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« Last post by AJM on May 28, 2024, 03:34:26 pm »
It's difficult for this not to become quite technical quite quickly, but at a very simple level a large disconnect between asset and liability behaviour tends to point to a risk the scheme is exposed to.
So where you say "the sensibly managed pension funds would not consist of 50year gilts at 0.25% yield" - that's not necessarily the case. The benefit of that sort of investment strategy is that all your guaranteed outflows would be funded by guaranteed inflows, which leaves the scheme with very little residual risk and very little chance of needing to make sudden cash calls on a sponsoring employer.
Many schemes would love to be funded on a low risk or self sufficiency basis (the fine detail of pensions regulation is not my precise field, but I think it's an expectation from the pensions regulator for mature schemes?). Either this, or a buy out (transfer of the liabilities to an insurance company). And when pension schemes transfer their liabilities to insurance companies (which again has attraction for many schemes because of the certainty it provides), insurance companies will look to fund all the outflow from some sort of gilt, corporate bond or similar assets.
Where schemes aren't funded on this basis, again very simplistically you could say it's because they need to earn a higher return than that strategy can provide (or, equivalently, they don't have enough money to fund everything from low risk assets) and so are having to take more risk in order to do so.
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« Last post by Tony on May 28, 2024, 03:20:53 pm »
Out of interest, how much as been raised so far. I emailed the the PDNP Foundation, I was grateful and pleased to receive the following response: £49k towards to cost of the [Cress-brook Mill] bridge has been raised or donated via the Foundation.
This includes £12,024 raised via the Enthuse platform (plus gift aid), £10k from the BMC Access and Conservation Trust, £5k from the South Yorkshire and North East Derbyshire Ramblers and a £20k donation from the Foundation’s own core funds. I believe the Foundation was pleasantly surprised by the success of this appeal. I gather it is hoped that the bridge will be open before the end of the year.
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« Last post by stone on May 28, 2024, 02:41:30 pm »
The whole point as far as I could see is that the sensibly managed pension funds would not consist of 50year gilts at 0.25% yield. They would consist of an asset mix that would see little or no change in asset value when gilt yields fell from 0.5% to 0.25%. Meanwhile the liabilities would get a bonkers increase in value. To try and bridge that disparity, they entered into these swap contracts. Those swap contracts were what caused them such problems when gilt yields went in the other direction from 0.25% (or whatever they were) to 5% or whatever.
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« Last post by AJM on May 28, 2024, 02:23:30 pm »
You won't get a sensible comparison if you allow for the impact of interest rates on the liabilities but ignore its effect on the assets (the change in the market value of a 50 year gilt when gilt rates fall from 0.5% to 0.25% is equally bonkers, given the maths works in the same way for both).
It's a good way to end up concluding that the whole thing is nonsense, which is fine if that's all you want to get out of it, but it isn't a comparison that makes any sense from a technical perspective.
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« Last post by mrjonathanr on May 28, 2024, 02:20:26 pm »
I very much agree with bringing social care funding back into the NHS. The current system where a person gets discharged from hospital into care and then becomes almost immediately a council/social care problem is a nightmare and just creates lots of perverse incentives that do not help the person involved one little bit.
Cheers Dave
Agreed. Its cost is also where property will get cannibalised and wealth concentrated upwards. I suspect a lot of people who imagine that they can pass on homes to their children will find that they won’t be able to, for this reason.
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It's a hard call, on one hand should she be ritually humiliated online by a gang of SJW's, or on the other, quietly taken off to the Gulag for her crimes?
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« Last post by mrjonathanr on May 28, 2024, 02:17:07 pm »
Revising planning is no bad thing but to focus exclusively on that when the real danger lies elsewhere is a dangerous red herring imo.
Apologies to Nemo if that reads as insulting, you never know on the internet. That wasn’t the intention. It was a little sarcastic poke because our friends in Tufton St would love us to focus on anything but the true cause: the accumulation of massive wealth at the top of society. Taxation is the answer.
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« Last post by stone on May 28, 2024, 02:12:19 pm »
The actual assets in a sensibly managed fund might be yielding say 4%/year before and after any change in gilt yields from eg 0.5%/year to 0.25%/year. There is perhaps a chance they change from 4%/year to 3.75%/year. Either way it makes no difference to actually paying the pensioners in the future. But it makes a vast change to a present value liability calculation based on those gilt yields.
Consider a typical pension liability that the USS fund is faced with. That would be someone getting a three year fixed term job between the ages of 22 and 25. I suppose they would then be expected to draw a pension when they are 67 until 90 or something. The change in that liability present value from a 0.5% gilt yield to a 0.25% gilt yield is bonkers IMO.
Anyway, for the time being this is mostly of (recent) historical interest since gilt yields are now 4%.
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A climbing partner of mine found this out the hard way, definitely worth getting a system which doesn't rely on similar sounding words with the same number of syllables being heard over long distances.
Oooooff!! We figured this out on our training burn - "safe, off-belay" was sufficiently different to all our other calls and seemed to work pretty well... Lots of French folk we saw seem to have gone down the walkie talkie route so might invest for our next trip....
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This is quite a surprising post to read Nemo. Has someone in Tufton Street hijacked your account?
This is a lazy generalisation surely mjr? The YIMBY movement, for want of a better term, which calls for a vast acceleration in house building, has proponents from across the political spectrum. Starmers proposals to bulldoze the planning system are one of the things that excite me the most. Green belt land is not all the same and the current system is far too restrictive. There are large swathes of green belt land where there should be no objections to building; referred to as the grey belt in this piece. https://www.theguardian.com/politics/2023/oct/11/labour-keir-starmer-pledges-to-build-new-towns-utilising-grey-belt-areasLocal activists and objectors have for too long leveraged the planning system for their own ends and blocked totally sensible development. In my own town a decaying brownfield site has sat derelict for years while councillors of all political stripes played to the nimby gallery and rejected applications for housing. These people should be ignored, which Starmer has commendably said he will do. From today, relating to YIMBYism from an infrastructure perspective: https://www.samdumitriu.com/p/will-labour-actually-get-britain
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