Credit deflation and the reflation cycle to come (part 2)

[Chewing Grass]

2 minutes ago, Don Coglione said:

Christ.

My ex has over 30 years of service and I reckon she is on £80k (for doing fuck-all). How much pension is she going to rake?

At the moment with 30 years in about £27600 p.a.

[Don Coglione]

1 minute ago, Chewing Grass said:

At the moment with 30 years in about £27600 p.a.

How does that square with Bob's anecdote?

[Bobthebuilder]

Just now, Cattle Prod said:

Wow. So how can they get pension access before the private pension age, without being nosy. Is it a police thing, disability or similar, or is this a perk across the civil service?!

Stroke.

[Chewing Grass]

Just now, Cattle Prod said:

Wow. So how can they get pension access before the private pension age, without being nosy. Is it a police thing, disability or similar, or is this a perk across the civil service?!

Don't know but I think retired on "I'll health" is how they swing it.

Some government 'pensions' are classed as 'deferred wages'.

Usually you can't get it before 55.

[Lightscribe]

 

38 minutes ago, Don Coglione said:

How many years of service and at approximately what salary level (if you know)?

As I used have dealings in this area, I can chime in here. Classic civil service pension is 1/80th (only one with a lump sum). So with a 40 year service on final salary of £60k would be £30k a year. 

Normally retiring at 55 (classic age is 60) would see it reduced 5% each year taken early. Tier 2 ill health retirement enables you take it unreduced, so in this example he has had 8 years paid for by the tax payer to the tune of £300k at current (lump sum and pension).  Obviously that is index linked so will cost far, far more in years to come.

That’s one of many. Expect Greece levels of pension funding crisis in years to come. Covid will x100 the speed of the demise of people not returning to work and taking ill health retirement. How anybody thought any of this was sustainable when these direct benefit pension schemes were set up is anyone’s guess. 

I have one (on a massively shitter scheme), but am certainly in no illusions that I’ll ever receive it. The economy will have self-imploded long before then. Still at least it was all good for some eh, make hay while the sun shines and all that. Fuck anyone else paying for it or those below. 

[Heart's Ease]

11 minutes ago, Lightscribe said:

 

As I used have dealings in this area, I can chime in here. Classic civil service pension is 1/80th (only one with a lump sum). So with a 40 year service on final salary of £60k would be £30k a year. 

Normally retiring at 55 (classic age is 60) would see it reduced 5% each year taken early. Tier 2 ill health retirement enables you take it unreduced, so in this example he has had 8 years paid for by the tax payer to the tune of £300k at current (lump sum and pension).  Obviously that is index linked so will cost far, far more in years to come.

That’s one of many. Expect Greece levels of pension funding crisis in years to come. Covid will x100 the speed of the demise of people not returning to work and taking ill health retirement. How anybody thought any of this was sustainable when these direct benefit pension schemes were set up is anyone’s guess. 

I have one (on a massively shitter scheme), but am certainly in no illusions that I’ll ever receive it. The economy will have self-imploded long before then. Still at least it was all good for some eh, make hay while the sun shines and all that. Fuck anyone else paying for it or those below. 

You'll remember the very short lived 'Premium' CS pension. Contributions significantly increased from the Classic and Classic Plus schemes, but accrual down to 1/60 with no automatic lump sum. Can take from 50 with normal pension age at 60 so a 50% actuarial reduction. Small print got changed a couple of years ago so if taken from 50 there's no inflation increase til 55 (assume CPI and they used to use September data).

Absolutely was used as a tool to keep headline pay increases down. See also granting of additional leave in lieu of pay increase. All kicking the can down the road for the future. 

Knew quite a few going at 53 and having their pensions 'made up' to 60 in lieu of redundancy. It was very good for them.

[Mapper]

1 hour ago, Bobthebuilder said:

£100K++ lump sum and £30k per year

 

1 hour ago, Bobthebuilder said:

52...

I mean...

What th...

How...

How ar...

...

[DurhamBorn]

When i went from GSK the redundancy was crap because it went on age not service,but they offered to increase my years in the final salary pension by 40%.Nuts.At the time i realised just how valuable that would be down the road so left and got 6 free years added on.When i moved into my SIPP last March those extra years ended up being worth £20k each.My partner works at the council,i tell her each years service is worth her putting on 5lb in weight on if i leave her ever or not  .To be fair her pension might end up £200 a week from them so not massive,but still nice.There is a huge sickness problem though where many have 6 months off every year and nothing done.The pension actually encourages you to do it so you can go on ill health.

I find little wrong in ordinary workers getting £200 a week,what really causes the problems are the none job managers etc pulling £500 a week because that being paid for by pushing low wage workers into poverty through massive council tax.

Lets see what happens once the BOE cant print the welfare budget anymore as we are now in a rising inflation and rate cycle.

 

[Yadda yadda yadda]

1 hour ago, Bobthebuilder said:

Stroke.

I understand it on that basis. The computer program will say expected default death at 80 or similar. A stroke at 52 will take that expected death age right down. Perhaps they account for less stress from early retirement or perhaps not. They might also account for severity of the stroke.

He could be a winner here and draw down a million at current value. It might go the other way. The scheme is clearly very generous.

[DurhamBorn]

59 minutes ago, Yadda yadda yadda said:

I understand it on that basis. The computer program will say expected default death at 80 or similar. A stroke at 52 will take that expected death age right down. Perhaps they account for less stress from early retirement or perhaps not. They might also account for severity of the stroke.

He could be a winner here and draw down a million at current value. It might go the other way. The scheme is clearly very generous.

Thats exactly what i used to get a transfer done.I had cancer 20 years ago,but i didnt say the time,i just said id had cancer and there was a very big risk i wouldnt get any or much value from my pension so i wanted it moved into a personal pension so i could leave it to my kids.IFA was actually quite good as they said you can insure yourself against that risk to leave kids etc,but it meant they wink wink said no,but then insistent client and due to having had cancer it ticked enough boxes for them if the FSA came calling.A few minutes after it landed with them i launched a transfer into my SIPP and they werent very happy at all,they expected the fees at 2.1% a year forever.

The fact government pensions are funded from present tax is the real killer.Copper over the road retired at 50 on big pension paid by the NMW lad in a bedsit working in Lidl warehouse.Its a very difficult thing for governments to tackle though.Re-value DB pensions as being worth 40x instead of 20x and a lower lifetime allowance would do a lot of lifting.

[ThoughtCriminal]

Here's a pension/medical retirement anecdote to get the juices flowing.

 

A few months after i joined the prison service I answered a General Alarm Bell on a different wing. Schizo con had flipped and slashed an officer called Tim who was trying to restrain him. He had a nasty cut on his forehead but nothing too dramatic. 

 

So he went sick (6 months on full pay was the max) but after a few weeks he hadnt come back. Then a few months went by, still no sign. Turns out he said his head had gone, PTSD etc. 

 

So my boss goes out to see him at home for a welfare visit and when he returned him and my colleagues were all laughing because Tim had grown his beard into a mess, was sat in the dark, stank of sweat, house was a tip and he was barely responsive. 

Everyone knew it was bullshit, he'd seized his chance and was going for it.

So end result was he was granted medical retirement. Big lumper and full pension. Was only 43.

 

Id heard officers say "id love to get slashed/stabbed. Nothing too serious, just for 6 months off", but i never actually realised they were serious until then. 

 

I thought "what the fuck job is this? What kind of people fantasise about being wounded to get 6 months off on full pay?". 

 

Anyway, fast forward ten years and im sat on association watching paedophiles playing pool and table tennis for an hour and i heard myself say to my mate" Id love to get thrown off the 3s (top) landing onto the netting. Maybe hurt my back or something". 

 

And thats when i knew i needed to leave. So i did. 

 

I still think about Tim. He moved to Spain, married a girl over there, has his own business. 

 

Alologies for thread derailment, that pension talk triggered a proper trip down memory lane. 

[leonardratso]

tim not so dim after all then.

[reformed nice guy]

I had this in the offtopic post about the tax raid:

Currency debasement will do everything they want to achieve:

    It reduces the relative value of their debts
    If wages rise, even if not as much as inflation, then their tax take rises
    Under reporting CPI and other inflation measures will allow them to devalue state pension payouts, housing benefit, tax credits, minimum wage and universal credit

Is that not the scam they want to pull? In an exaggerated way: Inflation rises 10%, they report it as 5% so bennies and pensions lag behind

[Yadda yadda yadda]

16 minutes ago, leonardratso said:

tim not so dim after all then.

Might have cut the inmate in on the deal. What was he in for, fraud?

[sancho panza]

On 19/06/2021 at 16:40, DurhamBorn said:

I actually think telcos are better inflation hedges than gold now because they can actually leverage the inflation by quite a bit,though of course they have some risk of failure,and regulation and tax risk.

This is a key point that people forget.The old 'gold is an inflation hedge' mantra gets trotted out so often it becomes a truth without anyone examining the basis of it.

Reality is that gold was an awful inflation hedge 1980 to 2003/4/5.Gold holders got burned in real terms.Hugely so.

Gold to me is a hedge against the central banks losing control and solvency risk.As you rightly point out,there are far better ways to hedge infaltion.

[reformed nice guy]

57 minutes ago, sancho panza said:

This is a key point that people forget.The old 'gold is an inflation hedge' mantra gets trotted out so often it becomes a truth without anyone examining the basis of it.

Reality is that gold was an awful inflation hedge 1980 to 2003/4/5.Gold holders got burned in real terms.Hugely so.

Gold to me is a hedge against the central banks losing control and solvency risk.As you rightly point out,there are far better ways to hedge infaltion.

Yup, I view my gold as insurance rather than an investment

[DurhamBorn]

3 hours ago, reformed nice guy said:

I had this in the offtopic post about the tax raid:

Currency debasement will do everything they want to achieve:

    It reduces the relative value of their debts
    If wages rise, even if not as much as inflation, then their tax take rises
    Under reporting CPI and other inflation measures will allow them to devalue state pension payouts, housing benefit, tax credits, minimum wage and universal credit

Is that not the scam they want to pull? In an exaggerated way: Inflation rises 10%, they report it as 5% so bennies and pensions lag behind

Yes,CBs just need to print enough so tax take increases faster than spending,and thats exactly what they are doing.My roadmap says inflation will be around 60% to 66% over the cycle to get there.I think its running at 10%+ now whatever they say official.

[Loki]

3 minutes ago, DurhamBorn said:

My roadmap says inflation will be around 60% to 66% over the cycle to get there.I think its running at 10%+ now whatever they say official.

Randomly I priced up the Toyota WS auto fluid for my truck.  20 litres, was £160 back in mid-April, over £210 now. 

Might buy another barrel...

 

[SpectrumFX]

10 hours ago, Castlevania said:

The above article is relating to the state pension which was never funded. That’s arguably ok at the moment, due to significantly increasing the age that you qualify.

The bigger issue is government defined benefit pensions. Roughly half are funded with the other half simply coming out from general taxation. They completely messed up life expectancy and projected growth rates. They’ve managed to tweak them by changing indexation from RPI to CPI; for younger workers, watering down the pension payouts and increasing the amount current government workers must contribute, but for anyone who’s already drawing or is close to retiring the payouts relative to amount contributed whilst working are fantastic.

They threw away much - if not all - of the indexation savings in the civil service pension by improving the accrual rate.

It's something like 1/43 now, although they present it as a percentage in the hope that people won't notice what they've done.

 

[sancho panza]

On 20/06/2021 at 09:16, DurhamBorn said:

Yes its down to endless liquidity.The Fed has printed so much US assets cant produce an income so entities are taking that liquidity now and buying up whatever they can elsewhere.Most countries have blocks,but the UK will flog off everything.Interest rate increases will change everything,but the question is how much damage is done before that happens.

Iv noticed since i was 21 and investing hard how much the UK has moved away from equity investing to houses.Lots of that is due to the cycle,dis-inflation etc,and houses couldnt of had a better macro backdrop.

I expect they would need to pay £2.60 minimum ,and could be a counter bid.I guess il just buy some more TEF Germany with the money.

I remember reading Bernard Grays investment book 25 years ago and in the intro he said in the 1970's 70% of stocks were owned by individuals,I would suspect that's way lower now.Punters have been steeered towards the housing ponzi and each downdraft in the stock market has been used to reinforce the hosuing ponzi.

On 20/06/2021 at 20:30, Bilbo said:

Which has the value of a Dutch tulip bulb 

You made me think of a fine paper by Didier Sornette I read many years ago.An amazing intro before it gets too mathemtaicla for me

Tulip bubble ran through generations from 1550 until it sank in 1636 aparently.Much like our hsuing bubble.

https://arxiv.org/pdf/cond-mat/0301543.pdf

[Hancock]

12 hours ago, DurhamBorn said:

Lets see what happens once the BOE cant print the welfare budget anymore as we are now in a rising inflation and rate cycle.

It will be a great thing to witness, need it to happen ASAP.

[Sugarlips]

Haven’t watched these guys before but if you have time, they have some great data and are not afraid to give their macro views on where we are at and the inherent risks we all face presently

 

[MrXxxx]

13 hours ago, reformed nice guy said:

Yup, I view my gold as insurance rather than an investment

Well yes and no...perhaps miners are the best way to get cover against inflation as a) they offer a return, b) they can't be created like paper gold, and c) everyone believes solid gold is the only insurance against inflation....problem is they can be very volatile and some are badly managed.

[jamtomorrow]

Enjoying all the "number go up" anecdotals, but we need to see more to know for sure we're dealing with entrenched inflation.

An updated velocity print would be very interesting and useful at this stage. However next one (M1 according to FRED) isn't due until end of July (since they're quarterly).

Historic sub-2.0 lows since Q2 2020, compared to 5.6 "normal service" pre-pandemic and previous cycle high in excess of 10.0, so any moves in line with the thesis of this thread should be *very* obvious.

[HousePriceMania]

 

 

I have to ask....

does anyone think there will be any sort of deflation or BIG KAHUNA now or are the people in the know just piling into any old asset they can get their hands on ?