No surprise there then
by Doug Brodie
/1. No surprise there then
Obviously, it’s all over and we have nothing to add, however, before we shut up here are a couple of interesting things we noticed:
Income map by state:
Election map by state:
The US national debt is currently $35.9 trillion; The incoming President has promised to cut taxes and ‘fund’ the military. Last time he had the Oval Office the national debt increased by $7.8 trillion – fairly speaking that included a year of pandemic costs. That increase was equal to $23,500 in new federal debt for every person in the country. Apparently, you can buy political power.
/2. A day in the life of Chancery Lane
It’s not what you think.
We don’t manufacture products, we plan, advise and execute, whilst producing written records of everything pertinent to advising you, our clients. Then there’s the administration – we have been trying to unpick £140,000 pension pot ‘locked’ in Guernsey, via Mauritius, since 2012. Don’t trust offshore advisers, this client’s money was stitched up by a firm called deVere – I only mention their name after The Sunday Times wrote up the client’s case:
Working on that case has involved tracking down and dealing with the regulators in both Guernsey and Mauritius, tracking down South African fund managers with knowledge of a related murder suicide in the fund business.
Unpicking fund accounts in a Swiss canton and ending up at a legal dead end with a Seychelles-listed company. And it’s still not resolved.
We were recently asked by a couple to help plot a map through their retirement plans: both resident and working in London, one a US national the other applying for his green card. They’ll retire to the US which means they can retain their UK pensions, but all UK retail funds, including investment trusts, are classified as PFICs, Personal Foreign Investment Companies, with seriously negative tax consequences for US ‘persons’. And after eight years retired in the US, they plan to move then back to Portugal.
Two clients, two retirement assets including some in the US, and three different tax jurisdictions.
In a similar vein, we have a client who works for a Danish firm, has moved back to the UK and will retire to Ireland – their tax charges are rubbish but he is Irish after all. We have been able to run Voyant cashflows for him using both UK and Irish taxes (if you thought the UK’s budget was bad, try Ireland).
Last week the FT contacted us to run through the budget changes in regard to pensions and IHT – keen eyed readers of The Pink ‘Un will have spotted the article in the Weekend FT, where we said that because IHT exemption remains between married couples, there’s clearly going to be some awkward conversations over cornflakes where the couples are retired and not married.
/3. Henderson International Income – the big ‘why not’.
The board has spent some time this year reviewing investment strategy and how this can be enhanced to provide a better balance between income and capital generation. After considerable consultation with shareholders, it has decided to tweak the company’s investment strategy.
Dividends from the portfolio will remain the primary contributor to the company’s distributions, but when there are compelling opportunities in stocks, regions or sectors that would otherwise be excluded due to their yield, the board is willing to utilise distributable reserves to supplement dividends paid to investors.
This will expand the potential universe of stocks in which the investment team can invest. It will also allow the manager to be more opportunistic and flexible through the cycle to deliver on the company’s objectives.
To aid with this, the company is seeking to turn its share premium account into a distributable reserve – shareholders will be asked to approve this.
Why?
We don’t have to support all trusts, and there are currently 31 trusts in our core research pool. We do not like/back/invest your money in trusts that use capital to maintain dividends. We are conservative, we need to see income and income/revenue reserves. We currently have just over £20m sitting in this trust and, subject to a meeting with the manager (Thursday 14th) we may move everyone. This strikes us very much as an action by the board, not the manager.
Following the meeting, we may do nothing, and in cases like these our clients pay to do that ‘nothing’ because that’s the right thing to do.
/4. ‘My friend said ….’ Is that enough respect for your lifetime income?
We don’t often hear that anymore – it’s the type of comment you get when you’re new to the industry and the person you’re speaking to is not quite sure of your credentials.
In income planning for a pension it has to be right the first time, there is no Plan B – you can’t get back forty years of working life to rebuild your money. Here’s a couple of questions folk need to get clear in their minds to work out the correct path to take – you don’t have to go through the gate at the end but you do have to take the right path.
On a scale of 1-10 how important is it to get this absolutely right?
How much professional time per month / year do you think your lifetime income warrants?
How much success have you had making stock market decisions?
Are you competent with numbers and personal taxes?
Are confident you can tell the difference between what you personally need, and what you’ve read about?
