The Pensions

[12DrinkMore]

I read this report and, really, I despair.

http://www.atimes.com/atimes/Global_Economy/KC11Dj04.html

For years, Americans slaved away in their malodorous cubicles under the rule of crappy monster bosses, their only dream of liberation being that the equity appreciation in their 401(k)s would allow them to sing Johnny Paycheck's famous Take this Job and Shove it on the day they became eligible for plan withdrawals.

And so were the lambs led fat and happy down into the screaming abattoir of the world financial crisis.

[purushanti]

I read this report and, really, I despair.

http://www.atimes.com/atimes/Global_Economy/KC11Dj04.html

For years, Americans slaved away in their malodorous cubicles under the rule of crappy monster bosses, their only dream of liberation being that the equity appreciation in their 401(k)s would allow them to sing Johnny Paycheck's famous Take this Job and Shove it on the day they became eligible for plan withdrawals.

And so were the lambs led fat and happy down into the screaming abattoir of the world financial crisis.

If the work is service to others, then the joy of it could be enough to keep one from retiring. But if one has sold out one's individuality and creativity for a buck, yes, does not feel so good. And things are changing so fast, perhaps soon no money for anyone, and people then forced to take responsibility for their own lives.

[samuibeachcomber]

ITs always been the same way,those with the most have the most to lose,and those that have slaved away in jobs they have n't enjoyed waiting for the big pension day also have a lot to lose plus a wasted life.

[GuestHouse]

More doom and gloom from 12DrinkMore - What's all this garbage about slaving away?

These posts of 12DM's increasingly read like the self pitying drivel one might expect from a teenager who's girlfriend left him because of his acne.

How do you come by so much of this garbage, do you spend your whole day trawling the net looking for it, or have you found a den 'useful stuff' from like minded gloom masters?

Here try this, I know its a tall order, but something here might just cheer you up

[PeaceBlondie]

Indeed, the article posted in the OP was very short on facts, and I quit after it mentioned the 91 year old Floridian who went to bagging groceries after losing his fortune in the Madoff scandall.

The article is totally USA-based, relating to retirement savings based on voluntary contributions rather than on pensions with defined benefits. And, that private pensions are underfunded. Plus a few catchy phrases like coq-et-vin in Provence and winters in Fargo, North Dakota. Maybe I should try writing financial articles.

But I do see the point, for non-Americans as well, that even private pensions are in deep doo-doo. Public retirement schemes from old age pensions to teacher's pensions are at risk. I figure it will take at the most five years until my pensions get cut. Maybe COLA freezes, maybe more penalties for living abroad, etc. Somebody has to pay the piper besides Mr. Madoff.

[flying]

Here try this, I know its a tall order, but something here might just cheer you up

HAhaha

I think it is a good idea

But I also just saw watchmen ( crappy movie ) & remembered this.....

As for the OP I know it will affect many folks. Also like PB said some will still get State drawn type fixed setups as long as the State remains solvent.

I always figured I would just work as long as I could due to being self employed.

I have taken my personal pension (earnings) all my life starting at age 20. Now 30 some odd years later I still take a year off here & there. Rich? Not by a long shot but I always figured we never know how long we will be visiting here so best to at least try & be balanced. So work to live not the other way round hoping for a golden ring in our supposed golden years.

Edited March 14, 2009 by flying

[Jingthing]

The article is totally USA-based, relating to retirement savings based on voluntary contributions rather than on pensions with defined benefits.

True and that is because the defined benefits Americans get are only at safety net levels. Americans are expected to save themselves, so there is a global economic impact from the fact that so much of American's retirement wealth has vanished. Consider that American consumer spending remains an important factor in the world economy and the people who are newly poor were some of these consumers. There is some good news indeed: Bernie Madoff will never leave prison alive.

Edited March 14, 2009 by Jingthing

[ronz28]

To me, the root cause of this market meltdown has been mark to market accounting that the accounting profession thrust upon the world a year ago. To avoid lawsuits CPAs strictly interpret new rules and force the banks, etc. to write down investments that aren't typically traded to fire sale liquidation prices. This has caused regulatory capital write-offs and shrinkage of loan capacity ten times the amount of the write-offs, stopping lending and has put the banks and economy in a death spiral.

Congress has finally wised up to what is going on and is forcing action thus giving the stock market some hope this week. Watch the U.S. House of Representatives Financial Services Subcommittee hearings on March 12, 2009 on Mark to Market accounting at

http://www.cspan.org/Watch/watch.aspx?Prog...Economy-A-41070

I would skip to the second session to understand the problem better first. There is a guy name Issac that really sums up the problem well,,,, he is in the afternoon session giving testimony at several points.

[geriatrickid]

The article is totally USA-based, relating to retirement savings based on voluntary contributions rather than on pensions with defined benefits. And, that private pensions are underfunded.

Maybe COLA freezes, maybe more penalties for living abroad, etc. Somebody has to pay the piper besides Mr. Madoff.

Defined pension plans in the private sector all but died for most companies. I lost mine 4 years ago. Now its defined contribution. The only ones still getting defined benefits in alot of countries are government and "public service" unions. They can do that because the taxpayers can always fund the shortfalls. I know you will scream for my nuts, but you are collecting a US Fed service pension right? I bet you never contributed enough over the years to fund the actual payout along with the medical benefits you received, so no sympathy from me. (Actually, I do have sympathy and you'd be right to kick my ass by saying that you took a lower wage than available in the private sector because the pension and benefits were better. Also, you'd be right to say that no one forced the government to structure the pensions that way.) Most private pension plans are in deficit positions now and the situation is worsening because of the heavy weighting in the stock market. I believe that CALPERS and OMERS are in deep doo doo because their massive real estate investments have melted.

To me, the root cause of this market meltdown has been mark to market accounting that the accounting profession thrust upon the world a year ago. To avoid lawsuits CPAs strictly interpret new rules and force the banks, etc. to write down investments that aren't typically traded to fire sale liquidation prices. This has caused regulatory capital write-offs and shrinkage of loan capacity ten times the amount of the write-offs, stopping lending and has put the banks and economy in a death spiral.

Congress has finally wised up to what is going on and is forcing action thus giving the stock market some hope this week. Watch the U.S. House of Representatives Financial Services Subcommittee hearings on March 12, 2009 on Mark to Market accounting at

Disagree with that vehemently. The accounting rules had no impact. It was all about boards not overseeing the company conduct. A responsible board would not have allowed the mortgage backed securities to go off so wildly. The boards should not have approved the compensation schemes that fueled the lust for paper profits. More importantly, the slight stock market recovery is mirroring what happened shortly after the crash of 1929. After this slight recovery, we will be back into the mess for a few more years yet. You can't just print out money and run massive deficits without there being a day of reckoning. The tide will turn in the US once the massive costs arising from the funding of the military in Iraq stops. There are still billions of dollars being spent and that's money desperately needed at home. (Not arguing the pros or cons of the war, just that it has cost the USA massive amounts to guarantee the security of the EU and 90% of Iraq's oil exports that go to India, China and the EU.)

Edited March 14, 2009 by geriatrickid

[midas]

There are some that believe the phenomenon of "retirement" would in any case be limited to one generation

Pension Funds Collapse: The End of Retirement?

Unless things change fast, history will show that the phenomenon of "retirement" was limited to one generation.

Unless things change fast, human history will show that the phenomenon of "retirement" was limited to one generation. After World War II, when European and Japanese economies stood in tatters, American capitalism could fulfill "the American dream," since there was little foreign competition to speak of. For the first time ever, workers were promised that -- after working thirty or so years -- they would be able to securely retire. That was largely the case ... for one generation.

The second generation is having a devastating reality check. 2008 was supposed to be a watershed year for retirement: it was the first year that the baby-boomers turned 62, and the retirement frenzy was to begin (since people could begin to draw on their social security benefits). Early in the year, however, a study was conducted that found one-fourth of these boomers were delaying retirement (only the baby-boomers who were actually able to plan for retirement were studied). The economy has since nosedived, and many more retirements are being delayed. The unfortunate reality is that many who planned on retiring will work until the grave, joining the millions of other baby-boomers who never had such dreams.

http://www.alternet.org/workplace/113981/p..._of_retirement/

[samuibeachcomber]

yes it was all a dream,in australia businesses were forced to donate 9% of an employees salary to a pension fund much of it geared to the stock market.Still, work never hurt anybody,and may keep many retirees alive longer.

[chiang mai]

More doom and gloom from 12DrinkMore - What's all this garbage about slaving away?

These posts of 12DM's increasingly read like the self pitying drivel one might expect from a teenager who's girlfriend left him because of his acne.

How do you come by so much of this garbage, do you spend your whole day trawling the net looking for it, or have you found a den 'useful stuff' from like minded gloom masters?

Here try this, I know its a tall order, but something here might just cheer you up

Sadly I am inclined to agree with the spirit of your post.

[Naam]

ITs always been the same way,those with the most have the most to lose,and those that have slaved away in jobs they have n't enjoyed waiting for the big pension day also have a lot to lose plus a wasted life.

right you are! one can only pity Warren Buffet, Bill Gates et al (especially Al© PeaceBlondie) who lost billions within a year whereas the average retired or soon retiring Joe Babyboomer who's access to monthly cash is reduced from let's say 3,000 dollars to 1,500 dollars can lean back, relax, twiddle his thumbs, sip a moderately expensive wine, smoke a good cuban cigar thinking "LAWD ah sez ah'm grateful that ah didn't lost a billyon or two like them poor buggers"

[teacup]

Thats why I learn to spending my times ......chasing my passions rather than pension.

Edited March 14, 2009 by teacup

[Naam]

Thats why I learn to spending my times ......chasing my passions rather than pension.

trading forex can indeed turn fast into a passion

[teacup]

Thats why I learn to spending my times ......chasing my passions rather than pension.

trading forex can indeed turn fast into a passion

Well you know what they say......"There is no passion to be found playing small"

[Naam]

Thats why I learn to spending my times ......chasing my passions rather than pension.

trading forex can indeed turn fast into a passion

Well you know what they say......"There is no passion to be found playing small"

you mean size does matter?

[teacup]

Thats why I learn to spending my times ......chasing my passions rather than pension.

trading forex can indeed turn fast into a passion

Well you know what they say......"There is no passion to be found playing small"

you mean size does matter?

Well it depends on the angle of perspective, really

[GuestHouse]

What geriatrickid, and many others who bleat on about public service pensions fail to mention (or even grasp) is the fact that it is generally the case that a public service pension comes with a big rope attached - You get caught with your fingers in the public coffers and you may face, loss of your job, loss of your liberty and loss of your pension.

The reason why governments have been so very keen to give reasonable pensions to public service is for the very control over their actions that the pension grab clause offers.

Those of us paying taxes for public services benefit from getting public service workers on relatively low wages who play the game because they don't want to loose there pensions. Lining one's retirement with a few dips in the coffers is not such an attractive option for people who might very well loose a life's pension rights.

And please, don't be so quick to pronounce the death of defined benefit pension schemes .... I can assure you they are not all dead yet.

[Naam]

What geriatrickid, and many others who bleat on about public service pensions fail to mention (or even grasp) is the fact that it is generally the case that a public service pension comes with a big rope attached - You get caught with your fingers in the public coffers and you may face, loss of your job, loss of your liberty and loss of your pension.

The reason why governments have been so very keen to give reasonable pensions to public service is for the very control over their actions that the pension grab clause offers.

Those of us paying taxes for public services benefit from getting public service workers on relatively low wages who play the game because they don't want to loose there pensions. Lining one's retirement with a few dips in the coffers is not such an attractive option for people who might very well loose a life's pension rights.

And please, don't be so quick to pronounce the death of defined benefit pension schemes .... I can assure you they are not all dead yet.

especially those denominated in GBP and held 'supervised' by british jurisdiction. remember our "slight disagreement" in this respect about two years ago? the sub topic was "Sterling, tax benefits, pension schemes, british jurisdiction" versus "currency and asset diversification, tax free status, offshore".

[teacup]

Fewer companies have pensions nowadays. Long time employment with the same company is not to be expected anymore. Not many companies left that can logically afford to pay more people to not work, than to work. The government is about the only one left, and they too are collapsing, like many counties in California.

If you still young like me, better to think about saving and investing money on your own. Look for tax free accounts among others.

Just me here

[GuestHouse]

"Sterling, tax benefits, pension schemes, british jurisdiction" versus "currency and asset diversification, tax free status, offshore".

I remember it well, I've been off shore, tax free and receiving contributions to my pension ever since - I've also received the latest report on the fund... I'm rather happy with the outcome.

If you still young like me

This raises another point.... On another day, and since we can drag up past discussions from years gone by, we'd be arguing that over any reasonable period of time the stock markets return solid and reliable profits - A few months into an economic recession and all this is forgotten.

If you are young enough, sit back and wait, things will recover. If you are older your pension (and other investments) where surely invested against a risk profile aligned with your age - (refer my previous comments regarding risk profiles and pension fund governance) or are we only experts in hindsight?!

Sudden flash back...... Oh of course, when I was discussing the benefits of risk controlled pensions others where ragging me over the delta being lost between risk managed pension schemes and going it alone on the stock market.....

You can have it both ways on the internet.

[Jingthing]

Just me here

Just most Americans actually. Company pension plans are dinosaurs. People do IRAs/401Ks instead. The trouble is most investors in such plans have lost about half their value in the recent past. That is troubling. Yes, I am one of the losers.

[Naam]

"Sterling, tax benefits, pension schemes, british jurisdiction" versus "currency and asset diversification, tax free status, offshore".

I remember it well, I've been off shore, tax free and receiving contributions to my pension ever since - I've also received the latest report on the fund... I'm rather happy with the outcome.

If you still young like me

This raises another point.... On another day, and since we can drag up past discussions from years gone by, we'd be arguing that over any reasonable period of time the stock markets return solid and reliable profits -

i will vehemently disagree as i have always considered investing in stock markets is gambling.

A few months into an economic recession and all this is forgotten.

bingo!

If you are young enough, sit back and wait, things will recover.

or perhaps they won't.

If you are older your pension (and other investments) where surely invested against a risk profile aligned with your age - (refer my previous comments regarding risk profiles and pension fund governance) or are we only experts in hindsight?!

Sudden flash back...... Oh of course, when I was discussing the benefits of risk controlled pensions others where ragging me over the delta being lost between risk managed pension schemes and going it alone on the stock market... You can have it both ways on the internet.

let me repeat that my disagreement was not pension vs. stocks but "GBP, pension schemes, half-assed tax savings, british jurisdisdiction" vs. "various currencies, unfettered selection and buying/selling of assets, tax free offshore".

[GuestHouse]

let me repeat that my disagreement was not pension vs. stocks but "GBP, pension schemes, half-assed tax savings, british jurisdisdiction" vs. "various currencies, unfettered selection and buying/selling of assets, tax free offshore".

Yes, but it doesn't go unnoticed that when the topic of predictions on which way currencies are going you remain silent. - On the fence with perfect hindsight.... and easy place to sit.

---

Anyway, we shouldn't let any of this get in the way of 12DM's doom and gloom fit - he's only happy when he's miserable.

Edited March 14, 2009 by GuestHouse

[12DrinkMore]

Anyway, we shouldn't let any of this get in the way of 12DM's doom and gloom fit - he's only happy when he's miserable.

Not true.

Actually I am on the whole fairly balanced. Well, I think so.

But I am very interested and more than a bit concerned about the way the finances of the western countries are heading. And if I could find a few positive reports then I would immediately post them here. But I can't find them, so I keep plugging away in TV in the hope that someone more intelligent than me can find some positive news and/or show me a solution to the issues I can see coming up in the next ten years.

Sure I could sit back and drink beer, take the "mai pen rai" attitude, and even "spend all my money today because I don't know if there is a tomorrow" and then sit in front of a supermarket with other boozers, staggering home and do the same the next day. But that is infinitely more boring than trying to understand what possible solutions there could be. And with the baby boomers coming up for retirement, a group that I am in, the question of how the pension problem is going to be dealt with is, for a lot of retirees in Thailand, very important.

And it is a huge issue. The pension funds are in deep trouble.

The national pensions rely on the current tax payers, but with the number of unemployed rising and the number of pensioners rising due to the boomers and living longer, can and will these pensions be paid? The increments in the case of the UK pensions have been under the rate of inflation, so it seems there is a long term policy to erode their value to nothing.

The private sector defined benefit pension schemes are severely underfund to a huge amount, which is increasing daily. When will the cash run out and what happens then?

The private sector defined contributions schemes are now looking distinctly sad, as savings wasted in the stock market have lost substantially and annuities taken out now are providing substantially less income.

The public sector pensions paid for by the tax payer can surely not have a future.

So what happens in five years or ten years.

I am hoping to find some government discussions/policies but no, nothing. The issue seems to have been totally swept under the carpet, possibly viewed as some hideous "pass the parcel" game, whereby the current government hopes that they will not be in power when the problem really strikes. But now it is imminent and in the next ten years will be well and truly upon us.

With the baby boomers alll heading towards 60, does this mean that 60 years of preparation have been wasted?

Yes it is not immediate gloom, but unless the issues are firmly dealt with now, there will be a lot of gloom and doom to come.

[473geo]

There is always the easy answer for governments to stave off pension payouts by lifting the pension age....allows more to be put in before the number of withdrawals increase. Do you think this is a likely scenario - pension age 70 years old in the UK. Yes?? that might make quite a difference to those with plans to retire to an exotic location while still relatively young and healthy at 65. Especially if private pensions also fail to deliver promises.

Just a thought....

[AlexLah]

In Holland they will freeze the pensions for 5 years (so no inflation correction) and proposed to increase the retirement age to 67.

Work until you die, I guess.

Edit: In Holland the retirement age was set in 1947 based on life expectancy, so now they try to justify a higher retairement age based on a higher life expectancy which means that on average you will have roughly 10 years to enjoy your pension that you have saved for the last 40 years.........

Edited March 14, 2009 by AlexLah

[GuestHouse]

I'd like to think 12DM's concern is our financial security in retirement - but unlike financial performance 12DM's past performance is a clear and reliable guide to his future returns - Post after post of gloom, misery and despondency.

I've got a pall at work just the same - a gambling addict, he's p1ssed his considerable life time earnings away on lame horses and pished up football teams.

He hasn't got a pension - he took the money out of his pension and threw it at a knackered horse - What he does have is a wish that pensions will collapse so that the rest of us can be in the same mess he's put himself in.

Edited March 14, 2009 by GuestHouse

[473geo]

So do you not think it is a not good idea to try and prepare a little for the future, for those unlike your friend who may be able to influence their own future...after putting their faith in knackered polititions and financial 'experts' in the treasury.I doubt anybody here is wishing for a pension collapse.