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Thread: Private Pensions - capitalist con job

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    Politics.ie Member making waves's Avatar
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    Default Private Pensions - capitalist con job

    This board is regularly howling with right-wing hacks about the need to shift everyone in the country to private pension funds. However, they rarely deal with the cost of private pensions to the taxpayer in the form of tax releif which disproportionally benefit very high earners and never talk about the con job being perpetrated on workers who take out private pensions in the form of fees, kick-backs and underperforming pensions.

    In August Professor Teresa Ghilarducci (Bernard and Irene Schwartz Chair of Economic Policy Analysis and the Director of the Schwartz Center for Economic Policy Analysis at the New School for Social Research, New York) spoke at a pensions seminar co-hosted by TASC, TCD Pension Policy Research Group and the INTO. Her presentation showed that pension tax reliefs, as presently structured, result in a significant increase in inequality in the US - a similar situation applies in this country. among the criticisms made by Professor Ghilarducci were that:
    • They are costly - because of the fees and charges of private providers.
    • Tax reliefs have failed to increase pension coverage and they disproportionately benefit high earners -in Ireland 80 per cent of pension tax reliefs accrue to the top 20 per cent of earner; in the US, Ghilarducci contends that while pension tax reliefs in the USA are regressive, they are less regressive than in Ireland.
    • They fail to provide an adequate income in retirement - as increasing the value of pension funds is largely dependent on the performance of the stock market and to a large degree, the gains in value are eroded by fees and charges, which is the case in both Ireland and the US.

    Read more here - progressive-economy@tasc: US Lessons on the Failure of Pension Tax Arrangements

    In 2009 the Irish taxpayer contributed €500million in tax relief on pension contributions of over €40,000. The overwhelming majority of tax breaks benefit high income groups. An ESRI study showed that 80% of the benefit of pension contributions goes to the top 20% of earners, while the Commission on Taxation found that these same earners benefitted by nearly €300 million a year in mortgage interest relief. A three to four year programme of phasing the number and cost of tax breaks down to EU levels would save an estimated €1.5 billion a year.

    http://webcache.googleusercontent.co...ient=firefox-a

    Last Monday BBC Panorama's 'Who Took my Pension' exposed the con job of pension fees and commissions whereby pension providers deduct significant sums of money from pension contributions, insurance companies did likewise as did the fund managers - all working through a well-oiled machine of kick-backs. Furthermore, Panorama claimed that more than half the pensions were performing below indexation, yet the managers were still claiming significant fees and bonuses for these underperforming pensions. The programme denomstrated how pensions salespepole can earn up to £1million a year in commission on pensions being sold to unsuspecting workers. The pension fund managers use pension funds that workers contribute to gamble on the stock-market with many suffering huge losses. 50 years ago over 90% of stocks and shares were owned by private individuals, now over 60% of all shares are owned by workers pension funds.

    The privatisation of pensions and the attacks currently underway against pensions of public sector workers mask the real crime being perpetrated on working class people. Workers are subsidising massive tax reliefs for wealthy individuals, massive fees and commissions for banks, insurance comanies and fund managers and are faced with the prospect of very small returns on their pension contributions.

    It is now necessary to reverse the privatisation of pension provision. Tax reliefs for high earners should be abolished. Pension contributions should be controlled and managed by the State which provide a guaranteed income for workers on retirement. And we should let the fund managers gamble on the stock market with their own money.
    Separate Church and State

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    Politics.ie Member seabhcan's Avatar
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    Good post.

    Slightly off topic but connected with your final comment about the growing weight of pension funds in the stock market - there is a great BBC documentary from the 90s about how pension funds led to the deindustrialisation of Britain. The documentary is called "the Mayfair Set".

    Basically, it plots out how pension funds are, by law, required to seek out the greatest return on investment, regardless of the longer term impact on the business being invested in. The funds regularly buy in to outsourcing schemes which dismantle industries and put workers out of jobs. These workers are the same people who's pensions the funds manage. Workers are paying fund managers to put them out of work.

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    Privatisation is anti-social in all respects, and should be reversed. Citizens need to bring their production and services under democratic control - not leave them in the hands of psychotic spivs.

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    Politics.ie Member Dreaded_Estate's Avatar
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    Quote Originally Posted by Cael View Post
    Privatisation is anti-social in all respects, and should be reversed. Citizens need to bring their production and services under democratic control - not leave them in the hands of psychotic spivs.
    You keep saying that Cael but what does it actually mean?

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    Quote Originally Posted by Dreaded_Estate View Post
    You keep saying that Cael but what does it actually mean?
    It means having publically owned hospitals, energy supplies, insurance, etc. etc.

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    Politics.ie Member seabhcan's Avatar
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    Quote Originally Posted by Cael View Post
    It means having publically owned hospitals, energy supplies, insurance, etc. etc.
    Like Ireland does, ya? ESB, Bord Gas, Quinn Insurance, VHI, etc, etc

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    Quote Originally Posted by seabhcan View Post
    Like Ireland does, ya? ESB, Bord Gas, Quinn Insurance, VHI, etc, etc
    Quinn Insurance is privately owned.

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    Politics.ie Member seabhcan's Avatar
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    Quote Originally Posted by Cael View Post
    Quinn Insurance is privately owned.
    Doesn't Anglo own it now?

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    Quote Originally Posted by seabhcan View Post
    Doesn't Anglo own it now?
    I doubt it. But, I wouldnt call Anglo publically owned either - even though the tax payer has to pay for it. When you own something, you have some control over it. We have no control over Anglo. Rather, Anglo controls us.

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    My first few years out of college were spent in the insurance industry. And yeah, it's blatantly obvious that the pension industry is from start to finish an utter scam.

    Save yer own money and invest in a balanced portfolio on your own account - 9 times out of 10 if you aren't an eejit chasing the next get rich quick scheme you can consistently turn in without much effort somewhere in the 3-5% p.a. range. Add that up with the joys of compound interest over 30 years and you'll realise there's absolutely no need for these restrictive badly-performing "pension" funds. Yeah, it is just another scam to get ordinary working people to hand over all their money to feckin morons in suits who think they are amazing.

    I keep trying to tell people - if it smells like a scam it's a fecking scam. If nobody can explain it to you in a way that makes sense straight away, chances are it's a feckin scam. If it involves trying to pull your strings and push your buttons - yeah it's almost certainly a scam. And if some washed-up old celebrities are doing the ads - feckin scam.

    What exactly is wrong with most people that they seem incapable of spotting the obvious scam???

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