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Phillip Dearden

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About Phillip Dearden

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  1. UK Budget - any impact on the IOM?

    I don't think anyone is lying to us. We have to decide how to interpret the date. I suggest that only debt due to non-government third-parties really matters. [You could also wonder if buying back money - which is really just govt. debt - by issuing gilts is the creation of debt or a transmogrification]
  2. UK Budget - any impact on the IOM?

    But is that right? £535bn is now held by the Bank of England. Is that really debt? http://www.bankofengland.co.uk/markets/Pages/apf/default.aspx
  3. UK Budget - any impact on the IOM?

    Yes, that was us. It was good while it lasted but eventually became too exciting...
  4. Public Sector Pension Liability

    Notwell I don't think we know enough about what the problem is. We can't really look at Pensions in isolation, they are a component (big one) of government expenditure and someone has to project government receipts and payments into the future and determine what is needed in terms of increased revenue or reduced costs - I don't know that number. Last year when the changes to the PS/CS pension scheme were being discussed I was told that sums had been done and that if implemented the scheme was affordable. If that is so, we don't have a problem. I am concerned that projections may have been based on optimistic assumptions and that if the world does not turn out to be as perfect as hoped for, then changes may be required. The Government Revenue account seems to be roughly fixed ie income covers expenditure (alomost) but the government needs a lot more than this to renew capital, to repay loans and to cover the increased pension costs - none of these are in the (current) Revenue Account. When and if the shortfall is identified, there is no magic answer, either revenue is increased (either higher taxes or more people to tax) or cut costs - all of which will cause unhappiness in some quarter and this has to be faced.
  5. Public Sector Pension Liability

    The £3.8bn is a discounted figure so the actual liability is greater...but I agree with your analysis. Someone in government will be projecting both pension commitments and government revenues so that MHKs can make decisons that avoid the train crashing.
  6. Public Sector Pension Liability

    This is tricky stuff. The Liability has increased by £832m to £3,823m in the year to 2017. £746m of this is due to a "change in financial assumptions". I think they have had to use a lower rate to discount the projected cash outflows in future. This is a bit technical but does not mean there are more pensions to pay but suggests a greater fund would be needed to meet the expected liabilities. You cannot dismiss it as a "mere technical adjustment" but it might not be as bad as it sounds if interest rates were to rise (as adjustments the other way round would then be required). This is all a bit technical and I would urge everyone to focus on future cash-flows not the Balance Sheet liability.
  7. Public Sector Pension Liability

    Why would you say that? I think they are well prepared and contain a lot of information. You do have to wade through a lot of stuff to get to the useful bits but there are nuggets in there. Have you looked at the cash-flows, have you looked at the trend of reserves, have you seen what would happen to the Net General Revenue Account if the General Revenue Adjustments Account was merged with it, have you wondered what Govt. Net Assets would be if the NI fund were considered to be something separate?
  8. Public Sector Pension Liability

    Can I half-agree? The PS Liability does not assume that all pensions are paid today. It is the fund we should have today if we wish to pay the pensions as they fall due, after making assumptions about inflation, investment profits, mortality etc... But I agree with your main point, the £3.8bn figure hints at the scale of the issue to be addressed but the real issue is cash flows going forward. Can "surplus" tax revenue, after funding essential services, meet the shortfall between contributions and pension payments.
  9. Public Sector Pension Liability

    I can see why people say this but there is a big difference. Ponzi schemes are fraudulent, they rely on a deliberate deception. The IOM CS/PS pension scheme was never funded and no-one claimed it was. If they had asked, pensioners would be told that their pensions would be met out of future tax revenue. We may wish it had been done a different way but I don't think we can say there was any deliberate deception.
  10. Public Sector Pension Liability

    £3.8bn is a very large number. "backed by reserves" is an odd concept (but often used). There is no Pension Fund. The pension payments must be met out of normal (tax) revenues. Reserves are the bottom half of a Balance Sheet and the assets that they represent might be cash but they might also be roads or schools, which you cannot use to meet pension liabilities. Thus, talk of reserves misses the point. £3.8bn is the size of the fund that would be required it it was a funded scheme, to meet the expected pension obligations as they fall due in future. If the government were a company you would expect it to have a fund of this size, but it is not a company and instead has tax revenue to rely on. To some extent the £3.8bn amount is alarmist and unrealistic. That amount will never be payable at one time and as interest rates rise, the calculation will change so that (the Present value of) the estimated liability will fall. What really counts is cash flow - will government revenues be sufficient to provide services and meet the pension obligations? This is a tricky question.
  11. Tax avoidance hypocrisy of Guardian Newspaper et al

  12. Tax avoidance hypocrisy of Guardian Newspaper et al

    Balance - I try, sometimes I fail. Offended - I referred to myself not being offended. I did not mention you. Avoidance - SIPPs and SSASs are created by UK statute. To call them avoidance is to give the term a very wide definition...but some people do. Witchhunt and hypocrisy - here is the nub of the matter. The Guardian often takes a stand I find hard to agree with but do think they believe in what they say. I can't see that their ownership structure is "avoidance" or hypocrisy.
  13. Well done Alfred

    We already have registration of Beneficial Ownership legislation - "encouraged" by external authorities. It is the dream of these external authorities that the various registers will be joined up electronically allowing tax and law-enforcement agencies to do a single search to see what overseas interests a person might have. These are not at the moment public and it is IOM Government's intention that they stay private. However, once up and running there will be calls for access by governments, journalists, academics, pressure groups etc and if these are acceded to, the registers will be almost public. This is the way the world is going.
  14. Tax avoidance hypocrisy of Guardian Newspaper et al

    Your question could be better balanced. The Guardian is owned by the Scott Trust Limited - a company from which no shareholder can take a dividend. It is designed this way to ensure durability and editorial independence. The trading company and the ownership vehicle are UK companies and their audited accounts are freely available. There is no Inheritance Tax exposure as there is no-one who has any value in their estate. I am no friend of socialism but I find it hard to be offended by a newspaper which has secured independent ownership so that it can spread its message free from editorial interference. If any tax has been avoided, it was by the original owner who gave the business away. I suspect that this was way before Inheritance Tax existed and if it happened today, Business Property Relief would mean there was no tax to pay. If you do not like their message, challenge it with an appropriate argument. If you resort to slurring the messenger, you have lost your argument.