First meeting with a new introduction from an accountant brings up the subject of Stakeholder Pensions. These were this Government’s answer “the pensions problem” where people were (and still are) not saving enough for their old age, all the fault of the wicked insurance companies that provided them who were considered too greedy in terms of charges. If charges could be reduced, low earners would rush to save for their retirement.

While a pension is just a savings scheme with some tax-breaks, a Stakeholder Pension is the “fleet model” of pensions with limited fund choices and for the first few years, a cap of 1 per cent on charges. This led to the ludricrous situation where pension providers lost money providing these contracts for several years and the low-income earners they were aimed at, did not want them. In a classic example of the law of opposite unintended effect, they did generate some jolly wheezes for saving IHT for example, for grandparents with loadsamoney.

Minimum contribution was £20 per month but that is not going to provide a pension you can live on even if you start in your 20s. As an answer to the pension question, they were little better than the equivalent of the answer to “Life, the Universe & Everything” which Hitch Hiker’s Guide to the Galaxy devotees http://www.bbc.co.uk/cult/hitchhikers/ will know is……..42! After years of pressure from the insurers, Government finally relented and allowed a maximum charge of 1.5 per cent for the first 10 years – perhaps remembering that insurance companies that lose money might go out of business and aren’t going to pay much in Corporation Tax.

8th October 2001, new rule for for employers with > 4 employees who must have a Designated Stakeholder Pension Scheme. They do not have to give any advice nor do they have to contribute, just have a Designated Scheme i.e. a particular scheme with a particular insurance/pension company which will then issue a certificate to let the employer off the hook. Given the huge interest that pensions generate, this was one of those laws “more honoured in the breach, than in the observance” as Hamlet’s Polonius diplomatically put it. But then regulator OPRA now part of The Pensions Regulator http://www.thepensionsregulator.gov.uk/aboutUs/index.aspx had the sanction to fine errant employers up to £20,000, and in March 2004 they dished out their first fine of £10,000 against a 300 employee company Foodflow Ltd. One of their employees felt he was prevented from joining a designated scheme and complained to the regulator. To their credit, they did not wade in and issue the fine immediately but the employer apparently ignored their requests and was fined, losing their appeal http://www.accessmylibrary.com/coms2/summary_0286-20799889_ITM

The maximum fine for this transgression was recently increased to £50,000 so any concerned employers reading this might wish to look at  http://www.thepensionsregulator.gov.uk/pdf/faq2007.pdf

Long-term readers of my blog will remember my previous swimming teaching experiences, and previous blogs on this subject can be found in the Swimming category on RH side of the browser. My forté was nervous people in general and usually nervous children in particular. The nervousness was often more with the parents than their offspring, but it was very rewarding emotionally to help them overcome their demons. Children generally learn more quickly while adults have much stronger motivation – decades of “I’ll do it sometime” finally get swept away with the grit to face it and book those lessons. In one memorable case and after two terms, we had reached the stage where it was time to jump in at the deep end from the side of the pool. Had forewarned the adult pupil the previous week, but he looked really nervous so I asked if I should hold his hand? Yes, he said quietly and in we jumped. Did it all himself next time and at the end of the lesson told me “I never thought I would be able to do that”.

So what’s prompted all this? Fellow blogger and tango dancer Tim Ferris whom I have mentioned before has found a new way to swim and apparently very efficiently http://www.fourhourworkweek.com/blog/2008/08/13/total-immersion-how-i-learned-to-swim-effortlessly-in-10-days-and-you-can-too/ Have yet to read his book The Four Hour Work Week http://www.amazon.com/4-Hour-Workweek-Escape-Live-Anywhere/dp/0307353133/ref=pd_bbs_1?ie=UTF8&s=books&qid=1203371924&sr=8-1 but suspect it’s basically, stick to what you are good at and delegate everything else.

Another person whose thinking seems against the flow is novellist and apparently ex-Feminist, Fay Weldon. In the week when the UK’s population reaches 61 million she suggests women have chidren first and career later ergo more teenage pregnacies http://www.telegraph.co.uk/culture/books/authorinterviews/6089253/Fay-Weldon-Its-easier-to-pick-up-your-husbands-socks-and-clean-the-loo.html Having done my own procreation relatively early in life – getting married at 23 and now with 3 lovely grown up daughters to show for it, she has a point but the thing about having children is you sometimes have to let them find their own way – and not just in swimming.

For a change, let George finish on a serious note. Had interesting meeting with the Chairman of children’s cancer charity www.campquality.org.uk who want me to help them in the UK. Their parent is a very large Australian cancer charity and while details not worked out yet, watch this space.

August – the Silly Season. Time for a break in Suffolk and two weeks of chill. Sister’s cottage is available in Saxmundham where pace of life is definitely slower plus plenty of family to catch up with. Very slow Internet connection and an overheating laptop become a virtue, resulting in little time on the net and lots of reading done. Halfway through the break, BBC are on the line wanting me on TV on Monday. Not the sort of thing one wants to turn down lightly, but my holiday togs do not include a pinstripe suit. They want to talk to a pension expert about a story of a council that has £7m of its £540 million pension portfolio invested in two tobacco company shares. The same council spent > £3 million last year on an anti-smoking campaign, Council’s Health Credentials Up in Smoke?? says the headline. http://www.wandsworthguardian.co.uk/news/4543507.Council_s_health_credentials_up_in_smoke_/ My limited wardrobe for the TV appearance does not worry them – I have one decent shirt, and they can film me at a local studio and splice that in to the news item for Monday. The weekend gives me time for thought but the issue is quite simple.

Wandsworth Council’s apparent lack of logic here is just the same as that of the national Government – running the NHS while raising £billions from taxes on tobacco products without which, Basic Rate Income Tax would have to be nearer 25% instead of the current 20%.

If you are running a pension fund and you have an investment that is producing good dividends and looks good value, chances are you would want to hang onto it or maybe even buy some more. Didn’t check, but suspect that the two shares involved are are doing their job and if not, would be due for a review or the chop anyway, regardless of ethical issues. You can’t have it both ways. Tobacco stocks, like supermarkets are a classic defensive investment when markets look sticky. We all have to do our shopping and smokers will always need their nicotine fix. Entertainments similarly, as friend Louise, Corporate Entertainments Director for London theatre group http://www.delfontmackintosh.co.uk/Hospitality/ has never been busier.

Changing the investment mandate so armaments, gambling, alcohol and tobacco etc are excluded can be done, but that means a smaller pool of investments to choose from and therefore a slightly higher investment risk. The whole point of investing in a pool of shares or assets rather than the few flavours of the month is to spread the risk.

In the actual programme on Monday which was with Eddie Nestor on BBC Radio London 94.9 FM Eddie asked me if many of my clients cared about this? Have always asked but “Very few” is my answer. There are plenty of IFAs who major in this if it means a lot, as any Google search with “ethical IFA” will reveal or visit www.unbiased.co.uk

First ethical fund in the UK (1984) was the Friends Provident Stewardship Fund shortly followed by NM Schroder Financial Management’s Conscience Fund – NM have long since been subsumed into FP. They were my first company in my financial services career and unit-holder meetings were always lively with an unforgettable one in the Natural History Museum surrounded by skeletons of many huge and frightening dinosaurs. After a review of the year in question, the investment managers invited questions from the floor but in those apartheid days, one issue which always raised temperatures and got things really lively was that of Sainsbury’s selling South African oranges. Sainsbury’s  are a common ethical fund investment are as they have a reputation of being a good employer and give large amounts to charity – positive ethical criteria as opposed to the above-mentioned negative ones. Sainsbury’s view was that the oranges in question were a good quality, reasonably-priced item and their purchases provided employment to people who were (and probably still are) very disadvantaged. If people felt they did not want to buy a South African product, there was a clearly priced alternative next to it.

Other people would get upset when a company with a new gizmo which would save the planet, was not deemed worthy of investment, usual reason being that these were typically start-ups which tend to be weak financially making them a very high risk investment – see http://www.georgeemsden.co.uk/2009/07/im-an-investor-get-me-out-of-here/ where 56 per cent of people lose all their money.

Interestingly, there is a US Government-run Conscience Fund but whereas the UK ones are for people trying to be good, this is for people who have been bad i.e. defrauded or stolen from Uncle Sam and want to make amends http://en.wikipedia.org/wiki/Conscience_Fund – wonder if it would catch on here – for MPs who haven’t come clean about their expenses, perhaps? Contributions to the US Conscience Fund tend to be annonymous and vary hugely, but don’t attract tax relief.

But as yours truly is not quite back in work mode yet, let me share some grisly trivia from one of my holiday reads: Salt A World History by Mark Kurlansky ISBN – 978-0-099-28199-3. In the chapter, Liberté, Egalité, Tax Breaks, is an intriguing item about a use of salt arising from a 1670 revison of the French Criminal Code. Suicide was an offence in France (and until 1961 an offence in the UK as well). But whereas the UK law was designed to prosecute those who did not succeed, the French law was used against those who did and their salted cadavers were brought before a judge and sentenced to be put on public display – YCMIU.

“When a man is tired of London, he is tired of life, for there is in London all that life can afford”  Samuel Johnson famously said and reassuring to find it still, 250 years later and from an unexpected direction.

Think personal injuries claims and clichés like ambulance chasing spring to mind with lawyers taking 50 per cent of the claim and so on. Recent business failures of firms who got their business via TV advertising and where clients had their arms twisted to take out expensive insurance, have not helped. A meeting at Kidd Rapinet in Craven Street restores my faith here in > one way.

There are three main ways of making a personal injury claim. Simplest is to have a straight forward fee agreement. This may be on an hourly basis or perhaps a fixed fee. Win or lose, you pay the fee. Next is a Conditional Fee Agreement where nothing is paid upfront and the solicitor will get his fees paid by the other side – usually the insurer – if he wins. But since this is on a “no win, no fee” basis, there is a risk that he will lose. As result, his fees will probably be double the amount of a straight forward fee agreement. Third way is a Contingency Fee Agreement where nothing is paid upfront but a percentage of the award is taken and is most common in the USA.

Insurance is recommended but in a Conditional Fee Agreement, the solicitor takes this out on behalf of the client. Insurance premiums and reasonable legal costs are recoverable so if you win the case, the costs should be covered and if you lose, the premium is waived. Compare this to some personal injury firms (the more aggressive ones perhaps) where they make the client pay for the insurance upfront.

Costs are decided by the Court and if not considered fair, are not awarded. The insurance taken out by a client in the above example will be much more expensive than in the other one where the solicitor takes it out on behalf of the client. The extra is of course, a commission and is not recoverable. Recent tightening of the rules here forced many personal injury firms out of business. Terms of Business may state that you cover any “insurance” shortfall if the Court decides on its own figure and may explain for example, where a client is awarded £10,000 damages, but only receives £9,000.

Simon only does the first two of the above methods and will not take a percentage. All being well, the client will receive all their compensation and his fees will be paid by the other side if a Conditional Fee Agreement is made – he expects to be paid for his time and only that – as he puts it, ‘only eat what I kill.

Interesting case? Lady phones up between Christmas and New Year after an accident 3 years before. She and husband are in a London taxi when they are hit from behind. Taxi driver has his own arrangements and gets his money. Husband not really injured so does not claim. Wife takes 6 weeks off work but neck is still painful. Previously, she was very much in the “fast track” for partnership in her firm within the next year. The pain stops her from attending evening social events and employers tell her that she seems to have “lost her edge”. Approaching one of the TV firms, she is told to accept an offer of £5,000 but decides to phone Simon only days from the 3 year deadline. Partners in some accountancy firms earn > £500,000 but she is not going to be made partner this year - next year, maybe. Papers are issued, no decent offer made so preparations made ready for trial. Days before this, offer is increased to £250,000 which is accepted. Had case gone to trial, claim would have been for several £million but with higher risk. Defending tactics would have included, “Is she really that good?” with other risks like has client has told you everything? Lady concerned is now employed elsewhere and while not in line for the previous level of earnings, is happy on her salary which is still in six figures.

Contact Simon Robeson 020 7024 8074 srobeson@kiddrapinet.co.uk or www.kiddrapinet.co.uk  Last word here – if you do get a large lump as compensation, best advice might be to keep quiet. Once you have got used to the money in the bank, you will then have an idea where you might wish to invest it or make it last. Majority of National Lottery winners apparently have little or nothing to show for their good fortune, two years later.

My American readers among others will find Craven Street an interesting location as it houses www.benjaminfranklinhouse.org and Herman Melville’s (think Moby Dick) former home further down towards the river.

Nice to have some feedback on previous blog about living with cancer from a tax advisor. Apart from the cruelty of having one’s life cut short, people will have limited options for conventional Inheritance Tax planning meaning that when they die, they pay more tax than necessary. Where estates are > £1 million, schemes are available to mitigate this and do not have the usual 7 year or 2 year wait for them to be effective. Contact me for details.

Summer hols not started yet when I hear of a Spanish one which might be my next at http://www.vaughantown.com/EnglishNew/indexenglish.asp where you help Spanish students improve their English in a remote village. Master coach www.georgemetcalfe.com did this earlier this year and thoroughly enjoyed it – applications all done on line.

Curiosity takes me back to The Eagle in Cambridge  http://www.georgeemsden.co.uk/2008/05/schadenfruede-dna/ to find the plaque marking the spot where Messrs. Watson & Crick got their brainwave about the structure of DNA earning them a  Nobel Prize later. The pub is busy on a Saturday afternoon with its mixture of tourists and students who wife says, look like nerds – probably what I looked like at that age. Said plaque (in brass) is above table 12, food is OK but not great – the chef overdid the mint on the lamb shank.

Drive back to London takes us past The Tickell Arms in Whittlesford which now has a 12 course taster menu on Friday evenings - http://www.thetickell.co.uk/seasonal/index.html but that will have a wait.