Family Money: Pensions in crisis
Managing director of Westminster Portfolio Services (Thailand) Ltd.
Those of us who have chosen to settle in Thailand are
fortunate in many ways. The climate is balmy, the cost of living is
relatively low, and we don’t have to pay tax on inbound remittances.
If you’re working as an expat, you’re probably
earning quite a bit more than you spend, and paying rather less local tax
than you’d have to pay ‘back home’. You may even be paid part of
your salary package in offshore hard currency - which you are wisely
salting away to fund your eventual retirement.
If you’ve retired ‘early’, you’re probably
drawing down an income from investments – which may have produced rather
less income in the past three years than the previous three! Or you may
have been eating into capital, which now that you’re not working any
more, cannot be replaced.
Or you may be drawing down a state pension, and you may
have a personal or corporate pension too. In any case, you probably
don’t give much thought to the next generation’s pensions – let
alone how they’re going to be paid for. You probably haven’t given
much thought to whether your own pension is sufficiently funded to last
you the rest of your life.
Private loss, public cost
Most countries in the EU run “pay as you go” (PAYG)
systems, where pensions are paid to retirees directly from current
workers’ contributions. But the population in developed countries is
ageing fast, while birthrates are still falling – in some cases to below
Forty years ago there were three workers for every
retiree across Europe, making state pension liabilities easily manageable.
That ratio has steadily fallen to two-to-one today, and by 2040 may have
dropped to nearly one-to-one.
Up until now, the solution was gradually to reduce
people’s dependence on state pensions while nudging them towards private
or corporate pension schemes. The expectation was that these schemes, run
by clever investment managers, would take advantage of ever-rising stock
markets and deliver far better pensions than the state ever could. But
company after company is finding its pension schemes in trouble.
Already the trend has moved from “defined benefit”
corporate schemes, where pensions are based on a proportion of final
salary, to “defined contribution” (DC) schemes, where your pension
depends on how much you have paid into your personal fund. In 1991
expatriates’ final salary schemes constituted 79% of employer pensions;
in 2001 this had dropped to 42%.
But over the past decade projections for these more
modest – and safer for companies – DC schemes fell by half, and the
market falls of the last three years have had a disastrous effect, with
many DC schemes now facing significant shortfalls. Ten years ago, a 30
year-old paying 10% of his salary into such a scheme could expect to
retire on 55% of his final salary. Today, for a similar 30 year-old in a
DC scheme, that figure is just 24%.
So well before the middle of this century, we won’t
be able to afford our pensions. Of course, those who have already taken
retirement here probably care very little about what will happen to state
pensions or even corporate or private pensions 25 or 30 years hence.
It’s their children and grandchildren who will pay the bill and not reap
Bad luck for Baby Boomers
The pensions problem is not unexpected. The population
in the developed world has been gradually ageing as the Baby Boomers have
grown up and had fewer children, later. Many Baby Boomers will be
expecting to retire in the next 10-15 years, and collect their state,
corporate and personal pensions, and enjoy the next 20-25 years of
By that time, however, the state will have run out of
money, corporate pensions will have underperformed expectations made back
in the heady days of the equity boom, and personal pensions – which may
have been invested even more aggressively than corporate pensions – may
have fared even worse.
By the time Baby Boomers’ children come to retire the
state pot will be empty, and personal pensions under-funded. How will
governments handle that problem?
Many governments are now talking about raising the age
of retirement. The UK government, for example, recently announced that
many workers would have to keep going until they are 70 to get a liveable
pension out of their state entitlement and their own savings. The
ridiculous excuse used by the politicians is that people nowadays want to
carry on working longer… Ask any expat retiree on Jomtien beach if he
European governments have already begun to put reforms
in place, albeit stutteringly. Germany, France and Italy – all with
generous PAYG pensions systems – started throughout the 1990s to turn
their systems around. Final benefits have been cut, contributions have
been raised. Italy is struggling to get workers to agree to longer working
lives and lower pensions.
Crucially, there has been a realisation that fully
funded private or quasiprivate systems must come in alongside the PAYG
systems. Foremost in EU politicians’ minds are the examples of Chile,
which adopted funded pensions in the early 1980s, and the US, which set up
its famous 401K legislation in 1980, allowing workers to build a
tax-friendly pot of retirement money. Both these countries’ pensions
programs are now relatively solvent.
Another alternative is to increase immigration flows of
young workers to offset ageing EU populations. This has worked for the US,
where both immigration and birth rates are high. But in the EU, some 56
million young immigrants would be needed to offset a similar fall in the
present 15 states’ working-age population between 2010 and 2050. That is
three times the current level of immigration – and would be a
politically very risky option in an environment which is becoming
increasingly right wing.
Lower expectations, longer working lives, and allowing
more immigrant labour may be necessary if a pan-Europe pensions crisis is
to be avoided. Selling these ideas to the voting public will be difficult.
The main solution has to be higher personal and public savings.
It could be argued that the collapse of the equity
markets has sobered people’s expectations. While stock markets looked as
though they would continue rising forever, there was little incentive to
raise savings rates. Now the idea of putting aside only 10% of your income
with the expectation of retiring at 55 on half final salary is dead in the
water. Coming generations will have to pay more, work longer, or get less
– or all of the above. Across the developed world, reality has begun to
Personal Directions: Put a bit of life into it!
By Christina Dodd,
founder and managing director of Asia Training Associates
It’s always rewarding to finally see participants in a
training seminar rush to fill the front seats! And when it happens, it’s
like the penny has finally dropped, and someone is actually getting some
benefit from all the effort that goes into training. It makes it all
Recently I ran a customer service program for staff dealing
in everything from pantyhose to fresh vegetables to champagne and wine. At the
beginning of the program they were all a little apprehensive as to what would
ensue, probably because this was the first ever training program they had
attended, apart from the very basic product knowledge courses.
As the program progressed, it became evident that they were
not only gaining some valuable information, but actually enjoying the style of
the program and the techniques used to impart the information. They began to
fill the front seats more eagerly than before; they stopped talking amongst
themselves and started paying attention with a very sharpened focus; they were
wanting to participate in the role plays and the group activities.
This aspect of training is one that I place great
importance upon because once people start to enjoy what they are doing and to
enjoy the way knowledge is being passed to them, it is much more likely that
they will absorb it and take hold of it with enthusiasm and zeal.
That’s what it’s all about!
My colleague and chairman of Asia Training Associates, Dr.
Chira Hongladarom, is a great proponent of this approach to learning. Only the
other day we were both attending a forum on reform in the civil service and
one point Dr. Chira made most emphatically was that, “It was time that we,
as educators, stopped lecturing and handing out copious amounts of notes that
no-one reads and started creating more interest in the classrooms through
dynamic interaction and practical activity.”
The training rooms and classrooms of companies and
educational institutions need to be filled with interested and eager
individuals thirsting for and taking in new knowledge and information. If this
is done only through theory and lecturing, then no interpersonal exchanges
will take place and little individual development will result. Of course a
certain amount of theory is necessary, but it shouldn’t overshadow and
dominate the methods of imparting knowledge and maximizing knowledge
retention. It shouldn’t be given at the expense of audience participation.
It’s refreshing to have people fill the front seats and
it is equally refreshing to see them open up and start to participate. Some
are quite shocked that they actually do get involved because normally in
Thailand it is the case of sitting back and waiting for others to speak first.
As individuals participate they gain more confidence and with confidence comes
a heightened awareness. One is able to draw upon hidden strengths and
abilities and as a result become more willing and more motivated to grasp what
is being imparted and to retain it.
The whole experience is interesting and enjoyable. Learning
should be informative and it should be fun. It should be something that
everyone likes to do. For a trainer nothing is worse than being in a room
filled with people who have no enthusiasm about what you are doing or trying
to say. You may as well pack up and go home because you have lost them - you
probably never had them in the first place.
I always get a real boost from training. I make sure that
everyone involved is happy to be there. If not, then they can make up their
minds as to whether they stay or not. Nine times out of ten all my
participants have a great time and go away with new thoughts and tangible
ideas. In some programs people literally run back into the room after the
break, as opposed to sauntering down the aisle. They don’t want to be late
and miss out on anything! They enjoy the training and so do I.
The training room should be a place people want to be. Not
a place that they have to be.
And that goes for the office or workplace as well. It also
goes for boardrooms and meeting rooms. Usually when people go to meetings you
see them drag their feet and carry their files as if they weigh a ton. The
atmosphere is lethargic instead of being charged with energy. Any type of
gathering is an opportunity and should be recognized as such. Staff tend to
shy away from meetings because they usually see them as ineffective, drawn-out
and sometimes boring. A lot of staff are reluctant to get involved in
discussions and tend to withdraw. Okay, there are times when issues need to be
addressed and matters given due and serious thought, but these things can be
done in a manner that doesn’t have people grabbing for the slightest chance
to leave the room. Managers need to review their styles in terms of conducting
meetings and getting their people together.
In fact it is not such a bad idea for managers at any level
to review their behaviour and management styles and to take stock of their
interpersonal skills on a regular basis. The response of staff to management
has a lot to do with the way management appears and behaves. It’s very true.
I don’t mean that you should be running through the office singing, bounding
and overflowing with gushes of exuberance. I do mean though, that most
managers should get out there and be a touch more excited about where they are
and what they do. Let the staff see it because it can have tremendous results!
As I said in one of my very first articles - enthusiasm
doesn’t cost a penny, it’s absolutely free! It doesn’t hurt and you
don’t need a college degree to acquire it. There is virtually no restriction
to sharing it with anyone, anywhere ... anytime.
If you are interested in finding out more about how our
training programs can assist you or your staff, please contact me at Asia
Training Associates (see advertisement) or at [email protected] co.th
Until next time, have a great week!
The Doctor's Consultation by Dr. Iain Corness: You are going to die!
by Dr. Iain Corness
Great way to start this week’s column? No? They say there
are only two things that you cannot avoid in life, and that’s death and
taxes. While there are many trying to avoid the latter (especially in
Thailand), there are none of us who are going to avoid the former. We are all
going to go one day. Even me! It’s just a case of when and where, I’m
I was reminded of this the other day when reading a medical
discourse in the journals on whether patients should be told of impending
death. For my money it is a total no-brainer. Of course patients should be
told. Why should the doctor not divulge such information? Surely the person
would want to know just how much time they have got? Even if just to clear out
the bank accounts first! If you know “when” then it gives you the
opportunity to inform loved ones, get the house in order and do the last crazy
things that you’ve always wanted to do.
When this subject comes up at dinner parties (bring a
doctor to the dinner table if you want a really morbid evening) the main
reason that those who say they don’t want to know is fear. Not so much fear
of dying, but fear of loneliness and the unknown. And fear of pain. And let me
point out that this is natural, very natural.
Let’s deal with pain first. With modern pharmacology,
pain relief should be a thing of the past. There was a period when we withheld
the big painkillers for fear of making the patients into “addicts”. What a
load of all cobblers! Worrying about addiction in someone who is terminal?
Totally misguided logic in my book, and fortunately modern medicine has also
decided that pain relief should be given in as large doses as is necessary. We
do not have to suffer pain before we shuffle off!
Knowing that one’s time is approaching means that the
family members can band together, visits are made, arrangements for people to
just be around the place are put into the family timetable. Fear of loneliness
can be overcome by prior discussion.
Fear of the unknown is a little harder to combat, I must
admit, as apart from some antediluvian records, there are no real histories of
people who have made it all the way to the pearly gates but had a change of
heart and returned. If there were, my Dad would have come back and made a
fortune writing a book on the experiences. Please note there is a difference
between this and the religious concept of reincarnation. However, those people
who have had near death experiences generally say that the only feeling was
one of floating above their body and watching the people resuscitate them
below. It was not described as being an unpleasant feeling and the return was
usually done with difficulty, so it apparently seems an easy way to the
So there is not too much to fear, from the sketchy reports,
but remember that life is for the living and we should all keep a cheerful eye
on the future, and enjoy as much of it as we can. It really just means we
should try and remain as fit as possible to get the most pleasure from
whatever is left (or is coming) to us.
My problem is with bad breath. Not mine, but my
girlfriend’s. In the mornings it would peel the paint from the walls,
but she does not seem to know this as she happily kisses me and expects
one back in return. I have tried holding my breath, but that doesn’t
work as I have to come up for air after thirty seconds. Have you any ideas
that might help?
Is that short for “Halitosis” I would imagine,
but do not despair, help is at hand, without having to go and hire a SCUBA
set for the early morning wake-up call. However, the first thing you have
to ascertain is that it is really your girlfriend that has the problem and
that you are not experiencing ‘blow back’ in the early morning. Try
first by jumping out of bed and throwing the toothbrush over the gums
before the morning snog. If there still is a problem, make flossing and
teeth cleaning the family fashion before retiring at night. If that does
not fix the problem you are left with two alternatives only, look for a
dentist or start looking for another girlfriend.
I have always tried to keep my cars looking nice, I
always wash them and take pride in their upkeep and appearance. Recently I
have noticed that I am getting scratches along the side of my car and
sometimes when I come out I have got a flat tyre, yet when I take it to
the garage there is nothing wrong with it. I think that the local
motorcycle taxi boys are doing this, but I can’t prove it. What do you
suggest? Before they destroy my car altogether.
Dear Angry Andy,
First, don’t get angry. It does not do you any
good, and especially in this country. If you get angry with people they
think less of you, not more. I presume that you must have offended
somebody if you believe they are deliberately damaging your car. If you
think the taxi bike boys are responsible then you have quite a few
options. You can employ a security guard to look after the pride and joy,
you can go and park somewhere else, or even more craftily, offer the
motorcycle taxi gang some money to look after the car instead. Personally
I would go for the cheap option of parking elsewhere, but I do not know
your circumstances. Hope this helps. Finally, don’t get angry, my Petal.
It never works in your favour.
With St. Valentine’s Day nearly here, what do you
suggest I get my lady friends (I have two). Last year I gave them your
favourite food of chocolates and we all shared a bottle of champagne
sitting on the balcony, but I’d like to do something different this
year. Have you any suggestions, Hillary? I have taken them to shows and
stuff like that before too.
Dear Two Dogs,
Well, aren’t you a lucky chap! Or perhaps you are,
as the old saying goes, as silly as a man with two “dogs”! Keeping two
ladies happy at one time is no small feat. Or is that no small feet? Those
are big shoes of yours. However, really, Two Dogs, how would Hillary know
what your ladies would like? They might be into knitting for all I know.
Surely you are not so wrapped up in yourself that you don’t know what
your two ladies preferences are? My only suggestion is to keep everything
light hearted, as St. V’s day is supposed to be. You aren’t going to
be proposing marriage now, are you? Or are you, Petal? Two Dogs, with two
ladies, you might be capable of anything. Or on the other hand you may be
bragging a little.
Dear Hilary (sic),
A few weeks ago there were some letters trying to get
information about who you really are, as I don’t believe you are really
called Hilary (sic). I have heard that you are a divorced lady in your
50’s. Can you tell me if this is correct? If I am right I will share a
bottle of champers with you, as I am also in my 50’s and my wife walked
out on me recently. This could be the start of a new life for both of us!
You are being just so provocative, Petal. You are
hoping that the call of the champers bottle will be so strong that I will
say you are correct anyway, and risk the rejection when we meet up for the
sharing of the promised bottle of bubbly. Unfortunately, just hoping is
not enough. You should be doing far more detective work than that. Just
listening to idle gossip, or in the case when you’re talking about me,
it’s “idol” gossip, is not the standard I expect, my friend. You
should not be listening to rumours at your age. No wonder your wife went
for a long walk and never came back. Or was that just a rumour too?
However, you are correct when you say my real name isn’t “Hilary” -
it’s “Hillary”, Petal, with two “l’s”. OK!
Camera Class: When all else fails - read the instruction manual!
I was rung from overseas the other day by a semi-pro
photographer who was having a camera problem. It was related to the viewfinder
instruction (FEE), in the manufacturer’s code, and the photographer did not
know what was meant. Fortunately I have the same brand of camera (Nikon) and I
was able to point the photographer in the right direction, but all this
expensive overseas telecommunications was really unnecessary. The instruction
manual explained it all, but it had remained firmly closed!
When was the last time you scanned the golden truths in the
pages of your camera’s instruction manual? For that matter, do you know where
it is? Now I have to admit that I am just as guilty as the next photographer on
this one. This was brought home to me the other day when I came across the
instruction manual for my cherished old Nikon FA. Now you have to remember that
I have been using this camera for the past sixteen years, so I am fairly au fait
with the use of this camera, yet it was amazing just what I had forgotten about
the capabilities of this camera.
For example, the double exposure facility on the top of an
FA, next to the rewind lever. I had been thinking about doing some double
exposure shots and will give you some ideas on those later. The self-timer,
stop-down depth of field preview and the ability to change the exposure metering
had all slipped my memory, as had the knowledge that when you run the camera in
“manual” mode, the metering pattern is different from the other modes.
In fact, it was an enjoyable half hour to read through the
book again. It even stimulated me to get the camera out of the bag and just
fiddle with the forgotten controls while reading.
No, the instruction book that comes with your camera is
really a very important operating document. The manufacturers have spent much
time, effort and money to make it as accurate as they can, and we, the ace
photographers that we are, chuck it in a drawer and forget about it.
I suggest that you do as I did and dig out the manual and
re-read it (for some people this will be the first time, I am sure) and explore
the different capabilities in your expensive investment. It is worthwhile. You
will be able to do much more with it.
Let’s now look at Double Exposures. Almost every camera
these days has a multiple exposure facility, even the mid-range point and shoot
compacts. This gives the photographer lots of artistic licence to compose and
create all kinds of different images - but there are a few wriggles to remember
to do this successfully.
Since you are superimposing separate images on to the one
frame of film, it becomes very easy to over-expose the background. By the time
you have taken three exposures, for example, you have now overexposed the
background by a factor of three and you will have an over-exposed mess.
First rule - select as dark a background as possible. Black
is the ultimate, as you can keep on shooting as many exposures as you like.
Consider shooting the double exposures at night, using flash and with the
subject positioned a long way in front of any background, so that it is not lit
by the flash burst.
The second important point to remember is that if your
subjects overlap in the photograph, you will get a ghostly image. To get over
this, divide the viewfinder into the number of exposures you are going to put on
the one frame. Into halves if it is a double exposure or into thirds for a
triple exposure. Then by positioning the subject carefully within the marked off
sections you can stop too much overlap. Use marker that will wash off, or you
will have permanently affected the viewfinder!
Read your instruction manual today and try some double exposures this
Recipes from Rattana: Burmese Beef Curry
This is another easy dish and is similar in many ways to the
southern Thai beef curry (masuman), but many of the recipes from SE Asia have
some similarities between the cuisines of the neighbouring countries. This is a
dish that can use the poorer cuts of meat as the cooking time is long - three
and a half hours, so even the toughest of cuts can be rendered more tender.
Ingredients Serves 4
Lean braising beef 650 gm
Sunflower oil 4 tbspns
Onions, chopped coarse 2
Garlic crushed 2 cloves
Ginger root grated 2 tbspns
Ginger syrup (or wine) 3 tbspns
Lemon or lime, small, quartered 1
Salt and ground pepper
Cut the meat into cubes around 1.5 cm. In the wok, heat the
oil and quickly stir-fry the meat until browned on all sides. Add the onion,
garlic and ginger root and continue stir-frying until the onion is transparent.
Add 200 ml boiling water and the lemon or lime, sprinkle with salt and pepper
and stir well. Reduce the heat and cover and simmer very gently for three and a
half hours. Top up the liquid during the cooking so the meat does not dry out.
Five minutes before finishing simmering add the ginger syrup and stir.
Serve with boiled rice and vegetables.