A little good news. Friends Provident announce the removal of Market Value Reductions (MVRs) sometimes known as Market Value Adjusters (MVAs – they are always negative) from most of their pension contracts and all of their life contracts. These MV things are applied when you want out of a with-profits contract at sometime other than when you originally said. The fund manager aided by the actuary (mathematician/number cruncher) will have done his best to match the future liabilities to the life/mix of the investments in the life or pension fund using shares, dated Bonds and Gilts. Choose a bad time for this and getting your money out can cost you a tiny or huge extra amount of your fund depending on: market conditions, the asset mix of the particular fund you are in and crucially: How Many are Stampeding for the Exit??? Don’t usually apply when stock markets are doing well but in the worst recession since WW1 (according to Bank of England) they have been as high as twenty per cent so any removal of the penalties is welcome. For an explantion of types of bonuses, see  http://www.georgeemsden.co.uk/2006/05/with-out-profits/ and if you have money invested in a with-profits fund and are wondering whether to stay there or not, there might be a fee for the advice.

With our soldiers in Afghanistan (and many other places) the recent stats from www.dasa.mod.uk make interesting reading:

• As at 30 June 2009, 155,185 War Disablement Pensioners (DPs) were receiving an ongoing pension. This represents a decrease of 7,935 since 30 June 2008.
• As at 30 June 2009, 32,290 War Widow(er)s (WWs) were receiving an ongoing pension. This represents a decrease of 2,365 since 30 June 2008.
• Over half of DPs (57%) and around five-sixths of WWs (86%) were aged 70 and over, as at 30 June 2009.
• Approximately five out of six (85%) DPs received pensions at the 50% rate or below. The largest group was those at the 20% rate. Less than 4% received the 100% disablement rate.
• The average weekly amount received by DPs, including pension and supplementary allowances was £75.17. The average weekly amount received by a DP at the 100% disablement rate was £319.15.
• The average weekly amount received by WWs was £216.14. The average weekly WWs pension was £114.69, with the remainder comprising supplementary allowances.

What the figures do not show is that women’s annuity rates are < than men’s – for the simple reason that women live longer – about 4 years > men on average. With the average age of brides being about 3 years < their husbands, this suggests an average length of widowhood of around 7 years, easily confirmed when you visit a nursing home. Some politicians bleat that lower annuity rates for females is unfair, and for annuities from SERPS/S2P for example, the rates have been equal for sometime. But equalising rates for both sexes will inevitably mean lower pensions for men, and the same people keep quite about the fact that women’s rates for life assurance are cheaper than for men, for the above reason.

Since this item started with Afghanistan, let me finish with it given the ongoing rumblings about their recent elections. Maybe outside my usual pension/finance ambit, but at least I’ve been there. The elections weren’t perfect, but Karzai did get quite a lot of support and if he is ousted/killed/replaced, do you seriously expect the next guy to be better or different? Regarding Afghanistan’s heroin production, if an otherwise poor farmer can earn 3x amount for producing heroin compared to say barley or rice, which one is he going to plant?

Alternative might be high value produce for supermarkets where people might be willing to pay a premium for high quality stuff, but please don’t mention the carbon footprint. For a country that is quite dangerous to visit, can’t see Tesco & Waitrose rushing to send their brightest people there to talk to the local farmers about planting exotic stuff for their shelves. Does give an interesting alternative to Fair Trade perhaps but with no natural alternative to H, can’t see any end in sight. As Lawrence of Arabia put it (and, yes I know the Afghans are not Arabs, but the principal applies)

“Do not try and do too much with your own hands. Better the Arabs do it tolerably than you do it perfectly. It is their war, and you are there to help them, not win it for them.”

And if you want the whole 27 articles:  http://telawrence.net/telawrencenet/works/articles_essays/1917_twenty-seven_articles.htm

Back in Blighty, employees lucky enough to be in a Defined Benefit pension scheme might wish to make note of the new Pension Protection Fund website  http://www.pensionprotectionfund.org.uk/Pages/homepage.aspx The risk of maintaining these increasingly rare schemes falls on the employer. Retiring next week and Stock Market falls off a cliff? Not your problem. If you are in the more common Defined Contribution pension scheme – it is the amount going in that’s fixed, not the pension coming out, so market falls i.e. the investment risk, are your problem. As those meerkats say, “Simple. Not even the same.”

Picking up from http://www.georgeemsden.co.uk/2009/08/hitch-hikers-guide-to-pensions/ the item on Tim Ferris’s 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 shows mixed reviews at Amazon but a positive one for Paul Chek who has interesting tasters of his stuff on www.youtube.com Decided to get his book http://www.amazon.co.uk/How-Eat-Move-be-Healthy/dp/1583870067 which it turns out, has helped some of my colleagues stay healthy.

Lastly, for one firm’s weekly view on life, the financial universe and everything that will fit onto two pages, I still  enjoy the Williams do Broe newsletter out of the the many that get sent my way http://www.wdebroe.com/OurLiterature.asp