mike No Comments

Retirement Living Standards

The Pension and Lifetime Savings Association

Retirement Living Standards


I’ve just been reading an industry article in today’s ‘New Model Adviser’.  This is a magazine for advisers by Citywire.  The article was headlined ‘UK adults in dark about retirement reality’.

As we work for most of our clients in both pensions and planning for retirement generally, I found the article interesting and thought I’d share some of the key data with you.  The Pensions and Lifetime Savings Association (PLSA) looked at retirement income needs.

The PLSA’s retirement income recommendations are as follows:


Lifestyle needs Annual income amount
Minimal for an individual £10,000.00
Moderate for an individual £20,000.00
Comfortable for an individual £30,000.00
Minimal for a couple £15,000.00
Comfortable for a couple £45,000.00


The article didn’t state if these are net or gross figures but looking at the figures, I would assume they are net.  Please note that these are figures for today and they would need inflation linking to any future retirement dates.

In terms of what people want from their retirement years these are the findings from another PLSA survey:

Retirement objectives Percentage of respondents
Not to have to worry about money 38%
To maintain my standard of living 34%
To be debt free 30%
To have a regular income 29%
To be mortgage free 17%


Respondents were allowed to select more than one answer.


Whilst the above is useful background information for ‘averages’ and ‘normal’ views in the UK based on this sample surveyed, I don’t think they are a useful guide for most of us.




Surely what you want depends on how you have lived, worked and earned throughout your working life?  If you have a great standard of living you wouldn’t want a minimal or even a moderate retirement lifestyle.

As this is the case you should look at your lifestyle now and decide what you would like in retirement.  The longer you have to plan and position yourself (or yourselves) tax efficiently for retirement the better.

It may just take a bit more planning now or you might need to look at your priorities and direct some more of your earned income/s into assets for your retirement.  Once you stop earning income most of us will live on our accrued assets (pension funds, cash, Stocks & Shares ISAs & other investments) for the rest of our lives.  You don’t want a shortfall!


Steve Speed


PLSA data from New Model Adviser 04/11/2019



mike No Comments

Behavioural Bias- How Are You Affecting Your Investments?

Behavioural Bias- How Are You Affecting Your Investments?


As investors, we’re all human. All individuals with our own characteristics, attitudes, beliefs and behavioural patterns. These different aspects affect our actions in day to day life in many ways to varying degrees. So why would we disregard ourselves as individuals when it comes to our behaviour in the investment market? The short answer is, we shouldn’t.

This belief has been reiterated lately in a report from Schroeders titled ‘The Bias of UK Investors That Could Lead to Lower Returns’. Over 23,000 investors have taken the Schroeders investIQ test with the aim of understanding these behavioural biases and how they affect investment actions and returns.

It was found that UK investors were most likely to suffer from what is known as ‘Ambiguity Aversion’. However, just because this is the most frequently occurring of the behavioural biases in the UK, doesn’t mean that we as investors should focus solely on controlling one behavioural bias. Each investor is human, and as humans we each have a unique combination of behavioural biases which make us individuals.

In a time when people are free to express themselves as individuals more than ever, psychology and a tailored appreciation of a person’s personality have become second nature. It is appropriate that this attitude is transferred into the world of investment. Below are the biases as listed by Schroeder:

Herd Bias: As humans we can be influenced by the thoughts and behaviours of those around us (The Herd). We tend to assume that the herd collectively knows something we don’t. As a result, we irrationally follow others, ignoring the information we have and what’s right for us as individuals.

Over Confidence: Overconfidence is the tendency to believe in yourself without considering factors beyond your control. This may lead you to overestimate your ability to make rational investment decisions. As a result, you might think investment markets cannot surprise you, you might take on more risk than necessary, and move investments around too frequently.

Ambiguity Aversion: Investors with ambiguity aversion tend to choose investments that will provide them with more of a known possible outcome over ones that are more uncertain. This could lead to investors taking less risk, which might lead to lower potential returns. However, taking on more risk is subject to greater losses.

Loss Aversion: Investors with loss aversion bias tend to feel losses more sharply than the equivalent gains. This can impact our ability to make rational decisions and we end up trying to avoid losses at all costs rather than logically considering the alternatives.

Projection: This is the tendency to believe that your current views, feelings and needs will stay the same over time although statistically this is highly unlikely.



Over Optimism: This is the tendency to overestimate the likelihood of success without focussing on any potential pitfalls. In investment terms, you may be too focussed on the positive potential outcomes and not realistically consider the possibility of incurring losses. As a result, you may take on more risk than you can sustain.

Anxiety: This is when you tend to be easily influenced by the short-term ups and downs of the market and feel compelled to take action. This may lead to irrational investment decisions that undermine your long-term financial objectives.

Regret Aversion: This is the fear that your decision will turn out to be wrong in hindsight. Your anticipation of feeling regret rules the choices you make and even when you’ve made a choice, you can still feel uncomfortable and you continue to dwell on your decision. The worry of not getting it right can also lead you to avoid taking any action altogether. In you desire to avoid regret, you may be tempted to follow the crowd, even if what others are doing isn’t appropriate to your circumstances. You believe that if things go wrong, you will have less regret if others have done the same.

Impulsivity: This is the tendency to focus on the here and now rather than the future and favour immediate rewards rather than future ones. For example, given the choice between receiving £100 today, or £120 in two weeks’ time, you would choose to have the money today. As a result, you can overvalue immediate rewards to the detriment of your long-term goals. In financial terms, this means you could find it difficult to change your short-term spending habits, in order to save sufficiently for the future.

Awareness of Behavioural Bias can now more than ever help us understand our clients as people. We can better manage and coach our clients to balance and control each of these behaviours and not allow them to affect investment performance. The overall goal is that investors feel fully satisfied that they have acted without unnecessary psychological hinderance and have maximised investment performance based on logical financial objectives.


mike No Comments

Woodford Equity Income Fund Wind-up Blog

Woodford Equity Income Fund Wind-up Blog


You may have seen in the news yesterday (15/10/2019), Neil Woodford’s flagship fund, namely the Woodford Equity Income fund is to be wound up with effect from 17/01/2020.


Neil Woodford has been a star of the investment world for years, a contrarian fund manager. When every fund manager bought into Tech stocks in the late 1990’s, Woodford didn’t. His fund was at the bottom of the pile – 4th quartile. Then the tech bubble burst and Woodford was the best UK Equity Income fund manager – his fund jumped to the top of the league.

It was announced in June 2019 that due to large requests from investors to redeem their capital and underlying liquidity issues within the fund, a decision was made to suspend the fund for future trades. The underlying aim of this action was to allow Mr Woodford some time to generate the capital required in order to meet investors’ demands for their capital back. This was to be achieved by repositioning the underlying investment holdings of the fund into more liquid assets/shares.

It was thought that the fund could be suspended until December 2019 or January 2020. However, following intervention from the fund’s custodian, Link Fund Solutions (who runs the fund on Mr Woodford’s behalf), they have now decided to wind up the fund completely.

What does this mean?

Essentially, the fund custodian (Link Fund Solutions) did not feel the action undertaken by Mr Woodford during the interim period (the fund suspension) was sufficient for investors interests and they have stepped-in, in an attempt to help investors, get their capital back quickly. Subsequently, Neil Woodford has now been removed as investment manager of the fund.

Link Fund Solutions Approach

Link Fund Solutions released a statement, which said: “After careful consideration, the decision has now been taken not to reopen the fund and instead to wind it up as soon as practicable. This is with a view to returning cash to investors at the earliest opportunity”.


The Regulator (the Financial Conduct Authority (FCA) View

Following the announcement to wind the fund up, the FCA has welcomed ‘the removal of uncertainty’ that Link’s decision has provided, adding, ‘We recognise that investors have been concerned about the state of their investment since the beginning of June’.

‘Winding up the fund will allow the return of money to investors through a number of distributions, which are likely to begin in January 2020. This means investors should receive some of their money back sooner than had the fund remained suspended’.

What is Mr Woodford’s opinion?

Mr Woodford categorically believes that Link Fund Solutions have made a mistake in their decision to suspend the fund, stating ‘This was Link’s decision and one I cannot accept, nor believe is in the best interest of LF Woodford Equity Income fund investors’.


What happens now?

Link have confirmed that during the interim period, the fund will continue with its repositioning, but with the aim of preparing the portfolio to be wound-up, after taking into account any liabilities the fund owes. The proceeds of an orderly realisation of the Fund’s assets will be returned to investors in a series of capital distributions.

The portfolio will be split into two portfolios:

Portfolio A: Which comprises the listed stocks and its winding up period will be overseen by    BlackRock Advisers (UK) Ltd; and

Portfolio B: Which comprises the unlisted assets and be overseen by PJT Partners (UK) Ltd during the winding up process

The assets under this portfolio are less liquid and will be sold over time in an orderly manner in order to attempt to minimise loss of value. It is fair to say that this portion of the portfolio will take longer to sell given the nature of the underlying investments which could ultimately delay the process of you regaining your capital.

Link have stated that they expect the first capital distribution to be made to investors by the end of January 2020, but this will depend on how quickly the value of the Fund’s assets can be realised.

Was this the right decision?

It’s a fine line, with good arguments for both camps, but, ultimately, I believe Link’s decision to wind up the fund to be a good logical outcome. My rationale behind this is as follows:

  • As the FCA have stated, it removes the ongoing uncertainty surrounding the fund i.e. when will the fund be reopened? And, could the fund be suspended again if there were mass outflows, if so, how long would that suspension last?
  • The repositioning of the underlying assets that make up the fund go against Woodford’s normal investment philosophy (a contrarian investment approach)
    • With the fund moving to larger cap (FTSE 100) stocks, it is likely to be more appropriate to invest in a fund that solely focuses on this market sector and has a good track record in this area

A major factor that will ultimately prove if this was the correct decision will be to see how the sale of assets under Portfolio B are handled. It is important that these assets are not just sold at a lower value to raise capital, as this would impact on the amount of capital investors get back. It is important that PJT Partners (UK) Ltd take their time in negotiations in order to attempt to get the true worth of the underlying assets held within the portfolio, which they have indicated they will do.



Carl Mitchell


mike No Comments

Markets – think long term

Markets – think long term


We have a lot of uncertainty about at the moment with global events, tensions and politics.  Early news on Radio 4 this morning said that oil price initially was up 20% and then fell back to only being 10% up on the back of the attack on the Saudi oil plants this weekend.

In addition, we have a lot of media coverage on Brexit and we are waiting for Trump/the USA to do a deal with China and move global trade forward.

From my point of view, I’ve been to a range of seminars and webinars over the last couple of weeks to get current views on the markets.  I’ve listened to input from the following:

  • Orbis Investments
  • Janus Henderson
  • Columbia Threadneedle
  • Tatton IM
  • Aberdeen Standard Capital
  • BNY Mellon
  • Investec
  • Blackfinch Investments
  • Prudential
  • J P Morgan

The key messages are still as follows:

  1. Over the long term the majority of your returns come from equities
  2. Be a long-term investor
  3. Remain in the market
  4. Don’t try and time the markets

This is basic investment input but valid now when people look at what is happening.  I would also add the following:

  • You need to be invested in line with your objectives and risk profile
  • Diversification helps you reduce volatility generally
  • Keep calm and carry on!

Sometimes you need to ignore the noise and just maintain your position.


Steve Speed


mike No Comments

Prudential ‘Smoothed Funds’ and general investment update

Prudential ‘Smoothed Funds’ and general investment update


Smoothed Funds

Prudential announced reductions in their Expected Growth Rates (EGR) across their range of ‘smoothed funds’ last week, 27/08/2019.

On their ‘flagship’ PruFund Growth fund they reduced the EGR from 6.20% gross to 5.90% gross on tax efficient products such as pensions, Investment ISAs and Offshore Bonds.  The gross EGR is reduced by product, fund management and advice charges.  These vary by product and volume etc.

This Monday, 02/09/2019, Prudential rationalised their reduction in the EGR and explained the current back drop for this reduction in EGR.  To precis, Prudential state that over the last quarter, 25th May to 27th August, Fixed Interest returns, particularly government bonds, saw a substantial drop in their annual yield of between 0.50% and 0.80%.  This is significant, for two reasons:

  1. A reduction in the 10- and 15-year Gilt yields will affect the so-called risk-free rate of investment returns, and
  2. Equity Based Investments across the PruFund fund ranges were reduced between March and June 2019

These two factors combined with the current backdrop and outlook effectively reduces the total expected returns across all asset classes.

As Prudential’s fund management team, The Treasury & Investment Office, focus on long term investment returns (at least 15 years), they have taken a long-term view on this.  Their view now is that a 5.90% gross return is reasonable over the long term based on the underlying basket of investment assets.

The ‘smoothed funds’ are very well diversified on a multi asset basis.  Prudential last changed their EGR on PruFund Growth in August 2016.  They tend to prefer not to change the EGR too regularly.

General investment update

Today I was at an investment seminar for the majority of the typical working day.  It was a good day with a wide variety of topics discussed including the following:

  • Orbis on investing for Drawdown
  • Janus Henderson on Sustainable investing
  • Columbia Threadneedle on Emerging Markets
  • Tatton IM on portfolio management post QE and upcoming structural considerations
  • Aberdeen Standard Capital the language of advice and regulatory change
  • BNY Mellon on the differing needs of income investors and the different styles and sources of income
  • Investec Wealth on an exploration of behavioural biases within investments
  • Blackfinch Investments on vulnerable clients. A key area for the FCA

Whilst the investment topics discussed varied widely some standard input was in evidence.  The following is normal for investors for the long term:

  • You need to remain invested in real growth assets, predominantly equities
  • Over the long-term equities outperform other assets. Be a long-term investor
  • Trying to time the markets is difficult and doesn’t work, remain invested

The current political backdrop locally and globally is disturbing but we all need to maintain the status quo and remain invested.



Steve Speed 03/09/2019


mike No Comments

When the financially savvy risk having their retirement savings scammed

When the financially savvy risk having their retirement savings scammed


New figures show cold calls, exotic investments and early access to Pension Savings to be among the most persuasive tactics used by fraudsters.

Often victims do not know they have been targeted until it is too late.  As these are not petty thieves, but sophisticated fraudsters using clever tactics to appear legitimate.

It is no surprise that at a time when savers have more flexibility than ever before over their pensions, scammers are targeting people’s retirement pots.  new research suggests that 42% of pension savers, which would equate to over 5 million people across the UK, could be at risk of falling for at least one of six common tactics used by pension scammers, these are:

  • Pension cold calls
  • Free pension reviews
  • Claims of guaranteed high returns
  • Exotic investments
  • Time-limited offers
  • Early access of cash before age 55

The research also found that those who consider themselves smart or financially savvy are just as likely to be persuaded by these tactics as anyone else.  The scammers have one aim – to rip people off.

Pension savers were tempted by offers of high returns in investments such as overseas property, renewable energy bonds, forestry, storage units or biofuels. However, exotic or unusual investments are high-risk and unlikely to be suitable for pension savings.

Helping savers to access their pensions early also proved to be a persuasive scam tactic. One in six 45-54-year-old pension savers said they would be interested in an offer from a company that claimed it could help them get early access to their pension. However, accessing your pension before 55 is likely to result in a large tax bill and you could wipe out the full value of your Pension Savings.

Last year, 180 people reported to Action Fraud that they had been the victim of a pension scam, loosing on average £82,000 each. The true number of victims is likely to be higher as scams often go unreported and those affected may not realise, they have been scammed for several years.

Working together on this we can defeat the fraudsters.  If you have any suspicion of being potentially targeted by scurrilous criminals, it’s safer to speak to your adviser and contact Steve Speed for peace of mind.  If Steve is not currently your adviser then feel free to get in touch with us for clarity.

If anything appears too good to be true it generally is. It is worth seeking Independent Financial Advice before you commit, and it becomes too late to pull out of a dodgy deal or too late for regulators or Enforcement Officers to claw back lost money.


Jason Norton – Operations Manager


mike No Comments

Pensions – UK Data July 2019

Pensions – UK Data July 2019

I’ve cut and pasted the following data from The Money Charity’s report received on 24/07/2019:

According to The Pensions Regulator’s Compliance Report, at least 10.11 million employees had joined a pension scheme under auto-enrolment by the end of June 2019, making a total of 22.12 million members of pensions schemes, but leaving 9.4 million employees unenrolled, out of the total declared workforce of 31.55 million.

According to the Family Resources Survey, 49% of working age adults actively participated in a pension in 2017-18, up 4% on the previous year. This was 71% for employees and 16% for the self-employed. The Annual Survey of Hours and Earnings reports that in 2018, 19.6% of private sector employees received an employer contribution to their workplace pension of 8% or more, whereas 94.8% of public sector employees received a contribution of 12% or more.

36.4% of employees with a pension were in an occupational Defined Benefit scheme in 2018, according to the Office for National Statistics, while 34.0% were in an occupational Defined Contribution scheme.

In August 2018, there were 13 million claimants of State Pension, a fall of 110,000 on August 2017. Of these, 960,000 were receiving the new State Pension (nSP) introduced in April 2016.


My thoughts on the above data:

It is good news that more people are in pensions, Auto Enrolment has helped with this.  However, I have a few real concerns with the data above.  They are as follows:

  • Those ‘Auto Enrolled’ into a Workplace Pension but not receiving advice could think that at standard Auto Enrolment contribution levels, the legislative basis, they have a pension for their retirement. A pension funded on the standard ‘minimum legislative’ basis will not provide much of a pension fund for your retirement
  • The self employed are still not getting the message. They need to be in pensions too, perhaps legislation in this area?
  • We need changes to Auto Enrolment on the following counts:


  1. Lower age, enrolled from age 18
  2. All of your salary should count for the contribution basis. Currently we have a lower and upper threshold and you don’t have to contribute against full salary (in generic terms)
  3. Higher level of contributions

Although the State recognise the need for changes to 1 & 2 above they want to defer until c 2025 as they have no more money to spend on pension tax relief.


  • Those in a Public Sector Defined Benefit pension scheme will be doing well. Politicians enjoy good (very good) pension provision
  • We seem to have quite a large proportion of the population still not in a pension. These might be people with 2 or 3 low paid jobs who are not hitting the lower threshold?  They could be people who have opted out under financial pressure or they could be people outside of the criteria.  Whoever they are everybody needs a pension unless you are very wealthy.

One of the key issues and a missing piece of the jigsaw is financial education.  We should start this at school and continue through college, university and in the workplace.

If we can catch people at a young age and spell out the benefits of good financial literacy and planning I believe we can make a real difference.



Steve Speed


mike No Comments

Retirement Planning

Retirement Planning – will you have enough income in retirement?


This is a big subject and an important one for those of you that want to have an enjoyable retirement when you have the time to enjoy your retirement you need to have the right resources too.

The shape of retirement is changing, when I started advising the focus was generally on building funds to buy a guaranteed income – an annuity, normally after drawing tax free cash.  If you were lucky you had well-funded company pension provision.  Inevitably you retired on a set date, age 65 for example.

Nowadays retirement is far more flexible.  Sometimes people chose to draw pension benefits early without retiring.  Many people carry on working either full time or part time well after their (normal?) retirement date.  Unfortunately, for many, this is a financial necessity.  For others, they work on for their own reasons.

Why would you work on after your ‘perceived’ normal retirement age?  Some of the benefits could be as follows:

  • To maintain good mental health
  • To maintain good physical health and strength
  • Higher levels of income
  • To build additional assets for retirement
  • A gradual phasing into retirement
  • Better for your long-term relationship (no break up from your spouse or partner)
  • To avoid babysitting or carer duties

Reading this back I might be a little biased.  I have plenty of clients that look forward to retirement and enjoy a full and active retirement.  Some people don’t know how they had time for work!

Ideally when you do retire you will have good levels of assets and pension income to sustain you in the lifestyle that you want.  To get to this position takes years of careful planning.  You need to be focused on building your assets and preparing to be tax efficient in retirement.

How do you do this?  Seek independent financial advice early.  The longer you have to plan generally the more tax efficient and better off you can be in retirement.  Don’t wait until it’s too late – be in a position when you decide when you want to retire!


Steve Speed


mike No Comments

Ongoing Market Volatility

Ongoing Market Volatility

Markets have returned to normal volatility over the last 14 months.  We are experiencing a lot more volatility than 2017 as this was a surprisingly strange year, good investment returns across most assets and regions and very low levels of volatility.  The global political backdrop is interesting for markets.

Volatility is not an issue for the long-term investor, you need to be in real growth assets for good long-term returns.  Short term volatility, for the majority, should not concern you unless you are drawing an income or about to draw an income.

Market research has been conducted about investors trying to time the markets, this is exceptionally difficult, and I don’t know anybody that can do this consistently.  Goldman Sachs have recently (2019) published some of this research.  Over the 20 year period from 1999 to 2018 if you stay invested (MSCI World Net TR Index) you would average 7.2% per annum investment return.

If you had been trying to time the markets and missed the 10 best days (these normally occur after a market drop) in the same index your average investment return would have fallen to 1.7% per annum.

What else can you do but remain invested in markets that are typically volatile?  You should be well diversified by assets and geography.  Preferably with ongoing active and tactical management of your investments.  For example, a Multi Asset Manager or a Discretionary Fund Manager can give you both active and tactical management.

Examples of the above active and tactical management fund managers are Prudential, Tatton, SEI, Royal London and Brewin Dolphin.

At People and Business IFA we compare and contrast fund managers and investment propositions, as we want our clients to have the best investment option to suit their needs, risk profiles and objectives at a reasonable cost for the specific investment proposition.

Just a quick word on cash, this is not a viable long term investment.  Inflation will erode the buying power of your capital over the medium to long term.  Cash could be used for diversification or short-term capital, known expenditure and emergency fund requirements.

As you become more experienced as investors you will be less concerned about market volatility and leave your investments to grow.  They should be reviewed annually for you and their suitability, your attitude to risk and capacity for loss confirmed.  At People and Business IFA we provide regular face to face annual reviews and updates as part of our ongoing service

If you are concerned about market volatility and your existing investments or investing, please phone to discuss.


Steve Speed 25/04/2019

mike No Comments

Investment Update

Investment Update

Goodbye 2018 Hello 2019!

For those invested for long term growth and fully invested for retirement income (Pension Drawdown) you will have probably experienced the heightened volatility in investments this year.  The higher your equity content the higher your volatility.

Following circa nine years of good growth and the great growth year we had in 2017 across the world, this year could have been a shock to the system and a reminder that volatility is normal when you invest for the medium to long term.

Investment returns for this calendar year (2018) have been nominal if not a loss unless you are in a specialist or multi asset investment.

Views for 2019 vary.  Some commentators (J P Morgan for example) tell us that the recession risk is rising over the next three years.  Invesco Perpetual tell us that we should consider eight key risks.  The highest risk being the Geo Political risk.  Trump, trade wars and the political risks arising from Trump’s domestic political situation.  Brexit and Europe get a mention in commentary on political risks too.

More positive views for 2019 come from Tatton and Prudential.  Tatton believe we will see ongoing volatility, but the risk has been factored into equity markets at too higher level.  Not all equity markets are good value though.  Prudential, managers of substantial multi asset funds, also had a fairly positive view in early December.  This may be because of their multi asset fund management skills and experience.  Prudential do tend to take the view of long-term investors (quite rightly too).

To summarise I don’t think 2019 will be an easy year for investors but you need to remain in real growth assets to benefit from investment returns over the long term.  If you are approaching the time you want to access your investment or draw pension benefits you might consider reducing your risk.  This is a finely balanced decision and advice should be sought.

On a positive note 2019 sounds like it might be a better year for investments than 2018.  Please note that we can experience shocks to the market and that the opinions shown above are only forecasts.  The world is quite difficult to read now.

Have a Merry Christmas and a happy, healthy and prosperous New Year!



Steve Speed