Welcome to this section of the website. We aim to include topical issues, personal commentary and observations. Some of our comments may be controversial and are intended to stimulate the grey cells.
Retirement Age Changes
It looks as though the minimum retirement age of 55 will be protected for those people whose scheme has written this into the rules. While the minimum age of taking benefits is being raised from 55 to 57 from April 2028 (unless the person had a special occupation), those people who are either members of a scheme or join a scheme before 5th April 2023, can have a ‘protected’ age of 55. This amendment to the rules does not appear to have an effect on members of the Armed Forces, Police or Firefighters as they are automatically protected even in the absence of updated scheme rules. This must raise an increased complexity to retirement planning.
Cryptocurrency
Governments have no money, only what they borrow or collect in taxes. Money belongs to the people of a country. It has long been recognised as a medium of exchange and a store of value. The relationship between and underpinning asset, such as gold, has long gone, but there is still a tacit understanding that it has value based on faith in the system. It is somewhat concerning, therefore, to hear that the Chancellor is thinking about issuing a crypto-currency. It has been stated that such an innovation would allow a Chancellor or Government to provide ‘helicopter funds’ to citizens by merely adding digital credits to a citizen’s bank account. Sounds good, but they could equally take it away for a host of reasons. It may be that this is the start of restricting freedom by taking ownership of our money.
Fossil Fuels
The World’s climate is changing and whether this is down to human activity or as a result of natural cycles, I am not qualified to say. We will all have our own views but I think the jury has already decided that fossil fuels are Public Enemy No. 1. Now, while many people may think that we can wean ourselves off fossil fuels at some time in the future (ergo, it will not affect me), a report has just been published by the think tank Carbon Tracker (the full report is here Why the end for oil & gas may be closer than you think (trustnet.com)). It suggests that the end of the use of fossil fuels will not be gradual but sudden and it quotes similar situations where there was a ‘cliff edge’ change, such as the telegraph. The question is have we reached the tipping point? If so, what effect will that have on shares? We can all think of the primary users of fossil fuel, such as airlines, but what about the secondary users? When you consider just how much we depend on fossil fuels, it may time to re-asses shares portfolios.
Digitalisation of Currency
As you may know Her Majesty’s Customs & Excise (HMRC) has moved VAT to digital submissions and there is every belief that income tax will go the same way. This is worrying, as although it is undoubtedly more efficient for HMRC, our freedom is slowly being removed. Our money belongs to us and just as a frog will not realise they are being boiled alive, there is a fear things are happening which we are accepting without question.
The Challenge over the Triple Lock
Currently, the State Pension is designed to increase by the higher of Average Weekly Earnings, CPI and 2.5%. This was promised to be maintained at the last election by the Government. However, it is now under threat as a result of the eye watering debt that the UK now faces. This does raise a question about the long term viability of the State Pension in any case. We are starting to see it being classed as a benefit when it is far from that. We pay for it through our National Insurance but policy makers must be looking at ways of saving money. Will State Pension following the Triple Lock into history?
Reduction in National Insurance
The Chancellor announced in the Budget that he was reducing national insurance contributions at the main rate by 2%, with an aim of abolishing them completely in the future. Readers will be aware that national insurance was originally designed to pay for benefits such as state pension. So, if they are abolished, where will the money come from to pay future benefits? Will it mean an increase in general income tax to offset the loss of national insurance? If so, future pensioners may be paying national insurance by way of income tax.
Reluctance of People to take financial advice
A recent survey by Royal London has identified some key reasons why people are hesitant about seeking financial advice. For those not currently receiving advice, 47% believed advice was too expensive. 29% would not trust advisers and 35% looked after their own money. It appears there is still a long way to go in providing prospective clients with information which improves knowledge and understanding of the financial adviser’s worth