Pensions advice, please.

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ASC1951

Guru
Location
Yorkshire
I believe Kazakh mining stocks are actually quite a good long term equity investment...
Oh, alright then, although the biggest UK listed, Kazakhmys, has halved in five years. But dabbling in individual foreign companies, especially in volatile sectors, isn't sensible for the average investor, who won't have a large enough portfolio to balance the additional risk.

IMO the important point is that even on a small scale it is easy to reproduce what the average managed ISA or pension fund will achieve, and to do it more cheaply, which over the long term will give you a significantly better performance than the professionals. Yes, you can do a lot better (and worse) by zooming in on small cap miners etc , but once you start doing that with the average investment pot, you are taking too much risk. Inflation plus one or two percent, low risk, is all the focussed amateur should be expecting and it is much better than the average professional achieves after charges.
 

swee'pea99

Legendary Member
All the rules are changing. There's a general assumption that what goes down must come up - 'after all, it always has' - and maybe that's true....eventually. But Japan had a massive stock market boom accompanied by rampant real estate inflation, then ran into a brick wall. Since when the economy's been pretty much flatlining for getting on 40 years. And that's *Japan*, where they can actually make stuff. Stuff that works.
 

swee'pea99

Legendary Member
Oh, alright then, although the biggest UK listed, Kazakhmys, has halved in five years. But dabbling in individual foreign companies, especially in volatile sectors, isn't sensible for the average investor, who won't have a large enough portfolio to balance the additional risk.

IMO the important point is that even on a small scale it is easy to reproduce what the average managed ISA or pension fund will achieve, and to do it more cheaply, which over the long term will give you a significantly better performance than the professionals. Yes, you can do a lot better (and worse) by zooming in on small cap miners etc , but once you start doing that with the average investment pot, you are taking too much risk. Inflation plus one or two percent, low risk, is all the focussed amateur should be expecting and it is much better than the average professional achieves after charges.
I agree with all that (and everything you said earlier, for that matter). I was just having a little joke.
 

srw

It's a bit more complicated than that...
Mate-it's my job, bored or not :laugh:
OK, then. With apologies to everyone else for the thread redirect - and I'll start from scratch so there is at least something in it for non-geeks.

Solvency 2 is the new European way of regulating insurance companies. It was supposed to come in in 2010, then 2012, then 2014. My latest guess is 2017 at the very earliest, but odds on "never" are shortening. It's progressed from a technical discussion about the management and supervision of insurance to a very political discussion about who makes those decisions.

A key principle is that liabilities (i.e. what the insurance companies hold to pay out) are valued using the market-equivalent concept I've already damned in this thread. And that insurance companies hold capital to protect policyholders against an extreme shock scenario.

Using the purist approach, anything (like an annuity) reliant on interest rates becomes horribly expensive - that's what we've seen over the last few years with the collapse of yields on fixed interest investments.

Anything (like an annuity with some measure of protection built in) with some form of long-term guarantee becomes punitively expensive. An enormous bunfight is developing between the purist academic regulators who had the initial concept and the insurance companies who have to design and sell products. Various alternative methods have been proposed to make the implementation more palatable, but none of them appeal to the academic purists, and they all look a bit like special pleading.

It's made more complex because the people who will make the decisions aren't regulators or insurance companies but European and national politicians and civil servants. And most of them don't really understand the issues because they've never sold insurance, and the national ones at least are driven by the interests of their nations and national industries.

The latest is a rather plaintive letter from a regulator more or less saying "guys, can't we at least agree that we need to agree something?"

If anyone really wants to discuss insurance company supervision - a topic on which I have strong opinions - I suggest we do it across the road in P&Lite. I should say that although Solvency 2 is one of my specialist subjects I don't deal with life insurance. And, in case any of my bosses or regulators are reading this, this is a personal opinion, not an opinion of my employer.
 

asterix

Comrade Member
Location
Limoges or York
So Solvency 2 is a kind of Basel 3? Except that the banks are allowed to assess their own risk exposure whereas the insurance companies have to stick to rules set outwith the industry?


In fairness to L & G, their trackers are amongst the cheapest on the market, so they will have been making much less on your investment than most other providers; and far less than UK managed funds or pension plans, which generally produce the same performance at three times the price.
..

Even more fairness to L&G, they have responded to my letter with remarkable speed and efficiency.
 

srw

It's a bit more complicated than that...
So Solvency 2 is a kind of Basel 3? Except that the banks are allowed to assess their own risk exposure whereas the insurance companies have to stick to rules set outwith the indu

There's a choice - either use a standard formula or use your own model. Either way there are scary amounts of judgement used.
 

Bromptonaut

Rohan Man
Location
Bugbrooke UK
[QUOTE 2076496, member: 9609"]I think there is possibilities if you can prove ill health - otherwise (99% certain) all pensions have this 55 year old rule (police & fire etc are the only ones exempt) Presumably they don't want people dipping into their retirement funds when ever they feel like it.[/quote]

IIRC employer provided 'contractual' pensions, at least the old fashioned final salary type, can be paid before 55 though likely with an actuarial reduction to reflect life expectancy. Civil Servants made redundant after 50 can opt for pension instead of a lump sum using the lump sum to buy out the actuarial reduction. The limit relates to invested personal pensions of the type over hyped in the eighties and later and is meant to be an anti avoidance measure against the fund being used as tax free savings.
 
Thanks for the reassurance. I have a tracker ISA taken out on advice 12 years ago. The target illustration - worst case - suggested it would be worth £13,500 today. It's actually estimated at c. £3,600, a value which it has rarely exceeded. I'm sure someone has been making money out of my investment, but it's not me unfortunately. When I phoned them ( Legal and General) to cash in, they went off, to get my details from file, they said, whilst playing me some not very nice music, and never came back. A letter has now been sent.

A few years back when I believed more of what banks and building societies told me, as part of a small investment Mrs Beanz and I put £1000 in a 5-year bond that was supposed to do well (aren't they all?). When it matured we called in and the somewhat embarrassed guy serving us had to apologise as there was a delay while the cheque was printed. The system was struggling apparently to add the 1p interest we were due. Our 'investment' had earned 0.2p per year and in real terms was worth far less than £1000 due to inflation. We'd had no communication from them about the bond over the 5 year period, how well it was faring or otherwise.

Ok, bad economic times, and 'the value of investments can go down as well as up' - but as you say, if it made a profit for someone, it wasn't me. Lesson learned.
 
I'd like to resurrect an old thread if I may.

My problem is that I'm hearing rumours that my employer is considering changing the terms of their defined benefit scheme such that my plan to retire at 55, in 3.5 years time, is suddenly no longer viable and I'm going to have to keep working to at least 59. So that gives me 8.5 years to accumulate some further savings.
So my question is what savings options should I be looking at that would give a worthwhile return over such a short period ?
The only option I know anything about currently is to buy AVCs from my employer. The returns look pretty woeful but they are taken from salary before tax so if I was to buy say £500 of them a month that would be a significant reduction in my tax bill.
Further thoughts welcome please.
 
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