FT: Hunt plans overhaul of ISA rules

[yorkshirelad1]

FT: Sat 23 Sept 2023 (front page): Hunt plans overhaul of ISA rules
https://www.ft.com/content/5849ad2e-2c11-4294-a334-f7c480f7a1eb
http://archive.today/2023.09.23-114813/https://www.ft.com/content/5849ad2e-2c11-4294-a334-f7c480f7a1eb

[88V8]

FT: Sat 23 Sept 2023 (front page): Hunt plans overhaul of ISA rules
http://archive.today/2023.09.23-114813/https://www.ft.com/content/5849ad2e-2c11-4294-a334-f7c480f7a1eb

Sounds like a pain for scheme providers.
And not that long to the next tax year, after which the Tories may be toast.

Still, let's hope it happens. Not often the govt gives us a freebie.

V8

[Dod101]

Thanks. That sounds like good news even although I have never held a cash ISA. I probably have more than £10,000 in cash (as working capital not as a savings back up) and it would be quite good to find a simple home for it, like leaving it in a multi asset ISA. The main point though is that it is good to read that Hunt is looking for ways to persuade the general public to invest in UK shares.

Dod

[mutantpoodle]

so it looks like having tried to encourage the institutions to buy / back british stocks
with clearly not sufficient success??
he now trying to get the public to have a go....where the institutions have chosen not to be thrilled at opportunity

how long before the claims appear from ordinary people who lose money doing this, claiming not enough info etc etc etc

(I realise many of us already do lose...but hoperully not 'big time')

[Lootman]

"One radical option being considered is an additional Isa allowance for investing in UK companies, according to these people, although this work is said to be at a preliminary stage."

Radical? When PEPs first came out, you could invest more if you chose UK shares. There were also single company PEPs, with an extra allowance, again only for UK shares.

So this is not new or radical at all. It is just going full circle to the original ill-fated idea, that was later dumped.

[Dod101]

so it looks like having tried to encourage the institutions to buy / back british stocks
with clearly not sufficient success??
he now trying to get the public to have a go....where the institutions have chosen not to be thrilled at opportunity

how long before the claims appear from ordinary people who lose money doing this, claiming not enough info etc etc etc

(I realise many of us already do lose...but hoperully not 'big time')

Please try to resist your cynicism. Presumably you are referring to the encouragement to pension funds to invest in UK shares. Pension fund trustees cannot just turn up for their next meeting and say, 'OK let's stick some money in that new start up in Solihull' These things take time and they no doubt need to consult advisers, their own laid down policies and consider whether they ought to change them, to establish a principle in the first instance and then once they have decided on a change of policy (or not) only then can they start to look for possible investments. All that will take time.

In the same vein, the Chancellor is now apparently looking to update the ISA rules. Whether that encourages more of the public to invest more or better remains to be seen, but probably more likely to make it easier for those already investing.

The point though is that if he can persuade more to invest in UK shares, whether corporate bodies like pension funds or individuals, that can only help established investors like most on this site and so surely should be welcomed.

Dod

[tjh290633]

"One radical option being considered is an additional Isa allowance for investing in UK companies, according to these people, although this work is said to be at a preliminary stage."

Radical? When PEPs first came out, you could invest more if you chose UK shares. There were also single company PEPs, with an extra allowance, again only for UK shares.

So this is not new or radical at all. It is just going full circle to the original ill-fated idea, that was later dumped.

My recollection is that you could only invest in UK shares initially. 25% unit trusts were permitted, eventually changed to 100%. I think it was when ISAs replaced PEPs that you could invest in any share quoted on a recognized stock exchange.

It may have been down to my PEP provider (Lloyd's Bank) who had a list of permitted shares, but I had to dispose of the US companies demerged from Hanson, and also Centrica when it was demerged from British Gas.

TJH

[CliffEdge]

Downsizing for growth, again.

[mutantpoodle]

quote DOD

Please try to resist your cynicism. Presumably you are referring to the encouragement to pension funds to invest in UK shares. Pension fund trustees cannot just turn up for their next meeting and say, 'OK let's stick some money in that new start up in Solihull' These things take time and they no doubt need to consult advisers, their own laid down policies and consider whether they ought to change them, to establish a principle in the first instance and then once they have decided on a change of policy (or not) only then can they start to look for possible investments. All that will take time.

The point though is that if he can persuade more to invest in UK shares, whether corporate bodies like pension funds or individuals, that can only help established investors like most on this site and so surely should be welcomed.

Dod[/quote]

yes OK I am cynical....HINDSIGHT is invaluable sadly only to be learnt from...shame we cannotdo anything to change it

with regard your comments re pension fund trustees
I would be most p*ssed off if trustees of my pension fund were not actively and on daily basis being fully aware of UK opportunities for investment
OK I accept they would not just turn up 'at their next meeting and stick some moneyin'
but they should always be having an uptodate book of actual and possible ivestment opportunities
they would (SHOULD) not need to start a thought process


and fyi...I do have some experience in this...TWO of my pension funds went belly up thanks to shortfalls trustees of course were not responsible
and now both those pensions are picked up by the \PPF...at greatly reduced value to me !!
(but little or no inconvenience to the trustees.........but thats not an issue here)

[Wuffle]

There are so many contradictions here.
Economically right wing, free market party suggests what you should invest in for starters.

As a proud cynic, can I suggest that having cut the allowances and irritated plenty by giving them extra faffing about, they are just on a low level political window dressing mission.
The 'British' element is transparently a further political gesture towards the recent Conservative converts of Brexit from the old 'Red wall' (where I live) who never should have been voting for them anyway and who are going to drift back on economic lines as well they should. In the same way that right wing economic policies suit most of the older, wealthier types hereabouts.

W.

[Dod101]

quote DOD

Please try to resist your cynicism. Presumably you are referring to the encouragement to pension funds to invest in UK shares. Pension fund trustees cannot just turn up for their next meeting and say, 'OK let's stick some money in that new start up in Solihull' These things take time and they no doubt need to consult advisers, their own laid down policies and consider whether they ought to change them, to establish a principle in the first instance and then once they have decided on a change of policy (or not) only then can they start to look for possible investments. All that will take time.

The point though is that if he can persuade more to invest in UK shares, whether corporate bodies like pension funds or individuals, that can only help established investors like most on this site and so surely should be welcomed.

Dod

yes OK I am cynical....HINDSIGHT is invaluable sadly only to be learnt from...shame we cannotdo anything to change it

with regard your comments re pension fund trustees
I would be most p*ssed off if trustees of my pension fund were not actively and on daily basis being fully aware of UK opportunities for investment
OK I accept they would not just turn up 'at their next meeting and stick some moneyin'
but they should always be having an uptodate book of actual and possible ivestment opportunities
they would (SHOULD) not need to start a thought process


and fyi...I do have some experience in this...TWO of my pension funds went belly up thanks to shortfalls trustees of course were not responsible
and now both those pensions are picked up by the \PPF...at greatly reduced value to me !!
(but little or no inconvenience to the trustees.........but thats not an issue here)[/quote]

It would be interesting to know why two of your pension funds went belly up. Was it a shortfall in funding or was it poor choice of investments? Usually pension fund trustees are accused of being too conservative by investing for instance in bonds, which is what the majority of DB schemes do these days. I do no know much about DC schemes so cannot comment.

Dod

[Alaric]

Usually pension fund trustees are accused of being too conservative by investing for instance in bonds, which is what the majority of DB schemes do these days. I do no know much about DC schemes so cannot comment.

Defined contribution schemes can vary as to how much choice they give the members. Some may operate on lines close to being an in house SIPP whilst others may offer a very limited investment choice is any at all.

It's only the latter where there's any point in cajoling Trustees to invest in unquoted UK companies. Otherwise it's individal members who as with ISAs would make the decision to go partly unquoted. It might be an uphill struggle given the numbers burnt in some way or other by Woodford.

With most if not all DB schemes outside the public sector now closed to new members and additional accrual, Trustees are likely to stay close to a Bond portfolio. That may not preclude loans to UK companies or infrastructure investment. If the accouting standards were changed so that investment volatility in the pension scheme no longer directly impacted a Company's earnings and balance sheet, more employers might be prepared to consider more equity investment for DB schemes, even closed ones.

[Dod101]

There is nothing that I have read that indicates the Chancellor wants pension schemes to invest particularly in unquoted companies. What I have read on this matter is that he wants to encourage them to invest more in London quoted companies, that is the public stock market.

Investing in unquoted companies would be adding considerable risk to their profile, but it seems he would like them to behave more as they did during the hay day of the DB schemes and the cult of the equity.

Dod

[micrographia]

With most if not all DB schemes outside the public sector now closed to new members and additional accrual, Trustees are likely to stay close to a Bond portfolio. That may not preclude loans to UK companies or infrastructure investment. If the accouting standards were changed so that investment volatility in the pension scheme no longer directly impacted a Company's earnings and balance sheet, more employers might be prepared to consider more equity investment for DB schemes, even closed ones.

The higher education workplace pension USS still has a DB component that is open to new members as part of its hybrid structure. I believe this is reflected in its substantial equity investments, as you suggest. It's a private occupational scheme (as I have to keep explaining to relatives with chips on their shoulders about public sector pensions ).

EEM

[Dod101]

With most if not all DB schemes outside the public sector now closed to new members and additional accrual, Trustees are likely to stay close to a Bond portfolio. That may not preclude loans to UK companies or infrastructure investment. If the accouting standards were changed so that investment volatility in the pension scheme no longer directly impacted a Company's earnings and balance sheet, more employers might be prepared to consider more equity investment for DB schemes, even closed ones.

The higher education workplace pension USS still has a DB component that is open to new members as part of its hybrid structure. I believe this is reflected in its substantial equity investments, as you suggest. It's a private occupational scheme (as I have to keep explaining to relatives with chips on their shoulders about public sector pensions ).

EEM

The point is that ongoing DB schemes are indefinite funds and so are quite suited to equity investment if no other reason than that the incoming cash flow helps to pay for the pensions and there is normally no need to ‘raid’ the capital of the scheme to help pay pensions whereas with a closed DB scheme it is not difficult to see that the capital will run down as the scheme progresses and reduces in size. It is thus more suitable to use bonds for the investment capital in order to match the assets with the liabilities.

Dod

[TedSwippet]

There is nothing that I have read that indicates the Chancellor wants pension schemes to invest particularly in unquoted companies.

Workplace pensions to invest billions in unlisted stocks - Investors' Chronicle

July 10, 2023
The government has outlined an intervention in the allocation of the UK's trillions of pounds of pension holdings, after Chancellor of the Exchequer Jeremy Hunt announced that nine of the largest defined contribution (DC) pension schemes had agreed to allocate at least 5 per cent of their default funds to unlisted companies by 2030.

[GeoffF100]

Here is an article that may cast some light on the matter:

https://www.thisismoney.co.uk/news/arti ... anies.html

Perhaps we will get an additional allowance for UK shares, and perhaps the rules on opening multiple ISAs in the same year will be liberalised.

[Dod101]

There is nothing that I have read that indicates the Chancellor wants pension schemes to invest particularly in unquoted companies.

Workplace pensions to invest billions in unlisted stocks - Investors' Chronicle

July 10, 2023
The government has outlined an intervention in the allocation of the UK's trillions of pounds of pension holdings, after Chancellor of the Exchequer Jeremy Hunt announced that nine of the largest defined contribution (DC) pension schemes had agreed to allocate at least 5 per cent of their default funds to unlisted companies by 2030.

As I said I had not read that. The FT item at the beginning of this thread does not I think mention that. I would not have thought pension fund assets were very suitable for investing in unlisted companies but we’ll see.

Dod

[mc2fool]

Here is an article that may cast some light on the matter:

https://www.thisismoney.co.uk/news/arti ... anies.html

Perhaps we will get an additional allowance for UK shares, and perhaps the rules on opening multiple ISAs in the same year will be liberalised.

Like other reports I've seen that one talks about Hunt wanting to make it "easier for ordinary people to invest in British companies" and goes on to say he's "reportedly considering offering an additional tax-free Isa allowance strictly for money invested into companies listed on the London Stock Exchange (LSE)."

Well, investment trusts are British companies and listed on the LSE, so will JP Morgan Emerging Markets (JMG) count?

How about the Chilean miner, Antofagasta plc (ANTO), also listed on the LSE, that has it's entire operation in Chile other than it's HQ and domicile which are in London (and even has a .co.uk domain)? There are lots of FTSE 100 companies that are similar-ish in having all or most of their actual business outside the UK.

Both are, of course, British companies but I suspect they don't epitomise the spirit of what this seems to be being spun as being about. Could it end up being FT250 ex ITs maybe? We await the devil in the detail ...

[Lootman]

Here is an article that may cast some light on the matter:

https://www.thisismoney.co.uk/news/arti ... anies.html

Perhaps we will get an additional allowance for UK shares, and perhaps the rules on opening multiple ISAs in the same year will be liberalised.

Like other reports I've seen that one talks about Hunt wanting to make it "easier for ordinary people to invest in British companies" and goes on to say he's "reportedly considering offering an additional tax-free Isa allowance strictly for money invested into companies listed on the London Stock Exchange (LSE)."

Well, investment trusts are British companies and listed on the LSE, so will JP Morgan Emerging Markets (JMG) count?

Back when PEPs were similarly biased towards UK companies, ITs were specifically excluded and for obvious reasons. For PEP purposes they were deemed to be collectives and so, despite being UK companies, they were subject to the much lower subscription amount for unit trusts and other types of funds. I would expect the same here, otherwise the idea of encouraging UK investments would be a joke. Which I happen to think it is, by the way.