An independent (financial adviser's) view

As I was searching for some pearls to pass on to my hopefully-growing band of younger protégés, it struck me this week that the most important thing about this job is to be interested?not in finance?(or not just), but in people. Even the most unlikely have a tale to tell if you dig a little below the surface. We've met WWE wrestling champions, vaccine makers, unlikely lady bikers and a couple of?septuagenarians still?happily working full-time. In fact, we see little evidence of the supposed hordes of over-50s deserting the workplace. Far more are following in the footsteps or Rod, The Stones and Tony Blackburn. And, hope for us all, Rupert Murdoch's marrying again at 92!?Anyway, I'm off to scan my bank account for the arrival of my first state pension payment.?So back in a couple of weeks.

“Interest rate rises to 4.25% after jump in inflation”

I think most civilised teachers and parents know that corporal punishment doesn’t work and just breeds another generation of parents who think it’s OK to beat their kids. And capital punishment has never done much for the murder rate in the US. In both cases, it makes those dishing it out feel like they’re in charge and doing something. Increasing interest rates to ‘stop’ inflation is just as brutal in its own way. ‘Reducing demand, squeezing profits and decreasing employment’ to ‘take the heat out of the economy’ doles out plenty of human misery, and rarely to those doling it out. How is it going to bring down food and fuel prices? It’s not, unless we go back to Scrooge’s Christmas Carol solution of ‘reducing the surplus population’. In the words of someone wiser still than me, there has to be a better way.

“Ministers delay plan to lift UK state pension age to 68 as life expectancy falls”

The good news, the state pension age looks like it won’t rise again; or not for a while at least. The bad news, that’s because life expectancy in the UK has fallen. Far more people have died, and died younger in the past 10 years than in other countries. The trend started in 2010, so directly correlates with a decade of public spending and health cuts, and it’s the poorest who’ve suffered most: ‘If you travel just six miles from the poshest part of Kensington in London to New Cross Gate, life expectancy for men falls by a staggering 18 years, from 92 to 74’ according to a rather shocking?Economist article. And that’s now, not in Victorian London. Of course, it’s those with least who will rely on the state pension the most. But not, sadly, for very long.

“Lower pricing leads to surge in home demand”

I suppose you could call this classic free-market behaviour; although it’s outside influences, in the end, which are the deciding factor. Prices keep going up until they reach a point of unaffordability, the unaffordability in this case largely due to a quadrupling of interest rates. So those who want to sell ask less and, bingo, people start buying again. It just takes Bert and Beryl at No. 14 to understand that their house will never sell for as much as Ron and Marjory’s at No.32, despite their new drive and beautiful begonias. They reduce the price, and, for some at least, the spiral starts to unspiral. Of course, if you decide not to sell, your house won’t have gone down in value and will almost certainly at some point go up again. So, hang on in there, and you’ll do alright in the end. Sound familiar?

“DWP backs ‘landmark’ expansion of auto-enrolment”

There’s been a lot going on, and this little piece of legislation may well have crept below your radar. It means that every adult employee, whatever they earn, will now be auto-enrolled into a?pension. It was previously only 22 year olds getting more than the ‘lower earnings limit’ of just under ￡6,400 a year. The idea is to ‘help lower earners, who have traditionally found it harder to save for retirement’. Here’s the scary thing however. If you run the numbers, someone saving 8% (the auto-enrol, workplace pension minimum) of their ￡20,000 salary for 50 years will have enough to give them a pension of around ￡8,000 a year after inflation. But very few are going to plough-on, saving at that rate for that long. And, if we haven’t sunk beneath the waves, we’re likely to have had at least 20 tinkering governments before then. So problem not yet solved, I’d say.