March 10, 2009
1) The government gets into the Pension Fund business. The government needs to set up a ‘Recovery Bond’ using our Pension companies as a conduit. The investment invests in Government Bonds which are specifically set up for the purpose of investment in our economy (a recovery bond of sorts). The fund should be used to provide the finance for infrastructural projects and reliefs on business. I am a Pensions Practitioner and there is definitely an appetite in the market for ‘guaranteed’ products out there. 90% of all pension business (and a substantial amount of investment business also) is currently being invested in Cash or Protected funds offering very little in terms of returns to the customer. The government could tap this resource very easily. It could have a minimum term also to allow for future cashflows.
2) How about setting up an SSIA type scheme for all with a few caveats:
a) Unlike the previous SSIA, all money is invested in the Government ‘Recovery Bond’.
b) It should have a specific term (i.e. 5 years) with a short enough horizon to keep it tangible for punters
c) It should have a carrot at the end of the term to allow people to reinvest in their pension (maybe even rolled back into the Govt Pension fund wrapped by the Pension Companies suggested above).
The impact of these ideas is:
A) The exchequer benefits from a cash inflow. The cash inflow would have a much greater effect than the projected savings suggested by cutting relief.
B) The government continues to support the concept of saving for retirement (which is an absolute necessity considering we are working towards a Pensions Timebomb already).
C) The ‘Recovery Bond’ allows a person to be patriotic and be able to do something about our economy.