Wednesday, March 29, 2017
Andy Haldane Maybe the First Honest Bank of England Employee
Andy Haldane Maybe the First Honest Bank of England Employee
...for admitting that he has absolutely no clue as to what he is doing.
FWIW pensions are a dead simple concept. They are just deferred income. What make them complicated is all the Kafkaesque rules written around them by the likes of Haldane and his cronies.
Dear God. What next! What next?
Update.
To save putting this in the comments thread.
The principle around the pensions tax relief is that you are deferring your pay. You get tax relief on contributions and the fund grows free of CGT and CT/IT (Yes, MW I know I know - but this is the principle). But when you draw your benefits as an annuity you get taxed on the whole payment, not just the interest component as in a purchase life annuity. This applies however you take the pension.
The laws of compound interest and the expected return on a mixed fund of shares, bonds and property (the assets in a typical pension fund) mean that if you save between 12% and 15% per year of your gross income, you will, by about age 65 have accumulated a fund large enough to buy you a pension which will be about 50% to 67% of your final wage. This is just one of those laws that works.
The problem is all the bloody rules around this simple concept. They - the government and their bureaucrats - have, to put it in technical financial services language, so forgive me, fucked it all up. End of.
I have run a business in this area for nigh on 30 years now and I have seen these ratios work and I have witnessed the utter, utter failure of the likes of Haldane and his cronies to do anything sensible ever. Ever.
And just to make another key point we do our level best to keep charges low. But when upwards of 70% of my revenue goes back out of the door in a combination of taxes and regulatory costs, we are not the cost problem.
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