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Comments
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I am very glad you are not running a DB portfolio.Dorset_Boy said:
The rules around what assets DB schemes and annuity providers have to be held were written by Whitehall mandarins with no understanding of investment markets. They seem to believe that the need to match liabilities is solved by holding assets best suited for the short term, rather than a well diversified portfolio.rick_chasey said:
Sure, I was thinking the same - how much of it is to do with gov't mandated gilt buying and how much of it is just liability matching in a world where the population is getting older?surrey_commuter said:
problem is that nearly all DB schemes are shut and as they head towards maturity the liabilities and assets will decreaserick_chasey said:Ah got it.
Over a 15-40 year time horizon, only a fool would hold fixed interest securities only, but that is what the mandarins have pretty much required.
The proportion of assets held in fixed income is pretty much entirely related to the profile of the run-off i.e. the age profile of your customers.
So if you're running the coal board pension fund, you'll have a massive proportion allocated to liquid fixed income assets as they're all drawing down on their pensions and you need the liquidity and low volatility.
If you're say, running the tesco fund, where even the DB scheme is much less mature, you can run a much lower fixed income allocation.
It's just a function of your liabilities. Underfunded funds will naturally run a higher risk strategy for non-liability matched assets in order to make up the difference, but this idea that somehow bonds are a 'bad investment' entirely misses the fact that the objective of investing in them is not necessarily for the returns but for the liquidity and lack of volatility.0 -
I suggest Rick you go and speak with some progressive investment managers. How long do you think the liabilities will last? Certainly more than 15 years.
With yields at historic lows, the strategy of excessive exposure to fixed interest is a capital catastrophe waiting to happen. That's why you need growth stocks even in an income portfolio.0 -
That's literally my jobDorset_Boy said:I suggest Rick you go and speak with some progressive investment managers. How long do you think the liabilities will last? Certainly more than 15 years.
With yields at historic lows, the strategy of excessive exposure to fixed interest is a capital catastrophe waiting to happen. That's why you need growth stocks even in an income portfolio.
but anyway.
How do you propose to pay the pension draws each month?
By selling your equity stake when you might be in the hole because of a short-term change?
I'm not sure you've really understood what I'm saying. No-one's saying only hold bonds. I'm not saying that.
But the liabilities mean you need liquid, low volatility assets - else you're just holding cash, which is worse.
If you're running a scheme where no-one is drawing on their pension for the next 40 years, by all means go full allocation to equities and private credit & equity.
But your liabilities need to be matched and you can't do that easily with equities.0 -
Except that the regulations effectively say that Rick. It's why the annuity market crumbled and a factor in why DB schemes are broken.
If interest rates rose by 2%, would holding cash be worse than the capital erosion on the gilt or corporate bond? Obviously duration on the fixed interest security becomes a factor.0 -
The annuity market crumbled when the gov't stopped making it the law to buy one.Dorset_Boy said:Except that the regulations effectively say that Rick. It's why the annuity market crumbled and a factor in why DB schemes are broken.
If interest rates rose by 2%, would holding cash be worse than the capital erosion on the gilt or corporate bond? Obviously duration on the fixed interest security becomes a factor.
DB schemes are broken not because they're allocating everything to fixed income (not least because...they don't) but because their liabilities are far in excess of what the actuaries thought they would be 30 years down the line and no-one is willing to pay up the difference.
Look at USS, for example. The UK's biggest pension fund.
https://www.uss.co.uk/how-uss-invests/the-fund/performance
That's the performance of their DB scheme, and further down it give a breakdown of their asset allocation.
You'll see even in 2018 the allocation to equities is well over half the entire allocation. So the regulation is plainly not saying to allocate exclusively to fixed income, is it?0 -
Certainly there's blame to be laid on the actuaries door who completely ignored increasing longevity when it was patently obvious it was an issues even before you were born.
WRT the annuity market, you show your ignorance. There hadn't been compulsion to buy an annuity for about 30 years prior to 2015. The promotion of freedoms was the final straw for many providers who simply didn't want open ended long term liabilities on their books that had to be funded using inappropriate assets.0 -
Hang on, you just said that DB schemes had to allocate exclusively to fixed income. I just showed you the UK's biggest DB fund doesn't and now you're just ignoring that?0
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Where did I state that DB schemes have to exclusively hold fixed interest? I said only "Over a 15-40 year time horizon, only a fool would hold fixed interest securities only, but that is what the mandarins have pretty much require"
Pretty much is not the same as exclusively.
Also, I could suggest I'm just following your general lines of argument elsewhere.
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In which case what are we even arguing about?Dorset_Boy said:Where did I state that DB schemes have to exclusively hold fixed interest? I said only "Over a 15-40 year time horizon, only a fool would hold fixed interest securities only, but that is what the mandarins have pretty much require"
Pretty much is not the same as exclusively.
Also, I could suggest I'm just following your general lines of argument elsewhere.
The liability range is anything from tomorrow to 50 years time, right?
Most DB schemes are for older people so there are plenty of short-term liabilities there.
It seems only reasonable to me that schemes be forced to hold a proportion of their money in liquid non-volatile assets that is proportional to the shape of their liabilities.
I don't know why that is controversial. Obviously if all you members are 25 years old, you don't really need to be holding DM bonds, do you?0 -
we are arguing about the govt distorting the gilt marketrick_chasey said:
In which case what are we even arguing about?Dorset_Boy said:Where did I state that DB schemes have to exclusively hold fixed interest? I said only "Over a 15-40 year time horizon, only a fool would hold fixed interest securities only, but that is what the mandarins have pretty much require"
Pretty much is not the same as exclusively.
Also, I could suggest I'm just following your general lines of argument elsewhere.
The liability range is anything from tomorrow to 50 years time, right?
Most DB schemes are for older people so there are plenty of short-term liabilities there.
It seems only reasonable to me that schemes be forced to hold a proportion of their money in liquid non-volatile assets that is proportional to the shape of their liabilities.
I don't know why that is controversial. Obviously if all you members are 25 years old, you don't really need to be holding DM bonds, do you?0 -
I could suggest somewhere...rick_chasey said:https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3655850
Nowhere else to put this butEnding Corporate Tax Avoidance and Tax Competition: A Plan to Collect the Tax Deficit of Multinationals
However it's an 18 page report so you need to explain concisely in your own words what your point is."I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]1 -
Dunno about that Stevo. You weren't happy when I accused you of passing the 'woke' gene to your offspring.Stevo_666 said:
I've never been so insultedsurrey_commuter said:Stevo_666 said:
Rick for president then. SC could be your chancellor of the exchequer after you've thrashed out your deal at 'La Granita'.rick_chasey said:
I recon a decent majority of cake stoppers would be better than the Tory MP who I grew up with.briantrumpet said:Stevo_666 said:
But I was putting my trust in Rick and SC...briantrumpet said:
That would be like putting your trust in relatives of someone who's had an operation screwed up by a incompetent surgeon being able to do the reconstructive surgery required.
The better plan would be to get a competent surgeon.
They're actually a bit thick.
Your politics are closer to his than mine
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That was a low blow Bally. However I'm struggling to find a new slur for you as you already have all the badges - apart from maybe the ageist one?ballysmate said:
Dunno about that Stevo. You weren't happy when I accused you of passing the 'woke' gene to your offspring.Stevo_666 said:
I've never been so insultedsurrey_commuter said:Stevo_666 said:
Rick for president then. SC could be your chancellor of the exchequer after you've thrashed out your deal at 'La Granita'.rick_chasey said:
I recon a decent majority of cake stoppers would be better than the Tory MP who I grew up with.briantrumpet said:Stevo_666 said:
But I was putting my trust in Rick and SC...briantrumpet said:
That would be like putting your trust in relatives of someone who's had an operation screwed up by a incompetent surgeon being able to do the reconstructive surgery required.
The better plan would be to get a competent surgeon.
They're actually a bit thick.
Your politics are closer to his than mine "I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
Having read the first five pages it is pretty logical. Big US company gets taxed say 21% on all worldwide earnings if the local rate is equal or more than this. So the Irish rate is 5% so Apple owes the remaining 16% to the US or it loses the abililty to sells products in the US. This makes Apple question the point of operating out of Ireland and allows Ireland to increase corporation tax. As always it has to be lead by big nations where loss to their domestic market would be a disaster for the business. This is not something a small nation can do as they dont have the clout.Stevo_666 said:
I could suggest somewhere...rick_chasey said:https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3655850
Nowhere else to put this butEnding Corporate Tax Avoidance and Tax Competition: A Plan to Collect the Tax Deficit of Multinationals
However it's an 18 page report so you need to explain concisely in your own words what your point is.0 -
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https://www.lbc.co.uk/radio/presenters/andrew-castle/more-likely-to-die-on-a-bike-than-from-covid-lockdown/
Your quote omits the full sentence that you're more likely to die on a bike if you're under 40. I don't know if that's true or not but if you're going to have a dig at me for liking Coopsters stuff then you'd better be accurate yourself.0 -
I mean, the big glaring difference here is cycling does not make you less healthy. Au contraire. If everyone cycled there would be *even fewer deaths*shortfall said:https://www.lbc.co.uk/radio/presenters/andrew-castle/more-likely-to-die-on-a-bike-than-from-covid-lockdown/
Your quote omits the full sentence that you're more likely to die on a bike if you're under 40. I don't know if that's true or not but if you're going to have a dig at me for liking Coopsters stuff then you'd better be accurate yourself.
And then there’s the obvious fact that it’s only a low risk because currently *so few people have it*
Last year 100 people died on a bike. By May 2020 over 200 people under 40 had already died of corona.
The whole thing is nonsense.
Honestly, a piece of unsolicited advice: if IDS says it, there’s really big chance the opposite is in fact correct.
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IDS has always been an odious sh!t.rick_chasey said:
I doubt he is thick as sh!t but he is certainly an odious sh!t. Or a complete sh!t.The above may be fact, or fiction, I may be serious, I may be jesting.
I am not sure. You have no chance.Veronese68 wrote:PB is the most sensible person on here.0 -
Thanks John, but I've still no idea what Ricks own point is. Rick needs to set out his view if he wants a debate on this.john80 said:
Having read the first five pages it is pretty logical. Big US company gets taxed say 21% on all worldwide earnings if the local rate is equal or more than this. So the Irish rate is 5% so Apple owes the remaining 16% to the US or it loses the abililty to sells products in the US. This makes Apple question the point of operating out of Ireland and allows Ireland to increase corporation tax. As always it has to be lead by big nations where loss to their domestic market would be a disaster for the business. This is not something a small nation can do as they dont have the clout.Stevo_666 said:
I could suggest somewhere...rick_chasey said:https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3655850
Nowhere else to put this butEnding Corporate Tax Avoidance and Tax Competition: A Plan to Collect the Tax Deficit of Multinationals
However it's an 18 page report so you need to explain concisely in your own words what your point is.
As for your take on it, I have a few questions:
1. Which country's tax rate should be used as the reference rate to calculate the top up? Problem is unless the world agrees, it will be a 'race to the top' determined by the greediest government or one with an agenda, which then has the power to blackmail a global corporation with a domestic tax rate change.
2. How will the calculation be agreed given there are differing accounting standards in many countries which will yield cifferent percentages?
3. How are local income taxes like US State taxes which vary in each state to be taken into account?
4. How likely do you think it is that (say) the US would stop one of its own commercial 'champions' like the US tech giants selling in its home market? Or any country denying consumers access to say Google, Apple, Facebook or Amazon? Or how about if this is a utility group supplying water or a supermarket group and is made to stop supplying water/food until it pays enough tax?
5. How does this account for the fundamental concept of territoriality in tax - that tax is levied on a territorial basis on profits arising in that country at a rate and based on rules set in that country?
6. Why does the article ignore all other taxes apart from corporation tax, which makes up no more than 10% of tax revenues overall?
The theory sounds nice to those with an agenda. But looks like it was written by a bunch of US academics and as you can see from just my initial thoughts based on what you wrote, the proposal is misguided, hopelessly impractical and unworkable in the real world."I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
I do love the use of 'agenda' as a pejorative. Everyone has an agenda Stevo; it's just a question of whether it's one that you like or not.1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
Pinnacle Monzonite
Part of the anti-growth coalition0 -
Nice bit of trying to argue about peripheral points. Try addressing some of my points above as to why it is unworkable instead.rjsterry said:I do love the use of 'agenda' as a pejorative. Everyone has an agenda Stevo; it's just a question of whether it's one that you like or not.
"I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
The article addresses a lot of these questions.Stevo_666 said:
Thanks John, but I've still no idea what Ricks own point is. Rick needs to set out his view if he wants a debate on this.john80 said:
Having read the first five pages it is pretty logical. Big US company gets taxed say 21% on all worldwide earnings if the local rate is equal or more than this. So the Irish rate is 5% so Apple owes the remaining 16% to the US or it loses the abililty to sells products in the US. This makes Apple question the point of operating out of Ireland and allows Ireland to increase corporation tax. As always it has to be lead by big nations where loss to their domestic market would be a disaster for the business. This is not something a small nation can do as they dont have the clout.Stevo_666 said:
I could suggest somewhere...rick_chasey said:https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3655850
Nowhere else to put this butEnding Corporate Tax Avoidance and Tax Competition: A Plan to Collect the Tax Deficit of Multinationals
However it's an 18 page report so you need to explain concisely in your own words what your point is.
As for your take on it, I have a few questions:
1. Which country's tax rate should be used as the reference rate to calculate the top up? Problem is unless the world agrees, it will be a 'race to the top' determined by the greediest government or one with an agenda, which then has the power to blackmail a global corporation with a domestic tax rate change.
2. How will the calculation be agreed given there are differing accounting standards in many countries which will yield cifferent percentages?
3. How are local income taxes like US State taxes which vary in each state to be taken into account?
4. How likely do you think it is that (say) the US would stop one of its own commercial 'champions' like the US tech giants selling in its home market? Or any country denying consumers access to say Google, Apple, Facebook or Amazon? Or how about if this is a utility group supplying water or a supermarket group and is made to stop supplying water/food until it pays enough tax?
5. How does this account for the fundamental concept of territoriality in tax - that tax is levied on a territorial basis on profits arising in that country at a rate and based on rules set in that country?
6. Why does the article ignore all other taxes apart from corporation tax, which makes up no more than 10% of tax revenues overall?
The theory sounds nice to those with an agenda. But looks like it was written by a bunch of US academics and as you can see from just my initial thoughts based on what you wrote, the proposal is misguided, hopelessly impractical and unworkable in the real world.
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Does it? In which case you'll be able to address these yourself. I look forward to your rebuttal.rick_chasey said:
The article addresses a lot of these questions.Stevo_666 said:
Thanks John, but I've still no idea what Ricks own point is. Rick needs to set out his view if he wants a debate on this.john80 said:
Having read the first five pages it is pretty logical. Big US company gets taxed say 21% on all worldwide earnings if the local rate is equal or more than this. So the Irish rate is 5% so Apple owes the remaining 16% to the US or it loses the abililty to sells products in the US. This makes Apple question the point of operating out of Ireland and allows Ireland to increase corporation tax. As always it has to be lead by big nations where loss to their domestic market would be a disaster for the business. This is not something a small nation can do as they dont have the clout.Stevo_666 said:
I could suggest somewhere...rick_chasey said:https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3655850
Nowhere else to put this butEnding Corporate Tax Avoidance and Tax Competition: A Plan to Collect the Tax Deficit of Multinationals
However it's an 18 page report so you need to explain concisely in your own words what your point is.
As for your take on it, I have a few questions:
1. Which country's tax rate should be used as the reference rate to calculate the top up? Problem is unless the world agrees, it will be a 'race to the top' determined by the greediest government or one with an agenda, which then has the power to blackmail a global corporation with a domestic tax rate change.
2. How will the calculation be agreed given there are differing accounting standards in many countries which will yield cifferent percentages?
3. How are local income taxes like US State taxes which vary in each state to be taken into account?
4. How likely do you think it is that (say) the US would stop one of its own commercial 'champions' like the US tech giants selling in its home market? Or any country denying consumers access to say Google, Apple, Facebook or Amazon? Or how about if this is a utility group supplying water or a supermarket group and is made to stop supplying water/food until it pays enough tax?
5. How does this account for the fundamental concept of territoriality in tax - that tax is levied on a territorial basis on profits arising in that country at a rate and based on rules set in that country?
6. Why does the article ignore all other taxes apart from corporation tax, which makes up no more than 10% of tax revenues overall?
The theory sounds nice to those with an agenda. But looks like it was written by a bunch of US academics and as you can see from just my initial thoughts based on what you wrote, the proposal is misguided, hopelessly impractical and unworkable in the real world."I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
Oh stop sealoining and read it yourself. Either you're interested enough to read it or you're not.
Either is fine.0 -
I don't have a horse in that one and have read it all before (tax arguments on here, not RC's source). Just commenting on a phrase I see a lot of. TBH, I'd hope most people did have an agenda.Stevo_666 said:
Nice bit of trying to argue about peripheral points. Try addressing some of my points above as to why it is unworkable instead.rjsterry said:I do love the use of 'agenda' as a pejorative. Everyone has an agenda Stevo; it's just a question of whether it's one that you like or not.
1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
Pinnacle Monzonite
Part of the anti-growth coalition0 -
It's your argument - stop being lazy and make it yourself. Reference the relevant parts of your supporting source material if needed. Why should I take the time to try and rebut my own points?rick_chasey said:Oh stop sealoining and read it yourself. Either you're interested enough to read it or you're not.
Either is fine.
If this was a debating society, your approach is the equivalent of chucking a large document on the table, saying 'there you go' and walking out. Fail."I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
It's not my argument.
I thought it was an interesting study in the context of prior discussions.
This isn't debating society. We're not arguing for the sake of it (at least, I'm not), and it's not judged.1 -
OK, thanks. I may well read it when I have time but as you haven't made any points yourself, there's currently nothing for me to reply to.rick_chasey said:It's not my argument.
I thought it was an interesting study in the context of prior discussions.
This isn't debating society. We're not arguing for the sake of it (at least, I'm not), and it's not judged."I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
Awful lot of replies considering thatStevo_666 said:
OK, thanks. I may well read it when I have time but as you haven't made any points yourself, there's currently nothing for me to reply to.rick_chasey said:It's not my argument.
I thought it was an interesting study in the context of prior discussions.
This isn't debating society. We're not arguing for the sake of it (at least, I'm not), and it's not judged.- Genesis Croix de Fer
- Dolan Tuono0 -
Johnson had a prepared answer to the question about the Brexit vote in PMQs today, and he was going to use it. Had to get it in once he realised the question wasn't going to be asked.0
