I am trying to consolidate two small pensions.

I am trying to consolidate two small pensions into one small one after expenses, charges etc. The charges are quite expensive but I have not got much choice. One of the two will disappear, if I don't take action by August. My financial adviser recoomended a lifestyle one, which moves into cash at the end of the term to provide some protection.
Let's hope it will perform. The financial adviser said the annuity rates were very poor at the moment so it did not make sense to get an annuity and especially at my age. I wish the charges were lower, since they hit investment returns. I suppose that
in many cases gross investment in pensions produces little after charges.

I must have been insane!!

In a very weak moment or was I insane but I was contemplating a minor purchase of War Loan. This was after my previous post on how likely it was for foreign investors to boycott gilts (British government bonds) for inflation and currency
reasons.

Obviously, this is not a recommendation one way or the other since this is not a professional blog and I have not got any professional qualifications. Most of my ideas probably come from the Daily Telegraph. I think it was in the 1930s that the UK government cut the coupon on War Loan, which was a tinsy bit naughty. It is an undated stock and some hold the bonds through inheritance. I still fancy buying them though, since they are a bit of history.
www.searchifa.co.uk

However, conventional government bonds can really be hit by inflation. A lot of financial pundits are saying that UK index-linked gilts are a better buy. In reverse,
if there is real deflation in Britain, then gilts and corporate bonds could be a wonderful investment if coupons are maintained. That is a big if, especially if yields reach the default levels of the 1930s.

Also bond prices are being distorted by quantative easing measures being carried out by the Bank of England, so I better lie down and wait for the War Loan urge to go away.

UK Chancellor Alistair Darling stretches credibility.

It is probably correct to say that UK Chancellor Alistair Darling is stretching everyone's credibility with his growth forecasts for the British economy, which is basically England. To get Johnny Foreigner to invest in £200bn plus worth of gilts, I would have personally introduced measures such as higher VAT, lower international aid and European Union payments and lower expenditure on PFI projects. As I am not chancellor....

Introducing a top rate of 50 pct might play well to the left wing of the Labour Party but will lead to a lot of talent going abroad. However, it will be nice to see top-level bureaucrats and town council fat cats having to pay more. I think it is the case that quite a few footballers and football managers get paid through the Channel Islands, so at least this will stop (I think?).

The mountain load of UK government bonds (gilts) will have to compete with US Treasuries, German Bunds and even Spanish Bonos. There is unlikely to be a currency gain since we need a very weak sterling to get the British economy going and to mask the effects of deflation. If there is a gilt buyers strike and we have to lift the yields on these British government bonds, then Gawd help us poor
Britishers.

British Premier Gordon Brown says the economic crisis started abroad. If you say so Gordon. Obviously, Northern Rock and Dunfirmline Building Society are major international institutions. That is why they hit the rocks. (sorry about the pun).

I suppose we live in dangerous times!!

G-20 already seems far away. And it was only last week. I doubt if the world's leaders were worried about British government bonds (gilts). I suppose we live in dangerous times. Gilts could be a poor investment if inflation takes off unless they are the index-linked variety. These last type of gilts are a favourite investment of the pension fund of the Bank of England itself itself according to economist Liam Halligan writing in the Sunday Telegraph..
The investment expert Brian Tora writes in moneymarketing.co.uk
that corporate bonds could be hit by either inflation or by a downturn longer than forecast.
I wonder if we need a return to the Goldilocks economy, not too hot or too cold. I know there are some big bets being made over corporate bonds on the basis they are underpriced and that they could provide much-needed income. There is a ghastly alternative scenario and this is that corporate bond defaults will match the 1930s Depression.

Could we get deflation and prolonged recession?

In the moneymarketing.co.uk edition for 19th March 2009 Brian Tora again does an excellent summary of the current financial situation. He muses about the 1970s and the problems suffered by the UK economy then. Tora concludes that "the risk of being out of the market is rising". Before that, he considers that gilts look vulnerable to a correction.
Since then we have had a gilts auction uncovered, which apparently the bond market taking a dim view of HM Government's borrowing plans. We could get a tough budget from Chancellor Alistair Darling, if he ignores his boss Premier Gordon Brown.
The government wants some voter friendly measures in the budget, which is happening late this year. Chancellor Darling will have to come up with a plan to get the public finances on track.

In the UK defined contribution pensions are being crunched.

Research by the firm Aon Consulting has shown that the value of defined contribution pensions has fallen from a total of £550bn in September 2007 to £410bn at the end of January 2008 according to a report by moneymarketing.co.uk.
I think Gordon Brown, UK premier, will have to increase the tax advantages of personal pensions since people will otherwise decide that these investment vehicles are not worth the candle. I am thinking about putting a modest monthly amount in a pension for 15 years and probably the sum and the time period are not sufficient. I will probably invest in a tracker but it could be quite diminished by the charges, which mount up in time.

Protected rights!! What are they?

On the British pension scene we have the thorny issue of protected rights. These can now be transferred into a SIPP.
www.searchifa.co.uk The area of protected rights should be a good one for IFAs to give independent advice. Companies seemed to have washed their hands over trying to help out their employees in this area. In fact, it is pretty hard to get pension advice anywhere.
The collapse of corporate pension schemes, such as defined benefit ones, have made state pensions more valuable. The state scheme should be the cornerstone of pension planning. I suppose the tax raid on defined benefit schemes sanctioned by the then Chancellor of Exchequer Gordon Brown was based on an understanding that the sponsor companies would make up the difference. In fairness, increasing longevity would badly hit the pension schemes of firms. Perhaps, the demise of Equitable Life made people question the security and certainty of pensions. Despite being told by the Parliamentary ombudsman, the Labour government has not helped the victims of Equitable Life.
I invested in an Equitable Life with-profits fund and it was not funny aking the hit when I transferred. The authorities regulated the firm, which was originally founded in the 1760s, but provided no compensation. British personal depositors in Icelandic banks got their money back, where there was no UK regulation. However, this was not the case for Dutch and German depositors (I think), who really took a hit.