Funny thing advice. Seems to be too much of it or perhaps too little, but which or whose advice do you follow? Trust your own intuition? Often this is right, but can be spectacularly wrong. Early in his career, actor Michael Caine threw up and rushed from the viewing room after seeing himself for the first time on a big screen in colour in the rushes of the feature film Zulu and seriously thought  he would be sacked. Previous acting parts had been small and in B&W including playing a Pakistani gentleman in Dixon of Dock Green, but Zulu made his name leading to the The Ipcress File and many other films. This led to his living in Los Angeles for a while with its clear blue skies but eventually the sight of this every morning ended up making him depressed rather than uplifted, so it was back to Blighty – too much of good thing it seems.

One can almost feel sorry for people in positions of power as advice is one thing they are often not short of. How many advisers does Barack Obama have to talk to every day? David Cameron has his share of advisers and has announced that he is not supporting the consensus on Personal Accounts anymore. These are the new compulsory pensions originally designed to come in 2012 for which a quango http://www.padeliveryauthority.org.uk/has already been set up. But enrolling everyone in is going to be a lot of work so implementation looks like 2015. Total contributions are planned to be 8 per cent of earnings including employer’s, employee’s and tax relief. This will help but is not enough to fully fund any pension scheme even with 7 per cent growth, so will help the problem but not solve it. Australia which is far ahead of the UK where financial services are concerned as well as having a younger population, makes people invest 8 per cent of their own earnings NET or before tax relief.

Most curious is the deafening silence over the public sector pensions cost of £1.2 trillion where we pay higher and higher taxes so 17 per cent of the workforce can have their pensions insulated from the economic problems the rest of us have to put up with. In 7 months time, the election should be out of the way and the bad news can begin – and Michael Caine is voting Conservative this time.

On a happier note, it is nice to have an enquiry from a client about Child Trust Funds. These are a strange new idea introduced by this Government where parents of children born after 31 August 2002 get a £250 voucher while poor families get £500 which their child can have at 18. Families can contribute  up to £1,200 a year and the Government pays a further £250 when the child is 7.  At 18, the scheme can be rolled into an ISA if the child has not spent it already but with so many financial products around, one wonders why ISAs were not used in the first place. If you haven’t decided on your CTF provider yet, here is a list: http://www.childtrustfund.gov.uk/templates/Page.aspx?id=1246

Thanks again to www.mycompanypension.co.uk for highlighting the latest Pension Protection Fund report http://www.pensionprotectionfund.org.uk/news/pages/details.aspx?itemID=136 which shows:

• 104 schemes are now in the PPF
• 31,465 people are receiving or will receive compensation in the future
• The PPF paid out more than £6 million in compensation between 1 September 2009 and 30 September 2009
• The average yearly compensation is around £4,000 per person
• The oldest recipient is 104, and the youngest is seven years old
• The PPF now has a total of 342 schemes in the assessment period representing a total of 196,118 members
  

Note that the PPF is for members of the increasingly rare Defined Benefit Pension schemes (employer carries the investment risk). Members of Defined Contribution schemes (employee or you carry the investment risk) are covered by the Financial Services Compensation Scheme – limits here: http://www.fscs.org.uk/industry/about_us/limitations/compensation_limits/

Have finally found the website http://www.pica.org.uk for the PICA Pension Income Choice Association mentioned in last week’s blog http://www.georgeemsden.co.uk/2009/10/pica-pica-pica/

Let me finish on long-term care again. Further developments in my enquiries show a huge disparity in capital required to provide a given level of benefit – £43,000 and £113,000. Getting a “rough quote” is basically a waste of time. The questions involved in getting a proper quote run for 3 pages and mean talking to the client directly or maybe their nurse/carer but at least the figure given means something. If the case goes to a formal application, then the proper long-term care underwriting is done with information supplied by the elderly person’s GP rather than a medical. There will be a cognitive test too i.e. do they know what day it is? but this is done sensitively by a nurse and takes 5 – 10 minutes.

To find a specialist adviser here, go to: www.societyoflaterlifeadvisers.co.uk where members will have passed specialist exams in long-term care and equity release. At the LaterLifeSymposium09 mentioned in my blog two weeks ago http://www.georgeemsden.co.uk/2009/10/they-dont-like-it-up-em/ only 1 person in 7 in a care home, had received financial advice.

And if you are doing nothing this Sunday lunchtime 8th November 2009, I will be discussing this matter on www.jnetradio.com from 1 – 2 pm.