kenneal - lagger wrote: Even some "fully funded" private schemes are unravelling because Gordon Brown raided them during his time as Chancellor to bail out Labour's spending plans because they looked a little bloated after a time of spectacular growth and they are now unable to fund the promises made in those earlier more affluent times because of current lower growth.
Having worked for a pension fund that would come under your classification as being "fully funded" this is not the full picture - not by a long way.
Firstly, it was known that well before Blair or Brown got to office that there would be a pensions crisis simply due to the fact that retirees were living longer and that there were less contributors paying in. Using the BAU economic model (yes, I know that is a nonsense) major problems ahead when the baby boomers retired was seen as inevitable.
Your point was that Brown raided the pension funds to fund his spending plans - actually that was one of the first things that he did. This was done on dividend payments - on a share dividend there is not only the rate of payment per share the dividend also has a notional tax credit. This was something that pension funds could claim back from HMRC until 1997 when Brown changed the rules. However, to blame all the woes of the pension "industry" on this is missing the point somewhat.
The financial crisis of 2008 and the subsequent QE, along with low interest rates, has been the real killer. Pension funds require interest payments from their assets to fulfil their obligations - with virtually zero% interest rates pension funds are investing in ever riskier ventures just to obtain a yield. The Treasury market simply isn't yielding anywhere near enough. It should also be noted that some larger pension funds own shopping malls and other commercial real estate that isn't performing particularly well at present - on current trends this is likely to get worse.
There has already been the closures of final salary pension schemes - I can see that this situation will only deteriorate further. As George Carlin noted the pensions will vanish the moment you come to make a withdrawal
Mods do you think this should become a separate topic?
A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools - Douglas Adams.