A view from...Cyprus!

I don't know whether its 'Blog protocol' to use a holiday picture-but here we are! myself on the left, then going around clockwise; Tina (my wife) our good friend Ria who lives in Cyprus, my son Noah and our good friends Janette and Carl who came with us.

So what-I hear you say-has this got to do with a financial blog?

Well....I thought I'd try something different. A bit 'Alan Whicker' meets 'Robert Peston' type thing....your feedback will tell me whether this worked..or not!

Cyprus-a population of 1.17m as of 2016 and a land mass of roughly 9,000 km2, Wales 3m population on a land mass of 20,000 km2 is almost proportionally the same size with regards to population and land mass.

So it comes as no surprise, that in certain beach areas along Cyprus' southerly coastline, the five of us were virtually alone and had swathes of beach and Mediterranean Sea as well as 34 degree heat, all to ourselves. We were staying 15 minutes drive from Larnaca Airport in a village called Pervolia. The picture was taken around 7.30pm on a Saturday Night...It seems that the tourists were more interested in Paphos, Ayia Nappa, Downton Larnaca or Limassol, as opposed to this little village and as far as the locals and the tourists that were there, that suited everyone fine.

It seemed to me, in this part of the world, taking it easy while working was the mantra. Nothing too busy please...just a gentle trickle of customers, with plenty of time on their hands is what there all about. As a relaxing holiday, that suited us fine-but...That ethic? in a Eurozone country? what's that all about? and that, readers, is what bugged me. Now don't get me wrong, Cyprus has every right to want to be chilled-200 miles east & Southeast is Lebanon/Israel 200 miles Northwest is Syria,  100 miles north is Turkey and a couple of hundred miles south is Egypt, so its not surprising that Cyprus becomes a relative Oasis of calm. Even the busy town of Larnaca, franchise owners of Haagen Das, KFC, Burger King etc, sit outside drinking Iced Coffee, inviting the lovely ladies to sit down and enjoy a similar beverage, appearing to pay no attention to the fact that the restaurant is quiet and maybe, like a few years ago, he should be offering menus and discounts to passers by, in the hope they'll sit down and spend a few Euro's.

On building sites (on which there were several) the laissez faire attitude appeared to exist along the banal decision to lay tarmac at 11am in 30 odd degree heat hoping it will set. With no signs put up, a lot of people walked onto to the path, becoming temporarily stuck and the workmen tutting as they had to re-apply the tarmac. Far be it for me to suggest laying it at 5am and then finish the day at 1pm! these workers toiled in the heat until 4pm most days. It was also interesting to note the half finished buildings. It turns out that the government demand taxes on built-but empty properties-from the developers, so the developers build a shell and wait until they sell it, before completing it-consequently, there are plenty of what looked like 'Abandoned builds' and houses with no roofs, swimming pools etc, as the developer waits to sell it.

But the quietness of this space between Paphos and larnanca and Larnaca and Ayia Nappa may not be quiet for long. 5 and 7 million Euro mansions are being built in areas such as Limassol and Pervolia. why? because wealthy Lebanese and Russians are buying them up. Why are they buying them up? because according to the locals, spent upwards of 5m Euros on a property and you get a Cypriot Passport & residency. Spend 300k Euros on a property and you get residency. A boardwalk is being built from Pervolia to Larnaca. The boardwalk will have houses to left, which will look over the sea to the right. This will not only sell the houses, but must surely indicate that restaurants, Bars, clubs, supermarkets, etc must soon be opening, to cater for these newly found 'residents'

'Passports for Houses' in Cyprus first raised its head in the FT in 2013. There are clear concerns about whose buying the properties, the money laundering checks that go on etc. That aside, Cyprus could become a quiet little spot for a lot of money and with that money, Cyprus could become a jewel in the severely dented and tarnished Euro Crown. Only time will tell.

Hope you enjoyed a different type of blog from me-please let me know!

Victor

Victor Sacks is an Independent Financial Adviser and Company Director of VS Associates Ltd, which in turn is an Appointed Representative of the Sense Network, who are Registered and Regulated by the Financial Conduct Authority.

If you want to get in touch with Victor;

E-victor@vsassociates.co.uk

M-07866 504896

T-01480 384711

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Can't touch this....

I daresay, the title of my blog for some of you, has conjured an image of MC Hammer, sliding along the floor in pantaloons that, were affectionately known around my neck of the woods as..well...'Sh*t Catchers' The middle seam, when legs were apart would be below the knee, yet around the ankle, there were elasticated cuffs..quite a sight!

For others, it's a familiar rant by a parent or child, or even as I show above, a simple message on a case or on a folder basically saying 'leave it'

So where am I going with this? an hour ago The Post Office announced a series of 24 hour strikes, as branch closures, job cuts and pensions come under attack.. The following is my own viewpoint and I've used my own ideas-So don't take this as advice, just something that hopefully, gives you a bit of info and food for thought....

Earlier this year, Financial Times Journalists voted for a 24 hour strike over Pensions, so did Dorset Firefighters and two Belfast leisure centres closed for a day as a result of similar action. Tube workers did the same in May this year.

Yes, the message is clear-Don't touch...my pension.

A pension? they strike for a pension? the same investment vehicle we hear Andy Haldane -Chief economist at The Bank of England- say is "Too complicated" and I'd "sooner invest in property"

The much maligned investment that most financial journalists pick holes in and the investment I hear being described as "Rubbish", is causing strike action?

We need to look into this then....

Let's be honest, any investment that starts off with "You can't access this until you're 55" isn't going to win many friends is it? OK, the access age will lower, if you are in a profession/Job that has been given special terms; Armed Forces, Police, Professional Footballer, Jockey etc-I could go on, but you get my drift.

Once we get over the Duration, we start to see some goodies:

-Tax relief on contributions at highest marginal rate of tax paid...So if you earn say £30k per annum, your highest income tax rate will be 20%, so with tax relief, an £80 per month from you, will be inflated to £100 overnight! 20% growth on your money!

-Once invested, your money grows predominately free of tax-Now there is a small element of dividend tax that can't be reclaimed, but in your hands, it grows tax free

-If death occurs before you retire, the fund is payable to your selected beneficiary(ies)

-At age 55 (or earlier, when dealing with special recognised careers) you can take a quarter of the fund value as tax free cash-either as one lump, or a bit at a time.

-The rest of the pot can be invested to provide you with an income for life, which will be taxed in the same way your income is now or;

You can opt for a flexible access pension and draw off what income you want when you want and ultimately when you die, it can be left to whoever you want to.

Oh, and we haven't spoken about the 2,500 + investment funds available.

What about costs, I hear you say? well yes, no one does "'owt for owt" If you are putting your money into a series of investment funds, there will be a charge which the fund manager will deduct-typically anywhere between 0.5%-1.5% per year, dependent upon the complexity of the investment recommended, so lets say you have £30,000 in your pension pot, £150-£450 per annum will be deducted. But remember, you're getting 20% PER MONTH tax relief, every time you pay in. Ultimately, you have no idea what your final value will be, but reviewing it regularly will help you and when the day eventually comes for you to start taking benefits, there won't be any surprises.

Now, when we consider the strike action being taken, we are talking about schemes that have similar mechanics, but the structure is very different. They are based on a percentage of Salary and so long as that individual stays employed, the pension value per annum, is a known figure to the individual and in fairness an unknown cost to the employer.

Lets take an example. A boy of 18 starts stacking shelves at a supermarket, earning £5k per annum. 35yrs later, he is chief executive of that supermarket, earning £450k per annum. His percentage payment into that scheme is set at 8% of salary from when he joins and doesn't change. His potential pension could be worth £262,500 per annum, yet at his peak earnings, he paid  just £36,000 per annum.

The supermarket would have had no idea how far this persons' career would have gone and no idea what the future cost of his pension would be (there's a good chance some £50-60k per annum would have to have been paid in by the supermarket, when our man was paying in £36k).

Now, lets say this supermarket faces competition, it starts losing market share and enters into a price war-its profits reduce, there isn't enough capital to fund pensions and they need to create breathing space-what can they do? push out retirement age? increase contributions from members? penalise anyone who wants to retire at the original retirement age? change the definition of 'pensionable pay'?

When I worked for a big Corporate company, all of the above were implemented and its my perception, that along with other measures, it's what's being put forward to members of the aforementioned companies who are going on strike.

Mr Haldane and others got it so wrong....A pension is a valuable asset. It doesn't have to be complex...and Isn't complex when someone takes time out to explain it.

By the way, if you understand a bit more about pensions now, that you did 15 minutes ago...tweet, text, or email me.

Have a great rest of week,

Victor

Did this post pique your interest in Pensions? do you have one and want to know a bit more about it?

E: victor@vsassociates.co.uk      W:www.vsassociates.co.uk

T: 01480 384711                         Twitter: @SmartSacks

M: 07866 504896

Victor Sacks is An independent Financial Adviser and company director of VS Associates Ltd an Appointed Representative of the Sense network, who are Authorised and Regulated by the Financial Conduct Authority.