Br Steel and the big Pension question
Discussion
FourWheelDrift said:
Welshbeef said:
You do know that most of the shareholders globally are pension funds don't you?
No they're not - https://en.wikipedia.org/wiki/Tata_Sons#Shareholdi...Majority are TATA trusts - http://www.tata.com/aboutus/sub_index/Leadership-w...
"The Tata trusts, majority shareholders of Tata Sons, have endowed institutions for science and technology, medical research, social studies and the performing arts. The trusts also provide aid and assistance to non-government organisations working in the areas of education, health care and livelihoods."
No British pension funds in there.
Take the FTSE100 most of he stock is owned by pension funds. Some funds could buy huge companies outright and be a pension fund which also happens to make cars or whatever.
FourWheelDrift said:
Welshbeef said:
You do know that most of the shareholders globally are pension funds don't you?
No they're not - https://en.wikipedia.org/wiki/Tata_Sons#Shareholdi...Majority are TATA trusts - http://www.tata.com/aboutus/sub_index/Leadership-w...
"The Tata trusts, majority shareholders of Tata Sons, have endowed institutions for science and technology, medical research, social studies and the performing arts. The trusts also provide aid and assistance to non-government organisations working in the areas of education, health care and livelihoods."
No British pension funds in there.
FredClogs said:
And if we know anything about indian steel magnates it's that they definitely don't get involved in trying to corrupt politics and democracy or splashing multi millions of pounds on fancy Regent Park mansions, no sireee...
You appear to be talking about not the issue at hand but wealthy individuals spending money as they wish. I see you like buying cars too with your money good for you same difference but the angle you have is the angle of envy. Our people in the UK have salaries which are vastly higher than overseas plus crippling on costs. The U.K. Plants are all massively old and need vast investment v overseas much newer and more efficient, China is playing the long loss making game and Tata don't want to be bent over they want to survive.
Welshbeef said:
FredClogs said:
And if we know anything about indian steel magnates it's that they definitely don't get involved in trying to corrupt politics and democracy or splashing multi millions of pounds on fancy Regent Park mansions, no sireee...
You appear to be talking about not the issue at hand but wealthy individuals spending money as they wish. I see you like buying cars too with your money good for you same difference but the angle you have is the angle of envy. Our people in the UK have salaries which are vastly higher than overseas plus crippling on costs. The U.K. Plants are all massively old and need vast investment v overseas much newer and more efficient, China is playing the long loss making game and Tata don't want to be bent over they want to survive.
Simply painting anyone who believes in the rule of democracy and social equity as "envious" is a willful intellectual cop out.
You've decided which side you're on, as I'm sure you know no man is an Island - good luck, there's nothing much left to discuss is there?
Foliage said:
Yep, but I'm trying to figure it out, hence why I'm trying to just ask questions, and put my moral/common sense stand point across.
From what you guys have said I have changed my standpoint.
From what you guys have said I have changed my standpoint.
Apologies for my aggressive response - in the Finance forum there often tend to be people commenting on pensions that don't really know what they're talking about, which can be quite frustrating!
To be clear, there are two main types of pension:
Defined benefit (DB) (i.e. 'final salary' type schemes) and Defined contribution schemes.
The Tata example is a DB scheme, where the employer provides a pension benefit to the employee at retirement, based on service. This is funded by employee and employer contributions during their working lifetime, which are invested in a fund entirely separate from the employer, overseen by Trustees.
The cost of the promised pension will depend on a number of factors, including the investment return achieved on the contributions, how long the employee will live for, the tax treatment of the fund, interest rates at retirement etc etc.
For the reasons outlined previously, the amount set aside for the Tata pensions is not sufficient to meet the promised benefits. Ordinarily, an employer would be expected to pay increased contributions over a set future period to remove any shortfall in assets versus liabilities. In this case the employer is broke so can't do this.
Because of the high and uncertain costs of DB schemes, these are very rare in the private sector (but common in the public sector, where the taxpayer can pick up the tab...).
Under a defined contribution pension scheme, the employee (and maybe employer) contributions are given to an insurance company to invest. These investments have a high degree of regulatory protection. At retirement the total value of the member's pot is then available to buy an annuity, but all of the investment risk sits with the employee - there is no guarantee as to the size of pension they can purchase.
FredClogs said:
Ok, well good luck on the flip side... I'm sure the TATA family will come to your aid and give you shelter in their ivory tower of stolen wealth come the reboot.
Simply painting anyone who believes in the rule of democracy and social equity as "envious" is a willful intellectual cop out.
You've decided which side you're on, as I'm sure you know no man is an Island - good luck, there's nothing much left to discuss is there?
You do know that the TATA foundation trust is a philanthropic organisation? So more needy people get help. Simply painting anyone who believes in the rule of democracy and social equity as "envious" is a willful intellectual cop out.
You've decided which side you're on, as I'm sure you know no man is an Island - good luck, there's nothing much left to discuss is there?
Look at Bill Gates all but £30m of hit £80billion wealth is in a charity be it to cure maleria of Ebola etc. He has got Warren Buffet to give all of his wealth too countless others give vast amounts (most tend not to shout about it ie M Schumacher gave vast amounts of his wealth to good causes anonymously only an annoying jurno found out then went to print).
I'm pretty confident plenty on here who are wealthy do give significant amounts away and those who don't have much give their time instead. Most don't blow their whistle about such things.
Welshbeef said:
FredClogs said:
Ok, well good luck on the flip side... I'm sure the TATA family will come to your aid and give you shelter in their ivory tower of stolen wealth come the reboot.
Simply painting anyone who believes in the rule of democracy and social equity as "envious" is a willful intellectual cop out.
You've decided which side you're on, as I'm sure you know no man is an Island - good luck, there's nothing much left to discuss is there?
You do know that the TATA foundation trust is a philanthropic organisation? So more needy people get help. Simply painting anyone who believes in the rule of democracy and social equity as "envious" is a willful intellectual cop out.
You've decided which side you're on, as I'm sure you know no man is an Island - good luck, there's nothing much left to discuss is there?
Look at Bill Gates all but £30m of hit £80billion wealth is in a charity be it to cure maleria of Ebola etc. He has got Warren Buffet to give all of his wealth too countless others give vast amounts (most tend not to shout about it ie M Schumacher gave vast amounts of his wealth to good causes anonymously only an annoying jurno found out then went to print).
I'm pretty confident plenty on here who are wealthy do give significant amounts away and those who don't have much give their time instead. Most don't blow their whistle about such things.
It's becoming more of an idiocracy day by day, let them eat cake!
Sidicks I can see things changing in that employees will say we want the employer contribution within base salary take it all upfront then put it into whatever investment vehicle they want to (or not) this way there is zero risk you have the cash you do as you please with it.
Pension ISA is interesting though with normal ISA being £20k per person per year and the ability to take cash out at any point I see little benefit of the pension ISA unless you've filled yer boots on tax free investments.
Career average is another variant of pension it's midway between DB and DC and provided the mortality rates are reviewed annually and any increase in employee and employer are made year on year then there should never be any problem.
Pension ISA is interesting though with normal ISA being £20k per person per year and the ability to take cash out at any point I see little benefit of the pension ISA unless you've filled yer boots on tax free investments.
Career average is another variant of pension it's midway between DB and DC and provided the mortality rates are reviewed annually and any increase in employee and employer are made year on year then there should never be any problem.
FredClogs said:
Well that's ok then, I'll sleep better tonight knowing they can renege on their contractual duties to the retired and near retired of South Wales (which btw is one of the most deprived areas in the UK, if not Europe) but I'll be safe in the knowledge that they've used their money tax efficiently to support what ever tin pot Donkey sanctuary tales their fancy.
It's becoming more of an idiocracy day by day, let them eat cake!
South Wales deprived!It's becoming more of an idiocracy day by day, let them eat cake!
You've not been to
Bulgaria
Romania
Belarus
Greece
Southern Italy
Spain 45% young unemployment
Estonia
Irish free state
Scotland
Slovakia
Serbia
Austria
Ukraine
Georgia
Kaliningrad.
What contractual duties the company is bust if hey don't find a buyer the fund is hit instantly by at least 10% to all live retirees or future, if they sell the new employer will not take the hit so who does.
Be nasty to Tata do you think they will think twice about moving Jag Land Rover production out of the U.K.? Hmm. We have so little leverage here and legally state aid is a nightmare in this instance. You cannot make the group cover the difference as you'd be changing the law and applicable to all companies now & historic.
Welshbeef said:
Sidicks I can see things changing in that employees will say we want the employer contribution within base salary take it all upfront then put it into whatever investment vehicle they want to (or not) this way there is zero risk you have the cash you do as you please with it.
Zero employer risk but massive investment risk, inflation risk, interest rate risk, longevity risk....Welshbeef said:
Pension ISA is interesting though with normal ISA being £20k per person per year and the ability to take cash out at any point I see little benefit of the pension ISA unless you've filled yer boots on tax free investments.
Career average is another variant of pension it's midway between DB and DC and provided the mortality rates are reviewed annually and any increase in employee and employer are made year on year then there should never be any problem.
Career average is pure DB, nothing to do with DC at all.Career average is another variant of pension it's midway between DB and DC and provided the mortality rates are reviewed annually and any increase in employee and employer are made year on year then there should never be any problem.
Jockman said:
sidicks said:
Career average is pure DB, nothing to do with DC at all.
Correct. ISA limit not £20k until next April 
Compared to Career average my pension would be essentially 2/3rds of £18k.
I know a number of people my dad included who had big promotions before they retired (I say before I mean a handful of years to go).
£20k a year for the vast majority to save after all other living costs is getting towards very wealthy.
Welshbeef said:
But rather than say me being on a 1/60th paying in 3% working 40 years all at £18k a year then last but 1 day I get a promotion to £250k with pure DB I'd be on 2/3rds of £250k.
Compared to Career average my pension would be essentially 2/3rds of £18k.
I know a number of people my dad included who had big promotions before they retired (I say before I mean a handful of years to go).
£20k a year for the vast majority to save after all other living costs is getting towards very wealthy.
The CARE fractions vary per scheme and they depend on the scheme rules.Compared to Career average my pension would be essentially 2/3rds of £18k.
I know a number of people my dad included who had big promotions before they retired (I say before I mean a handful of years to go).
£20k a year for the vast majority to save after all other living costs is getting towards very wealthy.
Agree on the £20k. It is not insignificant.
Welshbeef said:
But rather than say me being on a 1/60th paying in 3% working 40 years all at £18k a year then last but 1 day I get a promotion to £250k with pure DB I'd be on 2/3rds of £250k.
Compared to Career average my pension would be essentially 2/3rds of £18k.
I know a number of people my dad included who had big promotions before they retired (I say before I mean a handful of years to go).
£20k a year for the vast majority to save after all other living costs is getting towards very wealthy.
Yes, but that's nothing to do with Defined Contribution and everything to do with Defined Benefit.Compared to Career average my pension would be essentially 2/3rds of £18k.
I know a number of people my dad included who had big promotions before they retired (I say before I mean a handful of years to go).
£20k a year for the vast majority to save after all other living costs is getting towards very wealthy.
Plus, most career average schemes are actually revalued career average and also the accrual rate is typically higher than for a final salary scheme. None of which is relevant for the DB v DC discussion...
sidicks said:
Yes, but that's nothing to do with Defined Contribution and everything to do with Defined Benefit.
Plus, most career average schemes are actually revalued career average and also the accrual rate is typically higher than for a final salary scheme. None of which is relevant for the DB v DC discussion...
Fair enough - I saw it as a stepping stone from DB towards DC slightly less costly for employer and higher cost to employee but not the massive step change from DB to DC. Plus, most career average schemes are actually revalued career average and also the accrual rate is typically higher than for a final salary scheme. None of which is relevant for the DB v DC discussion...
Out of interest should we be thinking 50% of final salary to be a fairly good end result or is it as low as 1/3rd ? DC lifetime investment at a combined input of at least 10% from 18 to 65.
Welshbeef said:
It's tricky and could set the president for the decimation of every final salary scheme.
I don't like the idea, but I guess they will get more than if the sell off fails and the company is dissolved.But the government SHOULD be trimming the pensions of retired 'CEO' council workers, police, politicians, NHS bureaucrats etc. etc. especially those who have double/triple dipped and had big payoffs only to get another similar job.
Welshbeef said:
Fair enough - I saw it as a stepping stone from DB towards DC slightly less costly for employer and higher cost to employee but not the massive step change from DB to DC.
It's still 100% defined benefit. Whether it's cheaper or more expensive will depend on the accrual rate, the revaluation rate and the typical career path of employees.Welshbeef said:
Out of interest should we be thinking 50% of final salary to be a fairly good end result or is it as low as 1/3rd ? DC lifetime investment at a combined input of at least 10% from 18 to 65.
You'd need a combined input of 25% or more to have a high probability of achieving a pension of 50% of final salary, without relying on massive investment performance and / or favourable economic conditions at retirement.sidicks said:
You'd need a combined input of 25% or more to have a high probability of achieving a pension of 50% of final salary, without relying on massive investment performance and / or favourable economic conditions at retirement.
Ok so ignoring my final salary and career average pensions banked... The DC's I've been paying in a combined 14% so id be looking between 33-50% range maybe 36-45% range of final salary investment performance dependant. If that's the case I'm pretty happy with that & add in a number of buy to let rents should = fairly decent all else being equal. Welshbeef said:
Ok so ignoring my final salary and career average pensions banked... The DC's I've been paying in a combined 14% so id be looking between 33-50% range maybe 36-45% range of final salary investment performance dependant. If that's the case I'm pretty happy with that & add in a number of buy to let rents should = fairly decent all else being equal.
eh? If 25% combined contribution rate equates to a 50% pension then 14% would broadly equate to a 28% pension.But there's a massive amount of guesswork and assumption that goes into the above - you need to think not only about the average pension that you might be able to achieve, but also the likely distribution of that amount under different scenarios. Taking more investment risk might increase the average pension achieved but might also increase the likelihood that the pension achieved is less than (say) 20% of final salary.
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