The latest Investing Matters Podcast episode with London Stock Exchange Group's Chris Mayo has just been released. Listen here.
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https://www.gov.uk/government/news/brand-new-pension-scheme-launches-in-great-britain
Might be a bigger and longer term plan , but the returns will never get near a 25% P/A growth rate.
Barking up the wrong tree in my opinion.
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Triad Group won a large £2M Order since increased to £2.7M from a U.K. Government Department in February 2022, that’s only just been announced on its tender finder page.
All the work is due to be completed in Triads current financial year.
Triad itself appears to seldom announce contracts or their value.
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FT article
A start in the right direction to increase pension values.
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https://www.ft.com/content/fdc1c725-4e0d-4331-a7ed-704f010b1d9f
Two-thirds of the financial wealth of British households is saved for private pensions. Yet the UK pension system is highly inefficient.
On a conservative estimate, if the UK system matched best practice in the Netherlands, Canada or Denmark, for the same pension payments British savers could expect a reliable income in retirement that is 30 per cent higher than they will currently receive.
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Should I opt out of my pension and use the money to pay for the rising cost of living?
Personal finance expert Gemma Godfrey has been answering your questions on the cost of living and money saving dilemmas.
Friday 12 August 2022 12:40, UK
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Why you can trust Sky News
Personal finance expert Gemma Godfrey has been answering your questions on the cost of living and money saving dilemmas: Could your pension contribution be put to better use for things like paying your bills?
Mark A: Hello, I'm 37 years young and started a pension late. I had approximately £35,000 in there. With the world as it is, this has now dropped to £24,000. What on earth should I do? With the cost of living the extra money would be handy, rather than going in a pot which is disappearing.
Gemma says: This is such a tough question because for some people, paying into a pension is no longer an option as they're struggling to cover their current basic costs to live.
However, your question implies that you could continue to pay, you're just wondering if you should.
The most important thing to say is that when making any financial decisions, it's important to speak to a financial professional who can review your particular situation and offer personal advice
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“The most important thing to say is that when making any financial decisions, it's important to speak to a financial professional who can review your particular situation and offer personal advice.”
No it’s not , (in my personal opinion!)
Why. ?
All financial advisors follow the same path, as they have been conditioned to do.
That will NOT provide the average worker with a decent pension.
It’s just about impossible. (Poor long term investment returns.)
A new approach is required
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Triad Group Plc is the stock I have personally backed to produce above average returns going forward. That should drive my pension pot towards its £3M target.
This week the company will hand out a 4P dividend on top of the 2P paid at the interim stage. A total of 6P for the year producing a yield of 5%
If as I hope profits increase this year at the same rate as last year 67% then their should be room for dividends to increase by around the same amount.
Triad is absolutely loaded with cash, £5.3M , no debt, and it’s only ongoing investment is in it’s staff, hence ,zero capital is required to pumped back into the business each year.
The next results are the interims due in Nov.
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16 August 22
Nurses consider ditching pensions to afford bills
The news comes after NHS workers in England were handed yet another below-inflation pay rise during the worst cost of living crisis in a generation.
The article goes on to say the nurse in question pays in £440 a month to her pension and has another 30 years to go.
In the scheme of things with the employer paying in more , (on her behalf) it’s one of the better pension plans.
That said ,my view of investing one lump sum when your young , with no additional payments, into high growth low cap stocks , might be a better and cheaper solution .
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Concerns persist as inflation hits 40-year high
By Sophie Smith 17/8/22
Industry experts have warned that the continued increase in inflation could leave retirees struggling to make their pension last, although many trustees are thought to be reviewing the way benefits are calculated to ensure savers don't miss out on “vital” retirement income.
The Office for National Statistics (ONS) confirmed today (17 August) that annual inflation hit 10.1 per cent in July, up from 9.4 per cent in June, with indicative analysis from the ONS suggesting this could be the highest CPI inflation rate since 1982.
Interactive Investor head of pensions and savings, Becky O’Connor, suggested the latest rise will “heap more despair on people trying to plan a decent retirement” and "dismay" those who recently retired thinking they would be able to manage, while those who chose to retire early during the pandemic may now be regretting that decision.
In light of this, O'Connor suggested that it "looks like ‘back to work’ will be the order of the day for older people who would like to enjoy retirement but can’t because of rises in the cost of living".
“We’ve already seen from ONS labour market figures earlier in the week that more people aged 65 or over are continuing to work or returning to work since the pandemic," she continued.
"Higher inflation could drive this trend and put retirement on pause for hundreds of thousands of would-be retirees or bring more of those who had perhaps prematurely thought they were in a good position to leave work back out of retirement."
O'Connor also warned that retirees may be "caught between a rock and a hard place", as a rise in the amount withdrawn from a pension from £5,000 a year to £5,500 a year to cover a 10 per cent rise in prices could mean a pension running out two years earlier, at age 83 rather than age 85.
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A pension of £5,000 a year is a disgrace from those who have invested money into the pension all their working lives.
A massive shake up is required to lift returns for pensioners.
If private equity and hedge funds can do it, so should the pensions industry.
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Consumer champions Which? polled their retired members to find out where their money was being spent and discovered that most households spend around £2,200 a month on all basic expenditures and some luxuries, with many retirees spending an additional £4,500 a year on holidays and travelling. This means (according to Which?) that you’d need to allocate at least £39,000 a year during your retirement if you’re going to live comfortably and enjoy a new car every five years. And, of course, that’s without the benefit of the crystal ball we mentioned earlier.
Life insurance provider Aegon says that the average pension pot in the UK currently stands at nearly £50,000 with men saving an average of £73,600 and women saving an average of £24,900, so you don’t need a calculator to work out that Which?’s current £39,000 a year recommendation is far out of reach for most people.
Let’s break it down further…
At the beginning of this year, Scottish Widows calculated that a 30-year-old earning an average £27, 271 salary and contributing the current minimum to their workplace pension will achieve an annual income of between £9,734 and £14,047 when they reach retirement age – less than half of the salary they are living on now.
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Pension savers may need extra £90,000 in retirement amid high inflation
By Jack Gray 19/8/22
The average retiree may need to save an additional £90,000 into their pension during periods of ‘medium market performance’ to maintain a comfortable retirement over 20 years, according to PensionBee.
Meanwhile, those seeking a more ‘luxurious’ retirement would need to save an additional £140,000 during periods of medium market performance.
In its modelling, PensionBee defined medium market performance as 5 per cent annual growth.
According to the provider’s modelling, the average retiree in 2021 required an annual income of around £19,000 to maintain a comfortable lifestyle, which equates to an overall pot size of £330,000, assuming a 5 per cent annual growth rate and 0.5 per cent fees.
It also assumes that inflation will be 10 per cent in 2022 and 2023, 5 per cent for the five years following that, and 2.5 per cent for the 13 years after that.
However, periods of high market performance, which PensionBee defined as 7 per cent annual growth, would help mitigate the impact of inflation, with the additional savings required to maintain a comfortable retirement over a 20-year retirement falling to £10,000 in this scenario.
In 2021, the average retiree needed an annual income of around £31,000 to maintain a luxurious lifestyle, translating to a pot of £540,000, assuming 5 per cent annual growth and 0.5 per cent fees.
With inflation at 10 per cent, PensionBee estimated that pensioners would need to increase their withdrawal amounts to £21,000 a year for a comfortable retirement and to £34,000 a year for a luxurious lifestyle in 2022.
Commenting on the findings, PensionBee CEO, Romi Savova, said: "Our latest modelling highlights the real impact of yesterday's record inflation levels on pension savers, particularly for those who may already be withdrawing from their pension.
“Despite the alarming numbers, we want to reassure savers that it's possible to increase the value of their pension by following a few simple steps, without needing to increase their contributions at a time when finances are already tight.”
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Todays news is full of headlines reporting on U.K. inflation hitting 19% in the winter.
Most private and company pensions have inflation caps of ,up to 5%, but no more.
Those on a fixed income will find a 14% shortfall compared to last year in their pension income.
Very painful
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“In the 2020/21 tax year around 85 per cent of the 60,000 annuities purchased were 'level-only', meaning they had no inflation protection at all. Just 15 per cent of annuities bought were 'escalating', meaning they rise with inflation”
Yet all the above HAD to take financial advice !!!!
They are going to be absolutely stuffed as inflation eats out a massive chunk each year
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Large Director buying at Triad PLC has just been reported
First half results are due in around 7 weeks.
As a reminder, this is the company that I hope will enable me to achieve my 20 year target, of increasing each pound in my pension pot , from £1.00 to £100.00.
It currently yields over 5% has £5M cash and no debt.
Market cap £20M
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Today’s FT has publish a list of various Director share purchases.
Triad is one on the big ones.
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https://www.thisismoney.co.uk/money/investing/article-10324389/The-15-UK-companies-set-grow-dividends-year.html
Investors might like to read the above article.
First look at the % rise each year in dividends over the last ten years, then the projected rates this year .
TRD is not in the FTSE but has DOUBLED its dividend.
Outperformance like that on a consistent basis is what all investors crave for.
TRD only requires a very small after tax profit to double the dividend yet again at the interims in a few weeks time.
This is quite likely as the company already has a cash pile that’s equal to over 25% of its market cap, and can afford to pay out in dividends, all its earnings, while growing the business at the same time.
To put-in perspective most long established companies pay out perhaps 20% - 40%.
Fast growing Tec companies often pay out nothing.
.
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It appears few investors are brave enough to take full control of their pension investments.. ( picking individual stocks themselves ).
In doing so, they miss the chance of above average returns, as the city only ever delivers the average, that then goes on to provide a **** poor pension.
John Moret: Lessons from Sipp history for the new Consumer Duty
“As advisers continue to debate the FCA’s new Consumer Duty, what lessons can be applied to this from Sipps’ colourful regulatory history?
By John Moret 17th March 2022 8:00 am
From the moment Sipps were conceived by Nigel Lawson in 1989 I have enthused about the freedoms and flexibility that they can offer. Sadly, it is those attributes that have led to the demise of the Sipp originally marketed – many of today’s Sipp products resemble the bog-standard personal pensions that SIPPs were intended to replace. “
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naffordable for low-income earners
Home News Retirement Workplace pension contributions become unaffordable for low-income earners
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Michael Brown
Content Writer
Published: 21/09/2022
Seven out of 10 low-income earners said the cost-of-living crisis has made pension contributions unaffordable.
Almost 70% of low-income earners say they cannot afford to make any contributions to their workplace pension due to the rising cost of living. This is according to research from Legal & General Investment Management, who interviewed more than 5,000 workers across the UK private sector and classified a low-income earner as someone earning £10,000 or less a year.
“Auto-enrolment faces arguably its biggest challenge, with rising prices squeezing household incomes and forcing millions to re-evaluate their finances – including their capacity to save for the long-term,” said Tom Selby, Head of Retirement Policy at AJ Bell, an investment platform.
This is absolutely scandalous, it’s a given that anyone with such a low income should keep every penny.
In my personal opinion this auto enrolment has two huge drawbacks.
1/ A miserable life living off a very low wage , ( even lower after forced pension contributions).
2/ At age 66 a pension so low that the whole exercise is in effect found to be a stupid idea.
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Your average private pension pot fund is getting smashed to bits , but you read very little of this, in the newspapers.
The FTSE 250 is off 20% and government bonds are off, at the top end, by a staggering 40%.
Remember all financial advisors steer you towards “SAFE BONDS “ as you near retirement.
Proves my point I think what an utter disaster these advisors are for the common man , FORCED to use them.!,
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This is the next pension scandal.
Some have lost well over half their pension pot so far this year.
In fact some have been losing 10% a day on days like today .!,
From a few months ago .
Investors approaching retirement should look closely at their pension plans, AJ Bell has warned, after a type of fund popular with pension holders saw its value crash in recent months.
An estimated 850,000 pension savers are invested in lifestyling funds, which have lost 13 per cent in two months, according to the firm.
Most of these people will have been automatically invested in a default strategy which they signed up to many years ago, resulting in many of those invested in these plans not knowing about it.
“Many investors probably won’t be aware this is going on, but they could be sleepwalking into a bond market nightmare,” said Laith Khalaf, head of investment analysis at AJ Bell.
Lifestyle funds
Lifestyle funds are invested in long-dated bonds, known as annuity-hedging funds, which invest with the aim of hedging annuity rate movements.
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Pension funds terribly exposed , having to raise immediate cash to cover.
The piece points out that there are £1.5 trillion of assets held by UK pensions that have been hedged in so-called LDI trades. LDI (Liability Driven Investment) helps to match pension funds’ liabilities (future payments to pensioners) with the schemes’ assets. In a simple model this matching could be done by buying gilts of similar durations to the liabilities – if you owe your retired employees a collective £1 million in 2046, then you could buy a gilt maturing in that year. Or if you buy a quality corporate bond with a higher yield (a lower price) you can assign less capital to that liability, and use the extra cash to invest in a growth asset like equity, property, or private assets. Going further, you could use interest rate swaps or inflation swaps to match your duration liabilities. This means that you only have to put up some initial margin for the trade, and pay or receive collateral as market yields change (think of it like a contract for difference on a yield). If yields fall you would receive margin, and if yields rise the pension fund must pay margin to the counterparty. Using swaps gives the pension scheme far more capital to assign to those more interesting asset classes with high potential returns rather than having it tied up in boring gilts
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Bank of England forced to save the pension funds yesterday.
Personally, I am for ever astonished as to why anyone would trust them with your savings.
What happened to the stress tests.??
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Fears grow over member shock as DC annuity funds see one-third fall in value
LCP warns of member ‘shock’ at scale of decline in pot values in pre-retirement phase
Jonathan Stapleton clock
30 Sep
LCP's Stephen Budge: Schemes are already seeing a rise in the number of member complaints and concerns
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The muppets running your pension, can’t even get investments in bonds right. !
It appears everyone else knew rates would not stay at 360 year lows, but them !!
Those financial advisors have destroyed large pension pots just prior to retirement.
The crazy 60/40 rule .
Nutters trusted with your money.
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Sunday times reports this morning, the pension funds were 3-4 times geared, with their bets on the direction of gilts ( U.K. Bonds ). !
Yet again, joe public, ( through the treasury), is bailing out incompetence, with Billions of taxpayers cash.
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The EU forced pension funds to invest in European Government bonds to the tune of 70% of total investments .
Another move about to blow up. ( Who wants bonds, when the printing never stops .)
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Pensions watchdog called in to emergency talks on UK market turmoil
First time regulator drafted to high-level meetings on measures to tackle meltdown that followed mini-budget
The watchdog is understood to have been summoned to meetings triggered when there is a threat of major disruption to financial services.
Kalyeena Makortoff Banking correspondent
Sun 2 Oct 2022 16.52 BST
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More pension horror’s
Specifically, The FT notes that Schroders said it will make some redemptions originally due on Monday as late as July next year (the £2.7bn UK Real Estate fund), while Columbia Threadneedle said volatile market conditions had forced it to switch from daily to monthly payouts (the £2.3bn Pooled Property fund). At the same time, BlackRock also imposed new restrictions on withdrawals (the £3.5bn UK Property fund).
So that's £8.5bn of assets now tied up.
The NAVs of these funds has yet to really implode (that's the point) but that suggests the true 'price' is well below current levels (as liquidity risk premia strike).
As The FT notes, UK pension funds have been cutting real estate holdings for several months as rising interest rates and slowing activity have weighed on the property market. Tumbling prices of UK government debt have also increased the proportion of funds’ portfolios in real estate, prompting some to reduce their exposure.
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Average pension pots [UK]:
Ages 16-24: £2,700
Ages 25-34: £9,500
Ages 35-44: £30,600
Ages 45-54: £81,200
Ages 55-64: £189,700
Ages 65-74: £190,000
Ages 75+: £90,300
Thoughts:
The average is represented here (and throughout this post) using the median. Using the 35-44 age group as an example, if you lined up all the pension pots for people aged 35-44 in the UK from the smallest to the largest, the middle pot would be worth of £30,600. This is the median.
This means if you’re aged 35-44 and have a pension pot above £30,600, that’s larger than 50% of your age group.
I was surprised at how low those numbers are. Given the conventional wisdom is that you can safely withdraw 3%-4% of your portfolio per year in retirement, a pot of £190k gives you somewhere between £6k and £8k per year of withdrawals. That’s not much at all if you’re relying solely on your pension to fund retirement. Hopefully those with £190k in their pension pots will also have savings in their ISAs, or other investments outside their pension wrapper (like property).
These averages are only looking at people who already contribute to a pension. There are plenty of people who don’t contribute to any pension at all: