Having started a new job that has consumed my soul and time over the last 6 weeks I have a new years resolution to fill in the pension details and get myself a healthy pension plan going (as healthy as can be achieved in the current scheme of things anyway, what with the fire, brimstone, moon-as-blood scenarios playing out).
Mike over at the BOM(b, for it is) is posting (yet again) on the pension crisis-in-the-making that will engulf the "public sector" (read "your wallet and your childrens wallets, and maybe your grandchildrens...").
Now, my general stance on this is to think of all those hole-digging-consultants, the crevace-filling consultants and the general navel-gazing experts and think "bah, why should I be paying for their sorry ass pension anyway?".
It is at this point spitting over my evening reading that I realised that in addition to these people there are also doctors, nurses, police officers, soldiers and social workers (yes, there are some good ones, they must be in the majority otherwise the BBC and Daily Mail wouldn't get so worked up over the bad ones) who have done their job, grinned and born the incessant insane ramblings of every social engineering project that MP's have sprung upon them (let leave the messy question of those who actively encourage the insanity to another post) and have paid dutifully into their pension pot and expect a return.
The problem is, as the good Dr. Crippen points out, is that the bastards in Whitehall (all of them, since time immemorium) have been raiding this fund like a personal kitty for whatever insane scheme they want to push that week.
Now "investing" someones pension fund is what is supposed to happen; you hand over money to some clever dick, they put it towards something, train lines in Africa, etc. you recieve a return. This, for the slow-witted amongst you, is not what is happening here; they are spending the money on toys then expecting the taxpayer of tomorrow to pick up the tab; it is deferred taxation at its most insidious - forgot Browns billions he is "investing" in our banking industry and "public services"; there are entire multiples of this countries GDP that need paying in the next few years that is only increasing, unlike our relative GDP, which is rapidly decreasing.
Dr. Crippen rightly points out that the problem, in both private & public sectors, is a lack of respect for the individual money you are spending; he links to the following on private pension fund management:
"One of the most senior figures in the fund management industry has broken ranks and admitted that up to 40 per cent of private-sector pension pots are swallowed up in fees."
The Doc points out that the public sector fund (fat) controllers are much worse:
"This is worse than the city spivs. They only steal 40% of private sector pension contributions. The government has stolen 100% of the money contributed by doctors and nurses."
This negates one obvious and shocking addition; the money is just taken from tax payers in the form of either:
1. Higher taxation (very unpopular)
2. Turning the printing pressed on (less well understood, but arguably much more dangerous, i.e. fall of society dangerous).
Often (indeed today) we are seeing a combination of both; a devaluation of what you have in your wallet, matched only by the speed at which Gordo and the wonder-badger can take money out of it.
I have a simple solution to the private sector problem and it works around the following synthesis:
Pension fund managers are paid fees and bonuses on the basis of investing the money in some venture, which are paid up front with no link to the long term health of a pension fund.
In Short: Dude doesn't have to think long and hard with where or how to invest money, only that he invests it so he can get the fee for it.
The Answer: write into law that pension fund manager can only be rewarded for the long term health of a pension fund, i.e. My pension pot gains 5% of its value this year- you get 0.5% of it, my pot loses 20% of its value, the effective -2% loss is mitigated across the fund managers complete commission for all pension funds, i.e. the reward pot has both negative and positive feeds on it, and depending on how they invest changes their fee.
There's more; a percentage of the annuity is paid to the fund manager once it starts to be paid out; they get a defined % of the pot (something very small obviously).
Should be quite an incentive; you earn money when the fund earns money, not when you invest your clients money. You also earn money once a percentage of the annuity once it is realised so you are incentivised to get the best return possible in the safest manner.
As for the question of the public sector...it always comes down to one thing...