14
8
22
14 26
14
IN THIS ISSUE
8
22
14 26
DRAWING A BLANK Pádraig Floyd says the industry and end consumer alike are still struggling to make sense of pension freedoms P . 2-5 / WOULD YOU LIKE THAT IN A SMALL , MEDIUM OR LARGE , SIR ? Henderson ’ s Neil Hermon offers three reasons why it can be more lucrative to invest in smaller firms than their larger counterparts P . 6-7 / THE ADVICE AGE COMETH Maggie Williams says stringent rules around the Pensions Advice Allowance appear to be hampering its take-up P . 8-10 / DEPENDABLE DIVIDENDS The co-managers of SAINTS believe they have identified the characteristics of businesses best placed to offer a consistent payout to shareholders P . 12-13 / THE RIGHT TRACK Is it a good idea to invest your pension pot in passives ? Anthony Luzio finds out P . 14-16 / FUND , PENSION , TRUST Trojan Global Equity , BlackRock Smaller Companies IT and Edinburgh Investment Trust find themselves under the spotlight this month P . 18-20 / ON THE RISE The Japanese market is rallying after years in the doldrums – but , asks Adam Lewis , have investors missed out on the easy gains ? P . 22-25 / TAKING BACK CONTROL John Blowers highlights some of the major considerations for investors who want to take full responsibility for their retirement income P . 26-28 / MEANING BUSINESS Evenlode Income ’ s Hugh Yarrow names three stocks that help streamline their customers ’ businesses , helping them cope with a changing world P . 30 / WHAT I BOUGHT LAST Aviva Investors ’ Thomas Wells is using the Baillie Gifford Japan fund to complement an existing holding in GLG Japan Core Alpha P . 31
YOUR PORTFOLIO
/ PENSION FREEDOMS /
Pádraig Floyd says the industry and end
consumer alike are still struggling to make
sense of pension freedoms, more than two
years after they were introduced
S
INCE THE PENSION
FREEDOMS WERE
INTRODUCED IN
APRIL 2015, there has
been an enormous
amount of activity in the
retirement income market.
Data from the Financial Conduct
Authority (FCA) shows that almost
three-quarters (72 per cent) of those
pension pots accessed are held by
policyholders under the age of 65
and 90 per cent of these funds
contain less than £30,000.
The freedom to either take cash
or access income drawdown has
had a damaging effect upon the
annuity market. Last year, the
number of annuities sold was
down by 75 per cent from the pre-
freedoms level. On average, there
have been three times as many
income-drawdown sales over the
past two years.
People don’t want to buy
annuities because the yields on
UK government bonds – which
their valuation is based on – are at
historically low levels. This makes
them appear overly expensive and
as a result, more consumers are
entering into drawdown contracts.
But is this really the best decision?
MORE CHOICE OR LESS?
Drawdown has replaced annuity
purchase as the default solution
for releasing pension income, but
despite increased demand for this
service, there has been anything but
an increase of freedom and choice
in this arena.
“Looking back to 2015, there was
a high expectation that pensi ��g&VVF��2v�V�BV��6RF��0��&�WB�( �6�2F���5�����V@��bV�6���2&W6V&6�B�&w&VfW0���6F�v��( �vRW�V7FVB� �G'W7F�WFF�&V7B�6�ЧG'W7F�WFF�&V7B�6�Ф6�'&��W���6����b�Wp�&�GV7G2�B�FV2�'WBv�BvP��fR6VV��2�V"W�F��7F����( Ф��&�f�FW'2�fRv�F�G&v�g&��F�R�&�WB�"G&�V@�&�GV7G2( 2'F�7V�&ǒF��6Rv�F��wV&�FVR( 2�Vf��r&V�F�fVǐ�����vV��W2&�vR�F�Rd4&V6V�Fǒ6��VBW��F�R��GW7G'�F�����fFR��F��0�&�GV7B&V�'F�7V�&ǒf� ���FW"��fW7F�'2v��6�V�B'V��WB�b���W��'WBF�R&VGV6V@�FV��Bf�"��V�F�W2�ffW'2ƗGF�P�V�6�W&vV�V�Bf�"&�f�FW'2F�FWfV���Wr&�GV7G2��F��2&V��BF��2�6�( �B&V�ǒ�V6W76'���6�2&��ǒ'W'&�w2�F�&V7F�"�`�&WF�&V�V�B��( �F�R��&R��RFB&V��2�@�v��7F�W2F���V�F�W2�F�R��&P���R��6R�Gf�FvR�( ��P�6�2�( �Ɩ�Wv�6R�FF��rF���w0�F�G&vF�v�F�W2��Bv�&��0�V��R&R6��ǒ&W&VBF���f�"F�RwV&�FVR���R6���P�v��BW6R�bF�RW��7F��r��2�( Ф��D�R$TuT�D�.( �0�$D ���vWfW"�F�R&VwV�F�"&V���0�6��6W&�VBF�B��fW7F�'2��&P�����r7V"��F���FV6�6���2�F�Rd4�2F�6��GV7B&Wf�Wr�`�F�RV�Gf�6VB��6��RG&vF�v��&�WBF�6VR�bF�R�6��b&�W �Gf�6R�26W6VB6��7V�W'2F���R��"FV6�6���2�gFW"���G&vF�v�v2�WfW ���FV�FVB2�72�&�W@���7G'V�V�B�'WBv�&�&�V�@�V�FW"F�R��B&Vv��Rf�"F��6P�v��F�F�( �Bv�BF�&Rf�&6VB��F�'W���r���V�G���6RF�W��&V6�VBF�RvR�bsRगBv2�v�26��WF���r�b�7F�v�B&W7G&�7FVBF�F��6P�v�F�6��V&�RgV�G2�"76WG0�0