Won't somebody think of the Pension Funds?

I have to say I am disgusted that it appears the fee the taxpayers will receive for guaranteeing the liabilities of the banks will be so low.
I realise the banks may not have the ability to pay the fee in cash, as it would reduce their capital and impair their solvency.
However it should be possible for the Government to take an equity stake (dilute existing shareholder’s ownership). This would not affect the capital of the banks; it would only change the composition of the ownership of that capital.

A red herring has been introduced into this debate, by the Govt, stockbrokers, Alan Dukes and others. It is that if the government takes a stake it will hurt Irish pension fund holders. I have two problems with this argument.

  1. The guarantee is been provided by all taxpayers. Irish pension fund holders are a subset of the population. The responsibility of Government is to the taxpayers. If the scheme is to be fair the fee should benefit all not just a subset. (I personally am a taxpayer and hold some pension unit funds though a defined contribution scheme., so I fall into both categories)

  2. If the government takes an equity stake in the banks, it will not have a material effect on the pension funds values. The average Irish managed pension fund has 20% or less of its equity investment in Irish equities. I would hazard a guess that 15% or less of total fund values are in Irish equities. If we assume that half of the investment in Irish equities is in the four quoted financials in the guarantee scheme, we have a number of approximately 8% of Irish pension managed funds being invested in these four financial companies.
    If the government took a 20% equity stake, it would reduce the value of the pension funds by 1.6%. However over the long term the government guarantee will enable some of these banks to prosper. A 1.6% fall in fund values is not large in the context of the recent volatility we have seen in stock markets.

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I wish the Labour Party had someone more articulate than Joan Burton to articulate and protect the taxpayers’ interests in this scheme.

I’m busy trying NOT to think about my pension fund.

Irish pension funds shouldn’t have been anywhere near the ISEQ for the last 12 months.

If it gets to the stage where the Irish listed banks are nationalised (that is a possibility) then current equity holders would be wiped out. Givent he way the ISEQ is composed, that would mean >50% loss on any Irish equity holding.

So if 10% in Irish equities, the portfolio would lose 50%+ of 10% or more than 5%.

If the government really gave a sh1t about pension funds they wouldn’t be sticking them with a really high Funding Standard and would offer a State backed annuity fund for those in the private sector who are beginning to realise how insecure their pension benefits are.

This talk of saving the banks for pension funds is just more spin it’s not even worth a breath discussing the actual “merits” of this suggestion.

depositers should be offered shares in the bank they hold their money in…?
no. of shares proportional to the amount held on deposit
a real incentive to leave their money on deposit… ?

€21bn https://i130.photobucket.com/albums/p242/carlapryor/Smiley-bugeye.gif