Investors facing pensions nightmare: Star fund manager Neil Woodford to blow the whistle on £1trillion black hole | Daily Mail Online
Luckily house prices are doubling, so just buy more BTL, sorted.
So should investors follow Woodford's lead and start being scared about pension shortfalls? In a word: Yes, say experts.
'How worried should small investors be? Very,' says Justin Urqhart Stewart of Seven Investment Management.
'Although we have lived with deficits for a long time, they are potentially very dangerous.'
The facts bear him out. The latest research by experts at Lane Clark and Peacock shows that the combined red ink in the FTSE 100 was £46billion at the end of July.
A study by rival Hymans Roberston suggested that the shortfall across the whole of UK plc has breached the £1trillion barrier. What is going on? People are living longer, so it costs more to pay for their nest-eggs.
And pension funds are an unintended casualty of global efforts to save the financial system from collapse following the credit crisis. The reaction from policymakers – cuts in interest rates and QE – has had a terrible effect on pension funds, causing their deficits to balloon.
The post-Brexit measures from Bank of England governor Mark Carney – which critics believe are an over-reaction – have created more pain.
'Clearly, the UK's pension fund deficit has nothing to do with Brexit, it's been building in the background for years,' Woodford says.
'The last lot of QE just doesn't help,' says Tracy Blackwell, chief executive of Pensions Insurance Corporation. 'The Bank doesn't seem to realise that if companies have to pay more into their pension, it robs them of funds they could have used for productive investment and sets off a vicious circle.'
'How worried should small investors be? Very,' says Justin Urqhart Stewart of Seven Investment Management.
'Although we have lived with deficits for a long time, they are potentially very dangerous.'
The facts bear him out. The latest research by experts at Lane Clark and Peacock shows that the combined red ink in the FTSE 100 was £46billion at the end of July.
A study by rival Hymans Roberston suggested that the shortfall across the whole of UK plc has breached the £1trillion barrier. What is going on? People are living longer, so it costs more to pay for their nest-eggs.
And pension funds are an unintended casualty of global efforts to save the financial system from collapse following the credit crisis. The reaction from policymakers – cuts in interest rates and QE – has had a terrible effect on pension funds, causing their deficits to balloon.
The post-Brexit measures from Bank of England governor Mark Carney – which critics believe are an over-reaction – have created more pain.
'Clearly, the UK's pension fund deficit has nothing to do with Brexit, it's been building in the background for years,' Woodford says.
'The last lot of QE just doesn't help,' says Tracy Blackwell, chief executive of Pensions Insurance Corporation. 'The Bank doesn't seem to realise that if companies have to pay more into their pension, it robs them of funds they could have used for productive investment and sets off a vicious circle.'
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