Things is quiet with the football, Wimbledon and occasionally warm weather. Nice then to have a change from emergency Budget changes and my next Foreign Legion reading with a compact memoir of a magistrate. Bow Street Beak by Ronnie Bartle is a rare look at the judges side of the bench or magistrates court in this case. Bow Street Magistrates’ Court opposite the Royal Opera House, dealt mainly with minor crime but also with extradition cases. In 2006 it moved to Horseferry Road now being known as City of Westminster Magistrates’ Court. The police as we know them basically started in Bow Street, with Henry Fielding (author of the novel Tom Jones) being crucial to this. Life in the old days must have been pretty grim and the forerunners of our own “Bobbies” the Bow Street Runners, made life a lot safer.

The human side in the book is very enjoyable to read but most memorable will be the cases of the Guildford Four and extradition of General Pinochet. These two sections deal with the technical/legal issues and not the merits of either side and unavoidably perhaps, are quite heavy going. All the same, it is sometimes difficult not to get worked up about it. Chilean support was crucial to victory in the Falklands and Gen. Pinochet visited Mrs Thatcher secretly during the conflict, Chile gave its former Head of State immunity from prosecution and Spain which wanted to extradite him has never prosecuted any of its own people who did just the same things that they accused the Chileans of doing. 

Fortunately, IFAs don’t have to learn about international or criminal law apart from when they read a crime novel. Most surprising is the suggestion that the oath which witnesses and defendants take, to “tell the truth, the whole truth etc” be abolished in its current form. A good stocking filler http://www.amazon.com/Bow-Street-Beak-Ronald-Bartle/dp/187232889X

The Greys have it

Mention the idea of an employment agency for the 60 plus, and you probably think of an agency with many on its books and few jobs. At The Really Caring 60+ Recruitment Company http://trcrc.com/ the opposite is the case with 12 well paid positions which have been unfilled for some time. Of these, 10 are part-time and there are 3 other self-employed opportunities as well. Largest sector is charities including Hospice nurses and skills tutors and 3 managerial/supervisory full-time positions have been filled in the past month.

Thought about mentioning this agency to a gentleman at one of my pre-retirement TPAS seminars as he is being made redundant, but at 55 he is too young!

It Pays to Shop Around

The importance of shopping around or rather getting independent advice was brought home this week in a referral from another recruitment firm. The friend’s father is 65, has mild health issues and wants to take the benefits from his remaining pension scheme. The 4 page underwriting questionnaire is sent to several insurers to see who will offer the best rate. The client wisely wants an escalating annuity where the income will rise at RPI each year and provide his wife a 50 per cent pension should she still be alive when he passes on.

Responses from the insurance companies take a few days. Two say the client does not qualify (isn’t ill enough) for an enhanced annuity so will only offer standard rates, while the other annuity incomes offered vary by over 25 per cent. Sad here to mention that about 40 per cent of people are unaware that you do not have to buy your annuity from the pension provider and think they are saving money by doing it all themselves. New so-called Third Way annuities offer more flexibility albeit with a slightly higher risk but this can be discussed at the time. If the fund is well into five figures, the commission offered by the insurance/pension company will probably pay for the advice. If the fund is big enough, you don’t even have to buy an annuity when you take your tax-free cash and can stay invested, but the issues are a bit long to deal with here.

I hate pensions department

Let me conclude with my answer to a question at one of my TPAS pre-retirement seminars. If you hate pensions, then what are the alternatives?

1) win the Lottery. Most Lottery winners have nothing left after two years.

2) inherit some money or rather enough to live on.

3) sell your business if you have one, but it needs to be profitable.

4) find a rich husband? Nice if you can get it, but plenty of competition!

One would think a long established insurance group with US$362 billion (£222 billion) assets under management would know which way the markets are going, but even the best of us make mistakes it seems and I am not talking about football or goalkeeping. A long standing client wanted to provide a sum for his children so that when they inherited, there would be some cash to pay the Inheritance Tax. Probate cannot be obtained until this tax is paid and the Executors of the will don’t have any authority until they have probate. Without insurance, this Catch 22 situation can be managed if:

 * the estate is liquid and cash used or investments sold to pay the Inheritance Tax or

* the executors borrow from a bank but this can be difficult

Client wanted a single premium policy to solve this and the best one around at the time was a single premium whole-of-life policy from General Accident. Plenty of regular premium policies for this sort of thing but single premium ones are quite rare – not the sort of business most IFAs do every week. Premium was about £14,000 with the six-figure sum-assured payable on second death (when both parents had died) with the sum-assured guaranteed for 10 years. These passed and the surrender value stayed about the same. Recently this dropped by 40 per cent and the client who works in the City asked why?  pointing out that markets were UP by about 40 per cent in the last 18 months or so. The problem is that once the surrender value has disappeared, then further premiums will be needed to maintain the cover. Life cover gets more expensive as you get older and premium increases when you are planning to retire soon are not helpful. Reasonable explanation might be just this (higher mortality cost) but this is not mentioned and would not explain a huge drop in the surrender value in one year. It really looks like a smash and grab raid on a long-standing customer.  

The complaint is quickly acknowledged but the answer talks of market falls over 18 months and fairness to other policy holders? Check my stats again and the markets have gone up over this period. Another letter to Aviva brings a reply three times longer than the first one but still refers to market falls? Sadly, this looks like a formal complaint to the insurer and then to the Financial Ombudsman Service http://www.financial-ombudsman.org.uk/ if Aviva won’t come clean here. The former looks like it might end up within the Financial Services Authority which in turn is going to end up as a subsidiary of our central bank – Bank of England. Looks like someone has been studying O level Economics, but at least things will then be the right way round.

Aviva is a collection of many insurance companies it has taken over down the years, with about 30 different with-profits funds in varying degrees of health and one has to wonder if someone is robbing Peter to pay Paul?  We shall see.

Feeling like some missionary, I find myself in Essex speaking to over 40 would be pensioners as a volunteer for TPAS The Pensions Advisory Service www.pensionsadvisoryservice.ork.uk  - not to be confused with another TPAS Tenant Participation Advisory Service www.tpas.org.uk Early arrival allows me to talk to the lady organiser but the PowerPoint slides have not been loaded and my memory stick is full, so George has to wing it. All goes well and I am told to stop talking after an hour having handled several questions. Feedback shows 17 people thought the talk was pitched at the right level, 16 thought it too advanced while 1 member thought it was too basic – probably the guy at the back of the room who glowered at me the whole time. These presentations are free to employers who if interested, should contact The Pensions Advisory Service (Paul Hays).

I nearly fell off my chair moment of the week is Jeremy Warner’s excellent piece on BP http://blogs.telegraph.co.uk/finance/jeremywarner/100006277/why-obama-should-be-thanking-bp-not-demonising-it/ Barack Obama should be thanking BP!

Recent Childcare scandals prompt the inevitable call for more rules but the recent Disptaches programme on Child Protection clearly shows what too much regulation can do. http://www.channel4.com/programmes/dispatches/ 

Each new social worker scandal prompts more reviews and rules with the obvious effect that more time is spent on paperwork in the office leaving less time to visit the children who are threatened. With sanctions on putting reports in late, it is pretty obvious what the priority of a social worker will be. Didn’t watch all the programme but recent tragedies have mentioned the huge number of files that some social workers have to handle. In one case the council’s own maximum was 30 files per social worker whereas one social worker had over 100.

If ever a situation cried out for a paperless system, social care is one. A similar situation exists still in financial services where in paper-based IFA offices, client data may have to be transposed up to 15 times in order to get policy on risk. Most obvious examples are where client’s name, address, contact details, date of birth etc is copied and copied and copied with the risk of error increasing each time. Insurance companies recognise this and offer enhanced commissions for life insurance where the IFA submits the application electronically. Tablet computers with built in wireless chips have been around for years in the private sector, but seem rare in the public sector. Anyone who thinks more regulation will solve any perceived wrongs in financial services is being naive.

After David Cameron’s speech, the cost of accumulated government debt will hopefully sink in, but this has only doubled since about 2002. At that time, government debt went down for a little while which probably gave the last government the excuse to spend, spend, spend with most of the debt being accumulated in the last two or three years. Makes me wonder if we are heading for a rerun of the 1950s where the greyness and dullness of those childhood years still haunts me.

Same day, different programme makes me think about Afghanistan. The Grenadier Guards have returned from Helmand and are due to lead the Trooping the Colour this month. Good to see the soldiers talking to the elders in a village, but talk of withdrawing in a couple of years does not help and only encourages the Taliban to wait. http://www.bbc.co.uk/iplayer/episode/b00sqrqy/For_Queen_and_Country/  There are some chilling parallels with the French conquest of Morocco where the mindset of the Berber people seems strikingly similar to the Pashtun people in the Afghan region. Prophetically, one tribesman tells the French when they first land in Morocco “If you come, come to stay. Then I will join you”. All this from the tome that I haven’t finished yet Our Friends beneath the Sands by Martin Windrow mentioned in previous blogs. Tribal squabbling is the norm. Instead of spears, it’s AK 47 rifles these days, cheap at about US$50 each apparently. One man one vote or elections as we understand them, are something quite alien, especially when the President cheats at election time.

Eventually Morocco was pacified. Most intractable were the Berbers from the mountains who were very good fighters carrying very little kit with them and always making their shots count. Prisoners and enemies suffered unspeakably. Defeat in battle of one tribe led to the loser seeking aman (peace terms) with the victor, after which the peace which might last for a few months or a few years. French persistance eventually won through after some enlightened leadership from General Lyautey, but it took years. Colonial ghettos where locals were not allowed were banned, and  marriage with the locals was encouraged. Harking back to regulation and bureaucracy, the French administration in Morocco was three times larger than the British equivalent in India where the population was forty times larger.

With no empire anymore, no one relishes the prospect of an Afghan war lasting a generation or more, but a passing visit will not win it. The Taliban are a direct result of the vacuum created after the Russians were defeated when America did not wanted to get send any troops - Vietnam was too recent a memory. Our very sensible self-interest in being in Afghanistan is no better expressed than by former soldier Paddy Ashdown http://www.independent.co.uk/opinion/commentators/paddy-ashdown-what-we-must-do-to-win-this-war-in-afghanistan-1755787.html This raises the thought, will my two grandsons end up fighting there in 20 years time? We shall see.

What’s the opposite of writers’ block? Should I stick to pensions, finance etc or why not write about spies? For a second I reach for my calculator but with the whole blogosphere available, go for both. Slightly surprised that I have not had any panicky messages from Higher Rate Income Tax payers (see last blog) who may have thousands of pounds of unclaimed Income Tax relief. On the other hand, perhaps I should not be surprised as two afternoons at a new group pension scheme client result in only one proper pension discussion even after two e-mails to over two hundred employees. Perhaps they are waiting until NEST, the Government’s new compulsory pension scheme starts in 2012, but with the coalition taking “a long hard look” at it, apathy rules.

People with unrealised capital gains would do well to consider making them now and paying 18 per cent rather than whatever the new tax rate might be after the 22 June Emergency Budget. Objections from the Tory right about raising the capital gains tax rate, miss the point. Why have different rates for capital gains, personal income and companies? This just encourages tax arbitrage where you structure your affairs for tax efficiency rather than good business – the (tax) tail wagging the dog.

Even more ironic is the LibDem insistence on a fixed four year term for the next election date. OK this is  a necessary part of the Conservative/LibDem deal but with the real pain of spending cuts yet to come, four years may not be enough. It may be near the peak of the pain making the government very unpopular. An election happens and the previous lot get back in? Why not a one-off fixed term of six years? That would at least allow the emergency measures to work, but I am not holding my breath.

But enough of this monetary stuff. As a child of the Cold War or Baby Boomer, spies and spy novels have always been a welcome distraction to school and professional exams and a Saturday afternoon walk starting at Piccadilly Circus provides some real life spy stories brightening up a drizzly day. Much of the content revolves around the Cambridge Five spy ring: Guy Burgess, Donald MacLean, Anthony Blunt, Harold (Kim) Philby and John Cairncross. Many of their haunts are in Mayfair so the walk can be looked as a guided walk around one of the smarter parts of London. Norfolk House in St James’s Square where the D-Day invasion was planned, is on the itinerary as are other flats where senior American spies lived.

Most outrageous of the Five was Guy Burgess who liked chewing raw garlic, told everyone who listen that he was working for the Russians. And when making his escape with a suitcase of secret documents, gave the answer “State Secrets” to a curious customs officer who asked about its contents!

The D-Day landings were of course in Normandy but the Germans had been hoodwinked into thinking that the main invasion would be across the shorter sea-route to Calais and that the Normandy one was a feint. At the start of hostilities, the 30 odd German spies in the UK were rounded up and given a stark choice – work for us, or the firing squad. Just after D-day, Rommell wanted to move reinforcements down to Normandy but one the UK’s best ever spies John Pujol Garcia with the then glamourous name of Garbo, stopped this. After WW2 he disappeared and was only discovered many years later in Venezuela. Having been awarded the Iron Cross 2nd class by Hitler for his service to The Reich, he was invited to collect an MBE from Buckingham Palace which he did in 1984.

Saddest statistic to come out of the tour is that Stalin’s death toll is now known to be around 27 million shown from files now seeing the light of day, making Hitler’s Holocaust efforts seem rather humble. For some reason, this brings back a memory from the late 1980s when I was in the property business. A rather drab dark green painted shop in Tufnell Park came up for sale. The shop sold lefty books and had never seemed very busy but the name The Bellman Bookshop was in fine gold copperplate lettering. Top floor contained a boardroom which had the atmosphere of a shrine. Here the floorboards were bare in contrast to the rather bourgeois shopfront lettering. At one end was the framed front page of The News Chronicle announcing the death of  Stalin from 1953. Why didn’t the owners take this relic with them? But I digress…

The real world of espionage is apparently quite mundane and it can take years to infiltrate someone into an organisation before they start producing anything of value. James Bond driving around in an expensive car would have attracted attention which real spies avoid.

The heading is a comment from author Ian Fleming who was still writing when the first Bond films were made and the end part is “He was no Sidney Reilly”. The latter was one of the UK’s greatest spies and responsible for Great Britain getting oil from Persia initially via the Anglo Persian Oil company. Persia is better known as Iran these days and busy trying to make its own nuclear weapons which the Americans and few others are trying to frustrate. One thought probably in the back of Iranian minds is that they were a superpower long before the British and Americans were. The Anglo Persian Oil company is still around but has got itself into a fine mess in America just now, where we all know it as BP – British Petroleum.

Spy Walk details here: http://www.walks.com/London_Walks_Home/Saturdays_Walks/default.aspx#12899 and Sidney Reilly stuff here: http://www.trutv.com/library/crime/terrorists_spies/spies/sydney_reilly/4.html

Garbo’s story is in this book: http://www.amazon.co.uk/GARBO-Saved-D-Day-Secret-History/dp/1903365589 while story of Yuri Modin who ran the Cambridge Five spy ring is here: http://www.amazon.co.uk/Five-Cambridge-Friends-Yuri-Modin/dp/0747212805 You couldn’t make it up.

To conclude with the day job, if you are not sure about your tax position before the Emergency Budget Day or haven’t reviewed your portfolio for a while, George has been pretty busy lately, but would still be happy to hear from you.