So, he’s talking about tax relief for pensions:
Over the period when these funds managed to lose the pensioners of the UK money (even though those of many other countries made positive returns) we spend a total of £451 billion subsidising these pension contributions.
Now, I admit that in this time series some of the tax paid by pensioners will need to be deducted from the cost of tax reliefs given, because clearly over time there is a partial matching process going on here. Equally, not all need be matched: much of the tax paid will have been by people who made contributions before the period began, and so you could argue that the next cost was a but lower than £450 billion. I have no way of knowing by how much that might be the case (and nor has anyone else) but it would be very surprising indeed if this was £100 billion, but just in case let’s call it that.
That still leaves a net £350 billion investment by the state in pensions and apparently that’s all been lost, and more besides.
The problem with this is that when you go and read the report that this is based upon, the one that tells us that the real return is 0.7% minus, that return is after the tax that pensioners pay on withdrawing their pensions. Ritchie hasn’t bothered to read his source material.
It’s also the real rate of return, marked to market, over the 2000 to 2013 period. Ritchie would have everyone investing in infrastructure bonds instead of equities. Anyone care to calculate the real return on bonds over the past few years, when inflation has been higher than bond interest rates?