Pensions in the UK

Thank you for your recent Pensions campaign. Without it, I would not have gone to the trouble of tracking down and changing my pension fund to Aviva/HSBC Islamic Global Equity Index S6. Alhamdulillah.

I have a bigger concern about the pension market/industry in the UK. I am new to financially educating myself about investing and strongly believe there’s a high chance the pension market will crash, certainly before I reach retirement. It’s simply not sustainable.

Andrew Craig, in his brilliant book How to Own the World, says he would not recommend investing in a UK pension - he cites Argentina as an example where the state confiscated private pension funds to pay its debts. We saw examples of this in Greece too recently - private savers money was raided. The UK government is effectively bankrupt (again according to Craig and other investors/analysts, which I agree with).

I do not believe pensions will look anything like they do right now when I retire and am concerned I’m going to invest for decades only to have some, if not all, of my savings confiscated

The “problem” I have is that my employer matches my contribution by 100%. So this is free money and for now I want to contribute.

Finally to my question: what are the options in terms of transferring my pension funds to a safer vehicle? Are there any general Islamic issues I should be aware of. Can I only do this at the “end” when I am ready to pull out or leave the employer? Ideally, I’d like to take the employer’s contribution and manage the funds in my own investment account.

Thank you

Can you elaborate on what made you think like that?

If its a private pension scheme then I don’t think that it would matter if the UK Govt gets bankrupt as your money would be in private funds. HSBC fund which you are invested at the moment. HSBC is the fund manager and the investments are in individual stocks across the world so hardly any Govt involvement.

On the contrary, if its a defined pension scheme for eg for govt employees like NHS, Teachers etc. then one can argue that if govt gets bankrupt, they may not be able to get their pension …it all depends IF the UK govt go bust

The UK government is essentially bankrupt. There are many economic commentators, like Andrew Craig in How to Own the World, who hold the view that the state will raid private pensions - it’s just too juicy an opportunity. It’s been done before. They will introduce policy to legitimise confiscation of wealth (a nice way of saying theft).
I do think it’s naive and wishful to think pensions we contribute to now will actually pay out what is projected.

History of indulging – why the government will likely raid your pension
As mentioned in How To Own The World this has already happened multiple times in historic and recent times.

Take Argentina for example, in 2008 they simply nationalised $30 billion of private pensions in a single stroke.

Or closer to home in 1997 when Gordon Brown changed the way pension dividends work resulting at least £100 billion being transferred by retirement funds into government coffers.

Or between 2006 and 2016 which has seen the lifetime allowance being reduced by almost 44% resulting in a tax gain to the government of 2000%.