Someone’s been listening to The Sage on pensions, haven’t they?
In a Labour press release, she said: “Someone starting out their career today would have to work until the year 2423 before they’d see a penny from the Tories’ tax giveaway to the top 1pc.
“At a time when families across the country face rising bills, higher taxes and frozen wages, this is the wrong priority at the wrong time.”
But these calculations were quickly debunked by pension experts who said the crude sums ignored the reality of how invested savings grow.
Jon Greer, of the wealth manager Quilter, said: “Labour’s calculations to reach this figure are rudimentary at best and crucially overlook the power of compound interest. This is not how saving works.”
A worker with a £107,000 pot, earning £35,000 and still contributing to their pension, would take around 40 years to hit the cap, Quilter said, just a tenth of Labour’s estimate.
But as Spud has so movingly explained, the stock market never does provide a return so how can saving through the stock market for a pension ever work?
Both Spud and Ms. Rayner missing that shares pay dividends, the dividends are reinvested and so that’s where the stock market return is.
And yes, this is where that original Finance for the Future paper with Colin Hines went wrong.They compared the returns of bonds with interest to the return of shares without dividends. No, really, they did. Which is why they were so fucking wrong of course.