He used to be the chancellor of the exchequer and stands accused of directly creating the crisis in British pension funds by draining ordinary working peoples retirement funds for the purpose of getting extra tax income.
Many economic research groups blame the drastic reduction in pension values due to the decision of Gordon Brown to collect an extra £5bn a year by removing tax credits from their equity investments held in the UK stock market.
For many years pension funds had the ability to reclaim the tax on their dividend income.
The whole point of investing in a pension fund was that the fund was allowed to grow free of all tax, that is, both income and capital taxes.
It does make basic financial sense as clearly it is a good idea to provide for retirement so as not to be an additional burden on the state in later life.
It was simply not a tax fiddle as when you came to take your pension you could take a small element, about a quarter,in a tax free cash lump sum but the balance of the fund would be used to buy a life annuity and when this was paid out to you on a monthly basis for the rest of your life you would pay tax on that income.
By allowing the pension fund to grow claim refunds of tax on the dividend income it would re-invest that income in more shares and it has long been accepted that the reinvestment of dividend income generates exponential rates of return.
Ordinary working people took out these personal pensions knowing full well that tax relief was assured on their pension funds it was taken as a “Given” as if it was written in tablets of stone.
Company pension schems also worked in exactly the same way for many years.
Gordon Brown is clearly a serial destroyer of the ordinary working man as he decided to break the tablet of stone and in so doing he ruined pension funds.
With what appeared to be a growing economy and with the equity markets at high levels all of which had been inherited from the previous government with Ken Clark as chancellor the new labour government thought that they could simply get away with it and that pension funds could take a massive hit.
However they were clearly a touch less than cautious and imprudent.
They failed to listen to their own advisers as documents released under the freedom of information act have shown that Gordon Brown ignored any advice offered and just ruthlessly pursued his idea.
I wonder perhaps if it is simply that he does not like the idea of the stock market and does not appreciate the concept personal, private or company pensions. Lawsuit Money.
I say this as looking at one of his blogs he does seem to be very interested in the works of extreme communists. I quote what Gordon Brown says:-
“Later, whilst at Edinburgh University studying for my doctorate, I became truly enamoured by the works of Joseph Stalin and wrote several essays and gave seminars on the progressive policies of Stalin as well as Mao Zedong and their important and lasting contributions to the world we live in. I still have a deep admiration for Uncle Jo today”
Perhaps then he is really anti business and a communist and wanted to destroy our financial system pensions and the equity market all at the same time. He has to be congratulated as he does an excellent job.
Whilst this might sound extreme it does sound like the action of a spoilt child one who has seen a brilliant job done by his predecessors and then wanted to ruin it for every body else.
Why else would he sell OUR gold reserves for buttons and tell every body he was going to do it in advance. Why not sell part of the holding?
Other governments with more financial savvy than him have bought the gold and are now sitting on great profits. They are known as serial creators of wealth.
During the perod 15th May to 27th May 1997 Gordon Brown was advised by his own officals:-
1.Of course, the downside here is that benefits would be smaller and this would be running counter to a policy of improving retirement income.
2.Employees (or their employers) would have to increase contributions if pensions were to be maintained.
3.The general message is that the big employer pension schemes will be able to cope at some cost to employers. But members of money purchase schemes would all be potential losers.
4.There is very big uncertainty over the extent to which pension schemes could absorb the effect of the loss of tax credits.
5.The change would therefore lead to a reduction in pension benefits for the lower paid.
6.Some schemes — which will be given a high profile by the pensions industry — will be pushed into actuarial deficiency by the loss of tax credits.
7.It is possible that some local authority pension schemes may need to be topped up. If so, this will lead to extra public expenditure.
So he was advised that: Benefits would be smaller, contributions would have to be increased, members of money purchase schemes will be losers, there is big uncertainty, a reduction in pension benefits for the lower paid, some schemes will be pushed into deficit, this will lead to extra public expenditure.
So there you have it his own advisers told him in no uncertain terms of the risks and yet he still took the gamble with people’s pensions. Worse of all what he did was a reduction in pensions for the lower paid.
The proof of the pudding has to be in the eating so lets have a look at what the Pearl Group a major pension provider said in a recent publication in 2010 which is 12 years after Gordon Browns raid on pension funds came into effect. They state that ["e;]Since 2000, investment returns have been poor and as a result, asset share values have reduced.["e;]