Weekend reading: The Economist does pensions

Some great reads from around the Web.

Hello? Hello? It’s hard to be sure anyone is reading out there, given how the first four-day Brucie Bonus bank holiday of the year has coincided with – well – summer.

London has gone all Club Med, and even I feel like some ascetic monk, sat writing this on a Saturday morning while the sun blazes outside.

But YOU have come to Monevator (or opened your email) despite the competing attractions of burnt Tesco Finest sausages, traffic jams, and ogling the opposite sex in the park, for which I thank you.

Then again, maybe you’re reading on Tuesday.

Either way, the slight swizz is that my post of the week is actually from two week’s ago, when a fabulously detailed special report on pensions popped up at The Economist. But I missed it, and you shouldn’t.

This opening fact sets the tone:

When Gertrude Janeway died in 2003, she was still getting a monthly cheque for $70 from the Veterans Administration—for a military pension earned by her late husband, John, on the Union side of the American civil war that ended in 1865.

The pair had married in 1927, when he was 81 and she was 18. The amount may have been modest but the entitlement spanned three centuries, illustrating just how long pension commitments can last.

And so the gravity of the situation pulls us in:

• We discover that a couple receiving the maximum US social security entitlement would need a $1.2 million fund to buy the equivalent annuity.

• We learn that the first person to receive such a payment had only contributed $24.75, yet she withdrew nearly $23,000 and lived until 100.

• We see how UK life expectancy has risen nearly 18 years, but our once-glorious pension system hasn’t kept up (not least thanks to a certain G. Brown’s dividend raid…)

Make sure you follow the links in the sidebar towards the top of The Economist’s introduction to see all the issues this huge report explores.

The piece on changes in how UK companies account for pensions, for instance, may make interesting reading for anyone who invests directly into UK shares, some of which now seem primarily funds with a business bolted on, so swamped are they by their pension liabilities.

I tend to take a complacent view, even considering pension liabilities as an artifact of bear market conditions that will eventually juice my returns. But given the revamped powers of pension trustees in the UK, one can argue this view is too relaxed.

Alternatively, one can grab an ice-cream and save the arguments for when the sun stops shining!

From the money and investing blogs

• Memories of Florida’s beach home boom – Consumerism Commentary
• Investing in the face of high inflation – Oblivious Investor
• Bond yield and risks triangle – The Finance Buff
• Day trading is a scam: Don’t fall for it – Darwin’s Money
• Chinese water torture – Brip Brap
• No more interest-only mortgages from Halifax – Simple in Suffolk
• Greenblatt on the small investor’s advantage – iii blog
• Why UK homeowners are repaying their debts – The Mortgage Blog
• New Co-Op bond (but you’ll need £100K!) – Fixed Income Investor
• Inflation and the debt default paradox – Investing Caffeine
• When you get a windfall, treat it right – The Digerati Life

Mainstream media articles

• Rich people still don’t realise they’re rich… – New York Times
• …some thoughts from a UK perspective – Stumbling & Mumbling
• When will the Bank of England raise rates? – The Economist
• Help the BBC by doing its money psychology test – BBC
• How Terry Smith plans to picks shares like Buffett – Motley Fool
• Where are we now? Some words from the IMF – Bond Vigilantes
• The inflation risk of bonds in portfolios – FT
• ‘Governor’ platform to manage your cash across banks – FT
• The value of investments in farmland have soared – FT
• The dark truths behind gold’s rise – Merryn/FT
• Housing market emerges from hibernation – Telegraph
• Scorn in Japan for ‘flyjin’ foreign workers who fled – Telegraph
• Yorkshire Building Society takes over Norwich & Peterborough – Telegraph
• Buying a home currently £100 cheaper than renting – Telegraph
• The case for smaller company funds – Independent
• Commodities are over-popular, but pharma is in the pits – Independent
• How street art became big business – Independent
• Banks backing the buy-to-let bounce – The Guardian
• How to work for free on an organic farm – The Guardian

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