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A new retirement income for the self-employed- Muralidhar’s video.

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Arun Muralidhar spoke at the Pension PlayPen yesterday.You can watch the video here or download it for your private delectation!

There is nothing in Arun’s big idea that isn’t in the British savings culture. Peter Cameron Brown reminded us that National Insurance has been used by millions to save for retirement.

What is new is that the Selfies that Arun has helped become the retirement income system for Brazil provide coupons that pay income and do not offer a capital value at the end of the 20 years in which income is paid.

We heard how this went down well at the DWP and to ears that are adjacent to mouths that get to Ministers! There are black holes in the pension coverage system, especially for the self-employed and with part 2 of the Pension Reform project due to kick off soon, maybe Selfies have a part to play in “adequacy” for the self-employed and others outside the scope of auto-enrolment.

Steve Goddard made the excellent proposal that a £5 Selfie starter for anyone registered self employed be implemented before the end of the parliament. This would mean that income was on its way to those who have no income in retirement other than the state pension.

I’d be interested in more thoughts from Arun and others about use of Selfies and advantages to our economy of money flowing to Government. This should be no more than a “faceless bond”. Bob Compton pointed out that there have been War and Water bonds in the past and Selfies could be a pension bond investing in regenerating parts of the British Economy badly in need of capital

Addendum

Arun has posted on Linked in as a comment to the above

Arun Muralidhar   • 1st

Here are a couple of benefits to HM Treasury and then hopefully to the UK economy and prospects for growth.

1. Lowers risk of widespread retirement poverty. Plus an uncovered segment, self-employed, are now covered.

2. Source of long-term government funding for (green) infrastructure. UK infra is in need of upgrading just given my last two trips to Heathrow, Stansted and Cotswolds

3. If well-designed (e.g., indexed to VAT so retirement REAL standard-of-living is protected), then HMT financial health improved as receipts matched to payments

4. Financial inclusion – if you can buy these “Retirement gilts” in slices as small as £1/time, then the poor can save effectively and not be excluded and the rich can feel less “guilt”

5. Development of a domestically financed long-term yield curve (unlikely to have the LDI-triggered nuttiness in the gilt market).

6. One you have Certainty over a minimum retirement lifestyle, individuals might be more inclined to invest in equity and thereby foster a more equity culture that the government would like to have.

7. Will lead to financial innovation and better risk management by insurance companies and asset managers.

 

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