Investment planning in the new pension environment

The changes in pensions announced in the recent UK budget were quite staggering in their scope and I suspect that it will be several years before the full implications of them dawn on most people.

Ignoring the minor, but quite significant, changes the biggie was that as from April 2015 your pensions savings effectively becomes a proper savings plan ie one where you can take the money out. Up to now, pensions often seemed to be an insurance company scam whereby you paid them money over your working life and when you retired they kept that money and paid you out an allowance from it. As of April 2015, so long as you are over pension age (usually 55), you can withdraw those savings.

That to me changes significantly how I consider my pension. Money put into it is no longer lost to some insurance company but is available to me just as my other savings are. One of the effects of that is that I’m much more willing to save money in the pension which can only be a good thing.

Another effect is that it somewhat muddies the waters as regards the difference in a pension and an ISA. In effect both are now fairly equivalent places to invest your money. With the pension, you get tax relief on the way in (ie put in £100 and it becomes £120 in the pension but income paid out is taxable) whereas with the ISA there’s no upfront tax relief but you don’t pay tax on any income paid out. This means that, for most people, a pension is a better savings vehicle as they are likely to be paying higher tax when working than when retired. Also, the limits are different with the pension being, largely, limited to your total income whereas the ISA is limited to £15,000 ie there’s, for most people, no practical limit on pension savings.

Combined with the new freedom, it would seem that it’s best to put your investments in a pension and your cash in an ISA.

A final point to note is that with pensions effectively becoming jumbo ISAs, there are likely to be a lot more investment companies offering them which, hopefully, will reduce the charges in due course.

What I suspect will throw many people is that all of a sudden their pension has become a, hopefully, large savings account. What you need to remember is the reason behind pensions which was always to create a large savings account which paid you an income for the rest of your days ie lifting the lot and spending it as soon as you retire could cause you considerable financial difficulty later on.

Copyright © 2004-2014 by Foreign Perspectives. All rights reserved.

56 up – the early effect of parents

The Up series has moved on to look at the 56 year old participants and what’s most interesting is, as always, the enduring influence that the various parents have had on their offspring.

What’s less obvious is how significant that parental support early on had. It was fairly obvious that the upper class kids would end up doing quite well but that’s not necessarily a function of them being upper class but rather that their parents were able to provide a level of support that was more difficult to provide for the less well off parents. Moreover, in the social circles in which they moved, there was the expectation that one would work hard at school, in university and in one’s life thereafter.

The effect of parental support is much more clearly seen in the different lives of Tony and Nick. Although they both started off in very much working class homes (Tony in London, Nick in the country), their lives have turned out quite differently. Where they are now and how they got there seems to reflect the different type of ambitions that their parents supported so many years ago. Nick basically started with what might be termed working-class ambitions (ie he concentrated on getting a particular job) whereas Nick looked beyond that and is now a professor in an American university (ie he concentrated on what might be possible if he worked hard).

The parents aren’t involved in the series but it seems likely that the parents of both Tony and Nick had pressure from friends and family to have their respective children stick to working-class ambitions. Nick’s parents rose above that and so did their son.

Copyright © 2004-2014 by Foreign Perspectives. All rights reserved.

Child genius or just pushed a lot?


Channel 4′s series Child Genius gives an interesting behind the scenes look at how parents prepare their children for the Child Genius competition.

Taken as read is that all the children involved have above average ability or at least if you didn’t see the behind the scenes work you would assume that was the case. However, it’s far from clear cut given the sheer quantity of work that some of their parents put into their children. With the level of work that some of the parents have been putting in, even an average child could be expected to perform quite well.

For example, take the spelling tests. Yes, it will certainly help to have a great memory, but in reality a lot of the spelling of the words comes down to rote learning of the “big words” in the dictionary. Moreover, you can concentrate on those words with irregular spellings as those following the rules are easy to spell. Granted, it would be quite a boring task to learn those words in isolation but it doesn’t require a genius to do it nor is it necessarily a test of genius to do it.

The maths tests surely require genius, don’t they? Well, if they were maths, they might do but they aren’t maths – they are purely arithmetical tests. Therefore, genius isn’t required. What is required, in some cases, is an ability to calculate quickly in one’s head which is a combination of practice and knowledge of the various tricks to simplify calculations.

Surely it’s clear that, say, the pianist is a genius? Well, no, that’s not clear either. What is clear is that he’s put an awful lot of time into practising his music but it’s not clear that an average child couldn’t do the same if they devoted a similar amount of time to the task.

However, the craziest parents are the two psychologists who seem to be devoting their lives to two to one extremely intensive tutoring. On the assumption that the psychological methods they are using actually work, then applying them at that intensity to pretty much any child would easily get them into the competition. Their tutoring appears to be so intense that it raises the question as to whether their daughter would be able to cope in a normal teaching environment.

Copyright © 2004-2014 by Foreign Perspectives. All rights reserved.

Too much material

Now that I’ve pulled together most (not even all!) of the material on which I was planning on basing the book on, I find that I’ve way too much. The first cut was nearly 400,000 words but ruthless weeding has taken that down to a mere 170,000 although that’s before I’ve started to collect together some reference information which will likely add another 50k words or so.

In that the collection process could take forever, I’ve decided to make a small start on the writing more as a trial run to see just how much of the material that I have would fit into the book format. So far, it looks like there won’t be a whole lot taken piecemeal and it’s more likely to be a reference for the material that I’ll be writing for the book. That should make the book fresher than it otherwise would have been which I’m sure is a good thing.

Still, at least I’ve made a start now.


Copyright © 2004-2014 by Foreign Perspectives. All rights reserved.

Finally starting to work on the book: Living in France without a TV crew

We’ve been meaning to settle down to write our book for years now but have only just gotten going properly on the initial stages of it over the last week or so.

Our working title is that of the original incarnation of this blog: Living in France without a TV crew. We figured that we needed at least a working title to focus our attention on what material would go into the book and what wasn’t really that relevant.

We’ve even got a very broad provisional structure:

  1. Choosing a place in France, of which we’ve nothing formally written yet;
  2. Moving in which’ll likely draw mainly on the articles here from 2004-2005;
  3. Some chapters looking in more detail at various aspects eg learning the language, education, etc.;
  4. Moving back, which raised more issues than you’d expect.

To see what we’d already written, I’ve been pulling together the relevant posts from 2004 through to 2009 which, even after loads of deleting, amounts to 322 pages and 180,000 words ie we’ve loads to work with.


Copyright © 2004-2014 by Foreign Perspectives. All rights reserved.