Applying Control Engineering Principles To Pensions
Pensions are a nightmare and more rubbish is talked about them than any other financial matter, except possibly credit cards.
I’m in some ways typical, but the size of my pension pot is not typical.
When I worked for Metier, our wonderful accountant, Brian, set me up with a pension that I can live on.
I also have an income from the cash I got from selling the stud.
And when the DWP sorts it out I’ll have my State Pension.
So basically, I have a fixed sum coming in each month, from which I take my living expenses. Which of course varies on a month by month basis.
So at the end of each month I have a current account, which either has a small surplus or perhaps a small deficit. If it’s a surplus, the money goes into my Zopa account and if it’s a deficit, I withdraw a proportion of the payments made in at the first of the month.
So Zopa acts like a deposit account, that pays a reasonable rate of interest. The great thing, is that it costs me nothing to transfer money to and from Zopa.
There is of course a slight risk with Zopa, but I’ve used it long enough to have developed a philosphy that minimises bad debt.
Effectively, I’m using Zopa to damp out the fluctuations in cash flow, just as a control engineer might add damping to a feedback system.
The Department Of Work And Pensions Doesn’t Believe In Speed
I was sixty-five on the sixteenth of August and still haven’t had a sniff of a pension, despite several phone calls and a few letters.
I’m not someone who is in desperate need of the money, but surely if I was, it would be causing me great difficulties.
After all, it’s not if my pension age sneaked up on them and they’ve had my details since I started getting winter fuel payments a couple of years ago.
It’s a complete disgrace!
Birthday Charity Giving
I’ve had some more positive responses on my idea for giving to charity on your birthday, which I outlined here.
It just seems to hit a chord with people, to give to celebrate another year of life, hopefully well-lived.
So I’ve now given it a name of Birthday Charity Giving. It was the only sensible name I could think using the first letters of the names of my wife, son and the late company accountant, who set me up with the good pension I enjoy.
Why If Something Goes Wrong, Does It Always Happen To Me?
I avoided the NatWorst problem, as I’ve never banked with them, and over the last few years I’ve been very happy with Nationwide.
So today I got my comeuppance.
I have been trying to get a forecast for my pension, which will be paid on my 65th birthday in a few weeks time.
Today the DWP has informed me that they can’t find my National Insurance contributions from the Department of Revenue and Customs.
So now, I will have to navigate myself round what is reputed to be the worst Government system in the UK.
Why am I the one, whose records have got lost?
Bureaucracy Isn’t All Bad or How to Get a UK Pension Forecast
I am 65 in a few months and I need to find out what my State Pension is going to be, so that I can plan my life accordingly.
As I live only a short walk from my local Jobcentre Plus and they helped me with my winter heating allowance, I decided they would be the first place to try.
They couldn’t help me directly, but they gave me a list of useful numbers and told me to ring the Pension Service on 0845 606 0265. This incidentally is free from BT, but expensive from a mobile.
After I got home, I rang the number and they told me that the simplest way was to ring another toll-free number, 0845 300 0168.
It took me about ten minutes before I gave them all the information they needed, like both out National Insurance numbers, C’s Date of Death and our Date of Marriage.
The guy at the other end said, I’d get the Pension Forecast through the post in about ten days.
It was all fairly painless! And there were no charges anywhere. Not even phone ones!
QE is Bad For Your Pensions
I don’t mean dear old Liz, as I think the longer she lives, the better it will be for the economy and my pension. But the link is the opposite with Quantitative Easing, which according to several commenators will mean that long-term annuity rates will fall. This article is from CityWire. Here’s an extract.
On the one hand there has been uproar from some experts about the impact on people’s pensions. This is because QE is used to buy back government bonds, or gilts, which reduces their yields and in turn lowers annuity rates, which are linked to gilts and which determine the amount of pension many people receive.
However, others argue that annuity rates were already dropping before QE begun; that while we are hostage to the broader economic backdrop which includes QE, the eurozone crisis is what really matters. ‘It’s the broader backdrop that is most relevant,’ said Tom McPhail of Hargreaves Lansdown.
It doesn’t look good does it. I suppose I could put in a stove that burned paper and just put my pension in it, a bit at a time. I would at least be warm.
On the other way, I’ve sort of created my own annuity using Zopa, where I put the money I got from selling C’s Boxster.
NuLabor Is Now Hypocrisy Labour
They’re certainly being accused of that in The Times in a front page article, entitled Hypocrisy charge as Labour cuts its pensions.
It’s one of those titles where you can skip the rest.
Doctors Catch Bob Crow Syndrome
I like this use of words in a leader in The Times today.
I would define Bob Crow syndrome, as being unwilling to give up salaries and pensions, that are way above what similar groups of employees are getting.
The leader does praise British Airways pilots, who graciously took a pay cut rather than see their jobs disappear.
Does Ed Milliband Want To Be Labour Leader?
Ed Milliband is one of these people, who are very anonymous. Take most senior politicians and you have an image of them in your mind. If you look at Labour politicians of the last few years, there were a few characters, whether you liked their policies or not.
Surely though Ed Milliband must be one of the most unrecognisable Labour politicians of recent years as he just looks like so many of the others.
So why is this a problem?
If say I see someone on the television news saying something that I might find interesting, I like to know who’s speaking. With Ed Milliband, unless there’s a caption under the screen, I have difficulty recognising him.
And it’s not just Labour politicians, it’s a good percentage of all of them. I suspect that the selection process is so tight these days, that people like Kenneth Clarke, Boris Johnson, John Prescott and many others would not be selected. If you look at the women politicians, the ones that stand out have their little quirks. Just like my neighbour many years ago, Gwyneth Dunwoody.
To illustrate my point, there’s a government minister on the box at the moment, and I’ve no idea who he is.
I would think that Ed Milliband could rectify this anonymity problem, but he diesn’t seem to be trying hard.
So why did I give this post the title I did?
It would appear that he is not backing the strikes today. Is this because he is trying to be sensible or because he doesn’t want the job. The BBC puts their view here.
If he isn’t backing the strikes, his stance is surely a very simple way to alienate a large proportion of his supposedly core support.
You might ask what my view is on the strikes. I’m usually against strikes as in most cases the fact that a strike is called is a failure of company and employees to see the sensible solution. I’m not going to name them as I don’t want to shilt them, but there are lots of good companies and organisations, where there has never been a sniff of a strike.
With pensions, there was bound to be a problem, as the numbers just don’t add up. And they haven’t for years! So the blame for this problem is all of those politicians of the last fifty years or so, who put their head in the sand and hoped that some new disease would start to kill people at 65.
Are Pensions Just An Enormous Ponzi Scheme?
The title of this post was suggested by someone who I know well, who works in the City.
He has a point, as once people stop joining and contributing, it all goes belly up.
Think about it! And think too about all the rules brought in to protect the early joiners in the scheme and also to make sure that advisors get their part of your hard-earned pension pot!
The Anonymous Widower 