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QUOTE=Pierre;35426586]I understand the concept just fine thanks, that last paragraph was just to make a point that if the employee's and taxpayers (employers) contributions are invested on the stockmarket that they are subject to falls as well as rises.

I just love it when somebody insists they understand the concept and then clearly state that their insistence is misplaced. The unfunded public sector pensions are not and have not been invested anywhere as they have been spent on day to day running expenses for the country. There wouldn't be a problem if the public sector had a pension pot of hundreds of billions instead of IOU's which are now being portrayed as a liability on the tax payer.

Yes a pension fund is accumulated over time but it's ridiculous to say that falls in the stock Market over short periods don't affect the overall value of your fund.

Of course it is ridiculous which is perhaps why I didn't state as such. What I did state, albeit perhaps not obviously enough, was that compounding via investment is for pension purposes best considered over a working lifetime and not short term. 4 years is ten percent of what used to be the pension building lifetime of employment which is why I used the look back of 30+ years.

Investments take hits and stagnate for periods but over a working lifetime for pension funds they should average in at the lower market prices and be in a stronger position to gain when markets improve.

The recent stockmarket performance has taken billions of the value of pension funds, the recent BP crisis in the gulf only lasted a few months but also reduced pension funds by millions.

The biggest, longest and ongoing damage done to pension funds was by a certain Mr Brown when he withdrew tax concessions. I do not think that you have studied the performance of pension funds or why they claim to have lost ground. Your reference to stock markets is somewhat confusing as they are just one part of the mix. The pension fund that pays me has investments that range from stock markets globally with a mix of defensive, growth and income based stocks. They also have massive portfolios in property both domestic and retail plus a back drop of gilts and bonds.

Sure many of them plead poverty in the form of under-performance but careful reading of their annual reports shows that they are using the shortfall against insurance type actuarial liability commitments as opposed to actual performance. In many cases it is enshrined in law that the funds have to have certain levels of reserves and the liability for the shortfall lies with the employing company.

I, in certain years where we have experienced a bust, have had the pleasure of paying into my fund for the year along with my employers contributions, only to see the value of the fund fall overall. In short I lost a whole years contributions, and paid my fund managers for the privilege.

Are you saying that you personally paid a fund manager to lose you money?. If you have the choice of selection then perhaps you should have exercised your prerogative and moved to a fund with a decent track record. If you had no choice then maybe the company who made the choice of fund didn't make the wisest decision.

So I'm not so sure you get the concept?

I do not know why this was posted as a line on its own. I guess it was a Freudian slip

The difference between my pension and a policemans pension in that currently the final value of my fund is not guaranteed, whereas a policemans is, regardless of stockmarket performance, and it is guaranteed by the tax payer.

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I do not know the terms of your pension agreement but assuming that it is based on stock market performance as you state then I am sorry but IMO it is a rubbish scheme. I do not think that you are right but it looks to me like all you have is a scheme where you and your employer chuck a few grand per annum into a fund with the eventual proceeds to buy an annuity. It sounds like the perfect scheme to get fleeced year on year until the real fleecing comes with the annuity. You have to be wrong!!!!!

Policemen are paid extremely well and perhaps a lot better than the headline salary. However the feed back I get from a family friend who is a detective in a Northern city makes me think that they deserve every penny.

The funding of police pensions appears odd but is a government Ponzi scheme. It looks like working police pay by deductions a contribution which goes back into police funds which is then added to from Council Tax and then again topped up from general taxation.

The deductions which look draconian and the eventual payout are part of the package for which policemen and women signed up for. It is a contractual agreement between the employer and employee and must be honoured as it is them not us or government ministers who may have to deal with a machete wielding mentally ill individual with the strength of an ox.

Your argument is derived from comparisons between your lot and a policeman's. We all have a value to whoever employs us and to me the government's politics of envy propaganda war appears to have gained ground with some when the argument point is based on envy between a rubbish private pension and a quality contractual obligation which the government wishes to renege upon. I suspect that you truly would like to see a race to the bottom. Parhaps you need the company of others?.