In the past year pension schemes run by the UK’s largest 100 companies have seen £65 billion of their asset values wiped out. According to Deloitte (GAAP, 2nd January 2009) this is the equivalent to 17 per cent or five years’ worth of current pension contributions.
After reading above headline, watching Evan Davis on the BBC (BBC iPlayer – The City Uncovered with Evan Davis) and listening to the endless discussion on radio, It is hard not to conclude that the banking industry, traders and regulator are to blame.
They all claim that “Credit Crunch” has resulted in the decline in the value of stock and hence the value of our pension funds.
However, after further investgation, It seems that for all these years, long before the credit crunch, there have been other factors contributing into the declining value of pension funds.
The majority of us are not capable or able to make critical decisions about our pension schemes, decide on investment strategy and annuity and put our trust on the service providers who are expected to be making decisions for the benefit of their client. Instead, what these beneficiary getting are:
- Lack of appropriate protection from the government
- Complicated investment strategies which are not understandable by majority of us
- Clever service providers who put their interest first over the beneficiaries
- Lack of accountability by the administrator of their funds
Therefore, in next few days, I will be talking about how following critical factors that have contributed into the decline of pension funds over the years.
- Intelligent bankruptcy
- Amateurish and Self-interested city managers
- Poor management of pension funds
- High Annual Management Cost (AMC)
In the mean time take a look at the following headlines….
- BBC NEWS | Business | Pension fund deficits hit £195bn
- Woolworths creditors demand trading inquiry – Times Online
Tags: fund manager, mismanagement, pensions, value
February 9, 2009 at 18:25 |
Looking forward to reading future instalments!