![]() Standing accused for this is intransigent models, poor governance and communication from drawdown providers. I expect that we will hit a precipice in sequencing risk over the next 5-10 years. ![]() The challenge is longevity risk and faltering long-term income sustainability. Poor engagement leads to poor drawdown outcomes. Recall the first Crypto transaction ever made was for 10,000 Bitcoins to buy two Papa John’s pizzas for a sum today worth about £200 million! A great example of the disparity between money and worth but also time value and inflation.Įven without crypto in post-pension freedoms we now have a strange combination of flexibility and detachment among investors. GenYs are more happy to ‘invest’ in crypto than pay into an old fashioned system.Ī million pound pension in 1995 would be worth £2.37 million today (or roughly 80 Bitcoins). On inflation, did you know that £100 in 1973 would now be worth almost £1500 (or only 0.05 of a Bitcoin), the Pound having lost 93% of its value? The sense of money perception is itself generational. contribution rates lag heavily behind the likes of Australia and Canada. The baggage of “salary-sacrifice” that comes with auto-enrolment has not helped and U.K. Of course, there is no instant gratification, the optical cost of the lottery also appears far less than pension contributions because investors do not factor for inflation or time. That sum is of course uncertain but the odds of positive payout far outweigh the odds of the lottery. Yet it seems many are happier to gamble on a set of lottery numbers, which have odds of paying out on the jackpot at roughly 45 million to one, far more so than increasing their pension contribution that will pay out, at one-to-one odds, a future sum in retirement. and-go, I fear investors are becoming ever disenfranchised from money, all the more acute given the cost of living crisis, demise of physical coins in circulation, sluggish multi decade wage inflation and volatile markets.
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