Low interest rates will just prolong the pain.

what is to be expected......you've had a socialist government for that period... i have long regarded the uk stock market as over-valued....

no more boom and bust indeed!!

for that reason i've paid it little attention of late.... my approximation is that during the same period the clown has inflated the uk £ by about 80%....

thus the drop is much more than your graph suggests.... imv standards of living are dropping in the uk....

regards

Oh, look, this is rubbish. Well, it's technically true in that the govt is progressively raising "pensionable age"; but there is no rational basis for this. As Abelard comments, we live in an era of increasing leisure, thanks to mechanisation; living longer and better while having fewer children is a simple way of accomplishing this without destroying the work force.

And this is utter rubbish. If your pension pot has indeed shrunk by a third, as per the interview you referenced, then you [&/or your IFA &/or your pension company] are either monumentally unlucky or monumentally stupid. You shouldn't have all, or even most, of your pot in UK shares; for your pension fund, you need to spread the risks and minimise the danger of losing significant amounts. If you did, it still takes a degree of idiocy to underperform the FTSE. In any case, this affects only a quite small fraction of the UK population [1/15 according to a recent report], not all of whom are in "poor" schemes, not by a long chalk, so is scarcely a reason to inflict panic measures on everyone; and whatever effect there is has been heavily exacerbated by Mr Brown's pensions raid -- currently running at an average of #20K per pot [much more, of course, for those who are near or just past retirement].

If you are in the private-sector, then you can match the CS scheme in virtually-complete safety. If your income is below #24Kpa, then this is as simple as putting 15% -- the same percentage as nominally goes in as superannuation from CS/TPS/USS/etc schemes -- of your salary into cash ISAs. Above that income, or if you want to do better, you [or your IFA] may have to work a little harder. But if you can match the return of the typical ISA, you can match the standard "defined benefits" schemes. You *should* be able to do better -- each extra 1% of return nets you some 30% benefit in your pension [or, equivalently, a corresponding reduction in the amount you have to save each month]. In real life, 2% extra is easy, 3% not unusual. Civil service pensions simply are not very generous.

Of course, if you *start* saving in your 40s or 50s, then all bets are off. You need to start a "defined contributions" scheme when you are young.

[...]

Indeed anyone who wants to work past 65 [and who is physically and mentally able] should be allowed to. It's also very beneficial to pensions. But I don't share your view of the "problem". Jobs are polarising. We live in an era when physical labour is less and less necessary, and is being replaced by more demand on intellect at one end, but also by a huge increase in "leisure" jobs and "caring" jobs and similar. Many of these are perfectly accessible to "the lesser able". Actually, it's very nice when a shop assistant or a waiter or a road sweeper is clever *and* helpful; but I'd happily settle for helpful in most cases.

Likewise! I'm looking forward to exercising my "grey power" as my grey matter becomes less in demand ....

And to me.

The reason being what?

Both are destructive in different ways. I think Lardy meant the tools for controlling deflations are more limited. Japan as an example is probably quite unique because of its national psyche and the lethargic mismanagement. Lessons seemed to have been learned judging by the willingness to take action by Western governments, if absolutely nothing else. Zimbabwe suffers from additional ailments besides economic neglect. The comforting fact is that by consensus the real terror of stagflation no longer loom so large over the UK economy.

We already have different rates of borrowing.

You're Robert Mugabe in disguise and I claim my five pounds.

Not in the foreseeable future.

I see plenty. I see a sea change in attitude could be warranted.

The rich is getting richer, especially with "mechanisation". The aging population is a ticking bomb.

you have the morals of a plutocrat...what some people will do for money....

regards

Some would even try to flog the lamest of paintings on their webshites ...

You don't need to work if you're rich, not bothered about your standard of living, or are provided for by a partner.

What is your position in life? Have you actually earned your own money to provide for yourself for years and years?

Try working revolving shifts, a job where you often get lung disease, or have to understand a couple of hundred thousand lines of code in a month.

it's already well underway

or be less inscrutable!

you need a citizen's wage...but....

history teaches us that men and nations behave wisely once they have exhausted all other alternatives. eban 1970

regards

Shall I quote Keynes or shall I simply say men and nations could very well perish before all options have been exhausted?

The reason being that the last ten years were the tail end of a quarter-century credit bubble and that the governments were always likely to make the same mistakes the Japanese did rather than allow the economies to take their medicine.

I think you're wrong on that. Debt-deflation is the cure for the disease. The disease is the credit bubble.

That action is to borrow and spend more. The same action taken at each previous crisis. The same action that meant a bigger and bigger crisis each time as yet more private debt was built up. The same action that will make the next crisis even more devastating than a debt-deflationary recession if we don't take our medicine now and allow our economies to correct themselves.

FoFP

you could do either.... your second sometimes looks like a distinct possibility

regards

The point is not whether you need to work, but whether in an era of generally-increased health, wealth, leisure and automation, you should be required to work *longer*. You shouldn't.

Perhaps you could explain the relevance to money-purchase pension schemes of these rather strange questions?

I did a spreadsheet on google docs, unfortunately unshareable but I was wondering what real interest rate you should reckon on. In my opinion it is not safe to assume over 1%. Currently the real interest rate is negative. Amount/year 3600 Real return 0.01 Annuity Rate £3896.76 from thisismoney.co.uk, male 60, indexed linked Age Now 21 Retirement Age 60 Years to retirement 39 Savings at retirement £177,751 Pension £6,927

The above assumes that you can continue to save £3600/year in today's money tax free with a real return of 1%. Civil servants retire at 60 as far as I know. Annuity rates will probably be lower with increasing life expectancy in 30-40 years. With the state pension you would be on about 50% of pay, however, but you'd have to wait until you're 68. Would you be happy on less than £7000/year? You could easily spend £1500/year on fuel and the same again on council tax, and over £500/year on water and sewerage and that is half your money gone.

Working beyond mid 50s in many knowledge based jobs is not realistic. It is much easier to continue as a manager, though.

Is this the reality of the last 11 years? (Since Labour came into power.) Where is there an easy real return of 2 or 3 percent, please?

Your responses indicate to me that you may not be a householder supporting yourself.

That seems a very strange [and false, not that it's any of your business] interpretation; and you have still not explained why, even had you been right, it is relevant to money-purchase pension schemes.

You don't [shouldn't!] need a spreadsheet ....

My current ISAs are paying well above RPI or bank rate, which are what pensions and salaries are tied to [whatever your (or Abelard's) views on the "real" rate of inflation]. With RPI now predicted to go negative next year, the resulting politics could be "interesting".

This corresponds to a life-expectancy of around 100/(3.9-0.5) years, taking you to about 90 [assuming that the life company can also only get 1%]. If they can get, say, 3%, then it takes you to 60 + 100/(3.9-1.5) or over 100. Annuity rates are always extremely "cautious" -- for good reason -- so you should definitely avoid annuities except as required by law [unless you happen to have an unusually favourable GAR built-in]. If you expect to live to, say,

85, then [still assuming 1%], you can extract about 4.5% [#4500] at age 60, or 5.5% [#5500] at age 65.

I was assuming retirement at age 65 with 40 years of pensionable service; an extra year makes 2.5% difference to defined-benefit schemes but something like 8% to defined-contribution schemes [still assuming your

1% real-terms growth]

Or about #8600 if you retire at 61 after 40 years and pay yourself directly from your savings instead of going for an annuity.

Nothing to do with "happiness" or whether it's adequate, but with the comparison with CS [teachers, etc] pensions. You've made very cautious assumptions, retired early, and still come out with a figure that is in the same ball-park as the corresponding CS figure [#8600 net vs #12000 gross]. Each extra 1% on the real return multiplies the outcome by about 1.3 or 1.4; at 1.3, it takes the #8600 to just over #11K net, which is better than the corresponding CS pension. If you were to work on to 65 [or even 68], you would do *much* better.

But there are three other considerations: (a) the CS pensioner would also click for a #36000 tax-free lump sum; (b) the CS scheme is contracted out; if you are contracted in [as you should be if your job is not pensionable], then you will get some combination of graduated pension, SERPS and S2P [depending on when you started], which could well be an extra #4Kpa [or more]; (c) the CS pension would be #12Kpa taxable income, with no flexibility, whereas your ISA income is, within reasonably wide limits, yours to do what you like with -- move some/all to a better investment, take more one year and less next, etc -- and it's entirely tax-free.

Hmm. I worked through to retirement in a job that was just about as knowledge-based as any. Most of my colleagues did the same, with no apparent diminution of their ability.

It's certainly the reality of at least 9, perhaps 10, of the last 11 years, to judge from the performance of the life companies that my money was invested in [and despite Mr Brown's despicable pensions raids],

Worth noting, perhaps, that the government is offering you 2% over base rate to defer your pension. In view of what has happened to interest rates in the past week or three, they may have to change the rules, or else they will find themselves suddenly paying out a *lot* more in pensions over the next few weeks. But in general, as this is a long-term contract, like annuities, that offer is *extremely* cautious -- only really interesting because many people can arrange for it to be a tax-free lump sum.

Property rental typically pays between 5% [residential] and 10% [commercial or student]; as you still have the house, that's the real return [over an economic cycle -- not this last year!] once you've knocked off tax and maintenance. There are plenty of other easy ways of getting [in reasonable safety] a couple of percent over what you can get in a bank or building society deposit account -- but you have to take the long view, and not expect a guaranteed interest rate. My own bank puts a flow chart on its top page pointing you at various possibilities, depending on how much you want to invest and in what degree of safety.