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Chase Bank Limits Cash Withdrawals, Bans International... Before you read this report, remember to sign up to http://pennystockpaycheck.com for 100% free stock alerts Chase Bank has moved to limit cash withdrawals while banning business customers from sending...

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Richemont chairman Johann Rupert to take 'grey gap... Billionaire 62-year-old to take 12 months off from Cartier and Montblanc luxury goods groupRichemont's chairman and founder Johann Rupert is to take a year off from September, leaving management of the...

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Cambodia: aftermath of fatal shoe factory collapse... Workers clear rubble following the collapse of a shoe factory in Kampong Speu, Cambodia, on Thursday

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Spate of recent shock departures by 50-something CEOs While the rising financial rewards of running a modern multinational have been well publicised, executive recruiters say the pressures of the job have also been ratcheted upOn approaching his 60th birthday...

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UK Uncut loses legal challenge over Goldman Sachs tax... While judge agreed the deal was 'not a glorious episode in the history of the Revenue', he ruled it was not unlawfulCampaign group UK Uncut Legal Action has lost its high court challenge over the legality...

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Pension deficits up ‘at worst time’

Category : Business, World News

The deficit of private sector, final-salary pension schemes rose in March, figures show, during a key review period for company pensions.

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Your 401k won’t save you | Helaine Olen

Category : Business

Most of us have less than $100,000 in retirement savings, less than half what some estimate is needed

Most of us respond to questions about our financial prospects after retirement with sentiments that could be best be compared to the look on Captain Quint’s face when he realized he was about to be eaten by the shark in the 1970s classic Jaws.

There is a $6.6tn gap between what we collectively have on hand and what we will need to see us through our post-employment lives, The Center for Retirement Research at Boston College estimates. Experts routinely say the next generation of retirees will be the first to live more hardscrabble lives than their parents in old age in decades.

American families saw their net worth decline by almost 4% between 2007 and 2010, mainly due to the impact of the real estate crash. As a group, Americans have $9.5tn in retirement savings accounts. It sounds like an enormous sum of money but, in fact, it is nowhere near enough.

Most of us have saved less than $100,000 for our post-work lives. That number creeps up to a median $120,000 for those aged 55 to 64, according to the Center for Retirement Research. The math here is ugly: Fidelity Investments predicts that a couple who retired in 2012 at the age of 65 will need $240,000 for medical expenses alone. Just this month, Deloitte Center for Financial Services discovered that 60% of future retirees are convinced all their savings will go to health care expenses. They’re not wrong. Or at least not too far off.

And, no, the recent record-breaking streak by the Dow is unlikely to save us. Only about half of us have investments in the markets, and even then, for most of us, the amounts are mere trifles. It’s estimated that the top 10% of households when it comes to wealth own 80% of all stocks and mutual fund investments in the United States.

This is the end result of the slow, 30-year dismantling of the corporate pension system in favor of 401ks. The 401k was not, as it turned out, “a pretty easy way to make a million bucks by the time you retire,” as Kiplinger’s magazine promised in the fall of 2007.

Instead, it turned out to be a long, strange trip to a penurious retirement for all too many members of the Baby Boom generations and the ones that will follow. Never mind the psychedelic sideshows of the internet and housing bubbles. In black and white, we’re all but broke.

But does anyone in Washington care? It sure doesn’t seem that way. Even as 10,000 baby boomers will turn 65 each day for more than another decade, each cohort seemingly poorer than the next, we’re being told we need to make do with less. Almost all the talk in the capital is about how to make cuts and adjustments to programs like social security and Medicare that seniors – not to mention future seniors – see as vital to their economic prospects.

“We are having a debate about federal budgets and not personal budgets,” says Debra Whitman, executive vice president for policy at AARP. “We are not having a debate about if we downsize the federal government’s share on social security what will make it up.”

So we want help. And help, for the most part, is not what we are getting.

Instead, we’re told we should stay in the workforce longer and to save more money than we are currently doing. Just how to do this in an environment where median household income has fallen by more than 5% since 2009, and workers in their fifties who do lose a job have little chance of finding a new one within a reasonable period of time at anything resembling their former salary goes unsaid.

So what is to be done? As of right now, what little positive action there is on the retirement front is going on at the state level. California is now in the very early stages of setting up a state plan that would work like this: employees who aren’t covered by a workplace retirement plan could set aside 3% of their salary in a way where it would be pooled with that of others. When they retire, they would get an annual income. A similar plan was recently introduced in the Illinois legislature.

In Washington itself, Senator Tom Harkin plans to introduce legislation later this year offering his own retirement planning solve, one that is similar to the California plan. However, it would also allow people covered by workplace plans to put additional money aside. It would also – again, like California’s plan – be portable, that is, it would be attached to a worker and not a particular employer.

There are still problems. While saving 3% of one’s salary is better than not saving anything at all, experts routinely say we need to put aside anywhere between 10 and 15% of our money to ensure we will have enough money to live on after our work lives end. As for Harkin’s plan – well, given how things are progressing in Washington these days, no one is giving it much of chance, at least right now.

Most importantly, none of these retirement reform initiatives require employers to make any contribution at all – continuing to leave all planning on the employees.

Be afraid of what lurks in the retirement waters. Be very afraid.

EU cap on bankers’ bonuses is not going to fit

Category : Business

Banks’ response is predictable they will drive up basic pay because those at the top earn far more in bonuses than salaries

The European parliament’s insistence on capping bankers’ bonuses will clearly be popular. That doesn’t mean it’s logical. In fact, the measure looks doomed to fail in its own terms. The ambition is to make banks safer and more able to withstand the next financial crisis. In practice, banks’ response is entirely predictable: they will crank up base salaries, thereby making their cost bases less flexible.

The shame is that Capital Markets Directive 4 mostly contains sound and worthy reforms. For example: big banks must erect sturdier capital buffers and the sums they keep as liquid assets must be greater than in the past.

But the bonus cap is the point where good intentions lose touch with experience. Did the parliamentarians not notice how Goldman Sachs UK, for example, wanted to defer its bonus payments this year to April to dodge the 50p rate of income tax? That’s how banks behave: they will exploit any change in the rules.

The sure-fire response to a bonus cap will be a rise in salaries. That’s because very high earners at the top of investment banks earn far more in bonuses than in salary. Look at the top earner at HSBC last year, as revealed in this week’s annual report. He or she (the individual is not identified) earned £7m, comprising a salary of £650,000 and a bonus of £6.35m.

Under the cap proposal, HSBC would have been restricted to paying a bonus of £1.3m, assuming the bank won approval from its shareholders to pay bonuses up to twice the level of salaries. But is it credible that would happen? Of course not. The individual would first expect to be awarded a higher salary, perhaps as much £2m, so his or her total earning power was closer to the old level.

Note, too, that a large slice of that big bonus at HSBC was subject to deferral and clawback – it is dependent on performance not turning sour. But, if the cash is already out of the door in the form of salary, it’s harder to claw back.

That is not to deny that perverse pay structures contributed to the crisis. Of course they did, and the parliamentarians are right to say so. But there is no point in trying to cap bonuses if you are not also prepared to cap salaries. This is territory where the “waterbed principle” applies: if you push down in one area, another goes up.

The better response would be to concentrate on improving banks’ capital ratios and liquidity cushions and, like the Swiss, give shareholders greater powers to stamp on greedy managements. Until now, reforms had been heading in exactly that direction.

The City is resigned. It, like everyone else, can see chancellor George Osborne is isolated and humiliated; that the eurozone’s move towards banking union has changed the balance of negotiating power; and that Angela Merkel, normally a UK ally on financial matters, has an election to fight this year.

And, if they are honest, banks will also admit they invited over-prescriptive legislation by being so slow to cut bonuses even when their financial returns were so lousy and regulators, not only the public, were appalled by the display of naked self-interest.

Banks will now study the text of the final legislation and draw up their responses under the radar. Just don’t expect them to tell their high earners to take it on the chin.

Bankers’ bonuses: Europe right, Britain wrong | Editorial

Category : Business

The prime minister is still confusing the interests of the City with those of the nation

It sounds like the stuff of satire. On Thursday, RBS, the bank that taxpayers were forced to buy, posted 2012 losses of more than £5bn. That was after paying out more than £600m in bonuses. On the very same day, an EU draft agreement to cap bank bonuses emerged – and the prime minister immediately signalled that Britain would resist.

There are of course questions about the detailed design of the bonus cap, although to the citizen on the street the first of these is why it needs to be set as high as 100% of salary, with exceptional provision for double that. Then there are deeper doubts about whether or not internationally footloose financiers can be forced to wear a cap made in Brussels. The most obvious danger is that the restriction on lavish top-ups would be answered by a dramatic increase in basic pay. Certainly, the experience of the bonus tax suggests that this would happen to some extent. To assume things would be different this time, is to assume that the City is becoming more sensitive to shame. That may sound like a naive hope, although with Antony Jenkins’s new regime at Barclays staking its reputation on respect and responsibility, and with so much banking in state hands, with political will there ought now to be scope to challenge the culture. And let’s be clear: for a bank to agree to boost the salary of someone like Bob Diamond several dozen times over – which is what would be required to compensate for the loss of the bonuses he got in his heyday – would not be a decision a publicity-conscious business could take lightly.

All things considered, attempting to do something – as the EU proposes – is surely better than sitting back and doing nothing. Even if the worst happens, and the bankers claw back all their bonuses in increased pay, the reform would at least succeed in pushing their avarice into the open. Whereas bonuses calculated by incomprehensible formulae allow the money men to hide behind the misty idea that they are being paid to perform on some intricate criterion which the rest of us cannot hope to understand, higher salaries would make plain that their vast rewards are in fact automatic with the job; this transparency could catalyse outrage and eventually further change, even if there was little immediate effect.

But it is being far too kind to David Cameron to imagine that his resistance flows from any fear that the measure wouldn’t have immediate effect. Shielded by a Labour party which continues to hug the City too close – “it shouldn’t take the EU to get a grip on bonuses”, the opposition disingenuously carped as it sought to evade revealing that it too was against – the PM is simply continuing with the great British tradition of confusing the interests of the City with those of the nation.

Iberia workers begin five-day strike

Category : Business

Workers at the Spanish airline Iberia have begun a five-day strike in protest at planned job cuts and salary reductions.

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Pension deficits fall back to £211bn

Category : World News

The deficit of private sector, final-salary pension schemes fell back in January, according to figures from the Pension Protection Fund.

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JPMorgan slashes Dimon’s bonus by 53%

Category : Business

JPMorgan Chase cut CEO Jamie Dimon’s salary and bonus citing the London Whale losses. The bank beat earnings estimates for the quarter and full year.

Link: JPMorgan slashes Dimon’s bonus by 53%

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Pension deficits fell in December

Category : Business

The collective deficit of the UK’s private sector final-salary pension schemes fell slightly in December, the Pension Protection Fund says.

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Apple’s boss in massive pay cut

Category : World News

Tim Cook is to take home a salary that works out to 1% of the $378m (£235m) he received to be Apple’s boss last year.

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New Bank of England head to earn £874,000 a year

Category : Business

Mark Carney will take home larger package than heads of Bundesbank, European Central Bank and US Federal Reserve

The new governor of the Bank of England will be the highest paid central banker in the world, by a significant margin.

Mark Carney is quitting his job as governor of the Bank of Canada to relocate to London, on an annual salary of £480,000 and pension contributions worth £144,000. On top of that, he will receive a £250,000 housing allowance, taking his total package to £874,000, far beyond the pay of the president of the US Federal Reserve, the governor of the European Central Bank (ECB) and Germany’s central bank chief. He will also receive free health and dental insurance and the use of a chauffeur-driven car.

Carney initially rebuffed George Osborne’s advances, only to agree when the terms were sweetened and he was allowed to take the job for five years rather than the standard eight. One commentator said: “I suspect he realised he had Osborne over a barrel.”

His nearest rival in pay is the governor of the ECB, Mario Draghi, who receives less than half of Carney’s package, although he does enjoy the use of an official residence. Draghi is paid an annual salary of €371,148, plus an estimated €107,000 of allowances and contributions to medical and accident insurance schemes, bringing his pay to a total of £389,000.

Jens Weidmann, the softly spoken but fearsome president of Germany’s Bundesbank, is close behind on a total of £320,450. Meanwhile, Ben Bernanke – as head of the US Federal Reserve, arguably the most powerful central banker in the world – receives a relatively modest salary of $199,700 (£122,700). In terms of benefits, he is entitled to the same health and insurance benefits, pension and thrift savings plan as any other Fed employee. His salary is even lower than that of the central bank governor in crisis-hit Spain, Luis Maria Linde, who – according to 2010 figures – received the equivalent of £134,000.

Remarkably, some countries do not publish pay details for their most senior banker. France, for one, finds itself in a catch-22 position. The annual salary of the governor of the Banque de France must, according to a decree, be equal to the salary of the vice-president of France’s highest administrative court, the Conseil d’Etat. But the salary of the vice president of the Conseil d’Etat is kept private, meaning Christian Noyer’s pay is also a secret.

Admittedly, Carney is already on a healthy pay packet, although the Bank of Canada coyly publishes a salary range rather than an exact figure for his pay and benefits. As such, all we know is that Carney currently receives between C$425,300 and C$500,300 – a maximum of £311,000 in annual pay.

The reaction to Carney’s pay packet has been muted, as commentators hold fire on the man drafted in to save the UK economy. Former Liberal Democrat Treasury spokesman Matthew Oakeshott said: “If he really could stop our economy sliding deeper into stagflation, he’d be worth every penny.”