Pension funds World wide Depression looming and why people must save more 2010

The underlying reason is that medical advances over the last few decades have greatly prolonged our life span, forcing the pensions industry to support a greater number of pensioners for longer periods.Government figures show that average life expectancy in the UK rose by five years for men and four years for women between 1980 and 2000. But the problem has been exacerbated in recent years by dwindling stock market returns. Pension funds depend on steady stock market returns to pay policyholders. And when share prices fall - as they have been doing for the last two years - it becomes harder for funds to meet their obligations. Lower returns have forced most of the big company-run pension funds to suspend generous schemes which guarantee employees a fixed proportion of their final salaries on retirement. A large proportion of firms have now set up defined contribution or money purchase schemes, which do not guarantee the final pension sum and are therefore less risky for companies. An additional gripe, as far as employers are concerned, is the 10% tax on dividends earned by pension schemes, which was imposed by the chancellor shortly after the present government was elected in 1997. Dividends play an important part in the long-term health of pension schemes. Any tax on them increases the possibility that the scheme will not have sufficient assets to meet liabilities.

'Pension funds worldwide are in big trouble. Unexpected increases in life expectancy, changing accounting rules, contribution holidays/reductions, low interest rates and very poor equity market returns have led to a steep fall in funding levels. Especially UK pension funds, which always have had a relatively high equity allocation, have been hit hard, with aggregate shortfalls reported to be in excess of £200 billion.Several obvious solutions to the problem have been suggested. One is to require sponsors to increase their contributions. Another is to reduce pensions. These alternatives are currently being discussed at great length.

It means that the amount of money they need to put aside in order to ensure a given level of retirement income is rising steadily. Experts say that a 30-year-old man aiming to retire at 65 on an annual income of £20,000 a year in today's terms would currently need to save about £260 a month so do you think he can do this with prices increasing and a mortgage???This rises to about £450 for men aged 40. For women, deemed more likely to take career breaks, the minimum saving requirement is likely to be higher still.

There is still a basic state pension, but at a maximum of £86.05 per week for a single person or £131.20 for a couple, it is unlikely to fund a comfortable retirement. The low level of the state pension partly reflects a concerted move by successive governments, worried over Britain's rapidly ageing population, to encourage more people to save for their own retirement. However, that plan received a setback in the early 1990s when it emerged that many consumers were mis-sold new pensions which left them worse off at retirement than they would have been if they had stuck with their original scheme. Some say the episode has made consumers more reluctant to put their money into pensions.

A deficit alone does not necessarily mean there are intrinsic problems with the company pension scheme. It is important to remember that pensions are long-term investments, and it is likely that when market conditions improve the fund will bounce back. However, you might be asked to make more contributions into the fund. People are living longer and there will be increasing demands on the fund in the future. Problems have arisen in the past when a company scheme, already in deficit, has been wound up. This has left many workers with much reduced pensions, even though they have saved all their working lives. To counter this problem the UK government has introduced the pension protection fund (PPF). The PPF is a type of insurance scheme which all final salary schemes have to be a member of. The PPF is supposed to step in when a pension scheme gets into difficulties. However, the PPF has not been put to the test yet. What else is being done to solve the UK's pension problems? The government has simplified the rules governing personal and workplace pensions and now allows people to defer their state pension in return for a lump sum payment. But before making any more moves the government is awaiting a report from the Pensions Commission. The Commission will make a series of recommendations on how to boost UK savings and reform the state system in November 2005. In October last year, the commission estimated that more than 12 million people in the UK were not saving enough towards their retirement. The commission's interim report published in October 2004 said that some mixture of higher taxes, more saving or a higher average retirement age was needed to solve the UK's pension crisis.

SO WHAT WILL HAPPEN TO PENSION FUNDS:

1/. It will vary in the stability of eachs country's cash flows and if they can afford to hold & conserve funds for pensioners..

2/. Review the beneficiaries who may be abusing the system and change the funding amounts

3/. Increase the age for penion funds--- many countries now considering this option.

4/. Assets tests to determine who should get pensions and who shouldn't

5/. Remember many private pension funds went bust eg. United airlines, Enron??? many more will follow.

6/. As the baby bomer age draws near and more middle age than workers will hold pensions will countries reserves be enough to provide pensions to those supported by so few. Most countries currently rely upon only 30% of the working-age population to pay into the country's pension system. You got it the rest rely on the state to take care of them.

7/. Using a lifetime work history model (35 or 40 years of work before retirement, regardless of age).

Central banks & USA greed are the ones responsible for creating this Crises system thanks to their "fiat currency system" ( the fiat currency system that we have now is based on trust, trust in terms of paper money, trust in the government who really never can tell a situation will happen. From the USA every western country followed. We believe in them as we have no choice so now you can see whats happening ). Since the introduction of the Euro, monetary inflation has been exceeded 10% per year. A lot of people don't know it, but monetary inflation is the real, true inflation so think about your future. Monetary inflation is printing money & thats why we are talking about bilions now not millions. Credit expansion is based on the promise to pay money back. The Central Banks give money to Banks and Financial houses on credit. These Banks lend money to people hoping that it gets paid back because those banks are obliged to pay back the central bank. The central bank approves the credit that the banks lend to individuals and companies. If people are no longer able to pay it back because they've gotten so deep into debt, then the banking sector can't meet its obligations to the central bank either. But in this case Banks were ending 100% with no equity. That results in bankruptcy. And what we're now seeing - the first signs of this with the credit crisis - is that a few banks have already gone bankrupt. Bear Stearns & now Lehmans & then Insurance Companies like privately owned AIG with many more to come. The US Govt should not bail out the likes of AIG but they have & now you have one man dictating the terms of a Central Banking system & perhaps the collapse of the monetary system -- thats right Paulson! However the bailoput happened and the people are the losers. The winners are the bank execs who are taking home huge bonus payments eg Lehmans.The market crash has stalled the once on-course retirement plans of hundreds of thousands of investors & the losers are the borrowers --people who now cannot pay back the banks. But the situation is the world will get worse and people need to not just use one bank but spread their money around. Just watch other countries??? and you will then realize take your money oput of the banks and invest in gold.

Our motto buy gold& silver while its low & maintain assets you have. Most of all don't borrow & keep control of your funds???

George Soros, the hedge fund legend and billionaire philanthropist, said on the 9th April 2008 the subprime mortgage crisis is likely to cause global losses of over $US1 trillion, characterizing the situation as the most severe since the Great Depression. It is now Sept and AIG, Lehmans, Bears & Stern, Washington Mutual Inc, Icelandic bank, California-based IndyMac Bank etc have collapsed and many more to follow. Analysts project another 150 banks could collapse.

We have yet to see subprime hit Thailand --- it will as the banks are saying nothing yet hiding behind a charade & the politicians are more concerned about getting ministries & fill their pockets more. Condos in Bangkok are plentiful and Property Investors are saying there is not enough condos here but they normally say this so people will invest. If you borrow you are in for a shock. If you have excess funds to play with OK but stay away from fund managers & hold on to your money --- better still listen to us and buy condos only not 30 year leases under Estate managements and just buy what you need. But check out the condo and Company first if they have mortgages? The rest invest in gold & silver is our fix. . [ Read more about Fund Managers ]

The bailout helps the Execs and banks not the taxpayers and in fact thery lose out completely. The firm Lehmans, in the days before it filed for bankruptcy, sought board approval to pay three departing executives more than $20 million, according to Waxman."Even as Mr. Fuld was pleading ... for a federal rescue, Lehman continued to squander millions on executive compensation," Waxman said. Waxman displayed a chart that detailed what he said was $480 million in compensation since 2000 and pointed out that Fuld owned a $14 million oceanfront home in Florida, an extensive art collection and another home in Sun Valley, Idaho. "Your company is now bankrupt, the economy is in a state of crisis, yet you get to bring home $480 million," said Waxman. "Is this fair, when the CEO of a company that's bankrupt has made that much money?"

On Oct. 3, AIG said it had already used $61 billion worth of the loan and was selling off parts of its business to help pay it off.On Oct. 16, the House will hold a hearing on the regulation of hedge funds. An Oct. 22 session will focus on the breakdown of credit rating agencies, and a hearing on Oct. 23 will scrutinize the role of federal regulators.

Local banks have been cutting back funding lines to US companies as credit risks have jumped sharply in recent days.Bank executives said local banks have been refusing to roll over their short-term credit lines to international clients, particularly US firms, as a result of the global credit crunch.Some banks are concerned that funding will simply be transferred offshore to help parent companies starved for cash. Other bank executives said the cutbacks simply reflected prudential lending practices as credit risks have jumped sharply.While liquidity remains plentiful in the local money market, global equities markets have nosedived as analysts express concern that the financial crisis will spark a full-blown recession as companies are locked out of credit.US and European banks, already suffering from declines in the value of the securities and mortgage loans, have cut back new lending due to capital constraints and fears about credit risk.Apisak Tantivorawong, the president of Krung Thai Bank and head of the Thai Bankers' Association, acknowledged that some banks were cutting back short-term lending for some clients.''This is normal practice under each bank's risk management system. Definitely the uncertainty in the local and global economic outlook has led to higher risks and lower loan growth,'' he said.He said that KTB, the country's second-largest bank, was maintaining its lending practices, but that rejection rates may rise as credit qualifications for borrowers fall with the slowing economy.Net lending growth in the third quarter would decline from the first half, Mr Apisak said, due to the slowing economy. The bank in any case still expects to post a net profit for the quarter, even after increasing provisions to fully cover its $160 million investments in offshore collateralised debt obligations.Political unrest and the violent clash between the People's Alliance for Democracy and the police this week had also affected already-weak investor confidence, which in turn would affect investment and consumption trends for the near future.''The private sector is definitely concerned about the political uncertainties. After the violence on Tuesday ... the country has no solution to the problems. This will only further affect confidence and the economy,'' Mr Apisak said.For now, loan quality remains relatively strong, although the trend is negative in line with the overall economy.''The bank's non-performing loans for the quarter are expected to be unchanged from the last quarter. The negative environment will affect distressed assets over the next six months, but we see the situation is still controllable,'' Mr Apisak said.Wiwat Kittiphongkosol, an executive vice-president of Siam Commercial Bank, said the bank was maintaining its loans to both local and foreign clients.''The US crisis has been limited to the financial industry, but the real sector has remained normal,'' he said.But SCB is taking a more cautious approach to trade finance and clearing letters of credit issued by foreign banks.Mr Wiwat said liquidity conditions would tighten and funding costs would increase due to global market turmoil. Bangkok Post source 9th Oct 2008

If you are unsure of a gem shop in Bangkok contact the Tourism Assistance Center, Tourism Authority of Thailand, Le Concorde Building, 202 Ratchadapiser Road, Bangkok 10310. Tel: 694-1222, ext. 1090-1094, or the Thai Gem and Jewelery Traders Association, 942/152 Charn Issara Tower, 15F, Rama 4 Road, Bangkok 10500. www.tgjta.com , email tgjta@mozart.inet.co.th or telephone 267-5233-6.

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