We do live in a world full of insecurities. There are underfunded pensions wherever you look and historically caring institutions now apportion blame to others in a bid to excuse their own mis-management. Rather than looking for solutions, they appear to take the rather more simple approach of simply altering the rules to redress the accounting imbalances.

"Due to unseen circumstances outside of our control ..." is how the announcements usually start.

Really, "Unseen, outside of your control?". I thought that was the exact reasons these people sweet talked us into paying them millions of dollars of bonuses each year. The only consolation really is that we can all live in the knowledge that we are undiscovered geniuses. After all, if qualifying to be paid millions means admitting to the masses that we are only human, I’m reasonably confident that I can do that right now.

One has to ask what is the root cause of all these pension crisis and why, having paid the "required" premiums for many years, do those promises dished out all those years ago appear to bear minimal fruit? So, I thought I would take a quick look into who these institutions are that carry our retirements in the palm of their hands.

The mainstream US markets operate a three tier trading system based from the NYSE, AMEX and including OTC trading. First and foremost is the New York Stock Exchange (NYSE), secondly the American Stock Exchange (AMEX) and the final form trading overseen by NASD called Over the Counter (OTC).

The NYSE is based on Wall Street and its origins stretch back as far as 1792. The NYSE was originally set up by traders who met under a tree at the tip of Manhattan and signed an agreement to trade securities.  As the largest stock market in the US is indeed the NYSE and the scope of their remit includes; setting stock exchange policy, supervising member activities and overseeing the transfer of seats within the exchange.

The requirements laid down by the NYSE for a business to be traded on the stock exchange floor are extremely stringent, and whilst this doesn’t guarantee that investments in such businesses are by any means guaranteed, in terms of risk, it is possibly the safest of the three trading arenas and where I would hope my pension money is safely stowed!

The downside of the NYSE for businesses wishing to raise capital or to be quoted is that even meeting the NYSE guidelines, does not automatically guarantee a listing. This has historically led to Broker’s meeting on street corners outside of the exchange in order to take on business related to unlisted businesses and eventually the AMEX was formed in order to take on higher risk business. AMEX has progressed from its street corner days and now does have its own trading floor. But, it seems that over time and as with all businesses, once the policy machine starts turning and new rules become set in stone, there will always be a market for trading outside of that scope, and as sure as the sun will rise in the morning, along cam another form of trading known as OTC or over the counter trading, which primarily concerns itself with unlisted stocks and securities. OTC business is overseen by the NASD and is known as unlisted trading.

In terms of retirement planning one needs to look at where you should put your money. If I was 20 years younger I may find myself investing a proportion of my money OTC as the many years that would follow could give me an opportunity to right any small OTC disaster. If no disaster ensued I could expect some very high returns.

Moving into middle age, I would more than likely change my outlook on life and the future. Whilst I would still desire modest returns I may feel that the AMEX floor could offer me both returns and security and therefore I might realign that proportion of most speculative funds to the AMEX.

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In my final years before retirement, I think I would clam up!  I would certainly believe that my pension funds should be exposed to a minimal amount of risk and if I was to leave any exposure to my pension fund at all, it would more than likely be in the NYSE top 50 or 100 quoted companies. The rest I am embarrassed to say would probably remain firmly in the bank! (Though these days, that might be a questionable judgement call!)

So, with the perfect scenario in mind, what goes wrong?

Unfortunately, as a pension owner I don’t have the flexibility to contact the NYSE, AMEX or OTC brokers directly. This is the role of my pension administrator, and therefore I cannot ensure quick reactions to any sudden market changes. By default I am forced to ride out the storm, which is all very good if I’m a youngster as I could benefit in the aftermath by buying cheap stocks for a few years and reap the benefits from the long term game. But what of those retiring this year or next?

Those who have not had involvement within the administration of their pensions and are due to retire, may find them with pensions worth less now than they were a few years ago as a result of the economic downturn…It may be a case of delaying that retirement for 3-5 years in order to allow the markets to get back on track… this in turn will have an effect albeit not huge on people of my age wishing to move onwards and upwards and finding themselves stagnating in the scenario of dead man’s shoes

Either way, I think we may be hearing more from "would be" pensioners in the months and possibly years to come as the reality of this latest financial crisis in our increasingly uncertain world sets in.