D\’ye think we might accuse Ritchie of hubris here?

Second, to say that as a result the refusal to consider the pension reforms I recommend – requiring that at least 25% of all new pension contributions made in the UK go into new investment that will result in new investment and job creation in the real economy – is absurd. The result to pensioners is bound to be better than now and yet even those who should be horrified with current pension abuse cannot see that they have a duty to support such change.

He\’s complaining about the fees that pension funds take.

But do you see what he\’s done there? He\’s gone from \”here\’s an idea I cooked up, whadda ya think?\” to \”of course this is better so why isn\’t everyone agreeing with me?\”

There\’s been no thought at all about the relative costs of the two different investment programs. This might surprise Ritchie but not many others, but it is more difficult to find a \”new\” investment that is worth investing in than an old one that\’s worth it. More time and effort has to be put into evaluation.

For example, a tracker index fund (which is where people should be putting pension money) might be charging 0.3% a year, something like that. They know they\’ve got to hold the index (say, FTSE, so roughly the large UK companies with some foreign exposure on top) and that\’s it.

Contrast that with trying to evaluate new companies, new products. Even expansion of current production. For example, how much do the Angel business networks charge for raising money? 5% I\’ve seen as a fee with another 5% payable as warrants on equity.  And yes, of course, that 10% gets charged back to hte investors: they\’re getting 10% less company for their money, aren\’t they?

It\’s just typical Ritchie. His new born egg of an idea is so clearly superior to the last couple of centuries of experience (you know, finding good new investment opportunities is hard) that just the merest fragment of thought from the Master should determine the law of the land.

One other leeeetle point that might be made. The failure rate among new businesses is awful. Four out of five fail to see their fifth birthday. He\’s insisting that 80% of your pension savings should be pissed away on unworkable concepts and blue sky ideas.

Of course, we can reduce that failure rate by employing a set of professionals inbetween us and those new businesses, to evaluate them for us. Like, umm, those Angel peeps, the few people in the country who charge even more than fund managers.

I would normally expect you to have to think long and hard to come up with an idea for pension funding which is both more expensive and more risky than the industry we have now but Ritchie seems to have managed it with no thought at all.

Quite amazing.

9 thoughts on “D\’ye think we might accuse Ritchie of hubris here?”

  1. What is this real economy he and others keep babbling on about? Do we add it to concepts like fair taxation as something which allows these peeps to sound important, knowledgeable popular without having to come up with anything tangible beyond spending someone else’s money on their pet projects?

  2. Well, to anybody with any sense, assuming you don’t have enough to recognise that there isn’t actually any such thing, the ‘real economy’ would probably be that bit of it that isn’t permanently welded to the gubbermint teat. But I think he, not being well-endowed in the sense department, means the bit that doesn’t involve finance.

    Which shows two things – firstly (and strangely for somebody who spent most of his life passing off as an accountant before he became a ‘tax expert’) he has no understanding of how important finance is to businesses. Secondly, he wants us to be as poor as Vietnam (insert wherever you think low-margin manufacturing is escaping to nowadays), even before he steals the crusts we have left to fund his paymasters at the TUC.

  3. He couldn’t give one fuck about the pensioners. He just wants their money to be channelled somewhere he approves of by force of law. Returns on their investments are irrelevant.

  4. Think of a twat (like most of you filthy buggers weren’t already.) Now think of what the twat must look like on a blue whale. Now think about that Sarlacc thingy what Boba Fett got luzzed into in Return of the Jedi. That’s skirting round the vicinity of how big a twat is Murphy.He is an awful, awful man and I hope he gets a shrieking attack of piles.

  5. It’s actually quite an old idea of his. He sent me his paper on pension reform a few months ago. It dates from 2010: http://www.financeforthefuture.com/MakingPensionsWork.pdf
    Or, if you have better things to do with your time, here’s his blog on the same thing: http://www.taxresearch.org.uk/Blog/2010/09/28/making-pensions-work-dont-duck-the-issues/

    A very quick flick through either of these shows that Murphy is not actually proposing much in the way of new investment or job creation in the private sector at all. For “real economy” read “public sector”. Here’s a taster – from the blog:

    “And anyway, much of this money will go into government bonds and related products.”

    And from the summary in the paper:

    “Investment in local authority bonds for local regeneration, or in shares or bonds issued by a new Green Investment Bank and in hypothecated bonds e.g. to provide alternative funding to replace the inefficiently expensive Private Finance Initiative for funding public sector infrastructure projects……..would have paid positive returns to pension investors.” Or lost shedloads, of course…

  6. Richie also keeps ignoring the fact that – as numerous people have told him – restricting pension funds to a certain % of UK investments would be contrary to EU law.

  7. What happened to your blue sky idea Tim?

    Tim adds: I’m off to Germany on Weds to check a variation on it. Annoyingly, among all of the various options I had been considering there was one buried in the mounds of paperwork and reports that I’d misunderstood. This one has the possibility of being both simple to understand and not reliant upon new technology. Indeed, it would be an almost classic mining play: technology has changed over the past 100 years so why not dig up and reprocess the wastes of 100 year old mining?

Leave a Reply

Your email address will not be published. Required fields are marked *