Don't want to spoil things with any positives, but a weak pound means that the overseas earnings of UK companies, more than 65%, means their revenue increases (unless hedged).
Also, the increase in UK gilt yields means their pension fund deficits shrink because the higher coupon means less capital is needed to generate the same revenue stream to pay pensions. This means extra cash will be available to companies to invest in the business rather than pay into the pension fund.
Pension fund deficits have increased massively over the last few days with the collapse of the stock market. Businesses will have to spend capital to reduce those deficits.
The revenue streams from Gilts already held to pay monthly pensions will be unaffected by increased Gilt yields as those Gilts have already been paid for.
I think it is wrong that deficits have increased. In actuarial valuations liabilities would be discounted. When interest rates rise liabilities reduce and hence reduce deficits and required contributions. One of the reasons for such current high deficits is the very low current interest rates.
Having said all that I don't believe interest rates will increase once things settle down. Once there is a little more certainty about it our rating will be back up again.
Investments for pensions due to start paying in 10 or more years time will be primarily invested in stock markets and property. I don't see how a collapse in stock market values does not mean that these pensions do not incur increased deficits.
Because a deficit has 2 sides. It is the difference between assets and liabilities. Liabilities are pensions that have to be paid. If you are paying a pension in 10 years time it is discounted, generally by corporate bond yield rate. so assets could fall but liabilities fall more so deficits fall or maybe even become a surplus.
I think he was asking the question from the point of view of a self-invested personal pension rather than a company scheme.
Companies will have choices. Shut down the pension schemes, reduce benefits and/or pay more into them. The latter would have profound effects on dividend payments and thus stock market valuations. The former would drastically curtail the spending power of the grey pound. Whatever none of this is good news. Still, at least we've got that money we used to give to the EU, that will help.
Can leaving the EU do anything but exacerbate the situation I wonder? Many pension funds are heavy investors in (commercial) property. It is inevitable that such property will lose value if/when businesses like HSBC ship staff out of Canary Wharf and into Paris. Expect to see vast empty tower blocks coming to you soon. Mind you, converting the towers into accommodation could solve the housing crisis. Not that anybody would be able to afford them.
So HSBC have said the rumours about 2000 jobs going to Ireland ain't true
Angie in Germany has said we don't have to rush out the door
Germany, Canada have already said trade deals would happen
The FT has regained its losses which were inflated when they thought we would Remain
Millions of things do and think of how we do them but of course on less than two days it's going to fail as there is go complete exit strategy !! Be real
I have NEVER ever had the Government I wanted --- down to my weird thoughts on the World. However I have always believed in the democratic process. In order for it to work it requires an effective opposition--- always will -- instead of bleating and crying and starting pathetic petitions start to organise --- we are out --- but what type of out ? Not all 16 million that voted stay love the EU as not all the 17 million who voted out hate the EU. 3 years of a Tory Government left --- couldn't a pro EU opposition possibly win the next election ? Of course the EU say no going back --- however --- nothing is forever and it's all down to the deal .
Two weeks ago Joe Cox was murdered and many across this country and on here said the tone of politics in this country needs to change , to much hate and anger. Maybe people should reflect on that rather than STILL calling people who voted out --- cunts --- racists--- fascists , and maybe they should look up the word bigoted !
CamerMoron once said " we are all in this together " --- now we sure are.
Raise your heads up pull up your socks and we get to it --- it's what Brits do
We have first mover advantage prior to the inevitable breakdown of the EU and Euro
We will become a global safe haven midway between the US and Asia, with a talented workforce, secure democracy and unique competitive advantages in several sectors.
I'll bet on FTSE 100 ending at 5800 on Monday. Beyond that, not a clue. What do you reckon? Unlike @newyorkaddick, I don't see a buying opportunity, for ordinary mug punter investors unless there is a drop to 5500.
Deadly serious it's like a breath of fresh air has been blown over the country
So many people scared of the unknown and if that's your way of viewing the world then I can see why you voted to remain
Me I voted to leave because I have faith and real belief that this will hurt at the beginning but be much more beneficial in the long run for me and my kids and as such I am really looking forward to the future with more zest and vigour than before,
My view is welcoming. In the new and banishing the old
Tell you what mate, how about we treat you, your business and your life as CL bellweather for how Brexit is going.
I am serious, and mean it honourably. For the benefit of others, I know a little bit about your business. I greatly admire the decision you took to go into it, having decided there was no future in being a black cabbie. That was courageous, and is the type of entrepreurial decision that any country needs people to take, and be successful in.
I fear though that you have separated in your mind your business and other aspects of life, basically economics and politics. My little business is much smaller than yours, but I have been staggered to watch how its performance has been tied to the GDP of the country it sits in. (down, down down since 08, and then in the last 18 months, up again). Your business in addition is built on cross border activity across the EU as well as in non EU countries.
So, if you agree, let's re-visit this conversation for the first time just before Christmas, when you will have an idea of how 2017 is shaping up for you. Then a year from now, and 2 years from now.
Deadly serious it's like a breath of fresh air has been blown over the country
So many people scared of the unknown and if that's your way of viewing the world then I can see why you voted to remain
Me I voted to leave because I have faith and real belief that this will hurt at the beginning but be much more beneficial in the long run for me and my kids and as such I am really looking forward to the future with more zest and vigour than before,
My view is welcoming. In the new and banishing the old
It's not a ride at Chessington, "fear of the Unknown" is completely healthy when we're talking about our countries economic, political and social future. It's talk like this that makes me certain that many, many Brexit voters really don't grasp the magnitude of what they've done. Se9 can you tell me exactly what we've done then and where we will be in 3 years time.
Yep I don't mind using it as a barometer tbh, it will be a good gauge, we had a brilliant year last year and as such I went into partnership with someone I have been working with, and we have a company called Anchor Barn Events Ltd, very much in its infancy but we Have already won a decent size marketing contract and we are well along the way of working with a real market leader in a totally different sector than we are normally in, 2017 will be a great gauge,
2016 we are down 25% on turnover on last year due to the UK being the home of the rugby world cup, but we are on par if not slightly ahead on 2014
There are very successful people on here whom I trust their opinion and found that it was very similar to my own and this made me realise that for Lord sugar there was an Eccleston (spelling) and Dyson
We are not doomed nor likely to be so Imo, yes I expect to see a bit of pain early on and it's down to me to be resourceful enough to work a plan to come out the other side,
It's down to me to build the platform I Need to stand on to achieve what I want too
The same goes for the UK, we are a great nation we have great people In it along with arseholes
The EU is the same great people and arseholes also
We have much to offer we have a land rich in inventive and creative people, we have lost sight on what's possible due to being content with being part of a club,
That has to change now the decision is made its about doing it not talking about it, but it will take time. We need not to rush we Need to follow it through to the end and come out the other side
Crying and bitching gets you no where it's about sucking it up and getting stuck into making it happen
The bank of England won't collapse they have a contingency plan theu have said that
The world will see that the EU has served a purpose and stronger more vibrant set of nations will come from it we won't be alone in leaving
Deadly serious it's like a breath of fresh air has been blown over the country
So many people scared of the unknown and if that's your way of viewing the world then I can see why you voted to remain
Me I voted to leave because I have faith and real belief that this will hurt at the beginning but be much more beneficial in the long run for me and my kids and as such I am really looking forward to the future with more zest and vigour than before,
My view is welcoming. In the new and banishing the old
It's not a ride at Chessington, "fear of the Unknown" is completely healthy when we're talking about our countries economic, political and social future. It's talk like this that makes me certain that many, many Brexit voters really don't grasp the magnitude of what they've done.
I know what I have done, I used my vote to influence change and improvement to my life and that of my family, you chose to do the same but we both wanted different things
Now more people wanted similar to me and less people wanted the same as you
Your belief is that the world is about to spin out of control
My belief is that we are more than able as a nation to over come the adversity and come out thriving
The big difference being those that voted out did so knowing there would be hard times ahead at the beginning but we're undeterred by that fact
This country has gone through extremely tough times whilst in the EU not because of it but whilst in it and still come through them
Being In the EU didn't stop those hard times materialising in the first place
So it is evident that being part of the EU doesn't stop recession doesn't stop housing crisis doesn't stop unemployment reaching record highs or assisting them then reaching record lows
This country coped it coped without being bailed out it coped due to the people within it
Those people are still here and Imo if we can do it whilst being part of the EU then we can do being out of it
We have had two real recessions during our time in the EU
And no doubt we will have to go through that again, but for the last 12months I have heard the words threat of recession on the news every night and that wasn't based on brexit happening but just the state of the world as a whole,
No doubt every bad thing that happens will be blamed on brexit at first but I would bey my last pound that it would probably have happened anyway
Some really interesting insights and comments on this thread from both sides, I almost find my view of this result changing with every post. I am still mostly unconvinced this has been the best result for this country, but I also think there is such a design flaw in the monetary union idea, that the EU will prove unsustainable in its present form. If that IS the case then dark days would probably be ahead of us whether we are in or out. I wonder whether when the dust has settled on this, that we don't end up with some fudging on both sides of the future negotiations between us and the EU so that ties and links are not severed quite as much as the Leave campaign would be expecting. Afterall, this is not a legally binding referendum, and behind close doors, views and deals may be quite different. But what do I know? That's the continuing problem with this referendum result, I never felt qualified or knowledgeable enough to be able to make a really informed judgement on this, and I think that applies to a lot of us.
Don't want to spoil things with any positives, but a weak pound means that the overseas earnings of UK companies, more than 65%, means their revenue increases (unless hedged).
Also, the increase in UK gilt yields means their pension fund deficits shrink because the higher coupon means less capital is needed to generate the same revenue stream to pay pensions. This means extra cash will be available to companies to invest in the business rather than pay into the pension fund.
Pension fund deficits have increased massively over the last few days with the collapse of the stock market. Businesses will have to spend capital to reduce those deficits.
The revenue streams from Gilts already held to pay monthly pensions will be unaffected by increased Gilt yields as those Gilts have already been paid for.
I think it is wrong that deficits have increased. In actuarial valuations liabilities would be discounted. When interest rates rise liabilities reduce and hence reduce deficits and required contributions. One of the reasons for such current high deficits is the very low current interest rates.
Having said all that I don't believe interest rates will increase once things settle down. Once there is a little more certainty about it our rating will be back up again.
Investments for pensions due to start paying in 10 or more years time will be primarily invested in stock markets and property. I don't see how a collapse in stock market values does not mean that these pensions do not incur increased deficits.
Because a deficit has 2 sides. It is the difference between assets and liabilities. Liabilities are pensions that have to be paid. If you are paying a pension in 10 years time it is discounted, generally by corporate bond yield rate. so assets could fall but liabilities fall more so deficits fall or maybe even become a surplus.
I think he was asking the question from the point of view of a self-invested personal pension rather than a company scheme.
Companies will have choices. Shut down the pension schemes, reduce benefits and/or pay more into them. The latter would have profound effects on dividend payments and thus stock market valuations. The former would drastically curtail the spending power of the grey pound. Whatever none of this is good news. Still, at least we've got that money we used to give to the EU, that will help.
Can leaving the EU do anything but exacerbate the situation I wonder? Many pension funds are heavy investors in (commercial) property. It is inevitable that such property will lose value if/when businesses like HSBC ship staff out of Canary Wharf and into Paris. Expect to see vast empty tower blocks coming to you soon. Mind you, converting the towers into accommodation could solve the housing crisis. Not that anybody would be able to afford them.
There is no difference between a personal pension scheme deficit and a company pension scheme deficit, apart from the fact that individuals are oblivious and don't measure it.
A company measures it because it has to fund it, individuals don't measure it because they assume they only have to maximise investment returns and ignore the interest rate risk.
It's like saving up for a retirement apartment in Florida and thinking you don't have to factor in currency fluctuations between the £ and the $.
If the value of the pension investments in equities goes up by 20% people think happy days my pension has got bigger. Little do they know that if gilt yields have fallen by 25% they have actually lost ground. The reverse is true when markets fall.
Deficits have arisen over the recent past because when equities have grown, gilts have fallen back by a greater margin. The absolute movement in the equity market is irrelevant, it's the relative movement against gilts.
Asset return only affects how much you need to contribute out of your pocket, i.e. what it costs to accumulate any given pension pot, it's interests rates that sit on the other side of the scales and determine what your pension pot delivers as an income. The day pension advisers understand that, the day might come when individuals receive proper risk based asset allocation advice and see an end to churning your money to chase illusory investment growth from illusory manager skills.
Then people might realise the futility of trying to read anything into market volatility because it should already have been factored into the portfolio, should not be a surprise and will understand how gilt yields in an orderly market will compensate.
Did you know on Friday we were still up by 169 points in the FTSE100 from the start of last week? Also, you'll find the European Stock Markets suffered worse than our own markets. Of course, it was inevitable that the markets, share prices and the pound will take a hit because we are going through a un-certain change but long term we'll be ok. It's a good time to buy some shares at the moment!
If you are 10 years away from retirement you will have very little invested in gilts. Most of your fund will be invested in equities. So how are you affected by changes in gilt yields?
Low central bank interest rates have crucified annuity rates and the size of the pot needs to be much bigger than 5-10 years ago to provide the same benefits.
During accumulation phase, a higher risk weighting is normally recommended because losses have historically always been recovered over time.
As individual pots get closer to retirement, moving to risk free or less risky becomes important to avoid the risk of the pot being crystallised just after a market fall.
As to what rate you can get on an annuity, it depends both on the underlying rate a provider can get investing in gilts and bonds and the riskiness of them. Higher central bank rates helps, higher credit spreads only helps a bit if at all.
As Brexit is likely to lead to lower or negative uk central bank rates, even if overall borrowing costs rise, it may not be beneficial to retirees unless the expectation is that the risk free yield curve steepens compared to before (risk free rates increase at quicker than was previously expected).
Deadly serious it's like a breath of fresh air has been blown over the country
So many people scared of the unknown and if that's your way of viewing the world then I can see why you voted to remain
Me I voted to leave because I have faith and real belief that this will hurt at the beginning but be much more beneficial in the long run for me and my kids and as such I am really looking forward to the future with more zest and vigour than before,
My view is welcoming. In the new and banishing the old
It's not a ride at Chessington, "fear of the Unknown" is completely healthy when we're talking about our countries economic, political and social future. It's talk like this that makes me certain that many, many Brexit voters really don't grasp the magnitude of what they've done.
I know what I have done, I used my vote to influence change and improvement to my life and that of my family, you chose to do the same but we both wanted different things
Now more people wanted similar to me and less people wanted the same as you
Your belief is that the world is about to spin out of control
My belief is that we are more than able as a nation to over come the adversity and come out thriving
The big difference being those that voted out did so knowing there would be hard times ahead at the beginning but we're undeterred by that fact
This country has gone through extremely tough times whilst in the EU not because of it but whilst in it and still come through them
Being In the EU didn't stop those hard times materialising in the first place
So it is evident that being part of the EU doesn't stop recession doesn't stop housing crisis doesn't stop unemployment reaching record highs or assisting them then reaching record lows
This country coped it coped without being bailed out it coped due to the people within it
Those people are still here and Imo if we can do it whilst being part of the EU then we can do being out of it
We have had two real recessions during our time in the EU
And no doubt we will have to go through that again, but for the last 12months I have heard the words threat of recession on the news every night and that wasn't based on brexit happening but just the state of the world as a whole,
No doubt every bad thing that happens will be blamed on brexit at first but I would bey my last pound that it would probably have happened anyway
FTSE 250 down 6.2% today. Lower than Friday and currently at it's 52 week low. Looks like it'll probably go below 15,000 today. Don't worry, everything will be fine we've got our independence.
FTSE 250 down 6.2% today. Lower than Friday and currently at it's 52 week low. Looks like it'll probably go below 15,000 today. Don't worry, everything will be fine we've got our independence.
FTSE 250 down 6.2% today. Lower than Friday and currently at it's 52 week low. Looks like it'll probably go below 15,000 today. Don't worry, everything will be fine we've got our independence.
Can we have hourly updates please? This is getting exciting.
Can you start a new thread when it hits a five year low?
FTSE 250 down 6.2% today. Lower than Friday and currently at it's 52 week low. Looks like it'll probably go below 15,000 today. Don't worry, everything will be fine we've got our independence.
FTSE 250 down 6.2% today. Lower than Friday and currently at it's 52 week low. Looks like it'll probably go below 15,000 today. Don't worry, everything will be fine we've got our independence.
Can we have hourly updates please? This is getting exciting.
Can you start a new thread when it hits a five year low?
Sure. How about a separate thread when your pension is worth 53p?
I am not too concerned, BoJo said the currency is stable and that the NHS would be getting the lions share of £350m that we won't have to keep giving away.
His non attendance in HoC today must be down to the fact that not much is going on in the world at the moment
Comments
Anyway, this very fresh article telegraph.co.uk/business/2016/06/18/pensions-timebomb-faced-by-uk-firms-is-frightening/ suggests that the pension deficit of the 6,000 largest schemes totals £296bn and went up £24bn last month. BT's pension scheme deficit amounts to a quarter of the company's stock market valuation.
Companies will have choices. Shut down the pension schemes, reduce benefits and/or pay more into them. The latter would have profound effects on dividend payments and thus stock market valuations. The former would drastically curtail the spending power of the grey pound. Whatever none of this is good news. Still, at least we've got that money we used to give to the EU, that will help.
Can leaving the EU do anything but exacerbate the situation I wonder? Many pension funds are heavy investors in (commercial) property. It is inevitable that such property will lose value if/when businesses like HSBC ship staff out of Canary Wharf and into Paris. Expect to see vast empty tower blocks coming to you soon. Mind you, converting the towers into accommodation could solve the housing crisis. Not that anybody would be able to afford them.
Angie in Germany has said we don't have to rush out the door
Germany, Canada have already said trade deals would happen
The FT has regained its losses which were inflated when they thought we would Remain
Millions of things do and think of how we do them but of course on less than two days it's going to fail as there is go complete exit strategy !! Be real
I have NEVER ever had the Government I wanted --- down to my weird thoughts on the World. However I have always believed in the democratic process. In order for it to work it requires an effective opposition--- always will -- instead of bleating and crying and starting pathetic petitions start to organise --- we are out --- but what type of out ? Not all 16 million that voted stay love the EU as not all the 17 million who voted out hate the EU.
3 years of a Tory Government left --- couldn't a pro EU opposition possibly win the next election ? Of course the EU say no going back --- however --- nothing is forever and it's all down to the deal .
Two weeks ago Joe Cox was murdered and many across this country and on here said the tone of politics in this country needs to change , to much hate and anger. Maybe people should reflect on that rather than STILL calling people who voted out --- cunts --- racists--- fascists , and maybe they should look up the word bigoted !
CamerMoron once said " we are all in this together " --- now we sure are.
Raise your heads up pull up your socks and we get to it --- it's what Brits do
We will become a global safe haven midway between the US and Asia, with a talented workforce, secure democracy and unique competitive advantages in several sectors.
mug punterinvestors unless there is a drop to 5500. Tell you what mate, how about we treat you, your business and your life as CL bellweather for how Brexit is going.I am serious, and mean it honourably. For the benefit of others, I know a little bit about your business. I greatly admire the decision you took to go into it, having decided there was no future in being a black cabbie. That was courageous, and is the type of entrepreurial decision that any country needs people to take, and be successful in.
I fear though that you have separated in your mind your business and other aspects of life, basically economics and politics. My little business is much smaller than yours, but I have been staggered to watch how its performance has been tied to the GDP of the country it sits in. (down, down down since 08, and then in the last 18 months, up again). Your business in addition is built on cross border activity across the EU as well as in non EU countries.
So, if you agree, let's re-visit this conversation for the first time just before Christmas, when you will have an idea of how 2017 is shaping up for you. Then a year from now, and 2 years from now.
What do you say to that?
Se9 can you tell me exactly what we've done then and where we will be in 3 years time.
2016 we are down 25% on turnover on last year due to the UK being the home of the rugby world cup, but we are on par if not slightly ahead on 2014
There are very successful people on here whom I trust their opinion and found that it was very similar to my own and this made me realise that for Lord sugar there was an Eccleston (spelling) and Dyson
We are not doomed nor likely to be so Imo, yes I expect to see a bit of pain early on and it's down to me to be resourceful enough to work a plan to come out the other side,
It's down to me to build the platform I Need to stand on to achieve what I want too
The same goes for the UK, we are a great nation we have great people In it along with arseholes
The EU is the same great people and arseholes also
We have much to offer we have a land rich in inventive and creative people, we have lost sight on what's possible due to being content with being part of a club,
That has to change now the decision is made its about doing it not talking about it, but it will take time. We need not to rush we Need to follow it through to the end and come out the other side
Crying and bitching gets you no where it's about sucking it up and getting stuck into making it happen
The bank of England won't collapse they have a contingency plan theu have said that
The world will see that the EU has served a purpose and stronger more vibrant set of nations will come from it we won't be alone in leaving
Now more people wanted similar to me and less people wanted the same as you
Your belief is that the world is about to spin out of control
My belief is that we are more than able as a nation to over come the adversity and come out thriving
The big difference being those that voted out did so knowing there would be hard times ahead at the beginning but we're undeterred by that fact
This country has gone through extremely tough times whilst in the EU not because of it but whilst in it and still come through them
Being In the EU didn't stop those hard times materialising in the first place
So it is evident that being part of the EU doesn't stop recession doesn't stop housing crisis doesn't stop unemployment reaching record highs or assisting them then reaching record lows
This country coped it coped without being bailed out it coped due to the people within it
Those people are still here and Imo if we can do it whilst being part of the EU then we can do being out of it
We have had two real recessions during our time in the EU
And no doubt we will have to go through that again, but for the last 12months I have heard the words threat of recession on the news every night and that wasn't based on brexit happening but just the state of the world as a whole,
No doubt every bad thing that happens will be blamed on brexit at first but I would bey my last pound that it would probably have happened anyway
I am still mostly unconvinced this has been the best result for this country, but I also think there is such a design flaw in the monetary union idea, that the EU will prove unsustainable in its present form. If that IS the case then dark days would probably be ahead of us whether we are in or out.
I wonder whether when the dust has settled on this, that we don't end up with some fudging on both sides of the future negotiations between us and the EU so that ties and links are not severed quite as much as the Leave campaign would be expecting.
Afterall, this is not a legally binding referendum, and behind close doors, views and deals may be quite different.
But what do I know? That's the continuing problem with this referendum result, I never felt qualified or knowledgeable enough to be able to make a really informed judgement on this, and I think that applies to a lot of us.
A company measures it because it has to fund it, individuals don't measure it because they assume they only have to maximise investment returns and ignore the interest rate risk.
It's like saving up for a retirement apartment in Florida and thinking you don't have to factor in currency fluctuations between the £ and the $.
If the value of the pension investments in equities goes up by 20% people think happy days my pension has got bigger. Little do they know that if gilt yields have fallen by 25% they have actually lost ground. The reverse is true when markets fall.
Deficits have arisen over the recent past because when equities have grown, gilts have fallen back by a greater margin. The absolute movement in the equity market is irrelevant, it's the relative movement against gilts.
Asset return only affects how much you need to contribute out of your pocket, i.e. what it costs to accumulate any given pension pot, it's interests rates that sit on the other side of the scales and determine what your pension pot delivers as an income. The day pension advisers understand that, the day might come when individuals receive proper risk based asset allocation advice and see an end to churning your money to chase illusory investment growth from illusory manager skills.
Then people might realise the futility of trying to read anything into market volatility because it should already have been factored into the portfolio, should not be a surprise and will understand how gilt yields in an orderly market will compensate.
Low central bank interest rates have crucified annuity rates and the size of the pot needs to be much bigger than 5-10 years ago to provide the same benefits.
During accumulation phase, a higher risk weighting is normally recommended because losses have historically always been recovered over time.
As individual pots get closer to retirement, moving to risk free or less risky becomes important to avoid the risk of the pot being crystallised just after a market fall.
As to what rate you can get on an annuity, it depends both on the underlying rate a provider can get investing in gilts and bonds and the riskiness of them. Higher central bank rates helps, higher credit spreads only helps a bit if at all.
As Brexit is likely to lead to lower or negative uk central bank rates, even if overall borrowing costs rise, it may not be beneficial to retirees unless the expectation is that the risk free yield curve steepens compared to before (risk free rates increase at quicker than was previously expected).
Been using that account.
Remember that small blip in 2008 when the world's economies crashed? The good old days.
Can you start a new thread when it hits a five year low?
His non attendance in HoC today must be down to the fact that not much is going on in the world at the moment