Worldwide Financial Planning

The largest drivers of inflation were not as pointed out by the corporation sponsored politicians (strong wage demands, quantitative easing). Primarily you have a simple supply/ demand issue in many key areas that will drive it. Then you have profiteering.

UK government bonds fell and yields rose sharply as positive economic data increased the chances of further rate hikes from the Bank of England. Employment increased in the three months to April. The number of people unemployed increased very slightly but the number of those classed as inactive fell.

Last week’s personal finance column focused on targeted pension strategies, in which Peter McGahan mentioned annuities. So, this week, Peter covers the difference between annuities and pension drawdown.

Most pension funds have a full spread of bonds, property and international equities, and this is ‘managed’ by the fund manager. I say ‘managed’ because many funds are not managed at all, but you are still charged.

Retail inflation has continued to rise as the UK faces a new warning of recession. The British Retail Consortium said shop prices increased by 9% in May, up from 8.8%. Food prices are still rising fast but have slowed slightly as lower energy and commodity costs begin to filter through. Rising prices have supported listed retailers but this appears to be running out of momentum as retailers report sales volumes are falling.

Those with pension pots of in excess of £1million will undoubtedly benefit from the proposals of abolishing the lifetime allowance. The annual allowance hike will also benefit those earning between £100,000 and £260,000.