New podcast on caring for someone with dementia - by specialist carer Juliah Ratladi

 https://open.spotify.com/episode/30si4eqmyebYuPEV1HyHkh?si=mm0Q3bUuSfS6M3mSxnY6Pg

The link above will take you to Spotify where you can hear one of two episodes just released.

Autumn Statement 2023 - 10 Pension Aspects to note

 

The Chancellor made several announcements about UK pensions in the Autumn Statement. Some of these build on his Mansion House speech that focused on delivering the best outcomes for savers through consolidation of pension scheme assets and productive investment in the UK including more investment in private and illiquid assets.

 

Key announcements

1.    A pot is for life - the Chancellor announced that employees will be given the "legal right to require a new employer to pay pension contributions into their existing pension". An initiative designed to drive value to individual savers and to end the problem of individuals building up multiple small pension pots over their working life. 

Tiley comment: Neil Woodford and patient capital spring to mind! A star manager able to secure several billions in investment from individuals as well as as occupational schemes. How did that end? But if we have a few excellent Master Trusts at low cost that really add value and don't go off on a weird investment tangent, then it could work as it seems to have done in Australia. Improving on the rag bag of old style high cost personal pensions and neglected paid-up company schemes is a low bar to set.

There will be a call for evidence so no action anytime soon! 

2. Foundations laid for a defined benefit (DB) ‘run-on’ model - this winter the DWP will launch a consultation on a regime that will allow DB pension schemes to ‘run-on’ and potentially repay surplus to the sponsor. The consultation will also cover an option for these schemes to pay a higher Pension Protection Fund (PPF) levy in return for 100% coverage.

Tiley Comment: This could mean a DB pension scheme could continue with a 100% guarantee provided by the PPF instead of buying-out with an insurer and distribute surplus above a threshold to the sponsor taxed at 25% instead of the current 35%. This could be cheaper for larger schemes (or smaller schemes choosing to amalgamate with Superfunds such as Clara Pensions) due to the regulatory abritrage of not having a buffer of regulatory capital as required by insurers as well as their need to cover their administration costs years into the future and their tendancy to have a low risk bond dominated investment strategy.

3. Consolidation of small DB schemes - the DWP will launch a consultation on an option for DB schemes that are not well served by the current insurance market to use a vehicle run by the PPF as a consolidator. This option may be attractive to smaller schemes that find it difficult to obtain competitive buy-out quotations or where insurance is not affordable. Subject to the details being confirmed, this may also be a new option to reduce running costs for scheme sponsors and trustees as well as enhancing member outcomes and services. A potential game changer for the circa 2,000 DB schemes with assets of less than £10m each.

Tiley Comment: this would be useful for trustees and sponsors running small schemes where the governance budget is insufficient to manage them effectively at reasonable cost. The devil will be in the detail and managing change can be expensive for very small schemes. 

What else on pensions?

 4. A Growth Fund will be established by the British Business Bank to help facilitate investment by UK pension funds into high-growth UK start-ups. Eight pension providers and fund managers (Aviva, L&G, M&G, Smart Pension, Aegon, Phoenix, AON and USS) have voiced their support for the fund as a potentially valuable addition to the market.

The Chancellor also reconfirmed £250m in Government support to establish two further investment vehicles that can be used by pension funds to invest into UK science and technology companies. The Government expects this will ultimately lead to over £1bn of total private capital, including substantial amounts from defined contribution pension schemes, going to support innovative UK consolidation.

5. Abolition of the Lifetime Allowance (“LTA”) - the government will legislate in the Autumn Finance Bill 2023 to remove the LTA, which will take effect from 6 April 2024. The measures will clarify the taxation of lump sums and lump sum death benefits, and the application of protections, as well as the tax treatment for overseas pensions, transitional arrangements and reporting requirements.

6. A trustee register - the Government confirmed its support for the Pensions Regulator’s plans to implement a register of trustees to aid engagement with trustees and to update the trustee toolkit to include further information on productive finance.

7. Local Government Pension Scheme - guidance to these schemes will be revised to require them to implement a 10% allocation ambition to private equity investments and a March 2025 deadline to consolidate into asset pools exceeding £50 billion.

8. Small pots - the Government will also introduce the multiple default consolidator model to enable a small number of authorised schemes to act as a consolidator for eligible pension pots under £1,000.

9. Putting performance first - the Government will engage with the pensions industry on proposals to ensure that all aspects of the pensions market are playing their part to support best outcomes for savers including how to shift employers away from prioritising low fees ahead of long-term pension investment performance when they are selecting a pension scheme for their employees. 

10. State pensions - the commitment under the ‘triple lock’ will be honoured meaning the largest ever cash increase to the State Pension of 8.5% to £221.20 a week from April 2024.

St James Place top dog! Unfortunately it's the Best Invest Dog Funds table!

 

Very disappointing as the charges are high for many of these!

	Fund	IA Sector	Size (£bn)	Value of £100 invested after 3 years	3-year under     performance (%)
1	St. James’s Place Global Quality	Global	11.47	114	-24
2	St. James’s Place Global Growth	Global	7.49	109	-28
3	St. James’s Place International Equity	Global	7.09	101	-36
4	St. James’s Place Growth European Progress	Europe Excluding UK	1.85	113	-17
5	Scottish Widows UK Growth	UK All Companies	1.82	120	-14
6	Artemis US Select	North America	1.53	125	-17
7	Columbia Threadneedle Responsible Global Equity	Global	1.41	120	-17
8	abrdn UK Smaller Companies	UK Smaller Companies	1.11	90	-18
9	Troy Asset Management Trojan Income	UK All Companies	1.00	105	-29
10	St. James’s Global Emerging Market	Global Emerging Markets	0.87	85	-20

 Source: Spot the Dog, August 2023

Which fund groups earned the most dog tags?    

St. James’s Place not only topped the Great Danes list, but it was also the worst performing fund manager, with its paw prints on six measly mutts. It currently has £29.3bn across these six funds, that is 63% of the total dog fund assets in this survey. To put this in perspective, the next highest fund group Artemis holds £2.66bn dog funds, which accounts for 5.8% of the overall assets on the list. 

While three of six St. James’s Place funds are in the Global sector – Global Quality, Global Growth and International Equity – its poor performing Growth European Progress and Continental European funds appear in the European sector while it also features in the Emerging Markets sector with its Global Emerging Markets funds. 

Two things of note here is that St. James’s Place outsources management of its funds by appointing external fund managers as investment advisers, with the ongoing costs on its two largest global funds coming in at 1.88%. However, the group shifted the positioning on its three global funds in July last year as it looks to improve performance, though the switch has not had an effect yet.                                                                                                                                                      

Overall bad dogs                                                                                                                                                                                                                                                                                                       underperformance %

	Fund	IA Sector	Size (£bn)	Value of £100 invested after 3-years
1	Baillie Gifford Global Discovery	Global	0.78	61	-70
2	SVS Aubrey Global Conviction	Global	0.04	74	-64
3	Premier Miton US Smaller Companies	North American Smaller Companies	0.06	95	-47
4	AXA ACT People & Planet Equity	Global	0.01	92	-45
5	JP Morgan US Small Cap Growth	North American Smaller Companies	0.20	100	-42
6	Unicorn Outstanding British Companies	UK All Companies	0.06	97	-36
7	St. James’s Place International Equity	Global	7.09	101	-36
8	EF Rosevine Capital Global Equity	Global	0.01	103	-35
9	AXA Framlington UK Sustainable Equity	UK All Companies	0.07	103	-30
10	Troy Asset Management Trojan Income	UK All Companies	1.00	105	-29

Source: Spot the Dog, August 2023