It is a mark of one of these pods going well , that you don’t think it lasts too long. This one didn’t seem too long mainly because there were two guests who you feel privilidged to listen in to. The other reason was it was decidedly shorter than some recent ones (check below).
We didn’t get the badinage between the lads but we got a proper discussion of pension investment instead.
There have of course been a number of consultations this week (five if you include a consultation on SMPI projections and one from TPR on fiduciary behaviour. But the main coin that has dropped is that DC pots are going to become pensions one way or another and there are two consultations on RCPS (retirement CDC in old language). Unwelcome as CDC may be to Nico, his response will be fascinating.
Here is Darren’s smart summing up of who was involved and where.
I hope there are other guests from the Hague of the calibre of Chris Jeffery and Mark Delaney.
People now want VFM to be based on the outcome of people’s savings – their pensions! We should be embarrassed to have confined it to performance measurement on “accumulation”. This excellent podcast explains why the UK and Australia have the same problem with pensions.
Chris Jeffery of LGIM is twice brilliant. The first is when he reminds us that we over estimate how perilous our times are. Most of the time what seems market volatility is nothing of the kind. The second delight is that 6.4 is the magic number. 6.4 is the real return achieved by American equities over 200 years. $1 invested with dividends reinvested since the early 1800s would now be worth $1.2m or $20m if inflation wasn’t taken into account.
I’m glad investment people like these two talk of inflation being the big enemy for pensioners. It is and it’s not answered by level annuities or SMPI projections which quote no inflation proofing.
The conversation with the Aussie Mark Delaney is about how the Australian market was converted from institutional to retail in the early years of the century. This led to some very poor funds, a lot of consolidation and a lack of consideration of “pensions”. Super has been a success because of massive salary sacrifice filling in the gap left by a means tested state pension, I remain to be convinced that a 12% of total earnings as a compulsory contribution is achievable in the UK. If we want to means-test our state pension then maybe , but that would only please the financial services industry.
Much as I liked listening to Mark Delaney , I suspect that he needs to sell himself a little harder than his UK counterpart, Chris Jeffery.