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Weekend reading: Don’t mess with pensions. They’re working.

What caught my eye this week.

Ten million UK workers will increase their pension contributions from today, which should mean a more prosperous retirement for them down the line.

No, Monevator didn’t just benefit from a promotion from Oprah Winfrey or Richard & Judy that delivered us few million extra readers overnight.

In fact many of those millions who are about to spend less and save more are probably only vaguely aware of the fact. That’s the genius of the pension auto-enrollment scheme – started in 2012, and the true reason for the imminent extra saving.

Auto-enrollment makes it easier to do the right thing by doing nothing. So far the opt-out rate is a mere 9%. Still, I think it’s fair to say the higher contribution rates are needed – and they need to stick – to deliver these workers the retirement income they’ll expect.

This could yet be a challenge. The new contribution rates may look measly to some super-savers around here. But they will take a meaningful chunk of change out of pay packets, as this graphic from the BBC [1] illustrates:

[2]

Higher personal tax allowances – also starting today – will ease the pain. Head over to the BBC [1] for the full story.

Pensions and property

Even the invariably spiky Merryn Somerset-Webb in the FT [3] hails the success of auto-enrollment, and describes UK pensions as in “fabulous shape”.

The UK pension system is well-funded by international standards, and auto-enrollment means our level of pension assets is increasing faster than elsewhere.

There’s just one potential snag, Merryn warns, which is that some wonks believe pension savings should be accessible to young people in need of a house deposit.

No no no!

A pension is a backstop. It comes with tax relief for the very specific reason that it is designed to stop you being reliant on the state in your retirement.

Once the money is in it is in, you can’t lose it gambling or in bankruptcy; you can’t create negative equity with it; and you can’t fritter it way on the internet (not until you are 55, anyway).

Enabling pension access to pump up the housing market might seem a good way to address housing inequality, Merryn scoffs, but it would destroy the integrity of the pensions system.

I agree. Lifetime ISAs [4] are mutant hybrid enough!

From Monevator

The Slow & Steady Passive Portfolio: Q1 2019 update – Monevator [5]

From the archive-ator: Why I don’t use the FIRE acronym for financial freedom – Monevator [6]

News

Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1 [7]

New year taxes: The key changes [Search result]FT [8]

Super-rich pay average 10% inheritance tax, versus 20% paid by wealthy – Guardian [9]

House prices hold up better than expected amid Brexit doubts… – Guardian [10]

…or perhaps you prefer to focus on the 1.6% fall in March – ThisIsMoney [11]

Bridgewater’s Ray Dalio warns US inequality risks social conflict [Search result]FT [12]

[US] super-savers spend less on housing – Market Watch [13]

Hedge funds raise minimums as costs rise and returns dwindle – Institutional Investor [14]

[15]The US market doesn’t look that outrageously expensive – via Business Insider [16]

Products and services

‘Bundled’ Amazon product reviews mislead consumers – Guardian [17]

MPs demand more scrutiny following high-profile mini-bond wipe-out – ThisIsMoney [18]

Pension Partners: 80% of ETF assets are managed by three companies – via Twitter [19]

End of the line for Nationwide’s 5%-paying regular savings account – ThisIsMoney [20]

Ratesetter will pay you £100 [and me a cash bonus] if you invest £1,000 for a year – Ratesetter [21]

Online shopping: ASOS to crackdown on ‘serial returners’ – ThisIsMoney [22]

Do tactical allocation funds deliver? – Morningstar [23]

Comment and opinion

Fees versus fines – Morgan Housel [24]

What’s your next dollar worth? – Khe Hy [25]

Buy yourself a f*cking latte – Barry Ritholz [26]

Are your annual return expectations realistic? – MoneySense [27]

How some of the world’s oldest people make their money last – Next Avenue [28] [via AR [29]]

Getting real – Humble Dollar [30]

The mystery of preferring a ‘spend only the dividends’ strategy – The Retirement Cafe [31]

How can you best communicate what risk means to you? – The Value Perspective [32]

Key information I’d like to see in a KID – IT Investor [33]

An interesting look at how a US active investor reviews his fund portfolio – M.F.O. [34]

O tempora! O mores! – Simple Living in Somerset [35]

JP Morgan CEO Jamie Dimon’s annual letter is usually worth reading – JP Morgan [36]

Some thoughts on a seed investment gone right – Points and Figures [37]

Lessons learned on successful start-up growth from an AirBnB insider – Medium [38]

Brexit

A shambles on which the sun never sets: How the world sees Brexit – Guardian [39]

The United Kingdom has gone mad – New York Times [40]

Anger and frustration: How Brexit is affecting our mental health – Guardian [41]

89-year old Betty Boothroyd delivers blistering Brexit attack – via Twitter [42]

Robert Peston shows Boris Johnson doesn’t understand single market – via Twitter [43]

Nicola Sturgeon notes Jacob Rees-Mogg’s hypocrisy about our EU power – via Twitter [44]

A video game version of Hard Brexit [Video] – via Twitter [45]

Brexit’s macho drama queens set to be knocked out by reality – Guardian [46]

Kindle book bargains

Eat Well for Less by Jo Scarratt-Jones- £1.99 on Kindle [47]

What You Get is What You See by Alan Sugar – £0.99 on Kindle [48]

Off our beat

Demographic time-bomb: Finland sends a warning to Europe [Search result]FT [49]

Recycling isn’t about the planet. It’s about profit – Slate [50]

The share of Americans not having sex hits a record high – Washington Post [51]

This is Boring: The niche London conference that became a hit – Eventbrite [52]

10 animals being eaten into extinction – Guardian [53]

Arms Sales: US vs USSR (1950-2017) [Video]Visual Capitalist [54]

And finally…

“The world of work today is overflowing with systems, processes, tools, and assumptions that are deeply flawed and that push directly against our ability to express what is unique about each of us in the work we do every day.”
– Marcus Buckingham and Ashley Goodall, Nine Lies About Work [55]

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  1. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. [ [59]]