31st July-A massive gaping Pensions problem, does Iain Duncan Smith have the answers

I like the recent quote from Lord Hutton on public service pensions which went something like this:

It's not about removing what is a good pension position but about making it more affordable for the country. Well said that Lord, what we want is to get back to everyone retiring with a really strong pension provision.

So how do we get private pension provision to this level ?? - is the problem to be solved

Consider this from a recent OECD report:
outlook for future economic growth in developed economies is "uncertain and sluggish," and pension funds could suffer in the medium term, the OECD said warning that a fall in interest rates would weaken overall fund performance. 
http://www.dunover.com/investments/index.php?topic=1232.0

So what we are saying here is that pension funds are going to perform poorly. 

Consider this also:
the average pension pot submitted to Aon Hewitt is £56,000. If you took your 25% tax free cash of £14,000 then the remaining £42,000 would buy you a pension of £1200 a year
and also maybe this:
If you earn £40,000 a year and paid 9% into a pension that would be £300 a month. But to achieve a pension of say £24,000 a year index linked you would have to pay £600 a month from the age of 23.  

and the view from Tom McPhail pensions advisor at Hargreaves Lansdown
"Everyone should find out how much is being paid into their pension if it is less than 12pc of your salary, it is not enough." 
http://www.dunover.com/investments/index.php?topic=1231.0

Let me give the view of Dunover.com in all of this.

Yes I want to save for a comfortable retirement.

No I don't want to lock my money away into a pension fund where I can't get at it again until I'm 65

Yes I am not taking the tax breaks available for investing in retirement plans because I want free access to my money and avoid it being locked into poorly peforming pension funds until I'm 65

No, my children do not want to invest £600 a month in their pension as they have other financial issues to address i.e. paying back their student loans and trying to buy a home.

No I don't want to be locked into an Annuity when I retire because they are an increasingly poorly performing product 

Yes I may consider putting my investment funds into a pension plan near to my retirement as that may be beneficial from a tax perspective 

The overall message being:  
We need to think again on how the common man can build up a retirement income.

The sales spin from the retirement savings industry is not going to wash with me.

I and my children are not going to lock away £600 a month in a pension fund from the age of 23 in the hope that it will still be there when we get to aged 65.

So the next idea to sell us is ............................???

Rents rocket, but who would buy a house

The reason house prices are too high is a simple one.

The lending criteria from the banks which led to the current house price levels was based upon small deposits and interest only mortgages.

Now we have the opposite from the Banks, repayment only mortgages and 30% deposits.

So as Barratt Developments reported yesterday the new Govt scheme to provide a 20% loan matched by 5% from the purchaser has proved very popular with 100,000 people registering.

But it does not make financial sense to buy into a property you can't afford which will be reducing in price in a falling housing market.

Although rents are increasing at an annual rate of 4.1% it's still the better approach at the moment.

And probably will be for some time to come.

http://www.dunover.com/investments/index.php?topic=1223.0 

We are renting and have no intention of buying until house prices fall significantly from their current levels.

Bicester Village Shopping Outlet - a shoppers paradise

Had a walk up there with Diana yesterday as it's just down the road from us.

Beautifully set in a quiet country town, walking through the trees from the car park, the sense of quiet with an American New England feel is just what the doctor ordered for a shopping trip.

Bicester Village has the highest recorded sales per square foot of any shopping centre in the world.

You can see why. It is beautifully cleaned and maintained, high quality eating and drinking places and the toilets and services are all top quality. It's a great shopping experience even for an unenthusiastic shopper like me.

The string of brands you see as you walk down the main street is relentless, Prada, Burberry, Mulberry, Dior, Gucci, Alexander McQueen, Anya Hindmarch, Diane von Furstenberg.

There’s a White Company for duvet covers, a Le Creuset if you’ve run out of cast-iron pans, a Bonpoint for well-dressed babies and a Jack Wills for their teenage siblings. Also a Bose electronics store, offering, for example, a home cinema system reduced by £780 to £1,820.
There is no sign of recession here. Bicester Village has become the top attraction for Chinese visitors outside of London, with plenty of celebrities dropping in for a visit too.

http://www.dunover.com/investments/index.php?topic=1192.0


What did we buy there then, a samsonite suitecase for £90 reduced from £250 and a pair of shoes from LK Bennett at £60 reduced from £150. Very happy we were with our purchases too.
So forget the recession, treat yourself to a luxury shopping expedition and help the country too by helping our retailers and spending some money :)   

John Lewis sales up 20% - bucking the High St trend

Carnage on the High Street all week then along comes John Lewis posting a sales increase of 20%.

How do John Lewis do it then when Thornton's, HMV, TJ Hughes, Jane Norman don't seem to be able to.

Well apart from the obvious of stocking goods people want to buy.
  

Picking up on readers comments on the Daily Mail feature see if there is a theme developing that failing shops can learn from:

"What a surprise! John Lewis' customer service is excellent whilst the rest of UK industry's so called customer service is woeful, pathetic and dire; even if I have to pay an extra few £££s I prefer to buy from John Lewis knowing that if there is a problem they will help solve the issue."

"John Lewis are nice company. Good quality and service. Look after the employees with the profit share. They are a good model for other companies. Look after your staff, and they'll go that extra mile."

"One of the biggest incentives for me shopping at John Lewis are their free guarantees on most of their products. I also like the way everything is laid out in the shop and the staff are really friendly professional, knowledgeable and attentive."

"Want to know why? It's easy, they offer REAL customer service. Customers appreciate good staff. I would rather pay more to a shop that delivers good service and products, than to a store who pays minimum wage and provides staff who kno w nothing about their stock."

Read more: http://www.dailymail.co.uk/news/article-2010379/John-Lewis-bucks-trend-Sales-20-rest-High-Street-struggles.html#ixzz1QwOK1zA1

So in summary then all you High Street store owners, it's all about Customer Service being excellent.

Thats what will get us off our PC's and into the shops.

Better log off then and get there now.

Much healthier too than sitting at my PC all day :) 

Keep on spending, do your duty for your country

The suggestion is from Tim Mack of National Savings and Investments is that we save money by making  packed lunches and cycling to work.

Then he suggests we open a direct debit and put the saved amount into one of his savings accounts and watch it grow.

Given the average instant access savings account is paying only 0.9% that will be a long time in the growing.

Some 35% of people in the NS&I poll said they were saving for a house.

Working that out though, on a typical £150,000 property, you would need £37,000 to reach the 25 per cent deposit curently being demanded for first time buyers. At £100 a month, it would take you over 30 years of saving to get the deposit together.

With inflation currently at 5.2% on the last 12 months RPI, any savings you have are being wiped out very quickly.

Any case, we are all struggling for money right now and the last thing the government wants is for people to stop spending money and send more British businesses into bankruptcy.

So get out to the shops and get spending, it's the best thing to do for the country right now.

Read more: http://www.dailymail.co.uk/news/article-2009854/Astonishing-SIX-MILLION-Britons-savings-all.html#ixzz1Qw77tgtu

Too hot to eat says Mr Kipling

Premier foods then, the countries biggest food manufacturer.

Rocked by the markets as their share price dropped 22%, down to 19p.

People just don’t seem to be hungry anymore ??

The company gave one of the reasons for their profit warning was the unseasonably hot weather affecting the consumption of bread. Probably also the consumption of Mr Kipling cakes, fray bentos pies and smash.

Oh and also the loss of a significant pie contract to M&S costing it £10 million.

Oh and also the increased commodity costs resulting in £150 million additional cost.

The share price has now dropped 90% since it’s 2007 high of 300p.

But food is a cyclical business and the current consumer downturn is hitting sales of all things including food.

Ask yourself would you eat Hovis bread, Mr Kipling cakes, Branston pickle, Loyd Grossman sauces, Sharwood sauces.

If the answer is yes then you may also want to consider gobbling up some shares in Britains largest food producer at a very cheap price of 19p.
http://www.dunover.com/investments/index.php?topic=1212.0

But has to be on the belief that they won’t go bust before the British consumer starts getting hungry again.        

Lloyds Bank strategic review, you read it hear first .....

30 Jun

…..or actually it’s been appearing in the newspapers for about the last 10 days.

How will the share price react to this today then ??

Well there is a well known investment saying “if it’s in the papers it’s in the price” .

So this review must have been factored into the price for the last 2 weeks at least.

Ah yes the Lloyds share price. On the 24^th March with the share price at 60p Lloyds were tipped as a buy by brokers Evolution:

“Lloyds is the only bank in our coverage where we think investors might have a realistic chance of doubling their money, on an 18-24 months view. Lloyds remains our Top Conviction Buy.”   

Impressive indeed, and if you bought at 60p then you would be looking at a share price of 44p as we speak.

Oh dear ……………..

But if you believe that review then you are now looking at a potential increase of three fold if you bought now. Would that be 200% or 300% ? Not really sure but of the maths but an impressive investment if it came off.

So what will Antonio’s review say today, blah blah boring no doubt. Another 15,000 jobs to go, 1 billion out of costs, Halifax a challenger brand, Scottish Widows is staying, coming out of the APS scheme, bring back dividends next year …………

So unless Antonio goes off message, which is about as likely as Gordon Brown admitting the Lloyds/HBOS thing was all a huge mistake in the first place, it should be a predictable affair today.

But this quote from a city analyst is interesting:
“Investors will not be satisfied just by efforts to slim down the bank and will want a clear idea of the key areas in which it plans to invest over the next few years to boost revenue.
“The worry is that Lloyds is cutting costs to stand still,”

Lets hope the investors get satisfied then at some point.

Dunover Investments have been sinking money into Lloyds at various prices over the last year. It’s all been documented here:
http://www.dunover.com/investments/index.php?topic=813.0

Having told all family members and friends to do the same I’m finding life a little uncomfortable with a share price sitting at 44p.

Staying in is the new night out for all Lloyds investors at the moment, or that is certainly the case with my social life for now.

My calls of “don’t panic” and “it’s a long term investment” are best made in phone calls, it’s more pleasant that way and easier to avoid eye contact.

But when that share price hits the Evolution target of £1.20, I know they will all love me again …………