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Answering the question

Jeremy Henrickson says:
March 3 2023 at 12:41 pm
How can you keep getting this wrong, despite having this pointed our to you time and time again?

Defined Benefit (DB) pension schemes were previously the main investors of private individuals’ pension investments. While these were still open to new members and to new accrual, a significant allocation was made to equities, as this asset class has historically had the best long-term returns over any 5-year+ period.

As DB schemes in the private sector have closed to new members / new accrual, and therefore become cashflow negative , they have needed to focus on managing the liabilities as they mature. This has resulted in increasing allocations to government bonds (and corporate bonds) to match the pension promises to the members.

In contrast, as DB schemes have closed, private individuals have been directing their pension savings into defined contribution (DC) schemes, the vast majority will be in equity investment, probably 100% in equities in the early life of the individuals and then potentially reducing over time as retirement approaches.

If you only look at the (declining) DB schemes above and ignore the (growing) DC schemes, then you will continue to draw the wrong conclusions.

Richard Murphy says:
March 3 2023 at 2:30 pm
I got it as wrong as the FT did

Or not at all in that case

And your belief in the rational DB investor is quaint and utterly wrong

And I notice that you do, of course, ignore the issue I highlight that does not suit your agenda

How very odd

James Twining says:
March 3 2023 at 4:30 pm
You did say ‘in particular’ before launching into that data which does not relate to the vast majority of pension plans in the accrual phase, so I think you should cut Jenrick some slack.

As to your main point that the private sector doesn’t invest enough, can you think of any planning or regulatory change in the last 15 years of conservatism that has made it easier for the private sector to do so with their own money and at their own risk? I can’t off the top of my head. Possibly offshore wind, but that’s heavily subsidised so doesn’t count.

Richard Murphy says:
March 3 2023 at 5:12 pm
Most pension funds, by far as DB

Shall we deal with realities here?

Why do we need regulatory change for people to invest?

That last line is lovely. From the man who spends his time demanding regulatory change to get people to invest.

5 thoughts on “Answering the question”

  1. Whenever the underpowered intellect of the Blighted Potato engages in argument over areas in which he has no qualifications or expertise (frankly that’s almost every area), it brings to mind the adage

    don’t come to a gun fight armed only with a knife.

  2. There are tens of thousands of SIPPs.
    So most pension funds, by far, are DC
    A vast amount of DB pensions are unfunded (State Pension, Civil Service pensions, armed forces pensions …)
    Is Murphy so ignorant of the subject on which he is pontificating? Or doesn’t he care when replying to criticism?

  3. When someone intelligent points out one’s mistakes and false conclusions, most adults would understand and admit their errors. Doubling down on their own nonsense is the mark of very poor character and ignorance of the basics.

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