New rules will decimate profits A tightening of the International Accounting Standards Board's IAS 19 directive from 2013 will bar companies from using the so-called "corridor rule" which allows them to keep actuarial losses suffered by the final salary pension schemes off their balance sheets. The rule change is expected to slash hundreds of millions from the profits of many European companies next year The Bank and the bond vigilantes Central banks are no longer playing by the old rules, so why not try a new idea put forward by bond vigilante Jim Leaviss from M&G, asks Pauline Skypala. The new idea involves cancelling £350bn or so of gilts the Bank of England has bought via its QE programme, thereby reducing UK's debt to GDP ratio from 63 per cent to 41 per cent. Ingenious. But what are the downsides? Vix products are not for rational investors Vix products are neither a threat to the world financial system, nor a great way for the public to make money or protect its portfolios from real world risks, writes John Dizard, who wonders, therefore, why they are so popular A solution may be found in DC innovation in the US As debate in UK re-opens on what can be done to replace defined benefit schemes, Lord Hutton advises against copying the Dutch system of collective defined contribution and instead thinks a US innovation - Managed DC - could be the answer. It targets an inflation protected income for life for every member and works well without member engagement. German inflation better than EU break-up If German wages and inflation rise faster, the periphery will need less deflation to improve its competitive position. The Bundesbank should swallow, bury the Weimar ghosts and allow a German consumer boom, writes James Mackintosh CDC could lead to Ponzi schemes Pensions expert, John Ralfe, also wants to look further than collective defined contribution to replace defined benefit pensions. He is worried that CDC assumes equities will return to providing long term profit. With CDC, he points out, there is no sponsor and the guarantor of promised pensions can only be future generations of plan members - rendering the structure no better than a Ponzi scheme This entry was posted by Emma Boyde on Sunday, April 15th, 2012 at 19:26 and is filed under Uncategorised.