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When did you last review your pension?

Archive for April, 2016

When did you last review your pension?

Thursday, April 28th, 2016

A survey carried out by YouGov only a few years ago found that over half the respondents who contributed to either a personal or workplace pension scheme had not reviewed their pension in the preceding three years. More worryingly, many of these people admitted that they had never carried out a pension review.

If this sounds like you, then it’s possible that your pension is currently not nearly as productive for you as it could be, meaning you could be shortchanging yourself in terms of what funds are available to you when you retire. Reviewing your pension could even make a significant difference to when you’ll actually be able to start enjoying your retirement.

The world of work has largely moved on from the days when a person would stay with one organisation throughout their working life. The average worker today is likely to stay in each job they hold for less than five years before moving on. What this means in terms of pension savings is that most people are very likely to have paid into several pension plans. With all employers now legally required to offer a workplace pension, the likelihood of this happening is only going to increase.

It’s therefore more important than ever to regularly review your pensions to ensure they are working as efficiently for you as possible. If any existing plans were set up a number of years ago, they may be being affected by charges and fees that are uncompetitive when compared to modern plans. Transferring your savings to a more up-to-date plan could mean a greater proportion of the money you’ve paid in will actually end up in your retirement pot. And, of course, moving several different pension plans to a single provider will also benefit you in being easier to track and manage exactly what you’ve accumulated.

Whilst reviewing your pension is crucial, it can also be a very complex process. So, rather than attempting to tackle it yourself, it’s always advisable to seek the guidance of a qualified financial adviser who will be able to spot both the pitfalls and the potential gains you may be able to make. It’s also better to review sooner rather than later, as if you only give your pension any thought once you’re approaching the age at which you plan to retire, the chances are it’ll simply be too late to fix any problems.


Wealth? Fame? Working hard? What really makes us happy.

Wednesday, April 13th, 2016

It’s been 75 years in the making and the topic for countless philosophers to muse over, but a US study seems to have finally uncovered the secret to happiness and health.

Speaking during a TED Talk, Harvard professor Robert Waldinger revealed that, though wealth and fame continue to be commonly cited desires amongst millennials (those born sometime from around the early 1980s to around the year 2000), the research he presides over has found only one consistent factor: positive relationships.

During the twelve minute talk, Waldinger says that the data he and his colleagues have gathered indicates that people who are well connected to family, friends and communities are happier, healthier and live longer than those who are less well connected. People who are more isolated than they want to be suffer from shorter lifespans, see their brain function decline faster and generally experience lower health and happiness levels.

Other links between happiness and relationship status have also been uncovered. Whilst positive relationships can have a majorly beneficial impact on us, the reverse is true of negative relationships. The data gathered suggests that an unhappy marriage, for example, can have a more pronounced negative impact on the parties involved than the corresponding divorce would create.

So, maybe it’s time to forget about your cholesterol levels, because Waldinger looked at those as well in the study’s sample group when they were age 50 and found little link between poor results and happiness and satisfaction when they were 80. Those who had positive relationships at age 50, however, were also the happiest and healthiest individuals when they became octogenarians.

The message, of course, applies to us all and in many ways, but is particularly interesting for us to consider when it comes to our financial health and wellbeing. Great finances, well looked after and planned, allow us to focus on the important things in life; on nurturing those great relationships between ourselves, our connections, our partners and children. Keep working towards positive relationships and we’ll keep your money working for you and those close to you. Here’s to a happy, healthy future!

Retirement plans on hold for many over 50s

Wednesday, April 6th, 2016

A third of people aged over 50 who are employed in the private sector are now planning to retire later than they previously hoped, Aviva’s latest Working Lives report reveals. The 2016 report – which comprises research among UK private sector employers and employees – has a particular focus on employees aged over 50, following the end of compulsory retirement and with the first anniversary of the ‘pension freedoms’ approaching.

In particular, the Aviva Report survey asked people what age they hoped they would retire at, before they turned 40. Now, aged over 50, more than one in three (36%) admitted they would be retiring later than they thought – by an average of eight years. Among those who will now retire later than hoped, the report found a variety of reasons for people to postpone their retirement plans:

Not saving enough into a pension – 46%
The amount available through the state pension – 32%
I have debts to pay off (including mortgage) – 24%
Feeling that I still have a lot to offer at work – 21%
The level of enjoyment/satisfaction I get from my work – 20%
My employer wants to keep me on – 13%
Position of my partner – 13%
I have children who need financial support – 8%
I have elderly relatives who need financial support – 1%
Other – 10%
None of these – 3%
Don’t know – 2%

The Working Lives report also reveals a gap between employers’ and employees’ views on the impact of the pension freedoms, as the first anniversary of their introduction in April 2015 approaches. Over one in five (22%) employers think the freedoms could result in their employees having to work longer to make up for a shortfall in savings if they use part of their pension before retirement. At the same time, almost one in three (32%) employers are concerned they will lose valuable skills because people will retire earlier due to the freedoms.

However, these fears may be unfounded as the vast majority of employees aged 50 and above do not intend to alter their plans because of the pension reforms. Only 8% highlighted that the freedoms will result in them retiring earlier, contrasting with the concerns employers have around loss of skills. One in ten (11%) employees over the age of 50 now think they will retire at a later date because of pension freedoms, while 9% still remain unsure as to what the eventual impact of the freedoms will be upon their retirement plans. Seven in ten (71%) stated they have no plans to retire or that the pension freedoms have not affected their expected retirement date.

Aviva’s Working Lives report also questioned 500 private sector businesses of different sizes about a number of issues, including how prepared they are to deal with changing retirement patterns following the scrapping of the Default Retirement Age and the introduction of pension freedoms. The findings suggest the majority of businesses do not have plans in place, and that they are less prepared for staff retiring later (just 25% have plans for this) than they are for staff retiring earlier (29% have plans in place).

Even among large companies (250+ employees), less than half (42%) have plans in place should their employees retire later than expected, compared to 14% across both small and medium sized businesses. Likewise, only 48% of large businesses have plans to cope with staff starting to retire sooner than expected, compared to just 17% of medium sized businesses and only 15% of small businesses.

With many over-50s facing a later retirement than they hoped, the Working Lives report nevertheless found encouraging signs that levels of job satisfaction were highest among those aged over 65. A large majority (86%) of private sector workers in that age group said they enjoy their work, compared with just 57% of those aged 18-64. A similar proportion (85%) also said they get a sense of satisfaction from work, while 81% reported being valued by their employer – again, much higher than the younger age groups combined (57%). This backs up the suggestion that there are positive reasons for people wanting to stay on at work.

April market commentary

Wednesday, April 6th, 2016


Another month, another dire warning from the economic great and good. In March it was the International Monetary Fund’s turn to warn that the world faces ‘economic derailment.’

As always, the blame was laid firmly at the door of the Chinese economic slowdown, with IMF second-in-command, David Lipton, warning that steps needed taking to boost global demand. ‘We are clearly at a delicate juncture,’ he said, which may well be IMF-speak for something rather stronger.

Interestingly, world stock markets did not seem to be at a ‘delicate juncture’ in March, with all the markets on which we report moving upwards in the month, some quite significantly. One of the reasons for this was remarks by Janet Yellen, Chair of the US Federal Reserve, suggesting that the US will now ‘proceed cautiously’ with regard to any future interest rate rises.

In the US, the Presidential race is increasingly looking like Hillary Clinton vs. Donald Trump – although that won’t be to the liking of the Economist Intelligence Unit. In the middle of the month their Global Risk Assessment ranked a Trump presidency equal to Jihadi terrorism as a threat to global economic stability. The Intelligence Unit gave the prospect of ‘the Donald’ entering the White House a score of 12. China experiencing a ‘hard landing’ was the highest threat at 20: the UK leaving the EU rated only an 8.

…And March was, of course, the month when George Osborne presented his Budget in the UK. But by the end of the month his plans for deficit reduction and moving next door to succeed David Cameron had been very much overtaken by the continuing crisis surrounding the UK steel industry.


March got off to a good start in the UK. Nationwide said that house price growth was ‘steady’ in February, and McLaren Automotive announced plans to invest £1bn in 15 new models and employ 500 more staff. Car manufacturing was at a 10 year high and car sales for February reached a 12 year high.

There was the now customary claim and counter-claim regarding Britain’s possible exit from the EU, with Bank of England Governor, Mark Carney, describing it as the ‘biggest domestic risk.’

But in the first part of the month everything was leading to Chancellor George Osborne’s Budget on March 16th. His plans started to unravel even before the speech, when the much-heralded and widely-consulted-on plans for pensions tax reform were abandoned in the face of opposition from Conservative backbenchers.

The British Chambers of Commerce also contributed to a worrying backdrop, downgrading its forecasts for UK economic growth: the BCC is now expecting 2.2% growth this year, from a previous figure of 2.5%.

Nevertheless, the Chancellor still managed to deliver his customary confident performance, buoyed by figures released on the morning of the Budget showing that unemployment had fallen a further 28,000 between November and January and more people were in work than ever before.

‘Britain,’ the Chancellor declared, was ‘Set to growth faster than any other major economy in the world.’ However his forecast for growth this year was even lower than that of the BCC, at 2%. Growth would then rise to 2.2% in 2017 and then level out at 2.1% for the following three years.

These forecasts, the Chancellor was not slow to point out, were based on the UK remaining within the EU. Leaving, according to the Office for Budget Responsibility, ‘could usher in a prolonged period of uncertainty.’

So despite the world presenting what the Chancellor described as a ‘dangerous cocktail of risks’ everything appeared to be on course, with Osborne still committed to removing the Budget deficit in the lifetime of this parliament.

Sadly, everything then started to unravel remarkably quickly…

Iain Duncan Smith resigned and the Chancellor’s plans for cuts to disability benefits were abandoned even before they’d reached the Commons. Welfare u-turn leaves Chancellor with £4.4bn black hole screamed the headlines.

However, the news was to get significantly worse by the end of the month, as Tata decided to put its Port Talbot steel plant up for sale, potentially threatening anything up to 40,000 jobs (depending on which newspaper you read). As the month ended the Prime Minister was hosting a cabinet committee and desperately looking for a buyer: with the UK now a relative minnow in global steel production you suspect it will prove difficult.

There was one last twist of the knife in March. Figures released at the end of the month showed the UK’s current account deficit had ‘soared’ in the last quarter of 2015: the deficit in the three months to December was £32.7bn – equal to 7% of GDP in that quarter according to the Office for National Statistics.

What did the FTSE-100 index of leading shares make of all this excitement? Not much was the answer, although it did manage to gain 1% in the month, closing March at 6,175. The index is down 1% for the first three months of the year.


There was yet more woe for beleaguered carmaker, Volkswagen, in March as prosecutors in Europe decided to widen their investigations into the emissions scandal, whilst the head of the company’s US arm resigned.

In the wider European economy, unemployment across the whole Eurozone came down to 10.3%, but there are worries the European Central Bank’s stimulus package is starting to falter. Falling energy prices meant that the Eurozone stayed locked in deflation, with consumer prices down for the second consecutive month.

The ECB has cut interest rates to zero against the backdrop of the fragile global economy, and its stimulus package is now running at €80bn a month. It’s difficult to see what other action the Bank can take.

It was however, a better month for the major European stock markets. The German DAX index rose 5% in March to close at 9,966 whilst the French index was up 1% to 4,385. The two markets are respectively down 7% and 6% for the first three months of 2016.


We’ve commented above on Janet Yellen’s statement that the Federal Reserve will proceed cautiously with regard to interest rate rises, and this was in evidence in March with the decision to leave rates unchanged. The ‘Fed’ said that the labour market was expected to strengthen – the US created 242,000 jobs in February – but that it was still looking for inflation to reach its 2% target figure. We may not now see the four interest rate rises this year that were mooted in December.

There was good news when it was revealed that US economic growth for the final quarter of 2015 had been revised upwards from the initial estimate of 0.7%: this was increased to 1.4%, with the economy overall estimated to have grown at 2.4% for the whole of 2015.

Despite now reputedly sitting on a cash pile of $216bn Apple didn’t have things all its own way in March as it battled the FBI over the unlocking of the San Bernardino killer’s iPhone. In the event, the FBI managed to do it without Apple’s help in a move the company described as ‘dangerous’ and ‘chilling.’ You suspect that this story of law enforcement vs. the tech giants has only just begun.

There was nothing ‘dangerous’ or ‘chilling’ for the Dow Jones index in March, which rose 7% to end the month at 17,685. It’s up just 1% so far in 2016 – one of four of the major markets we cover to be in positive territory through the first quarter.

Far East

There were contrasting views on the Chinese economy at the start of the month. Credit ratings agency, Moody’s, cut the outlook for China from ‘stable’ to ‘negative.’ Unsurprisingly, China’s chief economic planner took an entirely different view. Predictions of an abrupt economic slowdown ‘were destined to come to nothing’ said Xu Shaoshi, the head of China’s state planning agency.

The economic growth target for 2016 has nevertheless been cut to a range of 6.5% to 7% – compared to the 6.9% at which the Chinese economy actually grew in 2015.

China certainly doesn’t appear to be lagging behind in the knowledge economy, with the BBC reporting that the country is opening the equivalent of ‘a university a week’ – something which is contributing to a gradual shift in the composition of the world’s graduate population, with the trend inevitably being away from Europe and the US and towards the Far East.

There was good – or at least less bad – news in Japan, with the economy shrinking less than previously thought in the final quarter of 2015. Analysts had been predicting a reduction of 1.5% – in the event, the figure was only 1.1%.

The economy also slowed in South Korea, growing by only 0.7% in the final quarter of last year, compared to 1.2% in the previous quarter. Despite this, the South Korean stock market enjoyed a good month, rising by 4% to end March at 1,996 – up 2% for the first three months of the year.

Other Far Eastern stock markets followed a similar pattern, with the Chinese market up by 12% in the month to 3,004 – although it is still down by 15% for the first quarter of 2016. Japan was up 5% to 16,759 (down 12% for the first quarter) and Hong Kong rose by 9% to 20,777 (down 5% for the first quarter).

Emerging Markets

The three major emerging economies on which we report – Russia, India and Brazil – completed the ‘full house’ for us in March, with all their stock markets moving upwards in the month. Having started the month at 1,840 the Russian index ended at 1,871 – up 2% in the month and up 6% for the first quarter of the year.

There was a rather more spectacular performance in India, where the market rose 10% in March to close at 25,342 – however, it remains down 3% on a year-to-date basis.

Pride of place, though, goes to Brazil – for so long the source of nothing but bad news. The stock market powered up 17% in March to 50,055 and is now up 15% for the year. This came despite Brazilian oil giant, Petrobras, posting a record loss of $10.2bn for the last quarter of 2015 – thanks, inevitably, to the plunging oil price.

And finally…

Competition for inclusion in ‘And finally’ has never been fiercer than it was in March. An early front runner was Google’s driverless car and its seemingly fatal attraction for other vehicles. Its far-too-close encounter with a bus was widely reported in the media.

No doubt encouraged by this, the DVLA announced that trials of ‘driverless lorries’ would take place on the M6 later this year. They’ll be choosing a ‘quiet stretch’ of the motorway in a move that will apparently save fuel – but presumably hit sales of Yorkie bars.

But pride of place for March went to the nation’s pets, and the news that pet insurance claims have hit a record. No fewer than 911,000 claims were processed in 2015, including a python that was treated for anorexia. Claims for dogs increased at almost double that of claims for cats, with ‘swallowed owner’s sock’ among those conditions showing an upward trend!

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