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Margaret Thatcher appears to be the UK's biggest pension thief.

After she privatized the UK pension system, insurance companies and other financial firms skimmed off over 40% of the average worker's account in excessive fees.

The administrative costs associated with any system of individual accounts can be broken down into three components:

_ Accumulation costs reflect the costs for administration and fund management that are incurred on the account of a worker who maintains his or her account with the same financial provider and contributes consistently to that account throughout his or her career. As this study finds and as previous studies have documented, these costs reduce the value of an individual account in the U.K. by an average of approximately 25 percent of the funds in the account over an individual’s working years. In other words, the amount of money in the account when the worker retires is 25 percent lower than it would be without these charges.

_ Alteration costs are the additional costs incurred when an account holder fails to contribute consistently to a single financial provider over an entire working career. Such costs could arise because the worker switches from one financial provider to another or because the worker leaves the labor force and ceases to make contributions. Most previous analyses have ignored these costs. The evidence suggests that such costs are significant. The data indicate that in the U.K. system, these costs reduce an account’s value by an average of 15 percent over a career.

_ Annuity costs are the costs incurred by the typical individual in converting an account to a lifetime annuity upon retirement. Although such costs may be of a somewhat different nature than accumulation and alteration costs, they represent a financial loss to individuals, just as accumulation and alteration costs do. In the United Kingdom, these costs reduce the value of an account at retirement by approximately 10 percent, on average.

Taking into account interaction effects, these estimates indicate that, on average, 43 percent of the value of individual accounts in the United Kingdom is consumed by various fees and costs over a typical career.

In other words, more than 40 percent of an account’s value is dissipated by fees and costs. This estimate is based on actual data from financial providers. It reflects a comprehensive treatment of costs associated with individual accounts.


Republican tea-baggers and trickle-downers have done the same thing to health care in the US where 30% of our health care spending is absorbed in administrative expense and private insurers' overhead & profit.

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