The following article is taken from Professional Adviser where Intelligent Partnership’s new AIM Report is highlighted. Click on this link to read the original post.
Professional Adviser’s investment detective Matt Morris delivers his verdict on key developments in the investment and pensions arenas from the last month or so
Lost In Translation
The government is set to launch new rules in 2018 to protect pension savers using workplace ‘master trusts’. The move towards auto-enrolment has resulted in the creation of around 100 master trusts that are designed to manage centralised funds for several employers at once. The problem is, not all of them are regulated so the Government has announced the Pension Schemes Bill, which sets out new standards around its governance, contingency planning and financial adequacy. The hope is this will help to protect workers’ retirement savings with important new controls for master trusts and stronger additions to existing legislation on exit charges.
Verdict: Promising lead
Great Expectations
Most of the UK workforce are relying on either their bank savings or property to fund their retirement, according to research by adviser Drewberry. In its survey of 2,000 UK employed and self-employed people, almost 8% of respondents stated buy-to-let investment would deliver additional income in retirement but twice as many thought the equity in their home would do the same thing. According to the firm, based on average UK property prices, a retired couple that was actually in a position to sell the family home and ‘downsize’ would be lucky to clear £100,000 after stamp duty, transaction fees and moving costs. With today’s annuity rates, noted Drewberry, this equates to a small, RPI index-linked income of around £2,500 a year.
Verdict: Back to the lab
The Right Stuff
Intelligent Partnership has released a new report on the AIM market to help advisers understand how firms on the index can be used for effective tax planning. According to the report, all AIM shares qualify for ISAs and approximately half of AIM shares qualify for Business Property Relief (BPR). The ISA wrap and BPR can be combined, giving investors 100% exemption from inheritance tax as well as tax-free growth and income. AIM VCTs provide 30% income tax relief and tax-free growth and income. There are a very small number of AIM EIS portfolios that, in addition to tax relief and tax-free growth, also offer loss relief and CGT deferral relief.
Verdict: Promising lead
The Kids Are All Right
Legal & General Investment Management has launched the Future World Fund, which invests in a new FTSE climate index weighted towards companies that contribute to a low-carbon future. As well as being designed to reflect climate change considerations, the index excludes companies that make parts for weapons such as anti-personnel mines, cluster munitions, chemical and biological devices. Legal & General will also be investing its own capital in the fund.
Verdict: Promising lead
Falling Down
The Melbourne Mercer Global Pension Index, which ranks both the state funded and private components of 27 countries’ pension systems against 40 indicators, has downgraded the UK from 9th to 11th place. This was mainly down to a reduction in the size of the pensions people can expect in relation to their wages while at work. The report considers factors such as rapidly ageing populations and the preparedness of countries’ retirement systems to deal with the significant financial pressures this presents. Denmark topped the list, with the UK coming behind the likes of Chile and Ireland but ahead of Germany and the US.
Verdict: Back to the lab
As Good As It Gets
Financial research consultant F&TRC has announced its annual product ratings for workplace pensions and auto-enrolment for 2016. The ratings are designed to assist advisers and employers in their decision-making process, by showing which providers have greatest strengths in different areas of their propositions. Aegon, Aviva, Friends Life, Royal London, Standard Life all picked up ‘Gold ratings’ in the Workplace Pensions category. In the Auto-Enrolment category ‘Gold’ was claimed by Aegon, Aviva, Johnson Fleming, Royal London and Standard Life.