it creates an entirely new investment framework,
completely free of the stock market, to provide a
secure and safe place in which an individual or
company pension scheme can invest to provide for a
pension in retirement
All of this is possible because the People’s Pension will be
backed by People’s Pension Funds. These entirely new
funds will be created to provide a way in which pension
contributions can be invested in the building of new public
infrastructure projects such as:
• schools and universities
• hospitals and other health facilities
• transport systems (including railways, trams and bus
• social housing
• sustainable energy systems
So, why aren’t current pension funds invested in such schemes?
Well, two reasons.
1) Some of them don’t have a mechanism by which a return is provided. It’s not actually possible to go and buy social housing and make a profit from it, nor do housing associations issue bonds that one can purchase as a retail investor.
2) Where such schemes do exist, where the structure does allow investment for profit in such things then investors, yea including pension funds, do indeed purchase them. Rather a lot of hospitals are in fact provided under such schemes……who is it that refinances the PFI projects once the equity partners have taken the risk of bringing the project in on time and to budget?
So, the problem isn’t in fact having new pension schemes. It’s in making sure that it is possible to set up a structure that will provide a return to investors. And once you have done that then people both can and in fact do invest in those very things.
So they’re just entirely barking up the wrong tree in the first place.
And that’s without beginning to note their second problem, which is the idea of bond financing being used to fund the equity portion of such schemes. Anyone really want to lend money to the bureaucrats at 4% without some buffer between investor and cost over runs?
And that free of the stock market bit is wondrous too. When tackled on this back then …..well, let’s look at the problem. Not all investors have the same time horizon. People are of different ages, have different investment goals. People also die, their estates must pay taxes and so on. So, we can’t have an investment system which locks people into an investment for, say, the 30 year life of paying back the cost of a new school. There must be a secondary market in these bonds. So that people can indeed move in or out of them over time.
And what do we call a secondary market in already issued stock and or bonds? Why, it’s something very like a stock market, isn’t it? And when tackled on this the Murphmonster did indeed agree that a secondary market would have to be set up. Which, umm, rather obviates the original point of being free of the stock market, doesn’t it?