QROPS update 26th August 2011 Pension income drawdown & Foreign exchange QROPS and QNUPS

At Gerard Associates Ltd we continue our daily look at factors affecting markets and currencies allowing some insight into conditions affecting exchange rates.

Cash and income timing from a UK Pension income drawdown, flexible pensions or QROPS (Qualifying Recognised Overseas Pension Scheme) should be considered to maximise the Pension drawdown, QROPS and investment income taken.

Investment market volatility and currency exchange remains a challenge. The global economics are volatile and unprecedented in history. Currency exchange continues to concern expats with UK Pensions, income drawdown now including flexible pensions, a QROPS and QNUPS (Qualifying non UK Pension schemes).

Thursday started off quite gloomy for sterling, as the first bit of news, out very early on,

showed consumer confidence in tatters, according to the latest figures from Nationwide.

Nationwide said yesterday that it sees no improvement in consumers’ willingness to spend

for the remainder of 2011 after its Consumer Confidence Index recorded a score of 49 for

July, down from 51 in June and well below the long term average of 79.

Nationwide’s chief economist said “With the economic recovery still facing

strong headwinds, it is unlikely that we will see any considerable improvement in confidence

in the remainder of 2011. Indeed, we may see further deterioration in August following riots

in a number of UK cities and the sharp declines seen in stick markets around the world”.

Consumer confidence is now falling away after signs of improvement at the start of the year.

Households are tightening the purse strings in the face of living costs that are rising faster

than wages. Many employees have seen wages frozen or are having to shoulder below inflation

pay rises.

Germany’s consumer sentiment (GfK) came in at 5.2 points in September, following a

revision that lowered the August reading to 5.3. The preliminary data showed a reading of

5.4 for August. The September figure is in line with economists’ forecasts.

“Germans’ willingness to buy is surprisingly robust,” GfK said. “However, the worsening of

the international debt crisis and rising fears of a return to recession for the global economy

have clearly left their mark on the economic optimism of Germans.”

GfK said German consumers worry that global economic weakness will affect the domestic

economic boom if export prospects collapse.

The latest reading of the Ifo business sentiment index – released Wednesday – confirms

consumers’ view. The Ifo index hit a 14 month low in August after its sharpest drop since

2008, in the latest sign that growth in Europe’s largest economy is stalling.

The number of Americans seeking new jobless benefits rose for the second week in a row as

thousands of phone workers at Verizon Communications filed claims, government data

showed.

New applications for US unemployment compensation rose 5n000 to 417,000, the Labour

Department said yesterday. Initial claims from two weeks ago were revised up to 412,000

from an original reading of 408,000.

Although the claims data was boosted by the Verizon strike, applications for jobless benefits

remain at an elevated level normally associated with subpar hiring trends. In a strong

economy, claims usually fall far below 400,000 as companies rapidly add workers.

IN THE UK

• Investors worry as Nationwide Consumer Confidence Index records a score of 49 for July, despite being above consensus it shows a decline of 2 points and the lowest reading since April
• The report shows UK inflation is outpacing wage growth, putting pressure on household incomes at a time when government budget cuts are fuelling concerns about rising unemployment
• MPC policymaker, Martin Weale, said the Bank of England can hold fire on further monetary stimulus despite economic weakness and recent market turmoil, as the overall picture is brighter than it was in the run-up to the financial crisis. These comments are in line with remarks by fellow policymaker, David Miles.
• GBP/EUR hits a low of €1.1318 during days trading after opening at €1.1363 and GBP/USD hits a low of $1.6260 after its recent run up to 3month highs.

ELSEWHERE

• German GfK Consumer Climate comes out at a reading of 5.2 points in September, in line with economists’ expectations
• The worsening of the international debt crisis and rising concerns of a return to a global recession clearly leaves its mark of Germans’ economic optimism.
• In Switzerland, economic expectations slumped to the lowest level in more than two and a half years in August, sliding 12.5 points to -71.4, down from -58.9 points in July.
• The Swiss indicator for the inflation outlook also fell, with only 14.3% of financial market experts still anticipating inflation rates advancing on a six-month horizon, compared with 23.5% a month earlier.
• US weekly jobless claims rise more than expected, by 5,000 to a seasonally adjusted 417,000, the Labour Department said, adding that striking Verizon workers filed 8,500 claims for jobless benefits last week, after submitting 12,500 applications the previous week.
• The RBA in Australia expect inflation to be at 3% by the end of the year but have said they will be keeping interest rates on to maintain stability despite rising inflation.

DATA TO LOOK OUT FOR

• A very important day for UK data, at 9.30am revised Q2 GDP figures are released, expected to come out at 0.2%, expect significant sterling volatility if it much different to the consensus.
• 10.30 Swiss KOF Economic Barometer, the figure is expected to fall but will the CHF continue to weaken?
• 1.30pm in the US sees Preliminary GDP figures, Personal Consumption and Michigan Consumer Sentiment, analysts suggest the figures will be disappointing showing falls across the board.
• The highlight of the week for USD traders is Ben Bernanke’s speech at Jackson Hole this afternoon beginning at 3.00pm. There has been speculation about whether or not QE3 will be implement today or not and what the Fed have up their sleeves to help the US economy avoid re-entering recession. The markets will be closely monitoring his words and we can expect movement in all currency pairs

Gerard Associates Ltd advises UK residents, expats and people considering living abroad on the technical and currency options available for Pensions, pension income drawdown, flexible pensions, QROPS, QNUPS and investments in a clear format allowing all customers to make an informed choice. Our service encompasses Pension including QROPS and QNUPS and investments in a clear format allowing all customers to make an informed choice.

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