Christopher Mellor, 65, withdrew his and his wife’s pensions ahead of Donald Trump’s inauguration in January
Christopher Mellor has a reason to be smug this week – or rather, 400,000 of them.
In January, the 65-year-old financial coach made the radical choice to put all of his and his wife’s pension funds in cash just ahead of Donald Trump’s inauguration as US president.
Against a backdrop of growing economic uncertainty, the couple realised their combined self-invested personal pensions, had hit the golden number of £2.8m, which Mr Mellor determined would be enough for their retirement.
“I said, ‘If we hit that figure, we will then go to cash’,” he told The Telegraph.
Mr Mellor has put their money into Vanguard’s Sterling short-term money market fund, which is currently returning around 3.6pc, or £9,000 a month.
The fund invests in bonds, short-term securities, and cash deposits.
It means it is still sitting within the wrapper of his self-invested personal pension so it did not trigger a tax bill and the transaction costs were minimal.
It is a move not without its risks but one that paid off dividends this week, when Donald Trump’s tariffs reset the international economic order – and caused havoc in the financial markets. Mr Mellor estimates he has saved £400,000 as a result.
Pensions and Isas – the bedrock of most Britons’ personal finance – took enormous hits as markets from the FTSE 100, to the Dax, to the Nasdaq, all plummeted.
The FTSE 100 plunged once more at market open on Wednesday, as tariffs came into effect, having lost more than 10pc since April 3.
For most, this meant chaos. The Telegraph has heard from readers who have lost as much as $400,000 (£313,012). Now, Mr Mellor, a retired financial adviser who founded an advice company with his wife Karen, 62, cannot believe his luck.
“When you get to the point where you have enough money, why take the risk? I am smug, to be blunt,” he said.
The couple made the decision on the basis that if they make 3pc interest on that number for the rest of their lives – with two state pensions as well – they would have enough money to “see us out”.
He added: “We were self-employed for the best part of 40 years. We ran our own business, we were able to maximum fund for many years, to the full annual allowance.
“We also had a commercial property in it when we had our office, and we made a significant gain on that commercial property over 21 years. So that’s why we’ve got the funds that we’ve got.”
He and his wife aren’t planning to touch the money for another couple of years, by which point it will be at the £3m mark, they estimate. Instead, they will use money they hold in other savings, including cash Isas, for their living expenses.
Mr Mellor has no mortgage, having taken out tax-free cash from his pension when he was in his 50s to pay it off. He has already provided for his two grown-up sons, both of whom have had help getting on the housing ladder.
Although he had moved approximately half his fund into cash last year, he was lucky to meet his target before Trump’s announcements.
Mr Mellor said: “If I hadn’t hit my number, I wouldn’t have moved it at that point, we might still be in the markets.”
Others have not been so lucky.
One reader told The Telegraph he was now being forced to delay his retirement for as long as five years, and that his plans had been “turned to dust”.
Those with defined contribution pots – especially those planning to buy an annuity in the near future – are worst affected, as those with gold-plated defined benefit pensions have their retirement income guaranteed.
Pension experts have advised caution and to avoid panic. But for those now facing the difficult decision between staying in work longer, retiring on much less or eating into savings to stick to their plans, that is easier said than done.
The reader who had lost $400,000 added: “A retirement next year is a sure-fire bet to be postponed for three to five years.”
He had held an active and diversified portfolio, which was exposed to the Magnificent Seven – the name given to a group of American tech firms including Apple and Nvidia.
The reader said of Mr Trump: “I can’t believe a 78-year-old businessman expects people to buy into a plan that will only come good once he’s dead.”
Other readers saw losses despite more conservative investments.
Alan Jaye, from Greater Yarmouth has been a firefighter for 36 years. He has a firefighter’s pension – which is defined benefit – but set up a personal pot as well, to make sure that he was covered for his dream retirement.
The day he turned 55 – March 17 – he took a lump sum from his personal pension, which had around £100,000 in it. His money was linked to the Fidelity World Index.
He said: “I had 27,000 shares in my pension, roughly sitting at £3.80 a share.
“When I got my pension lump sum, they sold my shares for £3.50 a share, so I lost 30p a share, which equated to £6,000 in real terms. I lost that much from my pension lump sum.”
Mr Jaye was taking his lump sum to pay off his debts, to book some holidays, and to put some in savings.
He said: “I’ve reached that age when I wanted to do stuff with my life. That was basically all I was doing with it.”
The firefighter blamed the US president entirely, and said: “It was only because of what he has done that I lost such a significant amount of money.
“It’s just disheartening, isn’t it. At the end of the day, I am just a normal person, the same as lots of other people who have bought into this. I just feel sorry for those people who are relying on it.”
