“When you get a few years from retirement, it’s the assets you already own that generate most of your income, not the money you put in to top things up at the last minute.Part 3: Best Method to Open and Convert ORF FilesĪdobe Photoshop is one of the best choices to edit ORF files.
It’s the same with pensions,” Mercer’s Senior Investment Consultant Brian Henderson says. If he found out halfway through, he might have had a chance. “If a marathon runner hits the last mile 20 seconds off his target time, he won’t be able to make it up. But it is not a failsafe solution for those who planned to take retirement soon. HARD SAVINGįor pension scheme trustees and members who reject a rapid increase in the risk to their capital, saving more can help mitigate the impact of damaging macro policy. In the meantime, because pensioners are living longer, the gap between the income they need and the total returns generated by the assets in their funds continues to widen. Lower interest rates earn savers less on their money, while an increase in the currency in circulation promotes inflationary pressures, reducing the purchasing power of that cash over time. While cuts in pensions paid to teachers, police and health workers across the indebted euro zone dominate the headlines, many private sector savers have failed to grasp the more subtle link between central bank policy and their dwindling wealth.
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The transfer of responsibility for retirement planning from the state to the individual has left policymakers in Europe and the United States free to prioritise quick economic gain over long-term growth, catching thousands of pension savers in the crossfire. “Funds cannot afford to suddenly pull out into the outside lane and stick their foot down, they need to have measured approaches for closing that gap,” he added.
“There are big deficits but there’s no silver bullet,” said John Belgrove, a principal at consultant Aon Hewitt, which advises pension funds running more than 10 billion pounds in assets. That leaves savers with a stark choice: raise the stakes to retire on time, or stay safe and work longer.īut if funds bet badly on assets they aren’t used to owning, they may inflame a problem that has already driven pension funds at major companies like BMW or British Airways into billions of dollars worth of deficit. But the loss of top credit ratings has meant their rules forbid them from investing heavily in many of those countries. In the past, fund managers could move up the yield curve, buying, for example, other AAA-rated euro zone bonds instead of German Bunds to get an extra percentage point or two of return. But some can’t, and not everyone wants to employ someone who is older.” RISKY BUSINESS “They are working longer if they have the choice. When they see the figures, they quickly realise they don’t have the funds to finish work,” Green said. “People are only just starting to understand how profound an impact these policies are having when it’s too late. Many of his clients have been forced to delay retirement as a result, typically extending their working lives by five years. Nigel Green, CEO of independent financial advisor DeVere Group, estimates a pre-crisis UK pension pot worth 10,000 pounds a year is now worth 20 percent less, hit by a triple-whammy of money-printing, low interest rates and poor market returns. “For governments in Northern Europe and North America, it’s about gaining time, avoiding any painful adjustments, keeping interest rates artificially low and hoping things will improve,” Nicolas Firzli, Co-Chair of the World Pensions Forum (WPF) said. Yet there has been little public discussion of the problem in the rush to try and head off a deepening crisis of poor growth and/or rising public debt in Europe and the United States. Without returns that outstrip inflation - still running at around 2 percent in much of Europe - they face the real value of their savings declining rather than ratcheting up over the next few years. That may yet rescue the global economy by supporting borrowing and growth, but it is very bad news for several generations of workers already set to retire later - and for longer - than their predecessors. government bonds on which pension funds traditionally rely to record lows.
LONDON (Reuters) - European workers can kiss goodbye to their retirements unless they take more risk to keep nest-eggs growing in a world where playing safe can cost you ever more dearly.įour years of near-zero official interest rates and successive market panics have driven the returns from low-risk German, British or U.S.
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