Planning for our future as we navigate an ever changing world

February 2021 Newsletter

It goes without saying that 2020 was an extremely challenging year for so many. All of us at Florin Pensions hope that 2021 has got off to a positive start for both you and your family.

Whilst your New Year’s resolutions may already be gathering dust (if you made any in the first place), there is never a better time to review your financial goals and objectives than at the start of the year. An accountant I was speaking to recently summed up his retirement goals perfectly. He said that it was not a question of how much money he was able to save for retirement, but whether what he would have would enable him to live the life he desired. As we may all have very different ideas about how we want to live in retirement, I think it is important to keep this in mind when determining if you are reaching your financial goals. There is no one size fits all in retirement.

In this newsletter, we bring you updates on the markets, US tax reporting and UK pensions:


31st October — 31st January 2021

Toby Ricketts
Margetts Fund Management Ltd.

During this period we have witnessed two historic events: Brexit, and a newly elected US president. Such events would normally dominate market sentiment, but both have been overshadowed by the continued uncertainty due to the Covid-19 pandemic.

The profile of the recovery altered during this reporting period as optimistic results from stage three vaccine trials were released by Pfizer/BioNTech and Moderna in November 2020, followed by Oxford/AstraZeneca. This caused a rapid shift in favour of traditional stocks as some investors took profits from technology sector gains, believing a route out of the Covid crisis was emerging.

During the reporting period the Investment Association (IA) UK All Companies sector returned 18.16%, closely followed by the IA Global Emerging Markets, IA Asia Pacific (Ex Japan) and IA Europe (Ex UK) sectors, which returned 16.15%, 15.17% and 14.76% respectively. The IA North America sector return was lower, at 9.45%, due to the higher natural weighting to technology stocks within North American stock markets. The IA UK Gilt sector provided a negative return of 1.19% as gilt yields marginally increased.

Global stock markets continued to recover from Covid-19 lows that occurred around the middle of March 2020.

The Brexit referendum took place on June 2016 to ask the UK electorate whether the country should leave or remain a member of the European Union. This referendum had been a manifesto pledge made by the Conservative party under the leadership of David Cameron during the 2015 election campaign. The strategy was to retain and attract increasing numbers of voters who were becoming disillusioned with EU membership and was successful in securing a Conservative majority.

David Cameron had been Prime Minister, in coalition with the Liberal Democrats, during the Scottish independence referendum in 2014, which secured a 55% majority of voters backing Scotland to remain part of the UK. This result may have led to confidence that the UK would similarly vote to remain part of the EU and this belief was endorsed by early opinion polls. As campaigning progressed, it became clear the result would be much closer than originally anticipated. In the event, the leave vote won by 52% to 48% and the term ‘Brexit’ was adopted to describe the process by which the UK would exit from the European Union.

In the days, weeks and months following the Brexit vote, it became clear that little planning or preparation had been undertaken to affect the UK withdrawal from the EU in practice. A tumultuous political period followed with three prime ministers in office and two elections taking place between the referendum and this reporting period. During this lengthy period of uncertainty, we maintained the expectation that the UK exit from the EU would pinnacle with a trade deal and this outcome was ultimately achieved on 31st December 2020.

The agreed deal essentially provides free trade of physical goods and close alignment in areas such as environmental, social, labour and tax transparency standards. The area of financial services is not covered, which is important as the UK benefits from trade in this area whereas the EU sells more physical goods into the UK than are exported.

Sterling strengthened slightly on the announcement, and this lacklustre response demonstrates the lack of clarity regarding which side, if any, has come out with

an advantage. The UK will benefit from improved future certainty but the benefits of being unshackled from EU membership will depend on the speed and quality of future trade deals together with how the EU relationship now develops. The UK stock market has notably underperformed its peers during the period of Brexit uncertainty, and we are optimistic that recent developments and attractive valuations will lead investors to increase UK allocations. The 2020 United States presidential election took place on 3rd November 2020 with the result eventually being declared in favour of Joe Biden. The Presidency of Donald Trump has challenged political ideals throughout his tenure, and his refusal to accept the election outcome and possible impeachment for inciting insurrection reflects his confrontational style throughout his Presidency.

Donald Trump campaigned on an ‘America First’ agenda and took aggressive action to protect American interests, especially in relation to trade, embarking on a hostile trade war with China amongst other things. His policy announcements were often delivered by Twitter, and global markets became increasing surprised by the erratic nature of policy developments, leading to increased volatility. Although US markets benefitted from Donald Trump’s approach, the effect on global markets has been mixed.

Joe Biden was inaugurated on 20th January 2021 and the Democrats now control both houses of congress due to the Democrat wins in the Georgia elections which followed the Presidential election. A more traditional style of politics is now expected, with President Biden already re-joining the US to the Paris Climate Accord and World Health Organisation, which were recently exited by Donald Trump. The new Presidential style is expected to be re-assuring for global markets and therefore an overall positive development, although anticipated tax and regulation policies could reduce demand for some US equities.

Under normal circumstances, Brexit and the US elections would significantly impact stock market valuations and market sentiment. However, market movements during this reporting period have been dominated by the effect of the Covid-19 pandemic, and this is expected to continue for the foreseeable future due to the scale of the crisis.

The global economy can be compared to the analogy of a man with his head in the oven and feet in the freezer being, on average, at room temperature. The on-going economic restrictions have created a deep freeze for sectors such as airlines and hospitality whilst extraordinary stimulus has created hot spots for on-line consumption.

China, where Covid-19 is believed to have originated, has achieved a full ‘V’ shaped recovery by supressing the virus successfully, whilst the UK, Europe and the US have endured a second or third wave of economic lockdowns. Economies which have suppressed Covid-19 have enjoyed a rapid economic recovery, suggesting that demand can return quickly in economies currently struggling with high infection rates, once the situation is under control.

Since the risk of Covid-19 was first identified, the global response has been impressive, particularly in relation to testing and developing vaccines. In the UK, daily testing capability in March 2020 was less than 10,000 per day and current capacity is around 750,000 per day. Vaccines have been developed, tested, approved and deployed, with data indicating they provide effective protection and dramatically reduce infections. To date, 10 vaccines have been approved (some with limited use) following stage 3 trials, with a further 13 vaccines in late stage trials or pending regulatory approval. Vaccines currently face production challenges, although we expect this will be addressed shortly and the summer will provide a vaccination window due to seasonally lower transmission rates.

The UK has demonstrated a strong relative advantage as the Oxford/AstraZeneca vaccine has been developed in the UK, production of several vaccines is taking place within the UK, and the UK deployed an early, aggressive vaccine procurement programme. The UK is currently leading Europe and the US in terms of vaccinations, and this could provide a material economic advantage if restrictions can be lifted ahead of other western economies. Combined with favourable valuations and the removal of Brexit uncertainty, the vaccination programme success could be a further catalyst for UK stocks to outperform.

Whilst acknowledging the risk of Covid-19 mutations’ potential to thwart the vaccination strategy, we observe that medical technology advances appear to be developing exponentially. Manufacturing capability improvements, vaccine refinement and the potential for combination vaccines are likely to be successful in suppressing the outbreak during 2021.

If Covid-19 is suppressed, as expected, the effects on asset prices globally will not necessarily provide a universal ‘lifting’ tide. The Covid-19 benefits enjoyed by virtual economy stocks could erode whilst real economy stocks should benefit. Over time, the picture will become more interesting with prospects of a second era of the roaring 20s, as the trillions of stimulus dollars boost spending when people re-discover their freedoms.

The end to low interest rates and quantitative easing is likely to be caused by rising inflationary pressures. Since these tools were used aggressively following the credit crisis, inflationary pressures have remained subdued. The magnitude, speed and aggression of the stimulus response to Covid-19 is now likely to provoke this outcome, leading to yields rising slowly from the current historic low points. This will reduce the value of government bonds and stocks which correlate, such as technology stocks, whilst value stocks generally benefit from higher inflation expectations.

Recent surges in Bitcoin, silver and GameStop suggest areas of potential market froth and downside risk. The tug of war between hedge funds and online investor groups creates a good story but will have little impact on the outcome for long-term investors. Stock markets have demonstrated the ability to eventually determine the fair price for stocks even if short term movements become more volatile.


We are optimistic that Covid-19 risks will diminish throughout 2021 as the vaccine response accelerates and is further boosted by warmer weather heading into spring and summer.

The evidence from economies that have successfully suppressed Covid-19 indicates a rapid economic rebound is likely to begin as restrictions are reduced.

This is expected to be positive for stock markets generally, with real economy stocks having more scope for recovery. Economies able to release restrictions sooner are expected to maintain an advantage into the next cycle, particularly the UK, which is leading vaccine roll outs and recovering from longstanding Brexit issues.

At this stage, we believe our current strategy remains appropriate with reduced weighting to US equities and global fixed interest. Increased weightings are being held in the UK, Asia, Emerging Markets and Japan where appropriate to the target level of risk.

Elevated market volatility is expected in the short-term requiring patience as speculation is creating unpredictable micro-trends.

Important notes

Please note that the contents are based on the author’s opinion and are not intended as investment advice. This information is aimed at professional advisers and should not be relied upon by any other persons. Any research is for information only, does not constitute financial advice or necessarily reflect the views of the author and is subject to change. It remains the responsibility of the financial adviser to verify the accuracy of the information and assess whether the fund is suitable and appropriate for their customer. Past performance is not a reliable indicator of future performance. The value of investments and the income derived from them can fall as well as rise and investors may get back less than they invested. Important information about the funds can be found in the Supplementary Information Document and NURS-KII Document which are available on our website or on request.


It is that time of year again when US taxpayers around the world gather information and prepare to file their annual tax returns. US citizens and green card holders working outside of the US are often surprised by this ongoing filing requirement. Citizens of other countries who become tax residents in the US are similarly taken aback when told that their worldwide income is now reportable on a US tax return.

Despite media coverage over the last decade, many taxpayers remain unaware of another potential reporting requirement, one for their non-US (foreign) financial accounts. Here, a US person may have to file the Financial Crimes Enforcement Network (commonly referred to as FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR), if the aggregate value of non-US financial accounts exceeds USD $10,000 for even one day in a calendar year.

Evolving US case law and US Department of Justice scrutiny make it critical for taxpayers to understand and comply with the FBAR rules. Below we identify key questions and answers relating to FBAR filing requirements. By understanding the rules and taking the appropriate steps to achieve compliance, US persons can safely maintain their non-US financial accounts and have peace of mind.

Who must file an FBAR?

A US person with financial interest in or signature authority over non-US financial accounts must report these accounts to the US Department of the Treasury annually (on or before April 15, with an automatic extension to October 15) if the aggregate account balances exceeded USD $10,000 at any time during the tax year.

Who is a “US person” for FBAR purposes?

Any “US person” is anyone subject to the foreign account reporting rules. This includes US citizens and residents, and legal entities such as corporations, partnerships, and trusts created under US laws. It is important to note that the ability to claim non-residency for income tax purposes through application of a US income tax treaty with another country does not enable a person to avoid the FBAR filing requirement.

What is a Foreign Bank / Financial Account?

When people think of foreign financial accounts, a bank account is usually the first type that comes to mind. Savings and checking accounts maintained with a branch of a financial institution (such as a bank) that is physically located outside the US are certainly included in the definition of an account needing consideration for FBAR reporting purposes.

However, the definition is broader than this. It includes securities or brokerage accounts, whole life insurance accounts, foreign retirement accounts (not held with a government), and annuities with a cash value maintained outside the US. Bitcoin or other virtual currency accounts should be reported on the FBAR if the account is held in a foreign exchange.

Additionally, the reporting rules apply to US persons who have either a financial interest in, or signature authority over, a foreign account. This affects officers or employees who have the ability to control the disposition of assets in a company’s foreign account by direct communication (whether in writing or otherwise) to the foreign financial institution. For example, the Treasurer of a company may have signature authority over (but no financial interest in) his employer’s foreign account or the foreign account of a subsidiary of his employer. In this situation, the Treasurer would be subject to the FBAR filing requirements.

Despite media coverage over the last decade, many taxpayers remain unaware of another potential reporting requirement, one for their non-US (foreign) financial accounts.

For those US persons with an interest in a foreign pension fund, the filing rules do not provide a blanket exemption; however, in certain circumstances, the foreign pension fund may not need to be reported on the FBAR. While a US person may meet the criteria for not reporting the pension on the FBAR, there may be reporting requirements on the US income tax return. The specifics can get very complex. We recommend that US persons with such holdings review their filing responsibilities with their tax or legal advisor.

Isn’t the FBAR part of the US Form 1040?

People often assume the foreign bank account reporting process is part of their US individual income tax return preparation, but it is a separate report and submission. Though the filing of US Form 1040 does not satisfy the filing reporting requirements for foreign bank accounts, there is a connection to US Form 1040. Earnings from foreign accounts must be reported and taxed on US Form 1040 and the state income tax return. In addition, the taxpayer is required to disclose on Schedule B whether they own any foreign bank accounts and may be required to report the accounts on Form 8938, Statement of Specified Foreign Financial Assets. Failure to answer the question appropriately on Schedule B has been used as evidence of willful noncompliance in recent court cases (see the question below regarding potential penalties).

When is the FBAR filing due?

The FBAR reports financial information for a given calendar year. The report must be received by the US Department of the Treasury on or before April 15 of the year following the calendar year being reported (i.e., the FBAR reporting information for calendar year 2020 would be due by April 15, 2021). A six-month extension to October 15 is available. This additional extension is automatically granted; a specific extension request is not required.

What are the potential penalties for noncompliance? Current penalties for noncompliance with the FBAR rules are severe. As an example, taxpayers who are found to have willfully failed to file or retain records of an account can receive a civil penalty as high as the greater of $100,000 or 50% of the amount in the account at the time of the violation. Non-willful violations are subject to lesser civil penalties but can still be significant.

Clearly, the penalty structure is such that US persons should take their obligation to file FBAR forms very seriously as well as to pay the tax associated with income from the accounts.

What can I do if I have not complied with the FBAR filing requirements?

The IRS recognizes that some US taxpayers may not be aware of the filing and disclosure requirements. They understand that these taxpayers should not be exposed to harsh penalties for a non-willful failure to comply with these reporting requirements. As a result, the IRS currently has programs available to help taxpayers become compliant. Many foreign financial institutions are currently providing taxpayers with reports detailing the financial account information that have been shared with the IRS. As such, it is only a matter of time before the IRS learns about your foreign financial accounts. Given the complexity and potential penalties, we recommend you contact your tax or legal advisor should you have any questions regarding delinquent FBAR filings.


Christopher Hall
Managing Director

Chris joined GTN in 2009 and serves as Managing Director of the Atlantic region and its comprehensive expatriate tax services. He has more than 19 years of expatriate tax experience, and his analytical approach to data and straightforward manner is reflected in how he handles each unique tax or program issue – logically and rigorously until he finds the right answer.

+1.917.470.9132 |


February 22, 2021

John Stoltzfus
Chief Investment Strategist, Managing Director
Oppenheimer Asset Management

Progress not perfection remains the order of the day

Key takeaways

  • Last week the number of vaccinations jumped higher across the world and in the US, increasing expectations of an economic recovery later this year.
  • Retail sales jumped 5.3% in January fueled by stimulus payments that the Congress enacted in December — far exceeding expectations of economists who expected a 1.1% rise.
  • Q4 earnings growth for the S&P 500 continued to exceed expectations through last week, adding justification for recent equity price gains.
  • 10-year Treasury yields rose to 1.34% on Friday, up 42 basis points since the start of the year, on inflation fears that in our view may well be unfounded.

With almost 84% of the S&P500 companies having reported thus far in Q4 reporting season through last Friday, earnings are up 6.16% on the back of 2.69% revenue growth per Bloomberg data. Not too shabby we’d say, particularly as Barron’s reminded us this week that at the start of earnings season just weeks ago consensus had called for an 11% decline in earnings.

So far five of the 11 sectors in the broad market benchmark have posted double digit earnings growth for the period including: materials, consumer discretionary, financials, technology and health care. Two sectors have posted positive single digit growth (communications services and consumer staples) while two other sectors (utilities and real estate) have posted single digit negative earnings growth. The energy sector, reflecting the domestic and global impact of the pandemic over the course of the fourth quarter during which infections spiked in Europe and in the US, saw its member companies that have reported show losses steep enough so far in the season to list earnings growth as “not meaningful”.

Results thus far in Q4 earnings season underscore the resilience evidenced among many companies through the pandemic, suggesting that much of the broad market’s gains have been justified.

On the vaccine front progress is becoming genuinely visible towards stemming the spread of the virus as the logistical hurdles experienced in the initial rollouts stateside and elsewhere around the world are addressed. Bloomberg’s vaccine tracker this weekend showed that some 205 million shots have been given worldwide across 92 countries. In the US nearly 65 million inoculations have been given so far.

In our experience the bond market has been known to project its expectations for inflation well beyond levels that are justified by the trends in the actual inflation rate.

Even as signs of progress against the pandemic rise in prominence, “what if” worries abound around the potential for virus variants to elude the current vaccines. Prominent vaccine developers and manufacturers appear confident that the existing vaccines or future variations on the vaccines will likely provide protection against mutant strains. We are reminded once again that wherever there is opportunity risk likely lies near and that wherever there is risk opportunity likely lies near. So far the efficacy of the most prominent vaccines being distributed around the world has raised confidence and improved sentiment at both the consumer and business levels worldwide. In our view, so far so good. Time ultimately will be the judge.

Investors begin to contemplate a post pandemic world

As the commodities markets, bond markets and the stock markets begin to discount the potential global economic recovery that likely lies ahead as Covid-19 and its variant kin get pushed into the rearview mirror worries about how much inflation the process of reflating the US and global economy might generate have grown.

Keeping the volatility typically inherent in the commodities markets as well as the potential for nervousness often found in the bond market in context appears to us to be the best course to follow at this time. Currently markets are navigating the transition from economies held hostage by the pandemic towards a process of economic recovery—eventually leading to sustainable expansions on a global basis. Such process will likely bring periods of resurgence and outsized growth that may represent economic reflation rather than prospects of untoward high inflation.

We counter the worries we hear about risks of levels of inflation high enough to cause the Federal Reserve (or other major central banks around the developed and emerging world) to “slam on the brakes” as unlikely due to long established vigilance by monetary authorities against inflation as well as secular trends tied to technology and globalization that are counter-inflationary. The latter include robotics on the factory floor, algorithms in the offices, the globalization of the labor force, strong competition among businesses, overcapacity within many sectors worldwide and an abundance of capacity to discover, process and deliver commodities worldwide (notwithstanding current bottlenecks caused in the short term by disruption to supply chains from by the pandemic).

Near-term Treasury bond prices are likely to remain under pressure as yields rise in anticipation of the economic re-openings that lie ahead. That said, in our experience the bond market has been known to project its expectations for inflation well beyond levels that are justified by the trends in the actual inflation rate.

As recently as 2018 the bond market over projected where bond yields were likely to normalize. Remember the 10-year Treasury at 3.11% in May of that year or its yield at 3.24% in November? Weeks later the price of the 10-year Treasury rallied to close the year at 2.69%, apparently on the realization that such a high yield represented how attractive it was to bond buyers rather than how far yields had further to go higher. The 10-year has not had a yield of 3% since 2018.

Looking back further in modern market history consider 1994 through the first quarter of 1995: a period wherein the Federal Reserve had raised rates convincing many market participants that rates would continue to rise through 1995. Yet it didn’t happen.

Once again time will tell. For now, we’ll favor equities over fixed income, remain overweight US markets while maintaining meaningful exposure to international developed and emerging markets. Among the sectors of the S&P 500 we rate as outperform are: information technology, consumer discretionary, financials and industrials.

Related to market capitalizations we are near market cap agnostic finding opportunity among large, mid, and small equity capitalizations. In terms of style, we opt to own a mix of growth and value companies as investor appetite broadens for equities and as the global economy moves towards economic recovery.

Florin Pensions and Oppenheimer partnership

For US wealth management advice, Florin Pensions partners with Oppenheimer & Co. Inc. (OAM) through OAM’s Professionals Alliance Group. Through this partnership Oppenheimer and Florin Pensions are able to help clients develop comprehensive solutions to address the financial objectives for both their UK pensions and US financial assets. Combining the services of both firms enables Florin Pensions to provide clients with a holistic financial strategy where their UK pension is managed in tandem with their wider US wealth. To learn more about OAM and Florin Pensions’ strategic alliance, please contact your Florin Pensions adviser.

Important disclosures and certifications

The published date of the recommendations contained in this report can be found by accessing disclosures. This report was produced at February 16, 2021 07:05 EST and disseminated at February 16, 2021 07:05 EST. Strategist Certification – The author certifies that this investment strategy report accurately states his/her personal views about the subject securities, which are reflected in the substance of this investment report. The author certifies that no part of his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this investment strategy report.


The UK government issued a consultation this month to increase the minimum pension age for occupational and personal pensions from 55 to 57 in 2028. This follows the UK government confirming these plans in 2020 and the UK coalition government announcing the same increase after a consultation back in 2014.

The government believes that increasing the minimum pension age “reflects increases in longevity and changing expectations of how long people will remain in work and in retirement”. It is also in line with the government’s view that the minimum pension age should be around 10 years below the UK state pension (which will also be rising on a phased basis to age 67 and eventually 68).

The proposed increase to the minimum pension age will not apply to pension schemes for the armed forces, police and fire services in recognition of their special position.

The UK government first introduced a minimum pension age of 50 in 2006 to “ensure a balance between the generous tax relief that the government provides to enable people to save for retirement and setting the right incentives for them to accumulate sufficient pension savings and not fall back on state support in retirement”. This was then increased to 55 in 2010.

When the minimum pension age has increased in the past, the government has included protections enabling qualifying persons to retain their prior minimum pension age. The consultation issued this month also consults on a protection framework whereby members of existing registered pension schemes would be able to retain their current minimum pension age of 55.

Whilst the government is giving people lots of advanced notice to this change, it may alter people’s plans for how and when they first access their UK pension. As always, it is important that any decision to access a UK pension should be based on solid financial planning and not just be a knee jerk reaction to changing legislation. Florin Pensions’ view remains that in most cases it is best not to access tax deferred UK personal pensions or US retirement accounts until in retirement.

At Florin Pensions, we are consulting with our clients’ UK pension providers to discuss this consultation and the proposed protection framework. The UK government consultation closes on 22 April 2020 and the government plans to publish draft legislation in summer 2021. We will update you as this matter develops to confirm how these changes could impact your UK pension in the future.


We would like to congratulate Kelci Laam (nee Bartee) for reaching her 1st year anniversary working with Florin Pensions as our head of administration. Kelci is from Northern California and enjoys exploring the great outdoors with her husband and two dogs.


Florin Pensions LLC 201 Spear Street
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The information contained in this newsletter is intended for non-UK residents and for your general information and use only. It is not intended to constitute or substitute investment advice or recommendations as to the suitability of any specific product or security. Florin Pensions LLC does not provide tax advice. Florin Pensions LLC is an investment adviser registered with the United States Securities and Exchange Commission. Contact us to receive a copy of our firm brochure.