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Weekend reading: Straight to the good stuff, summer 2020 edition post image

What caught my eye this week.

Hello! I’m half-on-holiday this week (and that’s without an NHS app ‘ping’ in earshot…)

My mini-break hasn’t stopped me reading the money and investing Internet. But it does limit my time to waffle on about it.

In other words, straight to the links this week.

Have a cool(er) weekend!

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Emerging Market bond risks

Emerging market bonds graphic

This is part two of a three-part series investigating whether Emerging Market bonds can enhance passive portfolios. Today we’ll consider Emerging Market bond risks.

In part one we looked at why you might be tempted to cast aside volatile Emerging Market equities in pursuit of the handsome risk-adjusted historic returns of Emerging Market US$ sovereign bonds.

But very few cases are one-sided in investing.

A big question mark still hangs over EM US$ sovereign debt.

Specifically, is its superior historic performance dependent on tailwinds that have mostly died down?

Emerging Market bond risks

The rise of Emerging Market bonds is partly a phoenix-from-the-flames success story.

Burned by crisis in the ’90s, developing world economies reformed their financial institutions. Their governments controlled spending and improved debt-to-GDP ratios. There was the helpful growth of China and globalisation, too.

Credit rating upgrades followed. Investors enjoyed high yields buoyed by outdated perceptions of Emerging Market bond risks.

Demand for EM debt got a further boost as Developed World yields shrunk. Many investors hunted further afield for income like truffle-loving pigs in a forest.

Fast-forward to 2021 and:

Vanguard warns EM bond outperformance could be a historical artifact:

A number of trends – including falling interest rates, tightening spreads, and several equity bear markets – substantially explain what we expect was a historical anomaly.

Over longer periods, we believe investors can reasonably expect to be compensated for equity risk through realization of the equity risk premium.

Source: Vanguard. (“Emerging-market bonds: a fixed income asset with equity-like returns (and risks).” August 2018. Page 7.)

To put that quote in context, Vanguard’s researchers cautioned against expecting Emerging Market bonds to continue to beat Emerging Markets equities on an absolute return basis.

Reading between the lines

Indeed any bond-curious metric we check doesn’t augur well for a repeat of EM bonds’ Olympian performance of the past 20 years. 

Yields have waned on Emerging Market bonds to near historic lows:

Graph showing declining Emerging Market bond yields (1997-2021)

Yield-to-maturity (YTM) peaked at 15.6% in August 1998 as financial shocks ripped through Emerging Markets. The YTM is now below 5%.2

In other words, we’re being offered less reward for taking risk today than the bond investors of yesteryear.

Note, the bulk of long-term bond returns turn on the size of their coupons.3 This is especially true at the intermediate durations that dominate EM US$ sovereigns. Today’s lower bond interest payments signal moderate rewards ahead.

Similarly, credit spreads (vs US Treasuries) have tightened:

A chart plotting the declining credit spread of Emerging Market bonds (1997-2021)

The credit spread peaked at 1321 basis points – that’s 13.2% – in August 1998. The historic low was 1.6% in May 2007, just before the Great Recession convulsed the world. This spread is 3.3% at the time of writing.4

The mountainous credit spreads and yields of the late ’90s and early ’00s indicate EM debt was consigned to basket-case status back then.

A fear of further defaults jacked up yields.

But Emerging Markets comfortably surpassed investor’s low expectations in subsequent years.

Which meant those elevated yields rewarded investors who took on risks that happily failed to materialise.

Default position

The subsiding credit spread indicates the perceived risk of default is lower today.

Comforting. But it also implies there’s less room for ‘equity-like’ upside.

Ultimately defaults will probably rise and fall in line with the global boom-bust cycle. An investor in Emerging Market bonds will lose when yields lag defaults. They’ll win when the market over-reacts and higher yields dominate even as defaults hold steady or decline.

As a passive investor I can no more time this default cycle in bonds than I can exploit stock market turbulence.

EM bond durations have also increased a touch over time. We’re taking on more ‘term risk’ today to bag our yield.

Finally, the EM debt market is much bigger than it was. It’s not a secret anymore.

Prediction time

So much for history’s rear-view mirror. How about forward expectations?

Fund manager Research Affiliates provides a brilliant range of tools, including expected return forecasts.

And these are pretty downbeat for Emerging Markets US$ sovereign bonds over the next ten years:

10-year forecast chart of Emerging Market bonds and Emerging Market equities

This expected returns chart shows annual GBP real returns (based on current valuations) of:

  • 0.7% Emerging Markets US$ sovereign bonds (blue bar)
  • 5.1% Emerging Market equities (red bar)

Note: Research Affiliates offers a range of returns along a probability distribution curve. I’ve stated the mean return.

Research Affiliates also offers an alternative forecast model that shows Emerging Market bonds in a better light. This uses yield and growth predictions instead of current valuations:

Expected return forecast chart for Emerging Market bonds and Emerging Market equitiesHere we see:

  • 2.8% Emerging Markets US$ sovereign bonds (blue bar)
  • 4.8% Emerging Market equities (red bar)

I don’t have an opinion about the efficacy of these different models. You can find Research Affiliate’s methodology on its website if you’d like to delve.

Will Emerging Market bonds yield for you?

One gauge of a bond fund’s annual expected return is its current yield-to-maturity. 

Current yield-to-maturity is a reasonable estimate of what you can expect to earn over the fund’s duration.

The following chart shows that current YTM is quite well-correlated to actual returns for EM US$ sovereigns:

Future bond returns are correlated with today's yield

A quick eyeball of accessible EM US$ sovereign bond funds gives us a starting yield of around 4%. The average duration is about 8.

That’s more encouraging. Although the one thing we can be sure of with any long-range forecast is that it will be wrong!

What should we do?

I don’t think anyone should oust Emerging Market equities from their portfolio expecting Emerging Market bonds to score higher returns.

That’s because it’s reasonable to assume the equity risk premium will reassert itself sooner or later.

Rather, the case turns on the chance of EM US$ sovereigns continuing to deliver superior risk-adjusted returns versus EM equities.

Any retreat from globalisation or a misfire from China’s growth engine will hurt EM equities. And rising EM bond defaults will probably correlate with such stock market drama.

The fates of the two sub-asset classes are therefore intertwined.

That said, Emerging Market governments can raise taxes, dip into currency reserves, and raise loans from the IMF and World Bank. That makes them less risky than EM equities, in my view.

Moreover, Monevator’s friendly quant, ZXSpectrum48k, has argued:

I also like the absence of EM FX exposure which I think you are simply not compensated for in EM equities. EM sovereign debt has produced the same returns as EM equities but with a fraction of the volatility. It also offers a somewhat lower correlation with broader equities.

UK investors are exposed to US$ currency risk via Emerging Markets US$ sovereign bonds, but not to Emerging Market currency risk.

There’s no need to hedge this US$ risk, as Emerging Market bonds should be allocated to the equity side of your portfolio. And currency risk can be seen as a diversifier, as long as it isn’t in your defensive asset allocation.

Same difference

Speaking of diversification, the geographic spread of Emerging Markets US$ sovereign bonds is quite different to Emerging Markets equity.

Take a look at the Regional Split rows below:

Emerging Market bond index characteristics

State Street. “Case for Allocating to Emerging Market Debt.” February 2021. Page 6.

  • Latin America, Central and Eastern Europe, and the Middle East and Africa are much better represented in EM US$ sovereigns.
  • In contrast, the Asia Pacific region dominates Emerging Market equities.

(Note: Emerging Market US$ sovereign bonds are labelled Hard Currency Sovereign EM Debt at the top of the left-hand column.)

You can also see that EM US$ sovereigns have decent yield, intermediate average duration, and a credit risk exposure that’s split across investment grade and sub-investment grade (junk) bonds.

Final asset allocation thoughts

Monevator contributor and former hedge fund manager Lars Kroijer made the case for diversifying into riskier EM government debt in his book Investing Demystified.

Lars suggested a 10% allocation to sub-AA government debt carved out of the equity side. He calculated this was roughly in line with the global split of risky assets between equities, corporate debt, and sub-AA goverment debt. (At the time he was writing).

Lars didn’t argue that Emerging Market bonds were vital or transformative.

Rather Lars was showing how to enhance diversification if you can live with the complexity.

Emerging Market bond risks may be worth taking for diversification

Personally, I haven’t yet been rewarded for increasing complexity in my own portfolio.

Despite this, I do still look for opportunities to diversify. The future often throws up surprises that backtests and forecasts gull us into believing we can factor out.

I have no actionable view on the future direction of US interest rates, the China-America trade relationship, or the fiscal positions of 74 Emerging Market countries.

Nonetheless I’m likely to soon split my EM equity allocation in half. This will enable me to allocate 5% to Emerging Markets US$ sovereign bonds.

Such a small allocation is unlikely to make a big difference one way or the other. But I think it’s appropriate to the merits of the case.

In part three I’ll look at the best Emerging Markets US$ sovereign bonds index trackers we can buy.

(Right after I’ve pulled these fence splinters out of my backside!)

Take it steady,

The Accumulator

P.S. Bond fund taxation is typically higher than with equities. This could be another black mark against Emerging Market bonds if you can’t fit them into your tax shelters.

  1. See Vanguard. “Emerging-market bonds: a fixed income asset with equity-like returns (and risks).” August 2018. Page 7. []
  2. That’s according to the market-dominant JPM EMBIGD index of EM US$ sovereign bonds. []
  3. How much a bond pays in regular interest payments. []
  4. Again, according to the market-leading JPM EMBIGD index of EM US$ sovereign bonds. []
Image of suit armour as symbol of Section 75 protection

This piece on Section 75 is by The Treasurer from Team Monevator. Check back every Monday for more fresh perspectives on personal finance and investing from the Team.

I was once scared of credit cards. I believed saving up for things I wanted to buy was always the right thing to do. Credit cards were the work of the devil. They were designed to trap you in debt at hideous interest rates.

I still believe those things to some extent. If I want something, I’ll save up for it. I only ever splash out if I have a real need, or if I consider it excellent value for money.

And I still think some credit cards – such as those with eye-watering interest rates pushing 40% – are awful. Especially those that target sections of society who can least afford it.

Yet as time has gone on I have also grown to understand that credit cards are essentially tools. Albeit tools with a dangerous edge.

Think of a credit card as like a very sharp knife. Extremely useful in the hands of a Michelin star chef. Less so – and potentially dangerous – when wielded by an amateur cook.

In other words, use credit cards in the right way (often contrarily to the goals of the card provider) and you can benefit, at no cost to you.

Get it wrong and you could find yourself servicing interest for years. That will leave your dreams of early retirement in ruins.

Cashback is a quick credit card win

An obvious way to use a credit card to your ‘advantage’ is cashback.

With a cashback credit card, you earn small amounts of money every time you spend on it. You’ll profit on everything you buy, so long as you pay off the balance in full every single month. That way you avoid paying interest.

I put ‘advantage’ in quotation marks above, because card providers still benefit when you use their card. Retailers must pay the card provider a small fee for each transaction. So using a cashback credit card as I’ve described won’t make your card provider lose sleep.

Of course your card provider won’t mind if you miss a payment and owe them a nice bit of interest, either. So unless you enjoy contributing to a banking giant’s annual Christmas party, set up a monthly direct debit to regularly clear your debt.

What is Section 75?

Now onto another way you can make credit cards work for you – to use one solely to benefit from Section 75 legislation.

Section 75 is part of the Consumer Credit Act. (Section 75 of it, shockingly enough).

This legislation dates back to 1974. The legal eagles who wrote it thought it would be unfair to have someone borrow to pay for something on a credit card, only to not receive the item, or to suffer issues down the line. Especially if they were still in the process of paying for it!

Today, almost 50 years later, Section 75 remains a powerful consumer tool:

  • Pay for something on a credit card that costs between £100 – £30,000 and Section 75 will automatically apply to your purchase. (As long as the thing you’ve purchased is for you).
  • Section 75 means the card provider which you buy from is equally liable for your purchase. So if anything goes wrong, you can knock at their door for a refund.

Importantly, you don’t have to pay for the whole item on a credit card for Section 75 to apply.

Pay just £1 or 25p –or any other humorously low figure – on a credit card, and your whole purchase is protected. Up to £30,000.

So if you’re buying a new car, then agreeing with the dealer to pay £100 on a credit card will give you protection on the whole purchase price.

You may find this a bit silly. But some retailers may put restrictions on the amount they’ll accept on a credit card, due to the processing costs involved.

(Since 2018 retailers can no longer charge a fee to use a credit card. However they can refuse to accept them).

Section 75: What are the main benefits?

Section 75 is particularly good for dealing with cases whereby a retailer has gone into liquidation.

For instance, you order a sofa and the supplier goes bust between the time it takes your payment and the delivery date – which can often be months away. Section 75 protection means the card provider can refund your cash. This sure beats making your case to an appointed administrator. There you’d probably have to settle for pennies in the pound, at best.

Section 75 doesn’t apply only when a retailer has gone bust. Say you want a refund for a defective or missing item and you’ve had no luck convincing the retailer to give you your money back. Section 75 enables you to seek a refund from your credit card provider instead.

A Section 75 claim doesn’t mean you’ll definitely be refunded – the card provider may not agree with your claim. But it’s fair to say that a banking giant is far more likely to pay up than a struggling retail provider keen to keep your cash. Financial companies usually have deeper pockets.

Even if your Section 75 claim is turned down, that’s not the end of the story. When you’ve paid on a credit card, you have the added option of taking your case to the free Financial Ombudsman service. It will then make a ruling on the behaviour of your card provider.

Remember, Section 75 makes both the retailer and card provider equally liable. So you don’t have to take your refund case to the retailer first. You can go straight to the card provider if you wish.

Section 75: What should I look out for?

There are no real drawbacks of Section 75. However there are some things to watch out for should you wish to rely on the protection.

Firstly, if you’re paying for something with Section 75 protection in mind, ensure it’s for your own personal use as the cardholder.

While the law isn’t set in stone, you may suffer some pushback if you make a claim via Section 75 for an item or service that wasn’t intended for your own use. (That said, one popular consumer website suggests that group bookings should be covered.)

Secondly, for Section 75 to apply make sure the thing you’re buying is actually over £100.

Annoyingly, if you buy two single flight tickets costing under £100 each – with a combined cost over £100 – you probably won’t have any luck with a Section 75 claim. However, a return ticket costing more than £100 means the cover will apply. It’s considered a ‘single item’ in the eyes of the Consumer Credit Act.

Thirdly, there may be an issue with relying on Section 75 protection if you buy via a third-party intermediary. More on that below.

Finally, if you’re buying something costing less than £100, don’t assume that you haven’t got any protection at all.

Lesser ‘chargeback’ protection applies for all purchases made on either a credit or debit card. This protection doesn’t have a legal basis. Rather it is part of rules associated with the major card processors (Visa, Mastercard, and Amex).

With chargeback you can ask your card provider for a refund. However unlike Section 75, under chargeback your card provider will seek a refund from the retailer you purchased from, rather than reimbursing you directly.

While it’s much less powerful than Section 75 protection, chargeback is still a consumer tool worth remembering.

My own personal horror stories

Knowing I’m a personal finance wonk, friends and family members often come to me for unofficial guidance. Despite this I’ve found convincing them to sign up for a credit card – solely for Section 75 protection – a tough sell.

That’s ironic, given that in my personal life I’ve seen the importance of paying for big purchases on a credit card.

A few years back, a former flatmate contacted me for help. She had paid upfront for a teeth whitening service. The provider went into liquidation when she was only a quarter of the way through her treatment. I was horrified to learn she’d put the £3,000 treatment on a debit card.

Unfortunately my efforts to convince her to use a credit card for all big purchases in future couldn’t bring back her lost cash. And I’m sorry to report that her chargeback claim was unsuccessful.

Similarly, but fortunately not so devastating, a family member recently purchased a large camping item from a retailer based in continental Europe. The value was just shy of £1,000.

The first I’d heard about this purchase was when I was contacted to ask for help when the item didn’t arrive. I asked what was used to purchase the item. Yes, you guessed it, a debit card.

A package did eventually turn up, albeit in a very damaged box. It was the wrong item! The cost to send it back was over £80. Other than explaining to my family member how easy it would have been to claim back the cost from a credit card provider, there was nothing I could do.

The same family member also experienced difficulty in claiming a refund for a long haul flight last year that was later cancelled due to Covid-19.

While Virgin Atlantic eventually gave way and refunded the money many months later, this was another instance where Section 75 would probably have come up trumps.

Third-party complications

If you want to rely on Section 75, try not to use a third-party service if you can.

There have been a few stories of people missing out on Section 75 protection due to a requirement that there must be a direct link between the customer, the credit card company, and the supplier or retailer.

Using a third-party website, such as a travel agent, may therefore mean you won’t be able to make a claim under Section 75. That’s because the travel agent may be seen as ‘breaking the link’ between parties.

I say ‘may’ as the rules on this are pretty blurred, and there’s conflicting information across the web.

To play it safe, always book direct if you can. So if booking a flight over £100, for instance, it’s probably best to go directly to the airline’s website rather than going through a travel agent, if you want to maximize your Section 75 protection.

Section 75: The takeaway

I’m wary of calling anything a ‘no-brainer’. We should always consider the drawbacks of any particular product.

Yet, as long as you don’t use a credit card to recklessly borrow, signing up for a credit card and using it to pay for anything over £100 really is a no-brainer, due to the free Section 75 protection you get.

But don’t just take my word for it – let’s hear from some readers. Have you ever gone to your card provider to make a Section 75 claim? What was your experience? Let us know in the comments below.

You can see all The Treasurer’s articles in a dedicated archive.


Weekend reading: Turning on the triple-lock

Weekend reading logo

What caught my eye this week.

I was a big fan of real-time strategy computer games in my frugal but otherwise misspent youth.

You know – those games in which you’d martial digital resources and deploy armies to expand your burgeoning industrial-military complex (or gold based goblin empire).

At their best, real-time strategy games gave you a glimpse of what it was like to be Napoleon or Marcus Aurelius – commanding legions!

At their worst, they were invariably broken by glitches that threw the whole illusion out of whack.

For example, weapon combinations whose lethality escaped the game’s bug testers and made your troops invincible.

Or technology tree choices that exponentially repaid whatever you put into them, giving your faction near-infinite riches while your computer opponent was still rubbing two sticks together.

Triple-lock turns the screw on UK finances

I thought of these glitches when considering the fuss over the triple-lock for pensions. As Simon Lambert noted in ThisIsMoney (my bold below):

The government made a deal in its manifesto to stick with the triple lock, which raises the state pension by whichever is the highest of consumer prices inflation, average annual wage growth, or 2.5 per cent.

It uses September’s inflation figure but July’s average earnings number, and this week the UK’s public finances watchdog, the Office for Budget Responsibility, warned that the latter could trigger a shock £3billion bill.

This would come from pensioners getting a bumper rise due to a quirk from the coronavirus crisis.

Average earnings figures are temporarily being distorted by furlough, lockdown job losses and a comparison to pay cuts in the depths of the crash a year ago, meaning that average wage growth is currently coming in at a high level and rising.

Annual wage growth climbed to 5.6 per cent in the three months to April, according to the latest official figures, and the crucial three months to July figure could hit 8 per cent.

That’s a very nice uplift for doing nothing different if you can get it. But the triple-lock wasn’t meant to occasionally throw up three melons on the slot machine of financial life like this.

An 8% rise after everything we’ve been through looks like a classic glitch.

Still, it’s worth remembering the triple-lock has otherwise delivered roughly what it was meant to.

The State pension has increased ahead of average earnings since the triple-lock was introduced in 2011. This halted an ongoing decline in relative terms that was previously making pensioners ever poorer.

And that outpacing has come even though in most years the State Pension has only increased by 2.5%, as cited by the BBC:

That’s the great thing about guaranteed increases from a mechanism like the triple-lock, at least if you’re not the one who has to pay for it.

You always get some cream, without ever suffering a sour year.

Screw who

With that point conceded to the triple-lock, an 8% rise does look dumb.

David Willetts, the president of the Resolution Foundation think tank, argues the annual earnings link should be replaced by figure that better reflects workers’ experiences of pay increases and declines:

“The Covid crisis has laid bare the design faults of the triple lock, with a severe jobs crisis last year inadvertently contributing to an unnecessary and unjustified 8% rise in the state pension next year.

The chancellor should take the opportunity this autumn to replace the triple lock with a smoothed earnings link.

This would mean the state pension would rise in line with the living standards of working-age people – a change that would be fair to all generations.”

You may remember Willetts was the unusually bold former Tory minister who in 2011 published The Pinch – a book highlighting potential inter-generational fallout from the good fortune of the Baby Boomer generation.

Since then Boomers have only gotten richer, and pensioners could now see an 8% uplift to their state income in the wake of millions of their grandkids being (rightly) ordered to stay at home, in large part for the sake of the elderly.

True, the UK’s State pension is not especially generous. Those who rely on it are not the same people that Willetts and others finger for hoarding an undue proportion of the nation’s wealth.

On the other – other – hand, one can argue today’s pensioners already had their chance to save during three decades of prosperity.

In contrast, today’s young now have to save for their future – at a time of financial crisis, lockdowns, globalization, Brexit, and near-zero interest rates, with houses unaffordable to most to boot.

But how many hands have you got? Because yet another point is that pensioners vote.

Something their favourite newspapers have pointed out repeatedly in calling for the 8% rise to sail through.

Pick your pension poison

It seems to me the 8% uplift is clearly a bug caused by unforeseen circumstances. In software terms, it needs a patch to update it.

However it’s also true the triple-lock was introduced to stop the state pension becoming inadequate over many decades of longer retirements and rising living standards. We all know that story.

Pundits who’ve never seen a state benefit they didn’t want to double argue we should all want to retain the triple-lock, because today’s young people will benefit from it in their old age, too.

Whereas ironically, many young people suspect they’ll never get a State pension – partly due to its high cost funded by a shrinking pool of workers.

A cost that could be made even worse – to the tune of £3bn forever – by this glitchy 8% uplift!

Finally, we have speculation – see my links below – that chancellor Rishi Sunak is looking to claw back money by further reducing the amount you can put into a private pension or by cutting the tax relief you receive.

You don’t need to be Daniel Kahneman to see that all this tinkering with the rules that govern payouts that you won’t receive for decades is deeply sub-optimal.

Pensions 2.0

I’m not especially old, and I’ve seen big pensions changes in my lifetime, myriad tweaks, and annual speculation that this allowance will be chopped or that relief will be scrapped.

That’s not even to get into the shifting age limits as to when you can get your hands on your money.

It’s pretty ridiculous.

Indeed I’m starting to wonder if we shouldn’t do a hard reboot towards a system so simple that everyone understands it – making it harder for future politicians to meddle with – albeit at the cost of more turmoil today.

I haven’t attempted to cost out the following idea, but in theory it could sweep away a lot of this ongoing nonsense in one go.

We evidently believe as a society that old people should have a minimum standard of living.

We also believe younger people should know they have a comfortable future to look forward to, for all kinds of good reasons.

Finally, we understand it’s incredibly difficult to make any forecasts and commitments about the far future – financial or otherwise.

Funding your retirement been described as the hardest problem in finance, due to all the uncertainty.

But perhaps the one entity that can make firm commitments is the State, backed as it is by taxpayers.

So – maybe we should set a universal state pension at a much higher level than today’s payout. Say 50% of a median workers earnings.

That would deliver a State pension of about £15,000 a year right now, compared to less than £10,000 under the current system.

Wow, right? But how do we pay for it?

Well for starters we then scrap the entire artifice around private pensions and tax relief.

All of it. Everything.

People could still save and invest whatever they liked in the usual way, of course. There would be no prohibition on aiming to be a multi-millionaire in your old age.

But the government wouldn’t help you get there.

So there’d be no private pensions. No annual allowances or tax-free lump sums. No crystalization events or similar. No tax wheezes at the margins.

All gone, at a huge (though possibly not sufficient) saving to the government of time, money, and bureaucracy.

Possibly ISAs could remain. We’d have to do the sums. But before you get too indignant, remember you’d be getting that far bigger state pension, too.

Don’t worry, be happy

Obviously the lower-paid and poorer would gain the most though from this system. I’m not sure that’s a bad thing, given the direction of travel of society over the past 20 years.

But richer people like most of us are (or will be) would benefit, too.

Our retirement plans could be built on stronger foundations. Difficult choices about whether to lock money away and what would happen to it would be replaced by simply saving as much as you could and wanted to.

Billions would be saved in accountancy costs and other fees.

One snag would be it would make the Boomers even richer. The wealthiest cohort of society would suddenly get a far higher State pension despite not paying much towards it. (They’d pay something – they pay tax, remember).

Perhaps we’d need a windfall wealth tax to smooth the transition? If that meant Boomer retirees short on liquidity moving out of their mostly empty five-bedroom homes to release capital or whatnot, that’d probably be a good thing, too.

Now as I said I haven’t costed out my alternative pension system.

Why bother? Even if I was an elected MP there’d be zero chance of it being implemented.

But I think it’s worth thinking about big alternatives to this ongoing muddle.

Otherwise we will battle on for years with shifting rules and benefits and a future target that looks more like a swarm of bees than a bullseye.

More patches and glitches – and the occasional threat of a crash – forever.

Good business for financial planners, politicians, and tax specialists. Not bad for money bloggers, either.

But a pretty dumb way to encourage people to plan their way through life.

Have a great weekend everyone. Stay hydrated!

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