Robot Revolution, Retirement and Rates

This week is Pensions Awareness Week - wake up at the back! - being drowned out by worries about AI Armageddon. We’ve also seen the Fed push up interest rates in the States which adds to the inevitable sense of a rate rise here in the next few months, despite the Bank of England keeping things on hold yesterday.

So. Pensions. This week we’ve heard that the full State Pension next year will probably be £250.70 a week – or just over £13,000 a year.

How do we know? The latest wage inflation number published this week was 3.9%. And the ‘Triple Lock’ says that the State Pension increases each year by the BIGGEST of 2.5%, wage inflation or general inflation (currently 2.9%). So, it’s highly probable that wage inflation of 3.9% will be the biggest figure and hence used to calculate the rise of nearly £500 a year.

Somewhat inconveniently, this will push pensioner earnings above the basic rate Income Tax threshold, meaning they have an Income Tax liability of about £93 a year and an assessment to fill out – unless the Government can work out a proportionate fix first. Doh. The thought of needing to migrate potentially millions of pensioners onto the online Government Gateway for a ‘simple assessment’ is enough to make anyone reach for the gin. Sometimes the tax man feels like a bigger threat than the robots…

As you pour your G&T, I have a nudge for all of you still working and not yet drawing a pension. Do you know where your pension from work is? Who manages it? Do you know how much is in it? That’s all. Find that out. Get your number.

We have reviewed Aviva, Royal London and Penfold’s workplace pensions which will help you to see what they offer and how they are doing. More names to follow shortly.

How much do I need and what am I in line for?

Most people look at pension numbers and have no idea how much they need or what they might be in line for. Here’s a handy rule of thumb:

Take your workplace pension number. The total sum you have saved here today. Divide this number by 22. That’s a very rough idea of the annual income you could get from this pension. Add that to the £13,000 State Pension a year. And that is the foundation number in your retirement planning today. Don’t have a hernia. You will save more into your workplace pension as you get older AND you can set up or pay into a private pension online too. But the starting job is to find out what you have today. And where.

As the Budget creeps closer, we want to hear from our readers what you make of the Triple Lock and the State Pension. Will you share your view please?

Nasty AI and what the markets think

In other jolly news, the robot revolution is going to wipe us all out, according to a bunch of rich American men who have already banked their money from it. Trump is apoplectic and thinks it’s a HOAX. I feel very reassured by his wise and calming words. I feel CALM because the ORANGE MAN says it is a SICK conspiracy. Phew.

As always, I look to stock markets as the most honest barometer of what people actually think because money doesn’t lie. So, here’s the question - do people believe that the tech firms will attempt to slow AI?

After Monday's open this week, the Philadelphia Stock Exchange Semiconductor Index (SOX) fell over 5% in the initial selloff and is now down more than 20% from its June peak. This is technically a bear market for chips. Nvidia dropped roughly 3.6% Monday alone and the Nasdaq 100 slid. However, things picked up and on Thursday the SOX went up by over 3%.

In other words, traders heard the ‘slow down’ message, took it seriously for a few days and then thought, Nah, and kept backing growth. We had a wobble not a rout and – for now – markets are buying the dip even as safety concerns escalate. At this rate, chips will be out of bear market territory by the time I have breakfast tomorrow.

In other news, I am heading to Nottingham this afternoon to drop my eldest at uni. It’s a big day! Mixed emotions for the long drive home but I know I will spend an hour cleaning the kitchen and the fridge out tomorrow. Happiness is a non-sticky surface 😀 and there will not be five pairs of enormous trainers by the back door on Sunday morning confirming that my house was the after-club destination…

Have a good weekend everyone. Please do take a minute to answer our pension questions if you can. Is the Triple Lock a brilliant idea – or an old idea past its use-by-date?

Holly