Government to take a two year 'pension holiday': SBP

[KingKane]

There is also the basic math to contend with.

A loan will cost anything between 5% and 8% per annum.

Stock Market returns will be between -5% and +3% per annum.(maybe, if there is a turn around) for the next 3-5 years.

This is a no-brainer. Its too obvious. there is not a hope in hell of making money in this environment.
You will actally save money by not borrowing and stop buying shares for about 2 years. When the Bull returns then you borrow to invest but not beforehand.
The state does not have to make a massive killing like the hedge funds etc. they just need to make a decent return over the long term.

The state under Charlie McCreevey decided to invest the 1% and not just when we were running surpluses either. Either it was a good idea or it wasn't.

[wombat]

The state under Charlie McCreevey decided to invest the 1% and not just when we were running surpluses either. Either it was a good idea or it wasn't.

I would say it wasn't. If I decide to invest my pension in the stock market, I take the risk & face the consequences. It's not a decision the govt. should make for us.

[cyberianpan]

The state under Charlie McCreevey decided to invest the 1% and not just when we were running surpluses either. Either it was a good idea or it wasn't.

I would say it wasn't. If I decide to invest my pension in the stock market, I take the risk & face the consequences. It's not a decision the govt. should make for us.

The whole point is being missed here, the State could put aside the money as cash either - they're not doing that

Also choosing not to invest (i.e. keeping as cash) is an investment decision of itself


cYp

ps Eurocrat: cannot find source I remember (over a year old), may stay looking

[rockyracoon]

The government's move, if reported correctly, is very short sighted in the extreme. A well funded pension scheme can only assist in future year's fiscal management. It's one of the few opportunities our government has to save money. If the government feels it can't fully fund the scheme, they should, nevertheless, make some provision.

I'd be very surprised, given how well portfolio theory and risk management techniques are practised as a given in today's financial market place, if the Government has allowed the pension scheme to invest solely in the stock market. I'm sure there is a good mixture of fixed rate instruments along with some equities. Hopefully, they invested money, and thereby spread risk, in Eurozone equity markets also. Most pension funds eschew such risky investments as commodities and certainly don't indulge in short selling.