Wednesday, 4 April 2007

Pensions Crisis and the Financial Services Rip-Off

It is well known that I am no fan of Gordon ‘the big clunking fist’ Brown, but the current obsession with pensions crisis needs a more simple explanation, so it will be my cause to give it a try

Firstly, private pension provision is only available to those who can afford it, but speaking to some less well off people they believe that it is the state pension which is under threat. They do not appreciate, because the papers do not properly explain it, that if the better off pay more tax, then the less well off might be required to pay less. The papers try to give the impression that what is good for the middle classes is good for the whole country. Obviously in their agenda the less well off who may have no private pension don’t matter.

Secondly, the crisis arises because the financial sector of the economy by buying and selling stocks and shares at ever higher and unjustified values and trousering the profits put themselves in a position that, because of the high value (completely notional) of those shares as assets on their books, they believed that they were financially sound and their pension schemes were in surplus.

Because they imagined a surplus they gave themselves a ‘contribution holiday’; in other words, the money that they should have been investing in the pensions of their employees was paid out to their shareholders. The employees were never told that they had too much money in their pension fund and that they didn’t need to contribute for a while. Not bloody likely.

Now they find that they were too greedy and since their bubble has burst and shares have fallen to more realistic levels it is everyone’s fault but theirs. But who will suffer as a result of the fact that workers’ entitlement was given to shareholders. Well, not the shareholders. Certainly not the greedy directors and financiers. Yes, you guessed it, the employees.

Just another disgraceful episode in the world of high finance (grand larceny) that is capitalism.

I hope that this clarifies my views on the subject, I certainly feel better for getting it out

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