Matching pension liabilities

It is a shame that a lot of the good sense about pension investments is hidden away. This morning there was an excellent article by Edward Chancellor in FTfm, Pensions still oblivious to bond wisdom.

The first rule of financial prudence is that assets and liabilities should be matched. Unfortunately, during good times this rule tends to be forgotten. There’s normally a profit to be made by borrowing in a low-yielding currency and lending in another at a higher rate; or by borrowing short and lending long. The mismatching of assets and liabilities lies at the heart of the current credit crisis. In recent months, many have discovered the perils involved in the pursuit of such easy gains. Only the pension world remains oblivious.

He may have the Pension Benefit Guarantee Corporation in his sights, but what is true that side of the Atlantic also holds good over here.

Who to believe?

If you believe the government, the chances of our children living as long as us is not certain. For example, according to the Department of Health,

Obesity is associated with many illnesses and is directly related to increased mortality and lower life expectancy. Tackling obesity is a government wide priority.

But how should we reconcile this with the information coming out of the Pensions industry. See two recent reports in the FT, Companies face up to the real cost of pensions and Proposals to add pressure on pension funding. The evidence is that we are all living longer, and will go on doing so (pace the Department of Health). What perhaps concerns the government is that illness will not kill us so quickly, so the cost to the next generation will be greater.

Parlez-vous Français?

It would be difficult to make it up (although there are times when I wonder if the Telegraph does). Apparently oral tests are to be axed from foreign language GCSE examinations because they are regarded as being “too stressful” for pupils. In their article, Pupils ‘pass’ language exam without speaking in this morning’s Sunday Telegraph, Melissa Kite and Julie Henry report:

“The Qualifications and Curriculum Authority will announce this week that teenagers will no longer have to demonstrate they can speak a language in the traditional oral exams that currently account for half the marks at GCSE level.

In the long-established oral test, students converse for about 10 minutes with their teacher in their chosen language. The exchange is recorded on tape and sent to examiners. In future, oral skills in lessons will be assessed by teachers who will award marks that will be moderated by examiners. It is not clear whether any oral work in class will be taped or how examiners will judge a teacher’s assessment.”

I liked the comments of the shadow Schools Secretary, Michael Gove (also reported in the same article):

“After being told they could get a pass without writing a word in a foreign language, now pupils are being told they can pass without speaking it. Once again this Government is moving the goalposts on examinations. Instead of proper rigour, we have got a watering down of standards. Language teaching is facing severe problems and our children’s capacity to succeed in an ever more competitive world won’t be helped if qualifications can be awarded without their actually acquiring proper skills.”

If only they knew it, the proper response might be “Sans blague”.

Uphill all the way

Very much cheered this evening by reading Lucy Kellaway’s latest FT column, Happiness is finding your inner receptionist. She writes:

“A couple of weeks ago another cheering piece of work was published by scientists at the University of Warwick showing that happiness over a lifetime is U-shaped. It looked at thousands of workers in 80 different countries and found that most people start off happy, and then slide towards misery, reaching a trough at 44. By our early 50s we start to get happy again and by our 60s and 70s happier still.

It isn’t altogether clear why we get cheerier as death draws closer. I suspect it is mainly because the burden of ambition and expectation slips away. We no longer hanker after what we are never going to have. I’m not quite there yet and neither are most of my contemporaries. Ambition still rages, and prospects are intolerably uncertain. But if we hold tight, the upward curve of the U will carry us along soon. We don’t need career coaching. We just need time.”

I read this to my youngest (a confirmed pessimist at 18) and his response was the title to this post. I am next going to email the link to my eldest!