On Tuesday 1st April (yes I know but it’s no joke), I- Henry Tapper – will be speaking at a Pension PlayPen talk. I am currently being forced by my business colleagues to spend some time “on holiday”, this is very irksome as I have some important things to say about the state of economy and what it means to those getting pensions and yet to get them.
My colleague Steve has asked me to berate the Labour Government but I cannot, we are in bad shape as a country but we can’t blame the past , we must look to the future to get us back on track.
What we have to do with the pensions we run or comment on, is insist on a proper balance between meeting expectations and creating opportunities, both for pensioners and the country.
I am told I will be asked the following questions
Was this just a Damp Squib for Pensions?
Why were there no real changes?
Will she attack the £140Bn state pension cost in the Autumn?
Pension Schemes Bill?
Pension Investment Review …stage II?
New DB surplus rules?
Transfer/consolidation window?
What does mean for UK Pension Schemes?
Mansion House/Kings speech ….still on track?
Will the attack come in the Autumn Budget?
IHT/Tax Relief..the usual under the microscope?
Is Labour “meddling” with our industry?
Opinion about our new Pensions Minister Emma Reynolds?
Magic wand…what would Henry recommend?
I would recommend you put your thinking head on before the event because I do not have answers to these questions (though I know what I would like to happen!)
I will be calling in from Perthshire for the pension playpen coffee morning at 10.30 am on Tuesday and if you want to join me, there is a free link at the bottom of this blog. I would particularly welcome young and old, male and female.
Thanks to all who make these sessions so memorable, I hope that the majority of this one will be given over to discussion between those who come and that my contribution will be to solicit your thoughts!
Regrettably I will not be able to attend the meeting on Tuesday, my hobby job needs me. One of the simplest lessons for our end user to understand is the difference between the impact of reinvested dividends. As I await a correction in the markets ( probably 20% +) I noticed some research by Aberdeen (summarised below) which brings the lesson home which you might share:
Aberdeen analyzed nine major markets over ten years to uncover the power of compounding with a £10,000 investment. The biggest difference between total return (reinvesting dividends) and capital return (not reinvesting dividends) was seen in the Dow Jones Index, which delivered £37,016 on a total return basis versus £29,651 on a capital return basis, a difference of £7,365.
The S&P500 Index took second place, delivering £41,485 on a total return basis versus £34,699 on a capital return basis, a difference of £6,786. The FTSE World Index came third, with £32,002 on a total return basis versus £25,439 on a capital return basis, a difference of £6,563.
Interestingly, the FTSE 100 provided a total return of £18,548 versus £12,682 on a capital return basis, a difference of £5,866. The AIM market delivered £11,335 on a total return basis versus £9,851 on a capital return basis.
Across all nine markets, the analysis shows that the true magic of compounding kicks in after ten years, assuming markets move upwards. With patience and a well-balanced portfolio, compounding can generate wealth over the long term.