Got a NEST pension? Consider changing your default fund

The government’s pensions auto enrolment fund has been wildly successful. Today, 87 per cent of people have a UK pension scheme, up from 55 per cent in 2012 when the rules changed to mean that you had to opt-out of saving (rather than opt-in). The numbers are even more impressive for young people: 84 per cent of people aged 22-29 now have a workplace pension, up from 24 per cent in 2012.

A huge number of these new savers are investing their money in a NEST pension, one of the government’s main pension scheme options which now has more than six million members.

99 per cent of these six million savers are invested in NEST’s “default funds.” In other words, of the millions of new automatic savers, only 1 per cent have made a manual decision about where their money goes.

I’m one of those 1 per cent.

The default fund option in NEST is not right for me, and I think many other savers who, like me, have many decades until retirement, should consider moving their money too.

What was the NEST default fund wrong for me?

The objectives of the default fund are threefold: maximising the total size of the retirement pots; ensuring that cohorts who contribute similar amounts have similar outcomes; and, to “dampen volatility” while people are saving.

To achieve these objectives, the default fund invests a maximum of 55% of its portfolio in equities, presumably because any major volatility in the stock market would mean a temporary fall in the value of their pension, which would put off savers who will then choose to withdraw their money entirely.

Even worse, in the first five years of investing, only 35 per cent of your default fund money is in the stock market, and up to 30 per cent of your money could be invested in cash (in other words, inflating away!).

The portfolio for the default NEST pension fund in its least conservative phase puts a maximum of 65% of its assets in the stock market, which I feel is very conservative

I want my retirement fund to make me as much money as possible and for me the best way to do that is to put it all in the stock market. Read my Freetrade review for more detailed reasons why.

Since I won’t be able to access my retirement fund for at least 30 years, I’m not worried about monthly or even annual fluctuations. NEST does provide alternative options for those who want to take on more risk, but even its “higher risk” fund targets a portfolio that is 70 per cent equities. The only option that is 100 per cent equities is the Sharia fund, (which also happens to be the fund that’s performed best since inception.)

In summary: the default fund is an incredibly conservative and risk-averse option, and you should consider changing it. Even if you don’t change, you should know where your money is going.

Further reading

NEST’s different funds and how they invest your money

UK Post Box review: my most luxurious digital service

Is your pension plan water?

40 interesting things I learned in 2019 (so far)

Emmet Gowin's aerial picture of the Nevada test site
Credit: Emmit Gowin

Inspired by Tom Whitwell’s list of 52 things he learned last year, I created my own list (with a focus on science, aviation, technology and food) which I’m still adding to throughout 2019.

  1. There is only about one atom per cubic metre of space in the universe. Source: George Gamow’s book One Two Three Infinity
  2. In the late 1700s Oxford had a climate similar to that of present day Edinburgh. Source: The Times
  3. Commercial airline pilots sometimes greet fellow pilots at cruising altitude by flashing their landing lights. Source: FT
  4. Sesame Street has a venture capital firm. Source: The Times
  5. Japanese researchers once invented a wasabi fire alarm which can wake deaf people up in the night. Source: Quartz
  6. Moby is the great-great-great-nephew of Herman Melville, author of Moby Dick, hence the nickname. Source: The Times
  7. The first cultivated carrots were purple and yellow, not orange. Source: Pop Sci
  8. Ciabatta bread was invented in 1982 by an Italian jealous of the popularity of the French baguette. Source: The Guardian
  9. The word “blazer” comes from the colour of the red ivy flowers growing on the side of the St John’s College building, Cambridge University, which the rowers of the Lady Margaret Boat Club used as inspiration for their outfits. Source: The Telegraph
  10. In parts of New Orleans the graves are overground concrete tombs because of the city’s water level. Source: Itotd
  11. Until 1987 it was common to operate on newborn babies without anaesthetic. Source: The Times
  12. Reuters News Agency was founded in 1850 with a flock of 45 messenger pigeons which filled a “telegraph gap” between Brussels and Aachen in western Europe. Source: Reuters
  13. Sharks have been around for at least 420 million years and survived four of the “big five” mass extinctions. Source: New Scientist
  14. Ordnance survey, the UK mapping company, was set up because the English were worried about revolutions in Scotland and France and wanted to know where they could easily transport their troops in case of war. Source: Ordnance Survey
  15. Mosquitos may have killed half of the 108 billion people who have ever lived across our 200,000 year existence. Source: New Scientist
  16. Only 20 per cent of Americans can do a single push-up. Source: The Atlantic
  17. Fanta was developed in Nazi Germany in response to an embargo on Coca-Cola. Source: The Local via Frank Swain
  18. Finland has a government committee called the “Committee for the Future” dedicated to discussing and solving big, future problems. Source: Jared Diamond interview in New Scientist
  19. Gold smugglers have set up fake gold mines in Uganda which are designed to legitimise gold that’s been smuggled in from Congo. Source: The Economist
  20. Over millions of years of chimp and human evolution there have been, on average, six changes to the roughly three billion letters in our genetic code every year. Source: The Guardian
  21. Spandex, the material used in most leggings, was invented during the Second World War when the military was trying to find a new material for parachutes. Source: The Guardian
  22. Almost all bananas sold today are direct descendants of one plant grown in the early 1800s in the greenhouse of Chatsworth House in the peak district. Source: BBC News
  23. The Nike “Just Do It” slogan was inspired by the last words of a murderer who was about to be executed by firing squad. Source: New Yorker Mar 18 2019
  24. The brain consumes about a fifth of a person’s metabolic energy each day. Cooking was essential for human evolution, because it means we don’t need to spend all day chewing — unlike chimps. Source: 1843 Magazine
  25. Swatch once invented a new unit of time for the internet called the “beat” which split the day into 1000 parts. Source: BBC News
  26. The first reference to a “freelancer” in literature is Sir Walter Scott’s 1819 novel Ivanhoe, where a feudal lord talks about his army of solders for hire taking over shipping in Hull. Source: Anna Codrea-Rado’s (excellent) freelancing newsletter
  27. Candle flames are hollow. Source: Massimo
  28. San Francisco has a dedicated human faeces removal team. Source: New York Times
  29. Honey found in Egyptian tombs for thousands of years is still unspoiled and edible thanks to its sugar content, acidity and low moisture. Source: Smithsonian Magazine
  30. Medical scanners are built with steel from sunken battleships because the steel has not been contaminated by the decades of nuclear testing. Source: Science Made Simple
  31. The yellow traffic signal was first conceived in 1920. Source: The Register
  32. Naturally occurring radioactivity in the body from isotopes like carbon-14 and potassium-40 disrupts the DNA of 85,000 cells every single day. Source: New Scientist
  33. China has only one time zone for the whole country, despite covering five time zones geographically. Source: New Scientist
  34. As many as 100,000 people are buried in mass, unmarked graves in Spain after decades under General Franco’s rule. Source: The Guardian
  35. The National Insurance fund which pays for everyone’s state pensions in the UK will run out by 2032. Source: FT Money Podcast and FT Adviser
  36. More nuclear bombs have been dropped on or have exploded in or above American soil than on that of any other country in the world. The true scale of US nuclear testing (1,054 tests in total) was unknown publicly until May 1993. Source: Emmet Gowin in The Nevada Test Site
  37. One of the best (open) sources of air pollution in Beijing is the US embassy’s RSS feed reporting the real-time air quality index. Source: Adam Vaughan
  38. Quorn, the “original” meat replacement product based on starch and protein, took decades to develop and cost £2 billion in today’s money to develop. Source: The Bottom Line
  39. Tom Hanks is related to Abraham Lincoln. “The maiden name of Lincoln’s mother, Nancy, was Hanks, and yes, it’s the same Hanks.” Source: The New York Times
  40. One of the major causes of plane crashes in Israel and Lebanon are bird strikes caused by migrating pelicans and hawks flying to Africa every spring and back again in the autumn. The Israeli Air Force has lost many aircraft to flocks of birds which are too small to be picked up on radar. To prevent this, Israel and Lebanon have an arrangement involving birdwatchers who warns each other’s air traffic control about migrating flocks. Source: TAUVOD

UK Post Box review: the most luxurious digital service I use

uk post box interface
The UK Post Box interface which lets you send snail mail (physical letters!) using a computer

Sending physical letters or “snail mail” in the age of email is still necessary sometimes. Whether it’s banks who refuse to accept PDF statements via email or magazines who won’t let you unsubscribe unless you physically write to them (GAH!), you might still have to go through the rigamarole of typing something up, printing it, finding an envelope and stamps and heading down to a post office to send a letter. Fortunately, there’s a solution. Virtual post service UK Post Box lets you do all this from a web browser.

UK Post Box review

Using UK Post Box is simply a case of uploading a PDF and pressing a few buttons, and the company will print out your message, put it in an envelope and send it off for you, first class. The price is a little higher than it would cost for you to do it yourself, but it more than makes up for itself in time saved.

UK Post Box is mostly designed for individuals who want a post forwarding service, or a fixed post box address in the UK which can receive letters and parcels (the company will even scan in your post and send it you as a PDF) but personally I find the snail mail element the most useful. I haven’t tried any of the other services, but I can imagine any UK expats, frequent travellers or people looking for a private address would find the other bits of UK Post Box useful.

How does UK Post Box work?

The company has a sorting facility which is based in Poole which is the base for their post boxes and their sending and receiving service. You use a web interface similar to an email inbox to upload documents and input addresses.

How much does UKPostBox cost?

It cost me £2.35 to send a three page letter to my bank. You do have to load up your account with credit (I added £25 at the start of the year), and this eventually expires after a year. As I said, this is a luxury service. It will always be cheaper to do the posting yourself.

How do I sign up to UKPostBox?

Sign up to UK Post Box using my referral link and you’ll share a discount with me on your membership.

AI and algorithms are useless if it takes a decade to fix simple problems

I’d like to talk about a simple problem on Google which I think partially explains why technology companies seem so utterly useless at preventing the spread of terrorist content.

In November last year, Google said it had fixed a bug on the visa waiver search engine results page after an investigation by the BBC forced Google to pay attention to the problem.

This “bug” was allowing people to use Google’s advertising network to set up sites that charged to file visa waivers. Instead of going directly to the US Government’s website – which still costs about $14 – they would charge users up to $99 for “checking” their application. 

The problem was first identified in 2009. It wasn’t “fixed” until 2018, eight years later.

I even fell for it in August 2009:

Why did it take so long?

Google’s solution to this problem – like a hammer which only sees nail – was to “develop a machine learning process to wipe out unofficial Esta ads.”

That process took eight years.

In the meantime, countless numbers of people were paying over and above what they should have for entering their details into a very simple online form.

Of course, Google met its minimum standard obligation of investigating and taking down any links that users reported were incorrect, but the companies taking advantage of Google’s incompetence could very simply edit the domain name and resubmit, a relatively trivial operation.

The BBC even sent some unofficial ads to Google, which its algorithms dutifully allowed to be displayed.

(It turns out that this process didn’t even fix the problem. It’s still possible to see unofficial advertising for ESTA visa waivers on Google. This story found dozens of fake ads charging up to $100, days after Google said it had fixed the problem.)

Now apply this problem to media savvy terrorist attacks

A Google mindset of do it first, collect data, and improve it over time (or Facebook’s “move fast and break things”) has dramatic consequences when more malicious operators take advantage of their weaknesses.

Google, YouTube, Facebook and Twitter have all been far too slow in taking down videos of the New Zealand terrorist attack. Even though they all have large, dedicated and sophisticated moderation teams seeking to remove this information, they are unable to stop people re-uploading videos. 

The obvious question is, why don’t technology companies do it manually? I agree with Alex Hern who says, they could have, “one person – just one – to sit there searching for ‘New Zealand terror attack’ and just delete the obvious reposts that keep popping up on that search term.”

So why don’t they do it? I also agree with Alex’s reason, that they have, “a desire to build scalable systems rather than one-off applications of human labour.”

Technology solutions: 
-Create a new algorithm to identify suspect terrorist uploads
-Use content ID matching algorithms
-Use AI-enhanced moderation
Human solutions:
-Disable video uploads temporarily
-Manually delete videos
-Employ editors to approve questionable content first

Technology companies can’t fix every problem with an algorithm

Just as big tech doesn’t invest in ideas that don’t “scale”, they won’t invest in solving problems unless there’s a scalable solution. Technology companies think they can “fix” unsolvable problems with maths. They think they can “fix” the problem of terrorists sharing their content with an algorithm, just like they can “fix” the problem of people being scammed for ESTA forms.

As the ESTA example show, they can’t. 

Humans might not be as fast than algorithms, but they’re cleverer, and technology companies need to wise up too.

TfL fare refund tool Reeclaim lets you save money on the underground

Sign up to Reeclaim and get money back if your tube is running late

In July I signed up to an automatic fare refund tool Reeclaim that gives me money back whenever I’m on a tube train that’s late. No catch.

As of 22 February I’ve received £9 back without having to do anything.

Half the time I didn’t even realise my tube train was late. All credit to TfL for letting their website work with such a scheme.

Is Spotify’s ‘non-complete heard’ ruining music?

Music producer extraordinaire Mark Ronson neatly explains why you need more than data to make good music.

…all your songs have to be under three minutes and 15 seconds because if people don’t listen to them all the way to the end they go into this ratio of ‘non-complete heard’, which sends your Spotify rating down”

(The “non-complete heard” is presumably a percentage of how much people actually listen to your song.)

Some artists have cottoned on and changed their style of music to accommodate accordingly.

“…you have to make sure the kick drum and the guitar have the same loudness and presence all the way through the whole fucking song or you don’t stand a chance.”

The problems of “the algorithm” in music have been written about before but it’s telling that it’s bothering one of the world’s most influential and successful music producers. What’s true for Mark Ronson is also true for film directors, authors, journalists, politicians, etc etc.

When you’re trying to say anything creative today, you have to talk to the algorithm too. Whether you like it or not.

What makes a great magazine cover?

Print magazine covers are having a bit of a renaissance. Perhaps it’s the fact that the Instagram-loving public cares and understands more than ever what goes into a good image, or that global political turmoil has given editors and designers more material, but it definitely feels like there’s growing emphasis on striking and adventurous imagery on magazine covers.

AdWeek recently, and rather cynically, suggested that in the US, a decline in magazine newsstand sales has led to a corresponding emphasis on more exciting and adventurous covers aimed at subscribers. Whatever the reason, there’s been copious discussion lately about magazines on social media. It’s also been the subject of two events that I’ve been lucky enough to attend.

The other week I went to a very interesting talk on the topic of great magazine covers, chaired by Ian Birch, the former editorial director of Hearst who has recently released a book about this subject, Uncovered – Revolutionary Magazine Covers. It also included Penny Martin, the editor of the Gentlewoman, Paul McNamee, editor of The Big Issue, and Robin Derrick, former creative director of British Vogue who is now pursuing a beauty project.

The talk comes a few weeks after a brilliant Somerset House exhibition on British independent magazines, “Print! Tearing It Up”, where I picked up a small poster of Paul Gorman’s “mindmap” of British magazines, which connected It to Suck, Blast to Crash!, The Face to New Musical Express and Private Eye to Passing Wind. (It reminded me a bit of Jeremy Deller’s “History of the World / Acid Brass 1997“.)

That excellent exhibition, which mostly focused on how independent magazines influenced mainstream publishers, introduced itself by saying that reading a magazine, smelling the ink and flicking through its glossy pages is “one of the great pleasures in life.” What Ian Birch’s discussion at the British Library argued is that without a good cover for that magazine you would never have picked it up in the first place. Here are some selected thoughts and notes from that talk, which I hope you might find useful.

Magazines aren’t magic

As Robin Derrick said in the discussion at the end, “It was Nick [Coleridge, chairman of Condé Nast Britain] who said [magazines] are bought on station forecourts with a sandwich and a packet of crisps.” They need to grab the reader’s attention and satisfy a need, in this case a need for a bit of entertainment for a train journey. When I have the time to buy and read a magazine, it’s often when I’m travelling. If I have an international flight I love to pick up a New Yorker or another glossy, and often it’s the cover or cover lines that will make me decide whether to pick up a copy. Robin later hammered this home by saying, “People at Vogue think they work in fashion. They don’t, they work in publishing.” Hmm.

I also liked Paul McNamee’s practical thoughts about covers. When he found himself deciding to put Bob the Big Issue cat in a Santa hat on the cover of the magazine for the Christmas issue, he said, “I’m a commercial editor. When we put that cat on the cover, it goes like crazy. There are no rules. If the cat works for you, put it on the cover. Not every week though. That might get a little tired.” He did admit, though, that he had another cat cover in his bag, planned for publishing within a few weeks.

Magazine covers can be markers for political progress

Ian Birch dwelled for a minute on International Times (It), “the newspaper of resistance” and Britain’s first underground paper. Talking about his March 1969 cover featuring an interracial couple kissing — which was still a taboo at the time — then-editor Peter Stansill said, “This might have been a provocative cover, but not to us. I never asked anybody outside of our readership what they thought about it. It was of no interest to me whether it would be accepted or not in the wider world. There were no cover lines, no accompanying story, it was just let’s send a visual message.” That’s certainly a common theme in what makes a great cover: an absence of cover lines, and letting a strong image do the talking. Also, read this excellent story by the photographer Horace Ové, who was the first black director to make a full length feature film in Britain, Pressure, in 1975.

Great magazine covers echo a feeling

Robin Derrick’s favourite cover of all time is also one of the most simple. British Vogue’s October 1945 cover was no more than a painting of a blue sky with a few clouds and haze, signifying the end of the second world war. After half a decade of twisting contrails left behind by bombers and fighters striking through the sky, the sky evokes a feeling of freedom which must have felt completely correct to people at the time. Derrick said it’s one of the few magazine covers he can think of that is of a blue sky. I can only think of one other, which happens to cover the same event: Time magazine’s July 1985 cover showing the cloud after the Trinity test, marking the 40th anniversary of Hiroshima and the birth of the Atomic age.

Are commercial ideas killing great magazine coverlines?

Gentlewoman editor Penny Martin made a point about the influence of digital formats on magazines, particularly in the women’s market. Despite being the former digital editor for Nick Knight’s SHOWStudio, she said, “I think there’s been a misunderstanding where magazines are chasing the digital form and they’re trying to replicate the tone and the content of what’s online. I think they should draw back from that and [do] the opposite. Because you know what you want when you’re doing that [mimes using a smartphone], don’t you?”

She also decried the tendency of copy in the fashion industry to mimic e-commerce styles. She said, “People are speaking to readers as if they are consumers. It’s to do with the dominance of e-commerce. Especially in my sector, where there this whole shoppable content thing, this nonsense that kind of hijacked the argument meant that now people are writing copy as if you’re talking to a shopper. It’s just so patronising. People underestimate how sophisticated the audience is.”

Great magazine covers are collaborative

Finally, some thoughts from me about how I’ve seen the process of magazine covers change. Today, it’s quite common to see editors and art directors taking a collaborative approach to selecting a cover, or at least being a bit more open about the process.

For instance, I really enjoy seeing Sunday Times Magazine Art Director Dan Biddulph posts “options” after he’s finished every cover, so I can see what they’re up to and give an opinion about which one I like the most; British GQ, where I used to work, recently experimented with teasing covers before they were released and making them available to buy on their digital app before it’s out on newsstands; and British Vogue has made the cover reveal an event in itself, sometimes including tickets, and often accompanied by equally compelling videos.

When it comes to fully animated covers, no-one has topped Teen Vogue‘s gun control issue with Tyler Mitchell, and their video series about the process behind finding new figures for the cover is great too. And in fashion, you only know you’ve made a compelling image if PortisWasp has remixed it.

To end, two questions for you:

  • What is your favourite cover and why? Leave a comment below.
  • If magazine covers are so important for popular culture and mainstream debate, why is there no magazine equivalent of #TomorrowsPapersToday, where every cover gets collated, shared in high definition and can be shared and debated? Tweet me if you think that should happen.

Pensions: WATER or a nice cottage by the water?

The polar bear optical illusion you can see in the Needles from Bournemouth. (Photo by Terry Robinson)

Two stories in the Sunday Times today offer two conflicting perspectives about pensions, which I think is as good a topic as any to restart my blog.

In Ian Cowie’s latest column about his retirement fund he says he’s recently liquidated a fairly big chunk of his shares so he can buy a seaside cottage. Good for him.

“…so many editorial colleagues over the years seemed to think they were being terribly witty telling me, “Pensions are boring. Sometimes I would say: ‘Not really, I enjoy sailing around in part of my pension.’ Soon, with luck, Sue and I will also have a Victorian cottage with a splendid sea view, all thanks to saving and investing effectively. How boring is that?”

Josh Glancy is less impressed with his pension savings which, at the moment, would probably only cover a few dozen Brooklyn brunches. Not so good for him.

“My retirement plan is more like Water: won’t aim to ever retire. This realisation was a shock at first, but I’m coming round to the idea. I’ve chosen to prioritise satisfaction over security, thrills today over funds tomorrow.”

I wonder what the two would say about each other’s columns…