| In early January, US Treasury Bills’ (similar to Gilts in the UK) rates rose to their highest since early 2020, so perhaps the days of the super-high transfer values for those with final salary (deferred) schemes are well and truly behind us – not that this is the only factor of course. Rates of 10 year Treasuries in the middle of 2020 hit 0.5% and have since been back over 1.85%. Dropping death rates and life expectancies are also playing a part in reducing trustees’ hypothetical liabilities to members. This also plays on the capital values of ‘safe’ government bonds of course, as I noted earlier. If these treasuries were undated, the value of £1,000’s worth in June 2020 would have fallen to £285. How safe are your ‘safe’ investments and how much do you have in these? I write this as I read that three million pensioners hold all their ISA money in Cash ISAs earning them little or nothing and losing against inflation every year now – the most pernicious of all taxes on our capital. Share ISAs should be considered for at least a proportion of that money I suspect and our own strategies deliver an excellent income (through dividends and interest) and the probability that capital will grow too over a sensible period. That need not be decades and even if death did occur earlier than expected, spouses can inherit ISAs with all of the tax benefits intact. Other beneficiaries may also inherit the investments, even if the ISA benefits are lost. That enables the investment term to be extended and the opportunities to continue. With 5 April approaching, time is running out to use your £20,000 allowance for 2021/22, so don’t hesitate to contact us. |
| Pension transfer values |
| Has the best boat been missed now? Transfer values from deferred pension schemes were apparently at their highest ever levels in November. If you need to have a review, maybe it is best sooner rather than later as you may catch some sleepy trustees who haven’t adjusted their actuarial calculations yet… Remember that in December 2020 bond yields were at their lowest and there was a record $18trillion of debt instruments where you had to pay for the privilege of putting your money in them. That figure has contracted savagely and is now ‘only’ $10trillion on minus interest rates! |
