Solar portfolio described as “older vintage assets with high value subsidy tariffs… Government‑backed incentives (ROC and FiT)”
TRIG – The Renewables Infrastructure Group
Moderate / assumed
Implied only
UK solar parks with long‑term contracted, inflation‑linked revenues; ROC not named but very likely part of the mix for older UK solar
NESF – NextEnergy Solar Fund
Pure‑play solar, very ROC‑heavy.
2024 annual report explicitly labels assets with ROC banding, e.g. Barnby, Nottinghamshire – 5.0 MW, 1.2 ROC.
Separate RNS on ROC/FiT indexation consultation confirms material exposure to both schemes.
Verdict: NESF is one of the cleanest ways to own a diversified book of UK ROC‑backed solar.
FSFL – Foresight Solar Fund
Large UK‑tilted solar portfolio; reports repeatedly reference ROC/FiT inflation indexation as a NAV driver.
2023 results note that sales of large ROC‑backed UK solar portfolios are used as valuation benchmarks for FSFL’s own UK assets—strongly implying similar ROC‑backed characteristics.
Verdict: High probability that a big chunk of the UK book is ROC‑backed, even if each site’s banding isn’t spelled out in the headline text.
“Solar portfolio includes older vintage assets with high value subsidy tariffs.”
“Government‑backed incentives (ROC and FiT).”
Named projects (Amber, Branden, CSGH, Monksham, etc.) include explicit ROC accreditation levels (e.g. 2 ROCs, 1.6 ROCs, 1.4 ROCs).
Verdict: JLEN/FGEN absolutely owns ROC‑backed UK solar—though it’s a smaller sleeve within a broader environmental infra mix.
TRIG – The Renewables Infrastructure Group
TRIG runs a big, diversified portfolio (wind, solar, batteries) with ground‑mounted UK solar and “high proportion of contracted, inflation‑linked revenues.”
Given commissioning vintages and UK focus, it’s very likely that some UK solar parks are ROC‑backed, but public materials don’t explicitly label ROC banding the way NESF/FGEN do.
Verdict: Treat TRIG as ROC‑adjacent rather than a clean ROC solar play—great for diversified infra, less precise if you’re targeting ROC cashflows.
For all the latest breaking mid- and small-cap news.
www.proactiveinvestors.co.uk
And finally, the agreed £548 million takeover of Bluefield Solar Income Fund by Drax Group has done something the sector has been waiting years for.
It has put a credible private market price tag on a listed renewable energy fund at a moment when the whole sector has been languishing at bargain-basement valuations.
The bid landed as funds like NextEnergy Solar and Foresight Solar were sitting at yawning discounts to net asset value, the legacy of rising interest rates since 2022 eroding the relative appeal of yield-generating infrastructure.
Both rose on the news, with Cavendish arguing the two funds, whose portfolios most closely resemble Bluefield’s in their concentration of ROC-backed UK solar assets, stood to benefit most from the valuation signal the deal provides.
Octopus Renewables Infrastructure Trust, Greencoat UK Wind and The Renewables Infrastructure Group also caught a lift, though all remain at substantial discounts, illustrating how much ground still needs to be recovered.
Perhaps the most encouraging element is Drax’s stated rationale: up to £2 billion of planned renewable investment by 2031, suggesting well-capitalised energy companies are willing to pay private market prices for assets the public market has persistently undervalued.
As you will note below, building a position here paid off, bought for the yield not for the price, if not, had the price risen, you could sell, book the profit and move on.
To understand the journey, you need to know the price history, the NAV, the dividend history and the latest price, easiest to follow in a chart.
The easiest ten percent to earn is the first ten percent and it’s also the easiest to lose.
The average buying price was 63p, the dividend 4.55p = 7.2%
The current expected dividends 6.2p current price, current price 65p = 9.6%
Discount to NAV 31%, so a strong hold, with the intention of taking any profits if they arrive.
Current profit £1,063, which you will see mainly from dividends earned and already has been re-invested, earning more dividends. If bad news hits the share the price could fall and take away all the profit and the dividends. Remember if you trade you will buy a clunker, how you deal with clunkers will determine how sucessful your are.
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The blog is WordPress, thru FastHosts, it’s easy to set up. There is a small monthly charge but there is also a free introductory period. GL
You watched the market fall and you decided to buy CMPI as if your timing was wrong you could still bank the dividend and hold until the market turned up, which could be many years.
Your analysis was correct and you bought after the first positive candle, now you could sell some shares and keep your invested capital in the Trust, to collect the recent announced dividend. If the price continues to rise, you could sell some more, now even though dealing costs have gone down, there is a cost to selling but it’s not your money, it’s the markets. If the price falls you could buy back the shares sold, if you think there is another buying opportunity.
One of the biggest concerns for asset allocators is the prospect of a return to a 1970s-style period of stagflation. To discuss how you can attempt to navigate this risk, Kyle is joined by Tom Becket, co-chief investment officer at Canaccord Wealth.
One of the biggest economic concerns for asset allocators is the prospect of a return to a 1970s-style period of stagflation.
To discuss the reasons why a stagflation shock is on the cards, and how investors can attempt to navigate this risk, Kyle is joined by Tom Becket, co-chief investment officer at Canaccord Wealth. The duo discuss prospects for funds, shares, bonds, and alternative assets.
Kyle Caldwell, funds and investment education editor at interactive investor: Hello, and welcome to the latest On The Money podcast, a weekly show that aims to help you make the most out of your savings and investments.
This week, we’re focusing on the topic of stagflation. We’re going to be talking through what it is and what it means for your portfolio.
Joining me to discuss this topic is Tom Becket, co-chief investment officer at Canaccord Wealth. Tom co-leads the firm’s asset allocation decisions and multi-asset model portfolio construction.
Tom, thanks for coming in today.
Tom Becket, co-chief investment officer at Canaccord Wealth: Well, thank you for having me.
Kyle Caldwell: Let’s start off with a definition of what stagflation is and why the threat of stagflation worries professional investors like yourself.
Tom Becket: Yeah. I don’t know what the exact definition of it is, but I think the way that your listeners and viewers can most understand it is a period of low growth and higher than desirable inflation.
Now, obviously, back through history, stagflation is relatively rare. A good example of it would have been in the 1970s, and there we were probably talking about inflation outcomes that were going to be, well, hopefully, much worse than they are in today’s environment, and growth outcomes in terms of recessions much more negative than we’re likely to see going forwards from here.
But really, the best way to sum it up is higher than desirable inflation and lower than desirable growth.
Kyle Caldwell: The reason why there’s concern about us entering a potential stagflationary environment is due to the conflict in the Middle East. In particular, it has increased the oil price, which in turn is increasing energy costs for consumers.
Tom Becket: Yeah. I think it’s a problem for everybody. We can talk about the root cause of it in a minute, and there’s probably immediate causes and underlying causes. But the reason it’s a problem for everybody is that people want higher rates of economic growth, people want there to be a better economic situation in terms of their pay packets, and people want the money they’re earning to go further.
A stagflationary environment affects all that, and it also makes it much more difficult for central bankers to set interest rates. It makes it much more difficult for them to support the economy. It makes decisions for policymakers, such as the government, much more difficult as well, and in terms of consumers, it probably means we’re spending more money on things which are considered stable and less money on things which are discretionary.
In short, Kyle, it’s a bit of a mess. The reason we’re looking down the barrel of a stagflationary situation here in the UK in particular – we can talk about the rest of the world if you want to, but let’s focus on the UK and be parochial for a second – is that economic outcomes in the UK at the moment are pretty measly. That’s for a variety of different reasons, but broadly, the country’s run out of money. We spent a lot of money on Covid.
There’s less ability for the government to support the economy at a time when the economic cycle is turning down and business and consumer confidence is pretty low. And without a really strong employment backdrop, the likes of you and I are not going to get significant wage increases, which means we have less money to spend on other stuff.
So, at the moment, the economic situation in the UK isn’t great, but at the same time, we’re at the mercy of fluctuating and rising global commodity prices, and let’s be honest about it, the price of pretty much everything going up. So, it’s not a great situation, triggered…as you said, by the fact that commodity prices have become unanchored because of the war in the Middle East.
Tom Becket: I think we’re already seeing signs of a stagflationary environment. I mean, inflation in the UK is already uncomfortably high, and it’s going to go higher. And this is different from the view that we had at the start of the year, and in fairness, to our pretty useless cabal of politicians in the UK and around the rest of the world, some of this is outside their control.
The effects of Middle East commodity price rises is problematic, but we were already in a situation where inflation outcomes around the world were on the high side, and uncomfortably high in certain places, and at the same time, the economic cycle outside the US in some pockets around the world was already pretty low.
So, the UK, I’m afraid, is already demonstrating certain signs of a mild dose of stagflation already.
Kyle Caldwell: You touched on interest rates. What can the Bank of England do in terms of its interest rate policy to try and stave off this threat of inflation?
Tom Becket: I’ve been very critical of the Bank of England for much of the last few decades of working in financial markets, and I think deservedly so. But at the moment, I do have some sympathy for them, even though their communication is frankly not very good. Because what can they do? They’re not OPEC, and even OPEC can’t control the price of oil anymore because their relationships around that are fraying. So, the Bank of England is in a very difficult position.
So, yes, ultimately, they could raise interest rates, and that could potentially help slow the inflationary pulses in the UK economy. But I think inflationary spikes driven by energy prices are different to what we saw coming out of Covid.
People will be trying to use the same playbook as in 2022, but it’s a very different situation in the UK for the Bank of England [than] it was then, even though back then, if you remember, they weren’t thinking about raising interest rates, so they got that one completely wrong as well.
But back then, the economy was strong. The labour-force backdrop was extremely strong. There was huge amounts of government money running through the economy. Wages were going up, and everyone had all this pent-up demand in 2022 because we were coming out of economic hibernation. We all wanted to do loads of stuff at the same time and buy loads of stuff as everyone else at the same time. So, the inflationary spike then was a problem, but driven by economic fundamentals.
At the moment, the inflation spike we’re seeing is really driven by one sector and one sector alone, and that’s energy. That in itself in the longer term could be quite disinflationary, i.e, if we’re all being forced to spend money on our energy bills and not on other stuff, you’ll naturally have disinflationary pulses taking place elsewhere.
For example, cinema tickets might go down or airfares might eventually go down because demand is being suppressed. At the moment, we’re just spending more and more money on energy bills and petrol.
So, look, ultimately, it’s not a great situation. The Bank of England can’t really influence it. I thought putting up interest rates here to try and quell inflation from energy prices would be a mistake and would just lead to further economic misery in the future.
It’s a difficult situation, Kyle, but I’m worried they’re going to compound the problem further by raising interest rates and killing off whatever economic activity is still existing.
Kyle Caldwell: Let’s move on to some practical pointers for investors. First, in regard to equities, of course in any scenario, there’s always winners and losers.
If we do have this period of stagflation, will the more cyclical types of companies be more in the loser category? And in the winner category, is it potentially those that are more defensive in nature? For instance, the [latter] are able to defend price rises. They have products or services that people continually use and are not going to give up.
Tom Becket: Yeah. You could make an argument for that. But at the moment, the tale of the tape is not telling you that. Actually, a lot of those dependable, defensive growth companies are performing really quite badly.
The first thing I’d say to investors is all is not lost. And you’re right – there’ll always be winners and losers. What we could be seeing now is the setting of the scene for opportunities to come further on down the track. At the moment, really, the market is being driven positively by two different sectors whose earnings are appreciating markedly, and that’s energy, no real surprise there, and the technology sector as well, where they’ve got this economic cycle which is taking place away from other economic cycles in the economy. They’re kind of oscillating on their own wavelengths.
Within markets themselves, though, there’s an argument to be made that staple-type companies should be performing better than cyclical companies, but I wouldn’t necessarily say there’s any evidence for that at the moment.
To your point though, if we were to see a situation where inflation remains at uncomfortably high levels for some time to come, while at the same time economic activity is suppressed because of us having to spend more money on energy bills, there is certainly the case that for things like toothpaste or staple products, we’d carry on paying for those price rises because we can’t do without it, and we would be spending less money on discretionary outcomes.
So, there is very much a case – if this carries on for quite a long time – that we could be in a situation where defensive, dependable companies start to be rerated, and cyclical companies are left behind.
Kyle Caldwell: In that scenario, would you be more likely to favour the more growth-focused fund over a value-focused fund?
If you look at the returns over five years, a number of value funds have performed very well. So, the likes of Temple Bar Ord
investment trust, Artemis Global Income I Acc (B5ZX1M7), and some of the ones that focus more on high-quality growth companies, they have underperformed quite markedly compared to those value styles.
Tom Becket: Yeah, there’s a case to be made for that. I’m not sure it’s as clear-cut as that, in all honesty. Some of those growth companies or funds focusing on growth companies have underperformed because the starting point was simply too high, and we’ve seen a rerating of those companies lower.
Arguably, you could say they’ve started to become more attractive, but at the same time, what we’re seeing in markets at the moment is a repricing of some of those old economy stocks, which has led to this value-driven recovery, and I think given where starting valuations are, there is a case that that could continue.
So, over the last few weeks and months since the start of the year, there’s continued to be a rotation towards areas of the value parts of the market, and typically when they start, they do carry on for a couple of years. So, I think it’s too early to tell that.
In answer to your question though, we are going to see a great deal more bifurcation between winners and losers in various different sectors, and I think we’re also going to see pockets of really quite extraordinary volatility. I mean, we’ve seen that for the last few years, haven’t we, Kyle?
Last year, the technology sector started the year really badly, collapsed into April, then had one of the strongest-ever recoveries on record, and in recent times, we saw the technology sector perform very poorly in March before having a Lazarus-style recovery in April and early May. I think that’s an indication that there’s lots of volatility going on.
Having too much betting on one theme, sector or style in particular would probably be the mistake, but we should expect that bifurcation to be creating opportunity for us all.
Kyle Caldwell: So, the key ultimately, as ever, which we talk about a lot on this podcast, is being diversified, including being diversified in terms of investment style?
Tom Becket: Yeah. I would say so because I don’t think there’s a really obvious way to spot good value at the moment.
I would say that markets generally are full but fair, but some of the extraordinary valuation discounts that we’d have seen in things like the value sector a few years ago, they have undoubtedly narrowed in the last few years.
One of the ways you can best see that is the fact that the UK FTSE 100 has been one of the world’s best-performing indices, and that’s quite value orientated, quite old economy, etc, and the fact that that’s really performed well in the last few years tells you that some of that valuation discount for value has narrowed.
So, at the moment, in particular, given there’s no obvious screaming value opportunities, it is a case of being really quite diversified and quite balanced.
Kyle Caldwell: In terms of bonds, inflation, of course, is the enemy of bonds as it erodes the purchasing power of the income that bonds generate. What’s your outlook for bonds in a stagflation environment?
Tom Becket: Well, the simple fact to mention is that yields have gone up. That is good. The second point has to go down to how long you think this stagflation episode might last, and how bad might it be.
The good news is, and you rightly point out that inflation is the enemy to bonds, it’s sort of like kryptonite was to Superman, it has the same effect on bond prices, but ultimately you just have to look at where yields are now and try and work out whether that’s good value or not.
Let’s take the UK 10-year gilt, which at the moment is trading about 5.1%. It’s been around that level for a while, and ultimately that could well be the price for some time still to come. So, 5.1%, and you know that every single year you’re going to be paid 5.1% from owning that 10-year UK government bond.
Now a lot might happen in the next 10 years. If I’d have told you back in 2019 what would happen over the next seven years, it might have tested our friendship through the threat of incredulity because we would never have predicted what’s happened in the last seven years. So, 10 years is quite a long time to predict.
But ultimately, if you think about it as a mathematical contract, you know you’re going to be paid 5.1% per annum for holding that bond, OK? So, what’s your inflation expectations during that period? Well, in the last decade, inflation struggled to get above 2% really. That was kind of the ceiling on inflation. My suspicion is the old ceiling is now the new floor. Inflation is not going to fall below 2% on an average basis for some time to come in the UK in the future.
So, let’s just put a premium on top of that in terms of inflation and say could it be 3%, 3.5%? Among friends, let’s say it’s 3.5% on average for the next 10 years. But if you’ve a bond that’s paying you 5.1%, you’re making a real return, a return adjusted for inflation, of 1.6%, which means the value of your investment now will be worth what it is in the future, the same as in the future, therefore the same in the future, but with 1.6% on top of that per annum.
That’s not a disastrous situation to find yourself in, and in particular, go back to the end of 2021 when I was just about as negative [on] these investments as anyone you could find in the industry, the yield was zero, and inflation rates were about to go much, much higher. In fact, they got above 10% in the UK. This is a very different starting point in terms of being rewarded, or suitably compensated, for investing in bonds.
Kyle Caldwell: We’ve seen lots of demand from customers for low-coupon gilts over the past couple of years because the [potential] returns on offer are really attractive, and also there’s no capital gains tax to pay. What should people think about in regards to whether to consider a low-coupon gilt over a gilt with a much higher coupon?
Tom Becket: It would depend entirely on your tax circumstances. So, if you’re going to buy a gilt for your ISA or SIPP portfolio, it doesn’t really matter one way or the other.
In fact, you would buy a high coupon bond because the tax efficiency plays in your favour because ultimately the lower coupon bonds are trading slightly more expensive than the higher coupon bonds with similar maturities because people are using the lower coupon bonds as being tax efficient. It’s not a huge amount of difference, but there is a difference.
So, if you’re using an ISA or a SIPP, I would just simply look for the tax efficient. Or if you paid no tax elsewhere, then again you can consider the higher coupon bonds, they’re probably slightly better value.
But if you’re using money which is taxed, and you’re a higher-rate taxpayer or a highest-rate taxpayer in particular, the opportunity set is absolutely still there.
You could argue that it’s even more attractive now than it was beforehand because we’ve gone from a situation in short-dated bonds where there were two interest rate cuts expected by us and by the rest of the market, including one in March, where obviously that didn’t take place. Now forget the two interest rate cuts. Markets are factoring in three interest rate hikes between now and the end of the year.
Well, as per our earlier conversation, if the Bank of England does that, we’ve got big problems from an economic perspective, and I suspect interest rates to be a lot lower in a couple of years’ time if they did that. But in terms of the effect on short-dated bonds, what it’s meant is that your yield opportunities become more attractive.
So, at the moment, you can get a roughly 5%-ish type return from a low coupon short duration bond, which if you were to round that up to a tax equivalency, if you’re a 45% taxpayer, is somewhere around eight and a bit percent.
Well, if you look at the wealth management industries, net returns over the last 20 years on an annualised basis, it’s about five and a bit percent from a portfolio that’s got 60% in equities. So, actually, this is still a really good opportunity to invest money in a tax-efficient way, and get money which is relatively risk free.
Kyle Caldwell: Of course, there are lots of different types of bond funds out there as well. But given those potential returns that are on offer, I suppose a lot of people might take the view that they don’t need to necessarily own a bond fund if they’re willing to go away and do the homework, the research, and learn about individual gilts?
Tom Becket: Yeah. Totally. But it’ll depend on the person watching this video or listening to the podcast to make their own decisions on that basis.
Bond funds can be relatively complicated, and bond maths is something that you do need to do a bit of research on. But you should be able to find lots of information written about these sorts of bonds, which will make it easier to understand.
Ultimately, I just want to point out why we remain a bit more optimistic than perhaps the current market environment would suggest, and I want to take you on a brief history lesson. If you go back to the end of 2021, when perhaps our PR department was less keen to put me on shows like this, we’re talking about a situation where it was really quite hard to make money.
You had bond yields in government bonds that were 0%, as mentioned previously, but in fact, that was actually not a bad return by comparison to $18 trillion worth of bonds around the world that had a negative yield.
Someone watching this might say, what on earth is a negative yield? That’s when you pay someone for the privilege of lending them money.
The yield you’re getting is less than zero, and people look at that and think that’s just completely crazy, but that’s where we were at the end of 2021.
If you want to take a bit more risk and invest in a high-quality corporate bond, you might have got a return of somewhere, based on the UK index, of about a 1.5% annual income payment. That’s almost nothing. And ultimately, after the various different fees of platforms and funds, that is probably nothing. If you adjust it for inflation, it’s worse than nothing, but let’s not go there.
If you wanted to take a lot of risk in bond funds back then, you could probably get a return between 3% and 5%, so we’re talking about the lowest yields ever in history.
Well, as we sit here today, those equivalent yields are almost 5% for a government bond, 6% for a corporate bond, and if you take some risk in fixed interest, you can find equity-style returns of 7% to 8%. So again, I appreciate it’s difficult out there. The environment is challenging, there is the threat of stagflation, there’s the threat of pretty much anything this year, Kyle, let’s be honest about it. But ultimately, the mathematics are starting to work in your favour.
Kyle Caldwell: I also wanted to ask you about alternative assets. In terms of potential hedges against inflation, the one that’s most often touted is commodities. What’s your view on that? I mean, they have historically proven to be a hedge, but it’s not always the case that when stock markets are volatile, assets like gold will necessarily protect you. I mean, we’ve seen that early this year – it didn’t play out for gold. Gold didn’t prove to be a defensive asset in that scenario.
Tom Becket: No. If you don’t mind, I’m going to separate broad commodities and gold into two separate stories because I think they are now separate stories.
You’re right to say that commodities are not always protective in market downturns, and a lot of this just depends on what the market downturn actually is.
If you go back to 2008 as an example, the really big financial crisis that I worked through, bonds performed well, equities performed poorly, and commodities performed poorly because that was an economic shock, a depressing economic factor with no real positivity, and so then therefore, with no economic growth, commodity prices came down quite considerably.
2022, another big market shock. Bonds went down aggressively. Equities went down aggressively because interest rates were going to have to go up aggressively. But because of the nature of the conflicts in the war in Ukraine, commodity prices went up very significantly because it was an inflationary shock, and the prices of all commodities went up.
There is a reason behind this history lesson, and we’ll get into the present state now, and that’s that in the situation that we’re in now, as the situation we’re seeing is once again inflationary, and economic growth around the world is measly but not disastrous, and commodity pressure points are appearing everywhere, commodity prices are appreciating at the same time as we’re seeing bonds under pressure and equities being quite volatile.
So again, it goes down to the nature of the shock. You can’t always predict that commodities are going to do well in these situations, but if your concerns are about greater inflation, then commodities are a diversifier.
But a lot of your watchers and listeners would say, well, hang on a sec. My positions in gold this year started really well and have gone really bad recently. So, the gold price went from $2,000 a few years ago when no one liked gold, no one cared about gold, to $5,500 when everybody loved gold and there was a huge speculative mania.
I heard that gold became the new bitcoin apparently, which probably tells you [to be] slightly worried about the level of speculation when you get to that point. Then, when we started to see the war in Ukraine, we saw a major pullback in gold from roughly $5,500 to $4,500.
To your point, it did no protection whatsoever. In fact, the biggest surprise through the whole Iranian war conflict has been the poor performance of gold.
But I think it makes sense because ultimately, gold has gone from being a safe-haven asset to more of an asset of speculation. Therefore, when people started to take less risk, the gold price sold off because people sold gold to perhaps try and cover their losses elsewhere, while the energy prices performed particularly well.
So, in our portfolios, we are keen proponents of broad commodities. I particularly like the energy complex. I really like industrial metals, and I’m very positive on soft commodities.
At the moment, I’ll be a bit more neutral on gold because it’s no longer got the real speculative throes that we saw a few weeks ago, or a few months ago, but I think at the moment, there’s probably still that can get more washed out. And I think we get better inflation protection in the stagflation environment through broad commodities.
Kyle Caldwell: I wanted to end by asking you for final thoughts on if you had clients who came to you and said they were really concerned about the threat of stagflation. What would you say to them?
Tom Becket: Well, I would probably take them on a journey through the turbulent twenties so far. If you think about the last seven years and everything that we’ve dealt with and have had to invest through, again, if you’ve made those predictions in 2019, people would have thought you were crazy. And ultimately, through this decade, despite the best efforts of central bankers, politicians, and various other geopolitical lunatics around the world, you’ve ended up with similar returns to that which we saw in the previous decade, just with a lot more volatility.
I would just say to people that, yes, the threat of stagflation is high, but not all is lost. There are plenty of ways that you can protect your portfolio against stagflation, and in the volatility that we’re being presented with, you should treat it as a friend, not an enemy. Volatility breeds opportunity.
I like it when the stock market goes down 10% to 15%, not because our clients get in touch being very happy, but more because it’s creating the seeds for the next round of opportunities in markets, just like we saw in 2022, like we saw in 2018, like we saw in 2008. Know, this will breed opportunity.
So, in our portfolios, you look at them now, I’m very optimistic on the outlook for inflation-linked bonds. I like the yields that we’re getting on government bonds. I like the yields we’re getting on broad bonds. I like commodities. I like things like mortgage-backed securities. I like areas of the equity market which are still offering quite diversified inflation-backed opportunities such as utilities, infrastructure and healthcare. All those sectors look to be quite good value.
So, I would say to clients that a broad diversified approach is right. There are opportunities in financial markets to protect against stagflation, and I would have embraced those investments, which are already starting to price in that stagflation environment.
Kyle Caldwell: Well, Tom, when it comes to my investments, as you know, I’m quite a bearish outlook. But I think after our conversation there, I’m now a little bit more optimistic.
Tom Becket: Well, as you know, by leaning, I would also be quite bearish. I think ultimately, it does pay to be protective of clients’ assets. But at the moment, I think you have to be honest. There’s a lot of bad things going on out there, but there’s lots of ways to benefit from it as well.
Kyle Caldwell: Well, thanks for your time today, Tom.
How much do you need to secure a comfortable retirement?
A new report estimates that financial comfort in later life costs £45k a year, but only one in 10 are on track to reach this figure. Craig Rickman delves into the data.
4th June 2026
by Craig Rickman from interactive investor
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How would you define what it means to live a financially comfortable life? To be clear, we’re talking security rather than luxury, although I appreciate for some people, splashing out on flashy stuff is core to a fulfilling existence.
Most of us must confront this question at some point during our working lives. We need to work out the level of earnings or income we need to live comfortably both now and once we’ve retired.
Last year More in Common, a think tank, calculated that quality of life and financial comfort tend to level off once annual income reaches the £50,000 to £80,000 ballpark. That’s a pretty broad range, of course. Some people will need more than others. The figure will ultimately hinge on your personal situation, including where you live, and spending habits.
Putting a figure on what will create financial comfort will never be an exact science – More in Common unsurprisingly found that people with six-figure incomes tend to have higher levels of life satisfaction than those who earn less – yet it can provide a rough gauge to those seeking a target to aim for.
The definition of financial comfort has grabbed the headlines this week after Pensions UK, formerly known as the Pensions and Lifetime Savings Association (PLSA), published its latest Retirement Living Standards.
The trade body crunches the numbers every year to estimate the annual cost of funding a minimum, moderate or comfortable retirement. “The figures reflect increased everyday costs across spending categories such as food, essential household bills and transport, as well as the social activities and hobbies,” Pensions UK said.
The data is split into one-person households and couples, calculates the amount needed both before and after tax, shows the income required should you receive the full state pension, and approximates the required savings pot size. Importantly, housing costs are stripped out of the numbers, so if you’re paying a mortgage or rent, you’ll need more income to meet the respective living standard.
The figures for 2026 are shown below.
Two-person household (per person assuming an equal split)
Standard
Income needed after tax
Income needed before tax
State pension
Income needed from your pension savings
Estimated defined contribution (DC) pot
Comfortable
£31,350
£36,045
£12,548
£23,497
£315K–£470k
Moderate
£22,700
£25,232
£12,548
£12,684
£170K–£255k
Minimum
£11,250
£11,250
£12,548
£0*
£0*
* For two-person households at the minimum living standard, the full new state pension alone may be sufficient to meet this level of income, depending on individual circumstances.
One-person household
Standard
Income needed after tax
Income needed before tax
State pension
Income needed from your pension savings
Estimated defined contribution (DC) pot
Comfortable
£45,400
£54,720
£12,548
£42,172
£560K–£845k
Moderate
£32,700
£37,732
£12,548
£25,184
£335K–£505k
Minimum
£13,900
£14,232
£12,548
£1,684
£23K–£34k
Source: Pensions UK.
There are a couple of things to clear up first. The estimated savings pot required is based on buying an annuity – a guaranteed income for life – assuming you receive between £5,000 to £7,500 per £100,000 of pension savings. Annuity rates rarely stand still and have seen a sharp improvement in the past half a decade and you have various features to choose from which can influence the income offered, hence the wide range.
You don’t have to buy an annuity with your pension pot, and despite rates improving recently most retirees opt for flexible withdrawals, but it’s purely to help illustrate the likely size of funds required.
If you find the numbers daunting, you’re certainly not in the minority. The broad sentiment is that they’re at the loftier end of the scale, so it may come as little shock to learn the accompanying field research paints a rather bleak picture.
Pensions UK found that only 23% of people are on track for a moderate retirement, while fewer than one in 10 (9%) are set to accrue sufficient wealth to live comfortably under its definitions. Elsewhere, 82% of the population are expected to achieve at least minimum standard of living, but that means 18% – almost one in five – will fall short.
Defining what comfort means
To unpack what kind of spending patterns and levels equate to financial comfort, let’s get a better understanding of how Pensions UK arrives at the figures.
The trade body’s definition for a comfortable retirement includes running a three-year old car, replaced every five years; an annual fortnight, half-board holiday in the Mediterranean; several long weekends away in the UK; £125 a month to spend on clothes and plenty spare for birthday and Christmas gifts.
For a moderate retirement, the areas of expenditure are essentially watered down, such as changing the car less frequently, and having less wealth to fork out on trips and presents.
Something to note is that the Retirement Living Standards purely offer a steer on what secures a minimum, moderate, or comfortable retirement.
A comfortable retirement will mean different things to different people; Pensions UK’s annual calculations can provide a useful starting point, but the key is to think about the lifestyle you aspire to once you leave the workforce, work out the amount you need to save, and start planning as early as you can.
One could easily claim that Pensions UK’s definition of moderate equates to comfortable in their eyes. A single person needs an income of almost £55,000 a year before tax to achieve financial security, a figure which is £15,000 higher than the current average UK wage, and clearly well out of reach for large swathes of the population.
Even if you qualify for the full state pension, you’d still need a pot of £560,000 to £845,000 by Pensions UK’s calculation. Couples, meanwhile, require £315,000 to £470,000 each, so up to almost £1 million between them, to generate the combined £72,000 a year before tax required to live comfortably.
Helping workers accrue retirement wealth
Around two weeks ago, the Pensions Commission published its interim report into retirement adequacy, and unearthed similarly worrying statistics, finding 15 million people are under-saving for later life.
Moving the goalposts and chipping away at valuable tax incentives may disincentivise savers at a time when many need all the help, encouragement and support they can get. One-quarter (24%) of the sample from interactive investor’s Great British Retirement Survey 2025 said they would feel more empowered to pay into their pension if the rules stopped changing.
The final outcomes of the Pensions Commission’s review, which we can expect in 2027, will be crucial to help workers reach later life on firmer financial footing. Reforming the auto-enrolment regime to gradually increase the legal minimums and expanding the qualifying earnings bands, are two possible solutions to boost employed workers’ pension pots. Any changes, however, must be balanced against the challenging financial headwinds facing individuals and businesses, with both continuing to grapple with rising costs and higher taxes.
The message is that savers need to increase what they pay into pensions, and provided you have disposable income or can rejig your finances to free-up some spare cash, that’s a sensible and important thing to do. Employer contributions and upfront tax relief are valuable leg-ups when building retirement wealth; making the most of these perks is key.
Equally, developments in the first half of 2026, namely the economic overspill from the Iran war, have created fresh challenges for our finances. Mortgage deals have worsened, energy bills will rise in July, and inflation could speed up again later this year. People who want to save more for their future may not have the scope to right now. If you’re struggling to make ends meet today, it’s natural for longer-term goals to fall down the pecking order.
On the policy front, it’s equally vital to complement pension reform with greater financial education so that people understand the value of increasing retirement wealth, helping to foster the necessary motivation and nous to stay engaged with their pensions. A bright spot on this front is looming on the horizon, with the pensions dashboards expected to be rolled out by this time next year, offering savers a clearer view of how their current retirement savings might support them down the line.
Foresight Solar is pleased to announce the first interim dividend, for the period 1 January 2026 to 31 March 2026, of 2.025 pence per ordinary share. The shares will go ex-dividend on 23 July 2026 and the payment will be made on 21 August 2026 to shareholders on the register as at the close of business on 24 July 2026.
The Board confirms Foresight Solar’s annual dividend target of 8.10 pence per ordinary share for the 2026 financial year.
GCP Infrastructure Investments Limited (LSE:GCP) delivered a solid performance during the six months ended 31 March 2026, demonstrating resilience despite continuing challenges across the UK alternative income investment sector. The FTSE 250-listed infrastructure debt fund remains invested across a diversified portfolio that includes renewable energy projects, PPP/PFI assets and supported living investments, with many holdings qualifying for the London Stock Exchange’s Green Economy Mark. A portion of the portfolio also benefits from inflation-linked income characteristics designed to support long-term returns.
The company maintained its interim dividend at 3.5 pence per share, keeping it on track to meet its full-year dividend target of 7.0 pence per share. During the reporting period, shareholders benefited from a total return of 5.0%, while net asset value (NAV) generated a total return of 2.4%.
Fourth Interim Dividend for the financial year ended 31 May 2026
CT Global Managed Portfolio Trust PLC (‘the Company’) announces a fourth interim dividend in respect of the financial year ended 31 May 2026 of 2.15 pence per Income share.
This dividend is payable on 10 July 2026 to shareholders on the register on 12 June 2026, with an ex-dividend date of 11 June 2026.
The normal pattern for the Company is to pay four quarterly interim dividends per financial year.
For the full financial year ended 31 May 2026, total dividends have increased by 3.3% to 7.85 pence per Income share (financial year ended 31 May 2025: 7.60 pence per Income share).
Financial year to 31 May 2027
In the absence of unforeseen circumstances, it is the Board’s current intention to pay four quarterly interim dividends each of at least 2.0 pence per Income share and that the aggregate dividends for the financial year to 31 May 2027 will be at least 8.0 pence per Income share (2026: 7.85 pence per Income share).
Interesting breakdown of this week’s gainers. I’ve been experimenting with a few passive income streams myself, and it’s encouraging to see which sectors are performing well. Do you think this momentum is sustainable into next month, or is it mostly seasonal
