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But, but…..

And seventh, they might point out that these index linked bonds were issued to help the pension industry that predominantly serves the interests of the wealthiest 10% of the UK so if any cuts are now called for as a result these will be to punish the poorest to help the richest.

And eighth, they should say ‘never again’ should we set out to help the richest at potential cost to the poorest, because that’s the real scandal in what is going on right now. As state services collapse what is being protected are the savings of the best off.

Government bonds are the government providing savings opportunities to those who desire to save with the government. That’s the argument in favour of government issuing more bonds.

Isn’t it? Or is today Tuesday?

16 thoughts on “Eh?”

  1. Is it true that only the top 10% of the UK workforce are enrolled in pension schemes? It seems unlikely to me. After all, does that mean that all those BT and Openreach engineers and pole erectors are in the top decile?

    He also fails to point out that the fixed coupon gilts were not so popular when inflation was running at over 10% year after year. Their creation was to make it easier for the Government to fund itself rather than to help out pension schemes for the rich. But this is Spud, the man who knows nothing, forgets everything, and changes his mind on an hourly basis, depending on whom he is addressing

  2. Ah, according to the ONS (presumably a right-wing think-tank in Spud’s view)

    “The workplace pension participation rate in the UK was at 79% (22.6 million employees) in April 2021”

    Why does he tell such blatant lies?

  3. Is there a “ninth”? This is the benchmark number for serious mental disturbance and combines with literals induced by keyboard-pounding. Poor fellow.

  4. “a result these will be to punish the poorest to help the richest.”

    I have no urgent desire to help the richest but I suspect there’s a strong case for punishing some of the poorest, to wit those who are poor because they’ve been arseholes, as distinct from those who are poor through ill luck. The old-timers were right: there is such a group as the undeserving poor.

    Unfortunately if you were to trust a bunch of government clerks to make the distinction they’d cock it up.

    Anyway, I propose an experimental scheme. The Scott Trust Limited is confiscated and the wealth used to fund the deserving poor in, say, Cornwall. Then we can see how it goes.

  5. First the numbers are wrong because most of this supposed cost was on index-linked bonds. Most of this supposed cost won’t be paid in cash for 18 years as a result, when these bonds will on average be repaid, which is when this extra cost might then be due.

    Second, the absurd cost is in that case due to the insistence of the Office for National Statistics that we recognise a cost to be paid in 18 years time as an expense now when we should be spreading it over the next 18 years i.e., over the remaining life of the bonds in question.

    Weren’t ONS flavour of the month when their data said that money can be created without end and have no inflationary impact? So one aspect of their accounting is ‘crap’ and the others are good?

    Fourth, there is also no real clue at present whether this cost might ever be paid. Deflation between now and repayment date could eliminate this expense. But even if that does not happen, the restoration of normal low interest rates means that over that period the real cost will be small.

    A man who has no understanding of inflation or interest rates is now an authority on both and can predict their trends over a two decade horizon?

    So, fifth, those writing about this should say that crap accounting for a cost to be paid in 18 years time is no reason to panic now, or impose austerity now, because it does not in any way suggest our government has a finding crisis.

    I’d say the government has a ‘finding’ crisis – in terms of it appears to have lost any vestige of competence or understanding of numerous topics.

    And, sixth, those commenting should ask a) why the government does such misleading accounting and b) why it issued bonds that could be so ridiculously expensive in the short term?

    But the government can’t go bust – isn’t that the constant refrain – who cares if the bonds issued are expensive? What difference does it make?

    Man is mentally deficient and completely unhinged

  6. Bloke in North Dorset


    It was mandatory and you had to opt out, so I’m surprised it’s not higher than the figure Diogenes found.

    With that and the implementation of pension lifetime caps it would bound be interesting to apse a chart of pension fund by wealth decile. If it isn’t now it won’t be long before the area under the bottom 80% > top 20%.

  7. Index-linked to help pension schemes
    New Labour compelled insurers providing pension schemes to “invest” in index-linked bonds providing a negative real return.
    For what definition of “help” is that true?

  8. I got as far as ‘and seventh’.

    Pensions are looking fairly irrelevant anyway, now that thousands of extra people are dying suddenly and inexplicably, to no discernible interest from Mr Whitty and Mr Vallance, and often long before they get to retire.

  9. I’m going to have a wild guess here. Those people among the 10% ‘wealthiest’ in terms of their pension pot are going to generally be those nearest retirement. Those among the poorest might include those who are only a year or two into their career.

    Spud talks as if the 10% wealthiest are a static group that never changes and that the pension industry only benefits this static group.

    Meanwhile, the ONS has calculated that the average pension pot of those 55 to State Retirement age is £200k. And I am sure that those a year or two into their career will move up the ‘rich list’ as they get older.

    Spud, as always, gets this badly wrong.

  10. You are, of course, entirely correct. As I’ve been known to point out in more formal terms. Anyone studying the wealth distribution without accounting for lifetime effects is insane.

  11. Like a stopped clock, the spud does have a bit of a point, although I suspect if he realised it he would back-pedal pretty quickly… The only pension schemes that are required to hold gilts are defined-benefit schemes — e.g. the Universities Superannuation Scheme — if you have a defined contribution scheme it won’t have this requirement. It’s not the pensioners themselves who benefit from higher yields because they are contractually guaranteed the payment, instead it’s the sponsoring company or organisation that benefits by having to pay not-quite-as-much in to top up the pension scheme.

  12. Somebody could write a thesis on Murphy’s view of inflation. He used to say we needed more inflation, then when we got it he said it was a one off or it wasn’t real inflation or the right sort of inflation. Now he is shouting at people who are investing to mitigate the risks of inflation.

    It would be fascinating to know what Murphy’s pension is worth!

  13. What if Murphy adopted Fischer Black's inflation theory?

    《I think that the price level and rate of inflation are literally indeterminate. They are whatever people think they will be. They are determined by expectations, but expectations follow no rational rules. If people believe that certain changes in the money stock will cause changes in the rate of inflation, that may well happen, because their expectations will be built into their long term contracts.》- Fischer Black in “Noise”

  14. The pensions industry offers his 10% the oportunity for an income in retirement on the basis of deferred spending now. The remaining 90% are more than happy to take welfare, or something for nothing! The really wealthy, or those he thinks he means with his 10%, have no real interest in either scheme! The con was to require the so called industry to stick its assets into government bonds, which you would have thought would have kept the murph happy!

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