Why private pension systems cannot work

[-HF]

just saw another one of those TV ads pushing you to invest into a private pension system.

most of them, if not all, are based on buying stock and bonds.
alas, the system is built on there being a market for these shares you buy, cos selling them off later is one part of your pension.

now why are we to invest into a private pension system? well, because there are more and more old and less and less young people to finance their pensions.

if there are less and less young people, who would then be supposed to buy the shares you wanna sell (stay with me, i know it's oversimplifying it) to up your pension? the obvious result is a shrinking market, which meets a growing supply. hence the prices will drop. and your pension is zilch.

there, :guinness: & :kebab: now, instead of investing money into something that cannot work out.

have a nice weekend. :D

[SGS]

We have always invested in property and buy-to-let property for our retirement. I think the only people who benefit from personal pensions are the agents who get the commission for selling them.

[cock-a-leekie]

You get a wiser investor with bricks & mortar in Leicester, Chester, Worcester... etc.

[-HF]

Urrhhhhh ? it doesn't quite work like that !!

enlighten us then, how does it work?

[-HF]

Well it's not younger people buying shares that older people are selling !!!!

All ages buy into stocks and shares and all ages sell them, if you have a private pension you whack £xxx each month into the plan (you get tax relief on this too), over a 20/30 year period your investment grows, it reaches a figure of say £500,000 this then buys you an annuity (a guaranteed annual income for the rest of your life)

The lower your pension fund the lower your guaranteed income

let me start this off by quoting myself, i'll make the part you obviously missed bold:

if there are less and less young people, who would then be supposed to buy the shares you wanna sell (stay with me, i know it's oversimplifying it) to up your pension?

i pretty much assume every pension plan says the same in the fine print (which isn't really surprising, as practically all of them are in fact based on insurance systems). it will be along the lines of them only guaranteeing what you paid into it, plus maybe a small interest, everything else is depending on market development. which means you could end up with less value than you paid in, depeding on the inflation.
since those already enjoying the payouts will not reinvest much if at all and the number new people paying into the pension plan will decrease, the system will start to crumble at some point.

now if you do not take part in a plan like that but buy and sell on your own, you depend even more on a market that will find less and less potential buyers.

again, oversimplified on purpose.

and we didn't even take into account crashing and overrated companies. remember how many US folks supposedly lost everything after WorldCom and Enron?

[-HF]

Urrrggg again no ! There is no "insurance" system, you invest your money, you take the risk. All company pension schemes are exactly the same, you can invest your money via your employee scheme or go private !!

You might be confusing the STATE pension scheme, where there are a decreasing number of contributors in relation to the number of withdrawers, ie. pensioners !

:takethat:


where did i say it is an insurance system? based on != is

you keep misreading or missing the point.

[-HF]

ok. you'll know. :D

[JT]

Urrhhhhh ? it doesn't quite work like that !!

But if you want to make a killing in the next two months then buy
into DAG on the London stock market, that's Digital Animations Group :ninja:

Tell me more about this DAG what do you know?

[JT]

P.S I seriously wouldnt worry about pensions. When the oil starts running out the U.S will end up blowing up pretty much everyone.

[-HF]

i for one am not worrying at all. i'm convinced we now ,id-30s will not get much if anything. it's just the ridiculous pressure they try to put on people to get their own pension sorted.