Obama targets pension advisers’ conflicts of interests
In a nut shell: the evidence establishes that, in America, advisers are being paid to promote uncompetitive products. In 2010 a proposal to stop this practice was blocked by the Republicans, for fear that too many firms, whose business model relied on the payments, would fail; a clear case of protecting vested interests.
It has of course happened in the UK in the past but the UK Regulator, the Financial Conduct Authority (FCA) already has the powers to stop it and has been doing so, robustly.
What does it mean for investors here in the UK?
That its time to have your old pension contract looked at.
If they are old and not providing a decent return, due to lack of investment quality or high charges, get them changed. Don’t just sit on them, say Pensions are a waste of time and ignore the opportunity to move forward.
Investments that meet your personal values
Ethical or Socially Responsible investing is no longer a limited market. There is choice, a range of objectives and performance. You can make money and make a difference. If your only investment is your Pension, then make certain it is sustainable and meets your values.
Do not assume that making appropriate choices about your, relatively, small pension pot cannot possibly have an impact on the world. If thousands of smaller investors do the same the impact becomes awesome.
One current geopolitical issue, as an example, is Europe’s dependence on Russian Oil. We may judge Russian a bully but it’s a bully whose resources (oil and gas) that much of Europe relies on. You may want to make a difference in investing in alternative energy, as part of your strategy.
See analysis below “Greece” for the view of one leading investment house.
Do you employ someone? Even if you initial answer to that is no, think again. Is your wife, husband or other family member paid to provide services , do you have contractors working for you?
If there is any possibility you have an obligation under automatic enrolment then it’s in your interest to find out:
visit www.thepensionregulator.gov.uk/employers/what-is-automatic-enrolment.aspx is an easy way to find out and avoid any none compliance fines.
- Automatic enrolment affects all employers with staff in the UK.
- You must enrol certain staff into a pension scheme.
- You must start doing this from your staging date, though there is an option to postpone automatic enrolment for up to three months.
- You must write to all your staff to tell them how they’ve been affected.
Who do I need to put into a pension scheme?
You must automatically enrol all staff who are:
- aged 22 to state pension age
- working in the UK
- earning over £10,000 a year.
Some staff who don’t meet the criteria above are able to opt in to the pension scheme you’re using for automatic enrolment. You must put them in if they ask.
You’ll have to pay a minimum employer contribution for all staff you put into this scheme.
Certain other staff can ask to join a pension scheme. You must put these staff in a scheme, but the rules are different and there’s no requirement for you to pay an employer contribution.
It’s the age and earnings of a member of staff that determines what ‘type’ of worker they are and therefore what duties you’ll have for them.
DWP State Pension Statement Service
Previously only available once you reach 60, now available from age 55.
The following is just an opinion, not mine, of the geopolitical situation surrounding Greece.
The much vaunted Greek deal is nothing but a bit of sticking plaster that papers over the cracks for a few months, but the problem is pretty much insurmountable in that Greece wants to reach a deal on it’s debts that it can afford and also stay in the Euro and this cannot be achieved without other EU countries writing off a huge amount of what is owed.
Greece (population 11 million) owes 300 billion Euros; 50BN to Germany & 40BN to France (this is now inter-government debt and unlike 3 years ago there is no domino-style Lehman threat to the banking system). In addition, there are other debts to the ECB etc.
The Greek idea of a deal is that its rich German uncle takes a say 90% haircut (similar to precedents in Argentina) so the debt becomes 5BN not 50BN – 5BN is a level that Greece can afford and 45BN is a figure that Germany could afford (Germany could issue 5 year Bunds on negative nominal yields & could borrow 45BN in about ten minutes). France could also borrow 35BN but that is a bit more tricky .
So what is the problem? Greece could then stay in The Euro, Greek crisis is solved and the great Euro dream lives on. Well it is not as simple as that for the following reasons – namely:
• Germany is not prepared to take such a hit
• The Greek offer is quite simple – take 5BN ( or an affordable figure ) or take nothing and we default – no different to any creditor /debtor negotiations between a bankrupt debtor and his creditors on either a personal level (IVA) or Corporate Entity
• The biggest problem for Germany is that this would set a precedent; if Greece is allowed to stay in the Euro and default on say 90% of its debts then Italy may want a similar deal
• Germany could afford (however reluctantly) to bail out Greece but no way could it afford a similar deal with Italy (and any others that decide to join the “can’t pay – won’t pay” brigade)
• Italy’s debt to GDP ratio is 135% and growing exponentially as the old debt compounds up and the economy does not grow at all (it may not for another decade).The figure for France is 105% and growing likewise; this French number jumps up if it has to take a hit on its loans to Greece.
• If Germany does not agree a huge haircut – Greece has no option but to default – it simply cannot afford to pay back this money. Greek option 2 kicks in and It then goes back to the Drachma and gets on with life debt free – not their 1st choice as they would prefer to stay in the Euro but a million % better than taking responsibility for its 300BN debt. Also Greece would still be in the EU, just not in the Eurozone like the UK.
• Germany’s thinks its trump card is that if Greece defaults Greece loses access to foreign funding as it would be become a debt pariah and unable to fund itself. – WRONG – Russia has offered Greece money if they have a problem with cash flow – in return for:
a)A NATO veto on attacks on Russia; Under NATO rules all NATO members including Greece would have sign off to attack Russia – Greece therefore has a veto on US & EU attacks on Russia using NATO – something very useful given events in Ukraine
b) The Russian Gas pipeline currently being built through Turkey has to enter Europe – Greece seems the obvious choice”
My blogs are simply personal opinions or information.
Nothing is intended to be used as advice and no-one should rely upon anything on this page for personal decision making; you shoulod always consult a Professional Independent Financial Adviser