Bilge, Budget and Black Friday
11 July, 2017
Following on from last week’s blog about rubbish letters from pension companies, I was contacted by literally hundreds of you with your own stories of frustration. “I get stuff like that all the time from my pension company – meaningless hieroglyphics that I file under chicken-sh*t…” wrote one angry MD of a tech firm, summarising the main gist of your thoughts.
Following on from last week’s blog about rubbish letters from pension companies, I was contacted by literally hundreds of you with your own stories of frustration. “I get stuff like that all the time from my pension company – meaningless hieroglyphics that I file under chicken-sh*t…”wrote one angry MD of a tech firm, summarising the main gist of your thoughts.
We were also contacted by the CEO of a small business who has chosen Standard Life as their workplace pension provider. He sent me a copy of his letter - this one’s a doozy, earning Standard Life this week’s Gobbledygook Award. Imagine people’s faces when they open this!! “No need to panic, darling. I’m in the S3ap Active Plus Iii Univ Sip Profile. Our retirement looks rosy.”
The serious point here is that compulsory workplace pensions (https://www.boringmoney.co.uk/learn/articles/bilge-budget-and-black-friday/#) basically added 1% to payroll costs this year. I think it’s a good move but for heaven’s sakes let’s at least position it well so that people see it as the benefit it is!! From April 2018 this cost will go up to 2% for employers. And for employees, it will rise to 3%. That’s a big chunk of a pay packet disappearing into this benefit which is so poorly explained that people throw the letters straight in the bin, open them with a grimace and push it slowly over to their other half, or attempt to read them but give up.
So here’s the plan. If you are the CEO of a small or mid-sized firm and you feel fed up about the letters your guys are getting, will you send me (mailto:firstname.lastname@example.org) your examples? If you are a customer and have opened a letter from a pension firm that has made your face ache, will you email us (mailto:email@example.com) a piccie? We want to build a good picture of exactly what you guys are getting before we take action. (No personal details /identifiers/account numbers in the pics please).
To the Budget. I have to say the weirdest part was when the Chancellor preceded his (non) growth forecast for limp GDP with the line "This is the bit with the long economic-y words in it.” Really!?!? Personal finance sections this weekend will be thin because there wasn't much on the agenda save the huge news about stamp duty for first time buyers, which has been abolished on the first £300,000 and reduced on properties of up to £500,000.
If you are a first time buyer wannabe this is a good time to run some numbers. If saving for a deposit you have Help To Buy ISAs (https://www.boringmoney.co.uk/learn/articles/bilge-budget-and-black-friday/#). Lifetime ISAs (https://www.boringmoney.co.uk/learn/investing-guides/product-guides/lifetime-isa/). The Bank of Mum and Dad 😀 Help to Buy ISAs are currently paying a maximum of 2.27% and there are now 4 options for stocks and shares Lifetime ISAs. This summary (https://www.boringmoney.co.uk/quick-reads/here-are-the-changes-to-stamp-duty-summarised/) of the stamp duty changes and how to save for a property might help. Or we’ve a 10 minute audio guide (https://soundcloud.com/user-180368339/audio-guide-holly-georgie-discuss-help-to-buy-versus-lifetime-isa)which compares Help to Buys with Lifetime ISAs. In plain English.
I hate this. It makes me feel curmudgeonly. Here’s my special deal. Take £80. And I’ll turn it into £270 in a Black Friday Holly Special. How? Stick £80 into an online pension today. (Our Best Buys (https://www.boringmoney.co.uk/best-buys/personal-pensions/) will help guide you). Taxpayers will get at least a £20 top-up from the Govt. Stick that £100 into the stockmarket. Leave alone for 20 years. Then collect. (I’ve worked with an average annual growth of about 5% which of course isn't for sure - just a reasonable assumption.) Or alternatively spend £80 on some plastic tat you don’t really want and then walk around in a cloud of 21st century consumerist existential crisis! BAH.
People without the foggiest about pensions and investments could do worse that to have a look at Nutmeg (https://www.boringmoney.co.uk/best-buys/reviews/nutmeg/) who announced this week that they are the first UK robo adviser to look after £1 billion of clients’ money. For 50,000 people. CONGRATS! Could they be cheaper? Probably. Will they suit everyone? No. Will they serve up well-diversified pensions for people at a decent price and get the busy or the less confident off the mouse wheel of indecision? Without gobbledygook and painful complex decisions? Yes.