Weekend reading: Don’t mess with pensions. They’re working.

What caught my eye this week.

Ten million UK workers will increase their pension contributions from today, which should mean a more prosperous retirement for them down the line.

No, Monevator didn’t just benefit from a promotion from Oprah Winfrey or Richard & Judy that delivered us few million extra readers overnight.

In fact many of those millions who are about to spend less and save more are probably only vaguely aware of the fact. That’s the genius of the pension auto-enrollment scheme – started in 2012, and the true reason for the imminent extra saving.

Auto-enrollment makes it easier to do the right thing by doing nothing. So far the opt-out rate is a mere 9%. Still, I think it’s fair to say the higher contribution rates are needed – and they need to stick – to deliver these workers the retirement income they’ll expect.

This could yet be a challenge. The new contribution rates may look measly to some super-savers around here. But they will take a meaningful chunk of change out of pay packets, as this graphic from the BBC illustrates:

Higher personal tax allowances – also starting today – will ease the pain. Head over to the BBC for the full story.

Pensions and property

Even the invariably spiky Merryn Somerset-Webb in the FT hails the success of auto-enrollment, and describes UK pensions as in “fabulous shape”.

The UK pension system is well-funded by international standards, and auto-enrollment means our level of pension assets is increasing faster than elsewhere.

There’s just one potential snag, Merryn warns, which is that some wonks believe pension savings should be accessible to young people in need of a house deposit.

No no no!

A pension is a backstop. It comes with tax relief for the very specific reason that it is designed to stop you being reliant on the state in your retirement.

Once the money is in it is in, you can’t lose it gambling or in bankruptcy; you can’t create negative equity with it; and you can’t fritter it way on the internet (not until you are 55, anyway).

Enabling pension access to pump up the housing market might seem a good way to address housing inequality, Merryn scoffs, but it would destroy the integrity of the pensions system.

I agree. Lifetime ISAs are mutant hybrid enough!

From Monevator

The Slow & Steady Passive Portfolio: Q1 2019 update – Monevator

From the archive-ator: Why I don’t use the FIRE acronym for financial freedom – Monevator

News

Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1

New year taxes: The key changes [Search result]FT

Super-rich pay average 10% inheritance tax, versus 20% paid by wealthy – Guardian

House prices hold up better than expected amid Brexit doubts… – Guardian

…or perhaps you prefer to focus on the 1.6% fall in March – ThisIsMoney

Bridgewater’s Ray Dalio warns US inequality risks social conflict [Search result]FT

[US] super-savers spend less on housing – Market Watch

Hedge funds raise minimums as costs rise and returns dwindle – Institutional Investor

The US market doesn’t look that outrageously expensive – via Business Insider

Products and services

‘Bundled’ Amazon product reviews mislead consumers – Guardian

MPs demand more scrutiny following high-profile mini-bond wipe-out – ThisIsMoney

Pension Partners: 80% of ETF assets are managed by three companies – via Twitter

End of the line for Nationwide’s 5%-paying regular savings account – ThisIsMoney

Ratesetter will pay you £100 [and me a cash bonus] if you invest £1,000 for a year – Ratesetter

Online shopping: ASOS to crackdown on ‘serial returners’ – ThisIsMoney

Do tactical allocation funds deliver? – Morningstar

Comment and opinion

Fees versus fines – Morgan Housel

What’s your next dollar worth? – Khe Hy

Buy yourself a f*cking latte – Barry Ritholz

Are your annual return expectations realistic? – MoneySense

How some of the world’s oldest people make their money last – Next Avenue [via AR]

Getting real – Humble Dollar

The mystery of preferring a ‘spend only the dividends’ strategy – The Retirement Cafe

How can you best communicate what risk means to you? – The Value Perspective

Key information I’d like to see in a KID – IT Investor

An interesting look at how a US active investor reviews his fund portfolio – M.F.O.

O tempora! O mores! – Simple Living in Somerset

JP Morgan CEO Jamie Dimon’s annual letter is usually worth reading – JP Morgan

Some thoughts on a seed investment gone right – Points and Figures

Lessons learned on successful start-up growth from an AirBnB insider – Medium

Brexit

A shambles on which the sun never sets: How the world sees Brexit – Guardian

The United Kingdom has gone mad – New York Times

Anger and frustration: How Brexit is affecting our mental health – Guardian

89-year old Betty Boothroyd delivers blistering Brexit attack – via Twitter

Robert Peston shows Boris Johnson doesn’t understand single market – via Twitter

Nicola Sturgeon notes Jacob Rees-Mogg’s hypocrisy about our EU power – via Twitter

A video game version of Hard Brexit [Video] – via Twitter

Brexit’s macho drama queens set to be knocked out by reality – Guardian

Kindle book bargains

Eat Well for Less by Jo Scarratt-Jones- £1.99 on Kindle

What You Get is What You See by Alan Sugar – £0.99 on Kindle

Off our beat

Demographic time-bomb: Finland sends a warning to Europe [Search result]FT

Recycling isn’t about the planet. It’s about profit – Slate

The share of Americans not having sex hits a record high – Washington Post

This is Boring: The niche London conference that became a hit – Eventbrite

10 animals being eaten into extinction – Guardian

Arms Sales: US vs USSR (1950-2017) [Video]Visual Capitalist

And finally…

“The world of work today is overflowing with systems, processes, tools, and assumptions that are deeply flawed and that push directly against our ability to express what is unique about each of us in the work we do every day.”
– Marcus Buckingham and Ashley Goodall, Nine Lies About Work

Like these links? Subscribe to get them every Friday!

  1. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”.