Monday, November 02, 2009

Idiots Today

Tim has already had a go at the more egregious bits of this but I want to stick my poniard in (I would have said 'stiletto' but despite today's diversity-friendly posting I still can't walk in them):

Remember, the biggest reason for our current pension crisis is that the future rewards of pensioners have been spent by the City today.

No, no, no. The biggest reason for our current pension crisis is s19 of the Finance (No.2) Act 1997. Ritchie clearly doesn't realise anything about deltas and compound interest (with pension savings of, say 40 years, you have time for significant compounding). The pension funds were in crisis before the big stock market falls. But we have time for compound ignorance:
November 2nd, 2009 at 13:50 | #8

Amazing isn’t it carol that a small tax change can apparently have brought down the whole system

And utterly wrong, of course

The reality is that the pensions of the wealthy still get far, far too much tax subsidy


Apart from failing to realise that "spent by the City today" is not the same as "far, far too much tax subsidy", hasn't he realised that it isn't actually the pensions of the wealthy that are important (there aren't enough of them - and most of their savings is likely to be tied up in mostly-CGT-free occupational shareholdings), it applies to everybody who has a personal pension (and, anyway, it's not been true since the Finance Act 2004 - unless you are in the public sector - and pretty much everybody with a defined benefits pension is, your we-don't-steal-from-this-bit-yet pension fund is limited - £3600 per year maximum tax relief, a contributions limit and a fund total limit - the latter aimed to provide a maximum pension of £75,000 per year - nice money but not 'wealthy' - tax beyond that is at 25 to 55% on the lump and then you have income tax on the disbursement).

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