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Sunday, 16 April 2017

Pensions Manager re-launches business site!

Click here to visit INTEGRITY PENSIONS

Here you can view my affordable business services to employers and trustee boards. I also help explain personal finance, pensions and investments to individuals and occasionally represent them in complaints to financial services companies and even the relevant Ombudsman.


I am currently assisting a FTSE250 leading engineering and project manager specialist, but am always interested in keeping in touch with anyone that might need short or medium term assistance at some point in the future.

Saturday, 28 May 2016

Exit Penalties to be capped - at last!

Pension early exit fees are to be capped for anyone over age 55, and about time!

Even David Brent is apathetic over pensions but when he is 55 he could benefit!!!

The Government announced in the last few days this great news for pension investors stuck in old style rip-off pensions typically sold in the bad old days - the 80s and 90s, but right up until 2004 in many cases.
Government figures show more than 300,000 people could benefit from this hard fought victory by campaigners including Which?, Henry Tapper, Martin & Paul Lewis (not related) and others. Possibly even this blog might of helped!
Steve Bee, the self-styled Pensions Guru did not help quite so much, and has campaigned more on the side of the IFAs and insurers who benefitted from high charges and overriding commissions, residuals, etc.
It has been proposed the cap will be 1% of fund values on existing pensions and this should take effect from end of March 2017. 
Policies set up after then will not be allowed to charge any early exit fees.
This cap will cover personal pensions and it is proposed a similar cap will apply to occupational pensions too, although most occupational pensions are set up more carefully with advisers, but smaller pension schemes (or most likely Group Personal Pension) set up by financial advisers may have exit penalties.
The final rules are expected later this year.

Saturday, 7 June 2014

Latest Real Return (above inflation) for shares since 1950

The annual Barclays Equity and Gilt study into historical rates of return once again underlines the value of the dividend in a long term investment strategy.

One of the more familiar strategies designed to bolster long term growth of equity portfolios is to invest in companies that offer a higher, but sustainable, dividend yield, preferably allied to a growing dividend pay-out ratio. 

These attributes, successfully combined with consistent corporate earnings growth, should allow investors to achieve total returns above the rate of inflation, even if market prices for their holdings have flat-lined. 

Research from Barclays shows that the average real rate of return on equities since 1950 has been 6.18% annually – of which 4.48% (72.5% of returns) is linked to the reinvestment of dividend. 

Long term inflation and interest:

So why do pension funds gravitate towards bonds?

The answer is regulation, accounting standards and short termism. Most commercial enterprises cannot afford the short term market price volatility associated with equities, except in a restricted sub portfolio, often referred to the 'growth portfolio'. Often you will see other asset classes in the growth portfolio to utilise diversification benefits. The 'matching' or income portfolio will consist of bonds providing certainty of income to meet cash flows expected.

With bond yields so low in recent years it has become increasingly obvious that a diversified portfolio of high yielding blue chip companies is now a more attractive option to many private investors with a desire to obtain an increasing income from their portfolios.

Warren Buffet often quotes the yield on his original Coca Cola stocks as 55%! This being the current dividend as a percentage of the original purchase price. Of course a bond purchased at the same time would have seen the yield remain the same at around 5% and the original capital would have been massively eroded by inflation.