The pensions panic.jpg

The pensions panic

By RAOUL RUIZ MARTINEZ features@algarveresident.com

Raoul Ruiz Martinez is a consultant for Finesco Financial Services Ltd., Glasgow and regulated to advise on capital investments in both the UK and throughout Europe under the MiFID regulation.

Unless you have been asleep or stranded in some remote location cut off from the world for the last two years, by now we all should understand that numerous global economies have been almost wiped out completely during the current financial crisis.  

We have experienced the bursting of the property bubble to the banks holding governments and their central banks to ransom. The media continue to remind us of the problems and it is now the long term investors, pension funds, who are reeling in the aftershock.  

Speaking of fundamentals, pension funds are designed to build up growth only usually achieved through a large part of long-term investment planning through shares and property.  You may be one of those individuals who were looking forward to having built up a healthy pension pot or even perhaps thinking ‘well, it can’t be that bad’ but when you look at your most recent statement, you may have experienced further disappointment. A great deal of the growth has been wiped out, literally, overnight.

Whether you have ever watched more than one episode of Dad’s Army or happen to be a fan of Coldplay, then DON’T PANIC!  What you need to start doing is assess if there is any damage and take control to redress the situation to suit your own personal lifestyle and goals.

Wealth control

We are experiencing a new era where as individuals we need to take more control of our wealth derived from long-term investments, such as pensions themselves. The general view instilled by the lawmakers of our societies is to take a retirement at a set age (65 for most of us).  Surely that is your choice whether before, at, or after that age.

Governments have burgeoning deficits that make the attraction of cutting state pensions more appealing, employers are distancing themselves from the responsibility of funding company pension schemes to reduce costs and large pension firms have been forced to apply a ‘one size fits all’ investment strategy. A rather less indeterminable factor is that we are all living longer. As a result, we will have more time on our hands than ever before. Other relevant issues such as property values, healthcare costs and inflation need to be factored alongside careful retirement planning.

There are those with private investments that may have included a portfolio of securities or properties, seeking to minimise costs and maximise returns. Having a balanced portfolio will have braced the fall and provided some protection. Institutions and banks continue to offer guarantees which will come at a price. For a certain demographic, it is human nature to buy insurance after the house has burnt down. However, will a portfolio lose out on some speculative growth or sudden high levels of inflation when markets are proving to be at the opposite end of the risk spectrum to what they were two years ago?

Secure financial planning

Today, for those with pension funds, there is a range of choices through secured routes (annuities), onshore and offshore private pensions (drawdown/SIPP and QROPS, respectively) and indeed new types of pension plans that mix the secured path through means of locking in secured returns even in falling markets while enjoying access to recovering investment markets (known as hybrid or ‘third way’ solutions).

Not every annuity, SIPP/QROPS or third-way pension is suited for everyone. We are individuals and this is the key to secure financial planning for the future. Question standardised packages carefully, as you may find yourself no better off than where you started.

Discuss your own situation with a trusted and qualified financial adviser who can help match your own personal thoughts, views and feelings with a tailored strategy that can make use of what is available through private or state sources.

Don’t panic – plan with care and precision.

Raoul can be contacted at the offices of euroFINESCOs.a. either by telephone on 289 561 333 or on email Raoul.Ruiz@Finesco.com Finesco Financial Services Ltd is authorised and regulated by the Financial Services Authority (FSA). Some of the services provided are not regulated by the FSA because they are not included within the Financial Services and Markets Act 2000.