
So I’m interested in “how should we invest our money so that it does make a difference for the majority and not just a few rich people?”
Could that be a future blog, or have you done that already and I’ve missed it?
Please quantify "Excessive Charges"
Well, there are sufficient funds to reconstruct the UK's dilapidated infrastructure. The income from Toll-roads, railway tracks and road-bridges can give a real boost to pensions. And if there are those, that say it doesn't, then look to the Danes and their Great Belt and Feman project. Pension fond investments in these project are giving high rewards. So turn on the green-machine!!
Yes but the Tories found funds to built a needless high speed line called HS2. Ignoring needed local rail for sure.
saving is just delayed expenditures. and very risky in the mid part of this century
I stopped working at 50 and retired with 26 years contributions, with the threat of test means to a limit of £30,000 I've decided not to work and live off my Army pension. By the time I qualify for a state pension and the acured inflationary interest on my Army pension I'd just make up the £30,000. However its a different question and problem if they include our assets including homes, savings and investments, then I'm going to lose the state pension or a reduced rate, hence I only contributed 26 years.
We should understand pensions I started paying mine when I was 18 for 14 years then it was frozen,well I was depressed at the time ,and surely I should have got it then under I'll health , but I didn't do it was frozen until I was 60.
Then another thing ,they offered me a small amount and a monthly sum .I thought I could draw the lot at a later date ,apparently not , so the NHS pension is hardly worth having .
Borrow and invest no save money
Please what do we do then ?
I m divorced got no other pension than what the Government will give me
Whilst it’s easy to “oh this isn’t important, you can just invest in a tracker fund, another commenter even mentioned the SandP500 invested in US companies!! I think he’s advocating for a government administered pension system, which isn’t run for the profit of private pension companies. One focussed on producing investment in new high skilled or specialist jobs.
🤕 I've probably not understood this correctly but are you saying, for example, invest pension funds in building council housing/sheltered housing/nursing homes which would
. increase disposable income for younger people who may then be able to save a deposit to buy
. decrease government spend on rent subsidy, Help2Buy, Buy2Rent, homeless/temporary accommodation for families & social oncosts in education, health & justice
. freeing up revenue to pay higher state pensions & possibly reduce tax burdens rather than allowing a few to make fortunes from the misery of the majority
'Second hand investments' - what do you think happens to the money paid to buy these? It goes (by stages) into new investment. Buying something does NOT take it out of circulation- the seller now has it. 101 economics.
Hi I think that what Richard is saying, unless the seller now takes that money and starts a new company nothing has been created. I hold a few shares in my employer, when I sell them it will likely be to buy myself something and that is likely to be a depreciating asset.
@@sarahandadrianwicks870 Investment total goes up over time. Some is invested in existing companies who use that capital to produce and innovate. Some is directed to new companies that start to do the same. Separating these as it they were totally different is pointless. The capital is essential to aid production. Removing the assets (asset stripping) prevents the company from conducting their business. How is this a good thing? Looking at a horse from underneath gives you a different view of the horse. But it is still the same horse. Richard should stick to accounting, not finance (quite different!)
You can’t keep everyone else in the world and pay decent pensions, if you pay into a private pension scheme people are robbed twice
The solution to the pension problem is to replace the current Ponzi scheme with a system in which every child alive today gets £5000 invested in a SIPP, which would, after 60 years, provide enough for retirement. We would phase out the current pension system over the same period so that, in 60 years, the state pension would be replaced entirely by a lifetime pension invested in a SIPP since birth.
Why not have the government give everybody 25k a year from (for the sake of argument) 65 years old. No more starving or freezing pensioners and a big increase in GDP just like that!
Hi Richard . Do you think pensions will be part of CBDC? Thanks
Poor comparison (with other countries) They pay higher pensions, but tax more- in the UK we have a choice of how much we want, and how much we pay. The level of pension (above a minimum) is not dictated to us.
In practice, my wife and I could live, moderately comfortably, on my state pension alone. Your standard of living depends more (much more) on your skill in spending than on how much you earn. The increased excess can be stored for retirement. I overdid this, and am now hopelessly over-funded.
The 'city' only over-charges you if you let it. Invest in tracker EFTs and the charges are miniscule.
Not true. You can't pay what you want, when you want. The amount one has to pay is set by law. And you can be fined.
@@CuriousCrow-mp4cx you misunderstand. The state pension is low*, but so is the cost. But you can add a private pension for a higher return. Optional, unlike many other countries.
* low but not zero- Australia, for example means tests you pension, and you may get nothing.
It sounds a lot like when I realized that there is true, public, social insurance, which is an effect of being able to spread risk across 65 million people, and then there is private for-profit insurance which is fundamentally different, as it is NOT based on spreading risk across the group, but by speculating on probabilities for profit.
Public social insurance is like a traditional barn raising: farmer's barn burns down - you need a barn to survive - so all the farmers around stop work and come to speed-build a barn for him. Real people working cooperatively ensures survival of all. This is the socialist interpretation of social insurance. Much is lost in turning these concrete social relationships into an abstraction and privatizing this social-economic function, both socially and economically, nationally and personally
I don’t trust them MF,I invest in myself or gold.
A superficial analysis. Firstly, whilst true that the state pension is lower than the EU average, the UK benefit system takes this into account and tops up incomes on a means tested basis. Otherwise why would the UK be a magnet for such high immigration levels?
Secondly, if you are paying the City of London high pension charges, you need to shop around a bit more. My pension charges are about 0.8% for example, that doesn’t seem so high to me on investments that grew by many times more than that.
I recommend that the ‘dead hand of a labour government’ leaves my pension well alone.
Pensions (and wages) should be sufficient to provide a dignified living for people, without the need for means tested top ups.
@@tonyy452well said, also with my company pension, there is no option to shop around.
UK is not a magnet for high immigration levels. It has historically and regionally low immigration, and few refugees. It's appealing if you want to speak English in Europe. People come here for the people - their family - in spite of the quality of govt, the cost of living, decaying infrastructure, crumbling schools and hospitals, and sh!t in the water.
Lesson 1 for every immigrant: there is no significant unemployment insurance or workman's comp or welfare or pension and applying for any of it is liable to do more psychological damage than the paltry sums could ever justify. In UK, family is your social safety net. Hopefully you have a family that can fulfill this function. If not: aristocrats don't care about your feelings ;-)
They won't though coz pension fund managers want their grubby hands on your money & pension contributions will become mandatory.
@@WarrenPeaceOG you must have been overseas for the past 10 years, is all I can say.
Pensionsbutalso the charges companies levy to make trades.
Accountancy question. Why would the state no adhere to IFRS and put the pension son the books? It says it adheres to IFRS. Then it goes and does the opposite.
Why aren't you calling that out?
I think I know. It's a socialist pension debt caused by redistribution and you can't have the great unwashed knowing they have been done over.
Rubbish. Any secrecy is to protect the parasites in the City of London.
Nurse he’s out of bed again
Well they're certainly been done over. But by the spivs in the City. Nothing whatsoever to do with redistribution - which has gone into reverse over the last 50 years anyway!
It's wrong to compare the state pension (which is paid per person) to being "the 6th wealthiest country" which is overall GDP. That was misleading of you. At least use GDP per capita since you are talking about a payment made per person by which we are actually something like the 22nd wealthiest.
They're gonna get lousier as there's a story going about that liebour is going to introduce a retirement tax.
What do you know about that?
I don’t understand any of this! Try harder. Break it down maybe?
yeah, try harder would be my advice
Murphy doesn't get much dafter than this..he wants no secondhand market for shares so no stockmarkets.. therefore no one will be able to sell an investment they buy nor value it.. this bloke is a crank!!!!
That is not what he said.
His suggestion is interesting. I love the way he takes an underperforming aspect of our current situation and suggests a transformative innovation.
He is an expert applying his knowledge to generalist concepts. I believe he grasps that our demographics will force change. We simply don't have enough younger people to support the ever increasing percentage of older people.
Every advanced economy is in the same situation. Creative thinking will soon become a necessity. Our current situation is untenable long term. Defining the goal and proffering a route to achieving that goal is sensible. We need 'outside the box' thinking.
Murphy grasps that.
I'm not sure what talk you listened to.
Interesting account name: pseudonym or troll?
What is wrong with what he says? Citations and evidence please.
The stock-market as it currently exists is completely unnecessary now. Its functions can be encapsulated in an app. Effectively, the City is a nothing more than a parasitic anachronism - and a damned expensive one, at that.
Very misleading as usual - Europe is actually in a far worse state than the UK. For example, the UK has nearly ten times the pension assets of Germany (Source Statista).
You forget that European countries have MUCH BETTER STATE PENSIONS!! E.g. in Italy you can retire on 80% of your last take home pay - FROM THE STATE PENSION. They don't need private pensions.
@@tancreddehauteville764 That is completely unsustainable and demonstrates your economic illiteracy.