{"id":47756,"date":"2022-09-05T02:49:56","date_gmt":"2022-09-05T02:49:56","guid":{"rendered":"https:\/\/adamfayed.com\/?p=47756"},"modified":"2024-02-23T05:34:03","modified_gmt":"2024-02-23T05:34:03","slug":"why-are-pensions-no-longer-common","status":"publish","type":"post","link":"https:\/\/adamfayed.com\/es\/economics\/why-are-pensions-no-longer-common\/","title":{"rendered":"\u00bfPor qu\u00e9 ya no son habituales las pensiones?"},"content":{"rendered":"<p>Escribo a menudo en Quora.com, donde soy el escritor m\u00e1s visto sobre temas financieros, con m\u00e1s de 422,4 millones de visitas en los \u00faltimos a\u00f1os.<\/p>\n\n\n\n<p><strong>En las respuestas que figuran a continuaci\u00f3n me he centrado en los siguientes temas y cuestiones<\/strong>:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>\u00bfPor qu\u00e9 ya no son habituales las pensiones?<\/li><li>Is the UK experiencing a cost of living crisis, or is it just fear mongering?<\/li><li>Is it better to invest in stocks, bonds or derivatives for mid-term (5-10 years) profit?<\/li><li>Is it risky to invest in US stocks from India?<\/li><li>When will global wealth inequality reach a breaking point?<\/li><\/ul>\n\n\n\n<p>Fuente de todas las respuestas: p\u00e1gina Quora de Adam Fayed.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">\u00bfPor qu\u00e9 ya no son habituales las pensiones?<\/h2>\n\n\n\n<p>Pensions are still common in most countries; they have just shifted to a different model. Take the UK as an example.<\/p>\n\n\n\n<p>Historically, people got a fixed payment in retirement. The best-fixed payments were final salary pensions.<\/p>\n\n\n\n<p>Plenty got other fixed benefits which were less generous. Those benefits became unaffordable and a blackhole:<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/qph.cf2.quoracdn.net\/main-qimg-7e30dcf8b66b55a12f33afed1d19939e-lq\" alt=\"\"><\/figure>\n\n\n\n<p>Therefore, they got removed by most companies. In their place came defined contribution, as opposed to defined benefits, pension.<\/p>\n\n\n\n<p>With those pensions, you are investing in assets, typically stocks and bonds, rather than getting a fixed payment.<\/p>\n\n\n\n<p>Your final payment is therefore dependent on the markets. It is similar to 401ks in the US where the employer and employee pays in every month.<\/p>\n\n\n\n<p><strong>This means that upon retiring, most people have two main choices:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Drawdown. Gradually drawing down the pot<\/li><li>Annuities. Get a fixed payment for selling your assets to an insurance company.<\/li><\/ul>\n\n\n\n<p>The image from the BBC below explains the choice in very simple terms, and shows how people can take 25% tax-free.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/qph.cf2.quoracdn.net\/main-qimg-8f668dcfa15935864abe40a343d60e08-lq\" alt=\"\"><\/figure>\n\n\n\n<p>Of course, there are different kinds of annuities. Some are linked to inflation, and some aren\u2019t, for an example, but that is beyond the scope of this answer.<\/p>\n\n\n\n<p>In any case, the decline of unions and the ageing population was always going to make the post-1945 settlement impossible to maintain.<\/p>\n\n\n\n<p>Interestingly, many British ex-pats decided to offshore their pensions after <a class=\"wpil_keyword_link\" href=\"https:\/\/adamfayed.com\/es\/living-abroad\/\"   title=\"mudanzas al extranjero\" data-wpil-keyword-link=\"linked\">mudanzas al extranjero<\/a>.<\/p>\n\n\n\n<p>One reason is the blackhole worry. Some of these pensions are based on the Ponzi scheme model.<\/p>\n\n\n\n<p>By that, I don\u2019t mean a fraud but the premise that the whole scheme can only work if there are more younger people in society to hold the entire structure up; it wasn&#8217;t clear those kinds of pensions were sustainable.<\/p>\n\n\n\n<p>At least with defined contribution benefits, your benefits are linked to asset performance and aren\u2019t usually affected if the firm goes bust.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Is it risky to invest in US stocks from India?<\/h2>\n\n\n\n<p>Investing in the entire US stock market, say the S&amp;P500 or Dow Jones, from India or any other country isn&#8217;t risky. It is the biggest market in the world.<\/p>\n\n\n\n<p>Moreover, it is an international index. Look at the countries where the big US firms generate revenue from:<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/qph.cf2.quoracdn.net\/main-qimg-8a95d82bd2a0d0000293fcf2caffca59-lq\" alt=\"\"><\/figure>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/qph.cf2.quoracdn.net\/main-qimg-4c43e7f18838251a2a37730d14c5a741\" alt=\"\"><\/figure>\n\n\n\n<p>In total, over 45% of the revenue of the S&amp;P500 companies is international, with some major companies having most of their revenue overseas.<\/p>\n\n\n\n<p>You also have many foreign IPOs:<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/qph.cf2.quoracdn.net\/main-qimg-087b8129b57f397f521e49e33f1c3cca\" alt=\"\"><\/figure>\n\n\n\n<p>Just as the US stock market has outperformed China\u2019s in the last fifteen or twenty years, it could happen whereby India and some African countries expected future growth, also helps the US market in the decades ahead.<\/p>\n\n\n\n<p>The most significant risk with the US market is that valuations are higher than in other markets. The USD is strong, and US markets have outperformed in the last decade.<\/p>\n\n\n\n<p>Long-term, this won\u2019t always continue because US and international stocks take it in turns to have their time in the sun:<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/qph.cf2.quoracdn.net\/main-qimg-4ce11da67549736097bbf9cca21815df\" alt=\"\"><\/figure>\n\n\n\n<p>But, another way of looking at the higher valuation is that markets aren\u2019t stupid, even if they aren\u2019t always efficient.<\/p>\n\n\n\n<p>The ASEAN region, India, China and many other stock markets look cheaper on a valuation basis than the US. Still, the market is taking into account the perceived lower risk of the US stock market.<\/p>\n\n\n\n<p>One reason could also be that we could be at the early stages of partial deglobalization. If that happens, the US will be less affected than countries more reliant on globalization.<\/p>\n\n\n\n<p>So, having some in the US and some internationally makes sense.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Is it better to invest in stocks, bonds or derivatives for mid-term (5-10 years) profit?<\/h2>\n\n\n\n<p>Derivative products are not good for the average investor, if the don\u2019t have an advisor.<\/p>\n\n\n\n<p>In terms of bonds vs stocks, we can\u2019t know which will outperform in the next five or ten years. Bonds sometimes beat stocks over that kind of time period, but usually they don\u2019t.<\/p>\n\n\n\n<p>Long-term government bonds, emerging market and corporate bonds can give you a much better return than short-term government bonds from developed countries, but they can also be volatile.<\/p>\n\n\n\n<p>You face possible currency risks as well, and don\u2019t tend to perform well during moments like 2022.<\/p>\n\n\n\n<p>As per the graph below, longer duration government bonds have performed poorly recently:<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/qph.cf2.quoracdn.net\/main-qimg-a73ee9d1b540e477485214c62afed435\" alt=\"\"><\/figure>\n\n\n\n<p>The key thing to understand is that in the long-term, bonds haven\u2019t done well versus stocks:<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/qph.cf2.quoracdn.net\/main-qimg-521609bfac919cc0a6279987c0a5a696-pjlq\" alt=\"\"><\/figure>\n\n\n\n<p><strong>Most professional investors merely add them to:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Provide diversification<\/li><li>Have some protection when markets go down. If your stocks go down and bonds are up for the year, you can sell off some bonds and buy more stocks.<\/li><li>Preserve wealth in retirement.<\/li><\/ul>\n\n\n\n<p>So, it doesn&#8217;t make sense to own loads of bonds, especially when you are young. As you approach retirement, there is still a place for them.<\/p>\n\n\n\n<p>We have moved into a low-yield environment for bonds. That won&#8217;t last forever I am sure, but is resulting in plenty of investors looking for alternative diversification tools.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Is the UK experiencing a cost of living crisis, or is it just fear mongering?<\/h2>\n\n\n\n<p>It is true. Inflation is at about 10%. Wages haven\u2019t risen that much.<\/p>\n\n\n\n<p>The bigger worry for many people is what will happen in winter, with energy bills said to skyrocket.<\/p>\n\n\n\n<p>This is leading to a \u201cdon\u2019t pay\u201d movement:<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/qph.cf2.quoracdn.net\/main-qimg-271a50baa86a7677b77d1ac1460f3157-lq\" alt=\"\"><\/figure>\n\n\n\n<p>It isn\u2019t just a UK issue. This has became known as the \u201cEuropean gas crisis\u201d.<\/p>\n\n\n\n<p>Personally, I think there will be some kind of bailout, even if they don\u2019t use that name, which will help the crisis in the short-term, even if it further decreases the price of the Pound Sterling.<\/p>\n\n\n\n<p>With oil prices and some commodities already down from the peak, and a possible recession on the way in many countries, inflation will probably moderate in the coming few years.<\/p>\n\n\n\n<p>The biggest issue is that many European countries, including the UK, sanctioned itself after the Ukraine-Russia situation.<\/p>\n\n\n\n<p>Inflation was rising even before the war, but the measures taken made it worse.<\/p>\n\n\n\n<p>If you are energy independent like the US or Norway, it doesn\u2019t make as big a difference.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">When will global wealth inequality reach a breaking point?<\/h2>\n\n\n\n<p>I am from the UK. The UK is facing its hardest hit to living standards in a very long time. Yet the average wealthy person isn\u2019t doing better.<\/p>\n\n\n\n<p>Wealthy inequality has gone down since the Ukrainian war, even though the poor have got poorer. The reason is simple. As asset prices have fallen, the wealthiest have fallen further than the poor.<\/p>\n\n\n\n<p>A similar thing happened during the 2008 and 2020 Covid-related crisis. In both crisis, initially global wealth inequality went down, as the wealthy briefly got much poorer. Inequality only increased after asset prices started to rise again.<\/p>\n\n\n\n<p>Likewise, i have personally lived in countries where inequality skyrocketed more than the West, but few locals compared, because they were getting richer. I spent time in China and Cambodia during the boom years, where real, inflation-adjusted wages were skyrocketing for the average person.<\/p>\n\n\n\n<p>Hardly anybody, apart from some intellectuals, cared, as their standard of living was going up. It is when things go wrong, or stagnant, when \u201cthe rich\u201d, immigrants or any number of other people get blamed for everything going wrong.<\/p>\n\n\n\n<p>Conversely, those countries with falling inequality in the last twenty years, have often struggled to gain growth. Wealth inequality has fallen in Japan, for example, since the Bubble economy, but only because the wealthiest got poorer (in terms of assets) than the poorest, unless they invested overseas.<\/p>\n\n\n\n<p>Look at Forbes from the 1980s. It was full of Japanese people. It no longer is. Has their fall from grace helped the average Japanese person? No.<\/p>\n\n\n\n<p>So, the issue isn\u2019t the gap between the top and the bottom. The bigger issue could be the perceived issue and getting more growth.<\/p>\n\n\n\n<p>If things get worse for those at the bottom, \u201cthe rich\u201d will get blamed, even if asset prices fall for a few years, and therefore wealth inequality falls.<\/p>\n\n\n\n<p>That isn\u2019t to mention that global inequality has fallen, now more countries have developed.<\/p>\n\n\n\n<p>In the 1970s, there was more income and wealth equity in the West, but much of the world was dirt poor, often due to extreme political ideas focused on equality.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>\u00bfLe duele la indecisi\u00f3n financiera? \u00bfQuiere invertir con Adam?<\/strong><\/h3>\n\n\n\n<figure class=\"wp-block-image\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1024\" height=\"604\" src=\"https:\/\/adamfayed.com\/wp-content\/uploads\/2022\/04\/smile-beige-jacket-4-1024x604-2.png\" alt=\"\" class=\"wp-image-41190\" srcset=\"https:\/\/adamfayed.com\/wp-content\/uploads\/2022\/04\/smile-beige-jacket-4-1024x604-2.png 1024w, https:\/\/adamfayed.com\/wp-content\/uploads\/2022\/04\/smile-beige-jacket-4-1024x604-2-300x177.png 300w, https:\/\/adamfayed.com\/wp-content\/uploads\/2022\/04\/smile-beige-jacket-4-1024x604-2-768x453.png 768w, https:\/\/adamfayed.com\/wp-content\/uploads\/2022\/04\/smile-beige-jacket-4-1024x604-2-81x48.png 81w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/adamfayed.com\/es\/become-adams-client\/\">Convi\u00e9rtase en mi cliente<\/a><\/div>\n\n\n\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/adamfayed.com\/es\/good-match-quiz\/\" target=\"_blank\" rel=\"noreferrer noopener\">Realice el cuestionario de elegibilidad de clientes<\/a><\/div>\n\n\n\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/adamfayed.com\/es\/contact\/\" target=\"_blank\" rel=\"noreferrer noopener\">P\u00f3ngase en contacto con<\/a><\/div>\n<\/div>\n\n\n\n<p><strong>Adam es un autor reconocido internacionalmente en temas financieros, con m\u00e1s de 830 millones de respuestas en Quora, un libro muy vendido en Amazon y colaborador de Forbes.<\/strong><\/p>","protected":false},"excerpt":{"rendered":"<p>\u00bfPor qu\u00e9 ya no son habituales las pensiones?<\/p>","protected":false},"author":1,"featured_media":47759,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":{"facebook_10166176115445471_100883565069113":""},"rop_publish_now_history":[],"rop_publish_now_status":"pending","footnotes":""},"categories":[31342],"tags":[],"class_list":["post-47756","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics"],"_links":{"self":[{"href":"https:\/\/adamfayed.com\/es\/wp-json\/wp\/v2\/posts\/47756","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/adamfayed.com\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/adamfayed.com\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/adamfayed.com\/es\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/adamfayed.com\/es\/wp-json\/wp\/v2\/comments?post=47756"}],"version-history":[{"count":1,"href":"https:\/\/adamfayed.com\/es\/wp-json\/wp\/v2\/posts\/47756\/revisions"}],"predecessor-version":[{"id":80902,"href":"https:\/\/adamfayed.com\/es\/wp-json\/wp\/v2\/posts\/47756\/revisions\/80902"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/adamfayed.com\/es\/wp-json\/wp\/v2\/media\/47759"}],"wp:attachment":[{"href":"https:\/\/adamfayed.com\/es\/wp-json\/wp\/v2\/media?parent=47756"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/adamfayed.com\/es\/wp-json\/wp\/v2\/categories?post=47756"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/adamfayed.com\/es\/wp-json\/wp\/v2\/tags?post=47756"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}