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    B983 – Fully Funded Pensions Bill 2016 (Second Reading), The Rt Hon. Nigel Farage MEP MP
    Fully Funded Pensions Bill 2016

    A
    BILL
    TO


    Replace pay-as-you-go pension schemes for state workers with a more sustainable fully funded system.

    BE IT ENACTED by The Queen's most Excellent Majesty, by and with the advice and consent of the Commons in this present Parliament assembled, in accordance with the provisions of the Parliament Acts 1911 and 1949, and by the authority of the same, as follows:-

    1 Repeals

    The Old Age Pensions Act 1980; Widows', Orphans' and Old Age Contributory Pensions Act 1925, Old Age and Widows' Pension Act 1940, Pensions Act 1995, State Pension Credit Act 2002, Pensions Act 2004, Pensions Act 2008, Pensions Act 2011, Public Services Pensions Act 2013, and Pensions Act 2015 shall all be repealed on the 31st March 2052.

    2 Pensions Fund

    1) A pensions fund will be created by the Department for Work and Pensions.
    2) The pension fund shall be maintained by a board of investment managers with one nominated government minister in a non-voting position.

    3 Pension Fund Investment

    1) A pensions fund shall be started with an initial £15bn investment by the government in year 1.
    2) A £15bn investment in the pension fund shall be made by the government in year 2.
    3) An annual investment of £5bn will be made by the government in each year following. year 2.
    a. the £5bn annual investment increases with inflation.
    4) An annual contribution of 1.5% of total annual income by each state sector work will be paid to the pension fund.
    5) There will be no restrictions on investments that can be made by the management board.

    4 Membership

    1) All new state sector employees from the commencement of this Act shall be required to join the pension scheme.
    2) Existing state sector employees below the age of 35 shall be mandated to join the scheme on the commencement of this Act.

    5 Receiving Pensions

    1) On the 1st April 2052 pensions shall be paid out to members over the age of 70 in accordance with this Act.
    2) Payouts shall be in a tax-free lump-sum amount at the start of every financial year.

    6 Payout Amount

    1) A base rate of £400 shall be set which increases with inflation each year.
    2) The annual amount received by each member shall be the base rate divided by the reciprocal of the number of years the member has been working in the state sector.

    7 Management Pay

    1) The pension fund managers shall receive a base rate salary of £100000 increasing with inflation.
    2) Pension fund managers will receive a bonus of 1% of the annual rate of growth of the pension fund.

    8 Cashing-in assets

    1) From 2051 the pension fund shall cash-in assets equal to the pension bill faced.
    2) Assets being cashed in shall not exceed the assets acquired by the pension fund in any given year.

    9 Non-state employees

    1) Workers not employed in the state sector may sign up to this pension scheme.
    2) Workers will contribute 3% of their annual salary to the scheme, unless;
    a. their annual income is below £14000

    9 Commencement, short title and extent

    (1) This Act shall come into force on the 1st April 2017.
    (2) This Act may be cited as the Pensions Act 2016.



    Notes

    Worked example

    At the base rate of £400, an employee who has worked in the state sector their whole life from graduating university at age 21 to the retirement age of 70 will receive [400 / (1/the number of years working in the state sector)] which is [400 / (1/49) which equals £19600. As the £400 base rate is adjusted for inflation each year going forward from the implementation of this Act, the value today, and in 2051 will be higher than the average pension in Britain.


    Britain is facing an unsustainable pension bombshell as the baby bloomers start to retire, it is not possible to prevent this pension bombshell in the short-term, however, it is possible to prevent this pension bombshell in the long-term by replacing pay-as-you-go-pension, paid for through general taxation, with fully funded pensions that rely on investment plans. The aim of this bill is to set up a pension fund that will be worth £200bn in government contributions by 2051, plus the appreciation assets acquired by the pension fund, plus the investments made in the plan by individual members.

    The Act allows members to receive a pension higher than today's value in real terms while reducing the government's annual contribution to £5bn in today's money just for inflation. The scheme aims to replace state pensions with a scheme that costs a fraction of the value of the current system

    The implementation date of 2051 is to give the pension fund 35 years to appreciate, and the age of 35 where state sector employees must join the scheme is to allow all 70 year-old state sector employees in 2051 to retire with a sustainable, large pension.

    The cost of this Act passing will be an initial £15bn to provide a starter amount to acquire assets, and the £5bn annual top-up is to quickly grow the pension fund to acquire more assets. The pension fund could be a constantly-appreciating trillion pound scheme by 2051 providing retirement security for pensioners whose great-grandparents have not been born.


    Changes


    Wording has been cleared up, and a new section added to allow non-state sector employees to join the fully funded scheme.


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    Aye
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    And what about the risk involved in these investments?

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    (Original post by Saracen's Fez)
    3 Pension Fund Investment

    1) A pensions fund shall be started with an initial £15bn investment by the government in year 1.
    2) A £15bn investment in the pension fund shall be made by the government in year 2.
    3) An annual investment of £5bn will be made by the government in each year following. year 2.
    a. the £5bn annual investment increases with inflation.
    4) An annual contribution of 1.5% of total annual income by each state sector work will be paid to the pension fund.
    5) There will be no restrictions on investments that can be made by the management board.
    Can I ask where these figures come from as opposed to wildly saying £15bn?
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    (Original post by ThatDoesntTickle)
    Can I ask where these figures come from as opposed to wildly saying £15bn?
    The figure of £15bn is a figure large enough to quickly grow the fund's assets but not large enough to become an unmanageable burden on the government, the £5bn is an annual fee to keep expanding the fund at little cost, and the 1.5% is less than National Insurance.
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    Nay. Expensive and exclusionary. The current state pension must be maintained.
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    (Original post by TheDefiniteArticle)
    Nay. Expensive and exclusionary. The current state pension must be maintained.
    No one is excluded from this pension scheme so that point does not stand, but wanting to maintain a mathematically unsustainable pension system is not a good idea.
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    (Original post by Nigel Farage MEP)
    No one is excluded from this pension scheme so that point does not stand, but wanting to maintain a mathematically unsustainable pension system is not a good idea.
    People who have not elected to join are excluded. People are irrational; the government needs to force everyone to have a basic provision at least for their retirement. The state pension should be beefed up and funded out of an increased progressive income tax rather than this regressive rubbish.
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    (Original post by TheDefiniteArticle)
    People who have not elected to join are excluded. People are irrational; the government needs to force everyone to have a basic provision at least for their retirement. The state pension should be beefed up and funded out of an increased progressive income tax rather than this regressive rubbish.
    Private sector workers can use the pension schemes provided by their employer which operate on a similar basis to this. That misses the point, the rate of growth of the retired population is growing at a much faster rate than the working population, the working population needs to pay more taxes to sustain pensions, or pensions need to be reduced. Because the rate of growth of the retired population continues to grow faster than the working population, the tax needed of all types would keep pushing tax rates up to 100% in the very long-run. Switching pensions in Britain to a fully funded scheme is one of the best things the British government can do to protect pensions in the long term.
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    (Original post by Nigel Farage MEP)
    Private sector workers can use the pensions schemes provided by their employer which operate on a similar basis to this. That misses the point, the rate of growth of the retired population is growing at a much faster rate than the working population, the working population needs to pay more taxes to sustain pensions, or pensions need to be cut. Because the rate of growth of the retired population continues to grow faster than the working population, the tax needed of all types would keep pushing tax rates up to 100% in the very long-run. Switching pensions in Britain to a fully funded scheme is one of the best things the British government can do to protect pensions in the long term.
    yeah, you're taking the current situation and not only imagining it in extremis, but also imagining it with some assumptions which don't hold; the income of a retiree with a property is significantly less, as it should be, than a person in work.

    Furthermore, pension ages can be increased in the long run.

    The bit I like about this is taking future state pension funds and putting them into an investment fund.
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    This bill went to vote quite a while ago.
 
 
 
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