The Morning Mumble The Pensions Quantitative Easing Programme & Vedanta

There's a little known rule within the the UK Benefits & Welfare Policy whereby if a person has knowingly exhausted funds or disadvantaged themselves deliberately they are not entitled to means tested benefits. Will this be coming into play in a few years time as "Pensions Cash" burns a hole in people’s pockets?

For myself I have never valued my pension, for a number of reasons; the limitations, the compulsory elements of buying an annuity, the restrictions on bequests to spouse and child, and finally, the fact a company keeps all your cash when all elements of the contract have been met. So why work your proverbial off to then give it to someone else. Better to work on your own pot I say!

Not only is it a clever way of injecting other people's monies into the UK economy now to be know as PQEP (Pensions Quantitative Easing Programme). The fear should be whether it will lead to a majority of people peeing their pension up the wall on travel and the like in the first few years without security for the longer term of retirement. People's arguments of "well surely if you've saved for such a long time via a pension you'd resist blowing it are warped." 

The UK has historically been reliant on Welfare and Benefits, with the Labour Government (albeit it was planned by the Tories via the Children's Tax Credit (CTC)) perhaps improving the lives of Children via the CTC. What they did not realise was they actually exponentially improved the lives of benefit claimants whom "live" on the system. So now will we in 30 years be hearing of people 'conned' out of their pensions on a regular basis and parties investing in unprotected funds. At least it’ll give some consumer programmes some news in dry periods.

For the majority of people, annuities will still be attractive for those wishing to have longer-term security, but perhaps in a difference guise, akin to the mortgage deals offered in the UK, X% above base for 1,3,5,10,20 years etc...on top of the conventional models of the annuity of impaired life etc...Its known most are financially incompetent. Having seen people take significant interest only mortgages and the like, there could be an argument if "the pension policy is maintained" for most people investing in their own property rather than any pension at all. The average person could pay their mortgage off some 6 to 7 years earlier. This perhaps will compel property prices to go further north.

So thank you Colin, the news is welcome, but as my pension is specifically 3% of my wealth and hopefully will never increase above that, i'll continue to operate an all in policy, its achieved a minimum of 10% per annum once I got my hands on it. This excludes the settlement from a certain pension company whereby they preferred to settle rather than prove to a court that they had operated my risk agreement in appropriately. A long story, that may bore you one time when I feel the need to type with alcohol.

The tax issues make no difference whatsoever in my view. I'll come off the fence and state my view is Labour gain votes via benefit payments and the tories by rewarding workers; oops Tori-berals. So for those wishing to manage their pensions, I'd ask them to consider whom they're investing with rather than what. The management are more of an indicator on the whole. For me, I like low risk, cash cows, the reason I went all in on Genel (GENL) around the 635-655's and again into Bluefield Solar. Admittedly in the past 16 months has been somewhat of a rocket for my pension with a 65% in its value compare or around 48.5% in the last full year. Its slowed down a little...Anyway, you'll get the idea...low risk, cash is essential, don't bother with speculation of micro companies if you do not want to acknowledge the risks.

Edit: Assuming people are not asleep already...

Something most parties are not factoring risk into and was totally missed because of the budget is: Vedanta's largest shareholder A K Agarwal slowly creeping up and just 6-7% short of 75%.  wouldn't want to be short on that stock any more as there are certain risks presenting themselves that would cause me sleepless nights. Perhaps Mr Agarwal is going to put VED out of its misery, resolve its cash issue and take it private? Hmmmm…What does Mr A Agarwal know that the market does not? hmmm

What was interesting was Goldman Sach's view on Copper. It's common knowledge that Copper is driven by Property as well, what Goldman have not factored in is the stress levels in the Chinese Property market and over leveraging, akin to Self Certification for Mortgaging (My view). Unsurprisingly, there's now news of Zhejiang Xingrun Properties. For the traders out there, Copper is struggling not to break the significant support level of $2.91/lb with brief incursions below into 2.89$/lb. Currently holding at 2.94$/lb (ish) but will further default news push it further south? The speculative short coverage for the sensible will provide some brief respite as traders buyback their positions. 

Sirius Minerals appear to be trying to keep the news flow up with the Question and Answer document on its recently announced Mineral Transport System ("MTS").   Looks very positive in terms of showing their understanding…

For speculation, Iofina's change of Director . We know Dr Fay is a holder of the stock but the departure may be strategic in terms of the appointment of someone one assumes is not related to David Bellamy, Dr. William Delaney Bellamy, will no doubt prove a positive for the company. It may even provide some short-term positives to the share price. However the company still needs to be selling it’s Iodine in greater numbers rather than carrying stock.

NEXT have come in a star: Results For The Year Ending January 2014. Are Next management now at risk of poaching? Say for Marks and Spencers? Matalan? Will there be some senior changes? I suspect so, after all a Golden parachute, higher pay etc…is not to be sniffed at!

Now, I was informed yesterday about the longstanding speculation of Barclays Bank being split into Investment Bank and Retail. The view most have taken is it would leave the holder poor if they lost the IB 

Arm. Well surely it would not be poorer if the separation was purely a divestment with 100% of the stock being issues to the current shareholders. Barclays are likely to be considering this, in order to separate the brands. Lets see…

Anyone for some North Sea Oil Small-Mid Cap Consolidation, if rumours are true there could be some savy plays coming to a screen near you!

Atb Fraser