Government has a new thought on long-term care – a £20,000 one-off tax payable at 65. This is the flip side of the NHS and the vast improvement in medical knowledge which has increased life expectancy which continues to increase at the rate of one year, every decade or so. Prudential say that the average pension fund of their customers is around £45,000 at 65. That figure is a year or two old, so probably £35,000 currently and with an annuity rate of say, 6 per cent, that would generate an annual income of £2,100. Take £20,000 out of £35,000 and well, it’s < half that. Income Support please? None of the choices is going to be popular to solve the issue of an increasing elderly population supported and kept in good health by a smaller working one – immigration of  younger working people may help here but disturbs another hornet’s nest – let’s not go there.

Interesting item on long-term care in BBC Radio 4 MoneyBox http://www.bbc.co.uk/iplayer/episode/b00ln09d/Money_Box_18_07_2009/ featuring Solicitors for the Elderly http://www.solicitorsfortheelderly.com/public/index.php Government likes an insured solution (sub-text – someone else will pay for it) but with only one provider in the market currently, interesting to see what bright ideas pop up – see http://www.georgeemsden.co.uk/2009/06/health-or-wealth/

If you have a house and are thinking equity release might be a solution, the amount of income you get is based on annuity rates which are not high at the moment (the flip side of one half per cent Base Rate) and the rates for anyone under 70 are not generous – and with house values falling, unlikely to improve. My last equity release case was years ago where a solicitor referred a lady in her 70s to me. A 20 minute telephone conversation established that she was spending all her income and had used up all her savings. Two children and a few grandchildren explained this but a new central heating boiler was needed and with two previous hip replacements having failed, she was unable to have any more. Apart from the extra income needed, some sort of capital reserve or emergency fund was essential. It also seemed perverse to have a fund for house maintenance but nothing for her own health, so we agreed on £10,000 for each eventuality. Fortunately the house was large and unencumbered so plenty of reserve if future income needed. The recent falls in house prices will not have been a problem as only the minimum equity was used.

Just after my Afghan/Vietnam rant last week, an interesting counter-argument “Jingoism in Reverse”  from Charles Moore http://www.telegraph.co.uk/comment/columnists/charlesmoore/5852723/Jingoism-in-reverse-how-the-media-are-beating-the-defeatist-drum-in-Afghanistan.html

BRX Bond Street has a lot of visitors and Mike Jennings of procurement specialists www.avenue-uk.com is back after a long while, having completed a 5 month stint at a global bank. With his extensive operational and procurement background, Mike is brought in to establish a Project Office to facilitate a wide ranging procurement project.  The savings are to be a mix of Supply side savings (reducing cost of purchase) and Demand side savings (reducing usage).  The programme will save up to £200 million and has already banked about half of that i.e. new contracts signed.  But after five months and with much work yet to be done, the bank’s senior staff decide that they need to be seen to save money on Consultant costs (across the bank) and so Mike ends up transferring the work he was doing to 5 of the Banks staff to add to their already full time workload.

Do Cost Consultants work in the long term?  If they are paid a one-off fee based on how much they save, then probably not.  Avenue’s own experience of clearing up the aftermath of Cost consultant work is that around 80% of work based on shared savings is either reversed or significantly changed over a three year period.

Same BRX meeting another guest is the Rector of St George’s Hannover Square http://www.stgeorgeshanoversquare.org/ where Handel regularly worshipped and “Morning Calm” is listed as the first regular weekly service of the day.

Seems like the UK may have its own Ponzi story with METRO (the free tube mag) and then Daily Telegraph running the story of an alleged £80 million missing from Business Consulting International http://www.telegraph.co.uk/news/newstopics/politics/lawandorder/5872975/Ponzi-suspect-arrested-outside-Knightsbridge-office..html Their site is still running at time of writing  http://www.businessconsulting-intl.com/ and if you think the name sounds good, http://www.businessconsultinginternational.com domain is still available.

But for a change i.e. with Europe having the initiative, Barclays lend US$ 3 billion to small/medium business lender CIT Group in the US  http://dealbook.blogs.nytimes.com/2009/07/19/cit-is-near-deal-for-3-billion-loan-to-avert-bankruptcy/?dlbk&emc=dlbk not to be confused with Citibank where it has hired some of their top M&A staff.

For different angle on money, Shawshank Redemption comes to London http://www.theshawshankredemption.co.uk/?gclid=CIOMo_fD5psCFU0A4wodeVWp5Q The film version of Stephen King’s original story Rita Hayworth* and the Shawshank Redemption is on many people’s lists of favourite films, but this is the first time it has been done on stage.

At in2 Consulting, platforms and wraps are topic of the month. These enable all one’s policies to be held, managed, bought and sold via one web-based account. Clients can check their values etc on-line compared to telephoning and asking, how much is my portfolio worth? None of the ones around is perfect and changes from one to another have to be done manually – a real pain. Some platforms have a database of 1,700 funds while others may have 5,000. There is also the issue of rebalancing portfolios. Changing stock market/fund prices can change a cautious portfolio to a more risky one or a real dog in performance terms. Big insurance companies are wading in, have plenty of money to spend and some are looking good. Regulator says we cannot just select one because it suited us a couple of years ago, so we are having a beauty parade. More features mean more costs, whether it is a monthly fee or an annual manangement charge.

Interesting times.

* WW2 screen icon http://images.google.com/images?q=rita+hayworth&sourceid=navclient-ff&rlz=1B3RNFA_enGB281GB282&um=1&ie=UTF-8&ei=20lmSpWRGYW5jAfJz_WUAQ&sa=X&oi=image_result_group&ct=title&resnum=4