The Great Debate UK
Europe’s bigger crisis waiting to happen
By Kathleen Brooks. The opinions expressed are her own.
So it looks like Greece has staved off default for another few months at least. Investors are breathing a sigh of relief and buying up risky assets like the world is a rosy place again.
The markets always suffer from a chronic case of short-termism, but once a sovereign debt crisis takes hold it is very difficult to reverse. Investors may be concentrating on Greek, Irish and Portuguese funding needs for the next 24- 36 months now, but it won’t be long before investors start to scrutinise longer-term liabilities that are currently being clocked up for the next 10,20 even 30 years.
The bigger beast that threatens Europe’s solvency is the demographic and entitlements crisis. While a lot is known about Europe’s aging population, the scale of the problem and its urgency are not well understood.
The IMF predicts that Greece will have the second highest growth in pension costs as a percentage of GDP in the G20 by 2030. Spain and Belgium aren’t in great shape either. Interestingly, by 2030 Italy and Germany will actually see their pensions’ costs start to fall, but that is because their populations are aging so fast that the bulk of their pension spending will be done in the next 10-15 years.
from Global Investing:
Russia’s babushka time-bomb
The babushka, that embodiment of Russian grandmotherly goodness that has spawned iconic dolls and inspired a Kate Bush song, poses one of the gravest threat to the Russian economy.
Moscow-based investment bank Renaissance Capital also expects this segment of the demography to spur politically risky pension reforms.
from Funds Hub:
Where there’s muck…
Pensions schemes are in trouble, but those attempting to get them out the mire are seeing some money-spinning opportunities.
Corporate retirement funds that have promised to pay workers based on their final salaries have long been heading for difficulties as we humble drones have the temerity to live longer than anyone thought possible. Combine that with roller-coaster markets and unpredictable inflation and interest rate prospects and trustees start hunting around for a golden bullet.
Osborne’s budget alleviates worries over pensions tax relief
-Joanne Segars is chief executive at the National Association of Pension Funds. The opinions expressed are her own.-
Osborne delivered a tough and important budget, but one issue he didn’t really square up to was the UK’s woeful record on saving for retirement.
A call for a cross-party consensus on pensions
-Damian Stancombe is head of corporate defined contribution at Punter Southall. The opinions expressed are his own.-
Pensions were a prominent feature of the chancellors’ debate recently, and are becoming a key battleground in the run-up to the election. Perhaps more interesting for us, however, has been the reaction of UK plc to the pensions issue and any government-led ‘solution’.
Crisis, what crisis?
– The author is a Reuters Breakingviews columnist. The opinions expressed are his own. –
Crisis, what crisis? That could be motto for the election manifestos published by Britain’s main political parties this week. Neither Labour nor the Conservatives addressed the country’s fiscal crisis head-on.
Considering defined contribution pension pros and cons
-Damian Stancombe is head of Corporate Defined Contribution Pensions at Punter Southall Group. The opinions expressed are his own.-
Three things to keep in mind for defined contribution pensions:
Higher earners
Pension plans help build financial security in retirement, and in the face of a looming pensioner crisis the government continues its efforts to increase the number of savers. There is one exception: if you earn more than 150,000 pounds all bets are off.
from The Great Debate:
Pensions and the coming savings boom
-- James Saft is a Reuters columnist. The opinions expressed are his own --
The explosion in company pension fund shortfalls in Britain nicely illustrates issues which will dominate economics and investment in coming years: the re-pricing of risk, a disillusionment with equity markets, and the boom in savings these shortfalls will help to drive.
Under current accounting rules, the pension funds of companies in Britain's FTSE 100 index are together 96 billion pounds ($170 billion) underfunded, more than double the deficit of a year ago and an all-time record, according to a report from pension fund consultants Lane, Clark & Peacock.
BT must be more efficient
- David Kuo is director at The Motley Fool. The opinions expressed are his own.-
BT’s annual results were expected to be bad. It turns out that they weren’t just bad – they were awful.
Now, many of us were expecting massive losses, a slashing of dividends, the axing of jobs and a gaping hole in the company’s pension fund. And BT duly delivered on all fronts.
Another fine mess, Darling
– Neil Collins is a Reuters columnist. The opinions expressed are his own –
“You wanted to see me, prime minister?”
“Ah, Gus, do come in. Rather awkward. Something we didn’t think of in the Chancellor’s pension proposals — I always said Alistair didn’t have the intellectual firepower to take my job.”
