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.