Financial Economics = Scorched Earth

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John Kiff rolled his tank onto my lawn this morning.


Well he can roll it off again and take his flamethrowers with him. For in the long march back from Moscow, Kiff, Ralfe & Co are doing their best to make sure that collective pensions aren’t just suffocated, but that they never return to haunt our boardrooms again.

In the mixed up world of Financial Economics, the fact that this summer people didn’t die very often, is seen as “bad news all round”.

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If you want to read the good news that so many of us are still alive, you can do so here.

How has it come to this?

It was not so long ago that pension funds wanted employers to pay dividends, it provided them with the cash-flow to pay pensions. Thanks to financial economists, the use of equities by pension funds is frowned upon. The Pensions Regulator can castigate employers who pay their shareholders dividends because most pension funds don’t rely on dividends anymore – they don’t own any equities anymore and that’s because of FE “scorched earth”.

The flamethrowers spouting fire from the FE tanks are now being trained on CDC, which (for them) is showing alarming signs of reviving collective pension provision. Even thought CDC provides no more risk to the corporate balanced sheet than Group Personal Pensions, Stakeholder Pensions and DC master-trusts, CDC is seen by financial economists as bad news.

In the context of John Ralfe’s observation that people living longer is “bad news all round” , you can understand why FE is so skewed against any form of  pension provision not underwritten by risk free assets. The philosophy behind Financial Economics is entirely divorced from the concept of “human well-being”.

This is why it is so entirely inappropriate to be applied to pensions, because pensions are paid to people to help them enjoy the second halves of their lives. Pensions ironically help us live longer. I know this because when I was told by Nurse Rebecca that I had the body of a man six years older than my age, I legged it to the gym!

By comparison, the best thing someone who is drawing down from a capital reservoir built up in an individual DC plan is “die”. It is especially good – if you are a financial economist – to die before you get to 75. That’s because your pension pot can transfer to your next of kin as tax-efficiently as possible.

This is what I mean by “scorched earth” thinking.


The genius of John Ralfebot – whoever he or she really is – is to recognise that it is Financial Economics that has turned John Ralfe into the twitter monster he declares himself. I am quite sure that the real John Ralfe is a carefree , cricket loving, moor tramping cove – who I could happily spend a day with.

But put him in FE mode and he and Ralfebot become inseparable, Ralfebot really is John’s Doppelganger, what Yeats called his “anti-self”. Ralfebot is the ultimate expression of Financial Economics. He is all about FE

Human values will reassert themselves

The de-huminisation of pensions, as advocated by Financial Economists, fulfilled by the FE scorched earth – will not last for ever.

Common sense will prevail. People will start celebrating us living longer – fake deficits will be revealed for what they are – pension funds will return to investing in patient capital and not in short-term debt.

In the meantime, we can have a bit of fun at the Financial Economist’s expense. They really are very silly indeed!


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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