Connect with us


The million pound pension problem

The million pound pension problem
The million pound pension problem

Surely, there’s no nicer problem to have than a million pound pension. Or to be specific, one that’s likely to exceed the UK’s £1,073,100 lifetime allowance, after which tax charges of up to 55 per cent apply.

This magic ceiling no longer rises with inflation. At the last Budget, chancellor Rishi Sunak froze the lifetime allowance (LTA) at this level for the next five years — a move expected to bring in nearly £1bn for the Treasury as more professionals are snared by it.

No one has much sympathy for “pension millionaires”, but the retirement income from a £1m pot is not enough to fund a millionaire lifestyle, and may not even make you a higher rate taxpayer. Plus, working out whether you will hit the LTA or not is quite a head scratcher.

Take my friend Rod, for instance. He recently celebrated his 60th birthday, which focused his thoughts on when he might retire (advisers say this is a common phenomenon).

So too is having quite a collection of pensions, including defined benefit (DB) — the most generous kind that pay a percentage of your final salary in retirement — and defined contribution (DC) — known also as money purchase, as you end up with a pot of money that you use to buy an annuity, or generate an investment income with.

Many people Rod’s age explore the pros and cons of cashing in a final salary pension, but he would rather have the security of regular income.

DB schemes are indifferent to market movements, but Rod was pleasantly surprised to see how his various DC pots had zonked up in value over the past year.

Great — but not so from a tax perspective, as he was now in danger of breaching the LTA.

The onus is on individuals to manage this in the run-up to retirement. That can be tricky if you have multiple pots, as different pension providers will not “test” your tax position until you start taking benefits, or hit your 75th birthday.

Advisers tell me their phone lines are buzzing with inquiries from people like Rod who require the help of a professional tax planner to work out how best to turn their assets into income as efficiently as possible. Sound familiar? Here are four questions to bear in mind.

What’s your retirement sequence?
Like Rod, most readers in their 50s and 60s are likely to have a combination of DB and DC pensions. Working out which benefits to take from which pension, and when, is a real puzzle.

David Hearne, a chartered financial planner who specialises in LTA issues, likes to use the visual metaphor of fitting rocks, pebbles and sand into a jar.

For most people Rod’s age, DB pensions are the biggest rocks. Hearne suggests starting with these.

The value of a DB pension is calculated as 20 times the annual income it generates, plus any tax-free cash. Rod is in line to receive £26,000 a year, plus a lump sum of £162,000, which would use up £682,000 of his lifetime allowance.

If he didn’t take a lump sum, his annual income would only be marginally higher at £28,000, using up £560,000 of his lifetime allowance.

Taking the tax-free cash might look like a no-brainer — but if Rod’s other DC pensions added up to more than £400,000, doing so would breach the £1.073m allowance.

“Once you know the percentage of your allowance that any DB pensions take up, you can calculate exactly what’s available for any DC pensions,” Hearne says, noting these “pebbles” can be tested and taken more flexibly to maximise the tax advantages.

Could it pay to delay?
At 60, Rod’s old enough to start taking his final salary pension, but intends to keep working. He doesn’t want to pay 40 per cent income tax taking a pension he doesn’t need when he might pay 20 per cent in later years.

Yet for every year he delays his retirement date, his annual pension increases in value, pushing him closer to the LTA.

“It’s all about working out the lesser of two evils,” says Hearne, adding that advisers will produce cash flow forecasts to illustrate the range of likely scenarios — and tax charges — that could result.

“When you’re making these kinds of decisions you need to be aware of tax, but you shouldn’t be entirely driven by it,” is his guidance.

Do you have a plan for your tax-free cash?
Just because you can take out a 25 per cent tax free lump sum from your various pensions doesn’t mean you automatically should.

“Inside your pension, that money is shielded from inheritance tax, dividend tax and capital gains tax,” says Michael Martin, head of 7IM’s private client business. Take out a big lump sum, and that money is immediately inside your estate.

“If you don’t spend it or give it away, it’s lying around waiting to be taxed, and at risk of slowly dying of inflation,” Martin says.

Assuming you don’t need the cash today, leaving it inside your pension could save your heirs from a 40 per cent inheritance tax charge if you died before the age of 75. This is a relatively recent quirk and there are fears a future chancellor could remove it.

So all the more reason to enjoy the money now? Rod dreams of buying a property on the coast that he could eventually retire to — but even here, there are tax consequences. Buying a second home before he sells his main residence would mean extra stamp duty, tax on any rental income and a potential IHT liability. By sticking with Airbnb for a few years, he could avoid these.

What if you’re not ready to retire?
If Rod keeps working, he can keep paying into his DC pension, benefiting from employer contributions and tax relief.

However, take more than just the tax-free cash from other DC pots and you risk falling into the tax trap of the MPAA (money purchase annual allowance) reducing your annual allowance from £40,000 to just £4,000 — for life.

Over a quarter of a million people triggered the MPAA under lockdown — but bizarrely, taking income from a DB pension makes no difference.

“If you have all of that, plus employment income, you’re unlikely to need to draw down any further taxable income from DC plans that would trigger the MPAA,” adds Hearne.

However, be aware that it’s not possible to place some older workplace DC schemes into drawdown arrangements once the tax-free cash is taken. You can move them into a Sipp, but Martin warns: “Watch out for early exit charges if you do this before your scheme’s normal retirement age, which could be 65.”

Pension freedoms were intended to give us more choice. In reality, they have made pensions so complicated that investing in some tax planning is a prerequisite for anyone heading towards the £1m mark.

Claer Barrett is the FT’s consumer editor:; Twitter @Claerb; Instagram @Claerb

Source link

Click to comment


Lina Khan brings a chance to reshape antitrust policy

Lina Khan brings a chance to reshape antitrust policy
Lina Khan brings a chance to reshape antitrust policy

The US political wind has not just shifted against Big Tech, it is reaching gale force. First came a highly critical Congressional report last October, followed this month by a set of antitrust bills. Then last week the Biden administration named Lina Khan, an academic who has created a new intellectual framework challenging the power of the tech giants, chair of the Federal Trade Commission.

Those seeking to clip the wings of technology companies must keep in mind that — for all the lurking concerns over privacy and social media’s threats to democracy — they remain hugely popular with consumers whose lives they have in many ways transformed. Many proved to be lifelines in lockdown. While bipartisan consensus is growing on the need for action, muscular measures will still struggle to muster the necessary Senate majority.

Yet Khan’s appointment is an important opportunity to equip antitrust policy properly for the Big Tech era. She has rightly portrayed as outdated the Chicago School approach — encapsulated by Robert Bork’s 1978 book The Antitrust Paradox — which prioritised prices as the best measure of consumer welfare. Rising prices signalled harm, but if a company was lowering prices to consumers, its size was not a concern.

Khan’s 2017 paper “Amazon’s Antitrust Paradox” argued convincingly that power, and harm, are today about more than prices. If companies such as Amazon use predatory pricing and integration across multiple business lines to drive rivals out of business, encouraged by investors for years to pursue growth over profits, consumers suffer from loss of choice and competition. While companies might seem to offer internet search or social media for free, moreover, users are in fact bartering their valuable personal data for those services; privacy, too, is a form of consumer welfare. Khan has also argued against allowing Big Tech firms to operate platforms while competing with companies that use them.

The beauty of pricing is it is easily measured. Less clearly-defined concepts of market power, critics say, risk being abused to rein in successful businesses unfairly. Khan and colleagues in the “new Brandeis” school argue that just as the early 20th-century lawyer Louis Brandeis updated America’s anti-monopoly regime for the industrial era, looking at companies’ impact on democracy and individual economic freedom, a new updating is needed and feasible for the 21st century.

Unless she has congressional backing, Khan may struggle to put her ideas into action via new laws. But she can creatively reinterpret existing law in terms of what constitutes consumer welfare. Court challenges may follow. With a conservative-dominated Supreme Court, Khan will need to temper her frankness, proceed cautiously, and choose her battles with care. Breaking up tech firms may not be feasible, popular, or advisable. Requiring them, say, to make consumers’ data portable, enabling people to switch platforms as easily as they shift bank accounts, might be realistic.

Bipartisan hawkishness towards China is another constraint; Big Tech can argue that restraining it would play into Beijing’s hands. Khan argues, with merit, that ensuring powerful incumbents cannot smother innovative newcomers is the best way to outpace China’s tech titans.

To bolster her position, the FTC chair should seek common ground with EU regulators, whose thinking she has already influenced. Even as their aims and values towards Big Tech start to converge, the US and EU may diverge on tactics. If she can boost transatlantic co-ordination, her ideas will gain resonance well beyond her own shores.

Source link

Continue Reading


There was no hawkish surprise

There was no hawkish surprise
There was no hawkish surprise

This article is an on-site version of our Unhedged newsletter. Sign up here to get the newsletter sent straight to your inbox every weekday

Summer really feels like it’s here, and I feel great. I must be missing something. Email me if you know what it is: 

Shocked by the obvious

The market threw some of its toys out of the pram last week. Let’s review.

The yield curve went dramatically flatter as the market adjusted to the Fed’s new rate stance (all the data that follows is from Bloomberg):

The dollar spiked in anticipation of higher short-term interest rates:

Investors abandoned the reflation trade, dumping cyclical value stocks in favour of growth stocks expected to stand out in a lower-growth world:

Stocks generally took a few lumps, as well. As the market moved, the consensus quickly formed that the Fed had sprung a “hawkish surprise” on Wednesday. The story went like this: after months of talking about its new inflation-targeting regime, and how it would tolerate inflation running above its target for a while, the Fed’s dot plot showed that the Open Market Committee members were much more hawkish than they had let on.

The dot plot that stimulated this bitter sense of betrayal showed the following:

  • Seven of the 18 members see a rate increase in 2022, versus four before;

  • Thirteen members see at least one rate increase in 2023, versus seven before; the average member expects two hikes, to between 0.5 and 0.75 per cent.

I talked to Rick Rieder about the market’s response. As BlackRock’s fixed income CIO, he is responsible for something approaching $2tn in bond portfolios. He described the market’s shock and mad rush to adapt:

There was this extraordinary surprise, in terms of the Fed moving as much as they did, because it was completely different than what they had said to date. The way those dots moved forward . . . you have to think the leadership is comfortable tightening sooner.

It was as large as a technical unwind of positions as I have seen — an extraordinary cleansing.

He described a situation where almost everyone was on one side of the steepening curve trade and other trades connected to it:

The liquidity of the markets was very thin. Often when people look at volumes being high, they think there is a lot of liquidity, but at any given price, liquidity was very shallow. Every time something was done it moved the market. Nobody wanted to be on the other side of these trades.

There was such a crowding into the same positioning, that this massive unwind followed . . . in a world where you have so much social media and everything else, everyone can line up on one side and when something changes, it can really upset the apple cart.

He does not think the Fed is making a mistake, though: “it’s totally appropriate, I think the Fed is doing the right thing.” This sums up the situation perfectly. The Fed said some things. The market, caught badly off side and piled into a consensus trade, freaked out. But the Fed said what needed to be said. 

What’s more — and here I disagree with Rieder — given what the Fed had said in the past and what had transpired in the past few months, what the Fed said should have been totally unsurprising. 

The Fed kept policy where it was, as expected. The chair said plainly that the committee as a whole expects inflation to be transitory, and as such sees no present need even to discuss raising rates, but that optimism about employment coming back means that, at some point later, discussing tapering asset purchases will make sense. This is mild, mild stuff, given that the past two core CPI prints were 3 and 3.8 per cent.

As for those dots, they delivered the shocking news that, with CPI, wages, employment, commodities, housing, and about six other things heating up, maybe rates will have to be nudged up a tiny bit a year or more from now, and maybe nudged a bit more within the next two and a half years. Friends, that’s what higher tolerance for inflation running above target looks like. 

A market that is surprised by this, given what the Fed has said and the data it is seeing, is a market that has lost touch with reality. It wanted the growth and the inflation and the sky-high asset values and the near-zero short-term rates and they wanted it all for ever and ever. And when Santa didn’t deliver all of that, and a pony too, it panicked.

The distinction between a market that panics because the Fed changed its stance and a market that was brought back to reality by the Fed acting reasonably is important. If you believe we just saw the former, you might hope in the future that some better calibrated, more precisely telegraphed action from the Fed will keep the market tranquil. But this will never happen, because a market that is huffing the glue of euphoria cannot be pleased. If we are going back to anything resembling normal policy, the Fed is going to drag the market there one messy overreaction to obvious facts at a time.

Of course you can argue that it is hard to come back neatly from very easy monetary policy, and that proves that the Fed’s whole approach is wrong. Or you can argue that the dot plot is a mistake, or that the Fed’s policy should be driven by mechanical rules instead of judgment. All of that may be true.

But if you think the Fed has just made a tactical or operational mistake, as opposed to being strategically or philosophically misguided from the outset, all that shows is that you are huffing the same glue as everyone else. 

One good read 

Late last week the WSJ had a very nice review of the effects of retail traders — now accounting for 20 per cent or more of volumes — on US stock markets. This stuff is no joke.

Recommended newsletters for you

#fintechFT — The biggest themes in the digital disruption of financial services. Sign up here

Martin Sandbu’s Free Lunch — Your guide to the global economic policy debate. Sign up here

Source link

Continue Reading


Activist shareholders must push for environmental change

Activist shareholders must push for environmental change
Activist shareholders must push for environmental change

Climate change is the most significant challenge facing humanity, and many commentators point to the malign influence of corporate profits, capital markets and investors in contributing to the trend.

But while some argue the best response is divestment, our recent work suggests engagement by long-term shareholders such as pension funds is an effective way to improve companies’ environmental impact. Activism, combined with monitoring and the threat of discipline by investors, can drive improvements.

My fellow researchers and I examined the campaign of the Boardroom Accountability Project, launched by New York City’s Pension Fund System in 2014. It identified companies that contributed significantly to climate change and those that lacked diversity, as well as other factors such as transparency in political contributions and excessive chief executive pay.

The campaign aimed to give long-term shareholders a voice at these companies by allowing them to nominate directors to their boards. At the start, shareholder proposals were submitted to 75 companies, and have since expanded to more than 150.

Climate change protests are piling on the pressure © Remko de Waal/AFP via Getty Images

We found that the factories of the companies that were targeted reduced the release of chemicals that caused cancer. They also cut emissions of the greenhouse gases that contributed to global warming, improved air quality within a one-mile radius, and had significant spillover benefits to the local economy.

Our analysis showed that companies were responding to the specific demands of the campaign, rather than to broader societal pressures for environmental improvements. They were introducing fundamental changes in their factories rather than taking greater risks or shifting pollution to third parties.

FT Masters in Finance rankings 2021

Singapore Management University appears in both league tables of finance degrees
Singapore Management University appears in both league tables of finance degrees

Find out which schools are in our ranking of post-experience and pre-experience postgraduate finance programmes. Also, learn how the tables were compiled and read the rest of our coverage.

These findings suggest that environmentally conscious shareholders may achieve their goals most effectively through climate-focused engagements. Such actions may also serve to boost the accountability of publicly listed companies, and provide a countervailing force to other parts of the market that are more difficult to monitor and regulate.

Historically, in response to demands from activists, socially conscious investors such as foundation endowments and religious trusts have pressured the boards of controversial companies to align with their social goals. Many, if not most, aimed to impose change by threatening to disengage — by selling their stakes.

In the late 1970s, for example, students urged the trustees of university endowments to divest from companies that were reluctant to reduce or eliminate their operations in South Africa, in order to put pressure on the country’s apartheid system.

Yet research suggests the sale of investments had little effect on valuations, or on South Africa’s financial market overall, if only because international corporate involvement was so small.

More recently, in 2016, Waltham Forest, a London borough, became the first municipal government in the UK to announce that its pension scheme would sell out of all fossil fuel investments.

Other investors, such as pension funds, have stopped investing in companies that operate in “sin” industries, such as alcohol, tobacco and gaming.

But such strategies come at a cost. Investors may lose out on returns from these profitable, albeit controversial, companies. For example, the California Public Employees’ Retirement System (Calpers), the largest US public pension scheme, resolved two decades ago to divest from tobacco. A report it commissioned in 2016 estimated that it may have forfeited $3bn in missed returns as a result.

Such divestment campaigns have become popular as money has flowed into funds earmarked for environmental, social and governance (ESG) targeted investments, and there has been broader awareness and activism around climate change.

More stories from this report

Yet the academic evidence suggests that the downward pressure on stock prices through the use of negative screening and filtering to clean portfolios of companies violating these principles is on average small — and comes at the cost of lower future expected returns for the investors.

Just as important, there is little guarantee that divestment campaigns are an effective means of achieving social goals. They lead investors to lose their voice as part-owners of a company.

If they engaged instead, they would be able to speak up on how managers should address climate change and to exert influence over businesses on the front line of the climate crisis.

Take the recent watershed case of ExxonMobil Corp, where investors were growing increasingly unhappy with the lack of corporate strategy to tackle climate change. Shareholders engaged in a proxy battle that resulted in the unseating of two directors from the board.

Such examples reflect our research that investors may both achieve their social objectives and maximise financial return by monitoring and engagement with companies, rather than by divesting.

Lakshmi Naaraayanan is assistant professor of finance at London Business School and a co-author of the research ‘The Real Effects of Environmental Activist Investing’


Source link

Continue Reading


Where women dare to tread: the act of reclaiming space

Where women dare to tread: the act of reclaiming space
Where women dare to tread: the act of reclaiming space

As a tourist, I’ve always judged the places I visit by one measure: not the quality of the restaurants or the beauty of scenery, but whether I could walk freely, without fear or obstruction. To be threatened or made to feel unwelcome in a strange place is harsh enough; when this happens in your own homeland, it leaves a searing scar.

Some years ago, writer and journalist Anita Sethi was travelling on a TransPennine Express train from Liverpool to Newcastle, when a stranger yelled that she was a “Paki ****” who did not belong in Britain. She recorded her abuser and reported him to the authorities.

Some time later, looking at a map, her eye was caught by the Pennines, the beautiful range of hills known as “the backbone of England”, and it inspired a desire to walk through the landscape as a way of reclaiming the space as her own.

The result is I Belong Here: A Journey Along The Backbone of Britain, the first volume in a planned trilogy from Sethi that combines nature writing and an exploration of roots and identities with personal memoir. “Humans have long hungered for footpaths, and that summer so did I,” she writes.

Sethi was born in Manchester. Her mother, born in Guyana, was part of the Windrush generation, one of the roughly half-million people who came to Britain from the Caribbean. Whenever she is asked, “Where are you from?” — or worse, told that “you don’t look like you come from here” — Sethi is firm: she does look like she belongs, because Manchester is home to so many people of colour. As she walks, she retraces the history of imperialism, slavery and empire that determined her place in the north of England — and in doing so, she makes a fierce plea for this painfully earned right to belong to be taught and explained.

For many years, the catalogue of literary explorers, walkers and flâneurs — from Soren Kierkegaard and Henry David Thoreau to Charles Baudelaire and Ernest Hemingway — was mostly male and mostly white. Even the more recent genre of nature writing has tended to continue this demographic trend, and yet within the last two decades there has been a shift.

This year marks the 10th anniversary of Open City by Nigerian-American writer, photographer and critic Teju Cole. This remarkable novel follows Julius, a Nigerian-German psychiatry student whose night walks around Manhattan and the wider city grow longer and longer, introducing a moving cast of New Yorkers, many of them immigrants. Open City reclaimed the streets for different groups of writers, and I remember the thrill, as a reader, of walking invisibly alongside Julius, invited inside the lives of people who rarely found their way into fiction.

But in 2018, Cole was moved to write an anguished Facebook post after two black men were arrested in a branch of Starbucks in Philadelphia, an incident that was widely seen as an example of glaring racial bias: “We are not safe even in the most banal place . . . This is why I always say you can’t be a black flâneur. Flânerie is for whites. For blacks in white terrain, all spaces are charged. Cafés, restaurants, museums, shops. Your own front door. We wander alert, and pay a heavy psychic toll for that vigilance. Can’t relax, black.”

Gender, as well as race, has played its role in creating what Sethi calls “barriers of place”. I felt an instant jolt of recognition when reading “Power Walking”, the brilliant 2018 essay by Scottish-Sierra Leonean writer Aminatta Forna, in which she wrote about the act of walking alone and female down a street: “I didn’t want to be a boy; I wanted the freedom I saw belonged to boys but not girls.”

It’s a theme that underpins works including Wanderlust: A History of Walking (2000), Rebecca Solnit’s magnificent study of cultural, political and spiritual quests — and also Lauren Elkin’s Flaneuse: Women Walk the City (2016), her account of women, from Virginia Woolf to Agnes Varda, who asserted their right to wander like men. But it has been explored in a number of recent novels too. In Rachel Cusk’s Outline trilogy and Jhumpa Lahiri’s Whereabouts, for example, the women protagonists claim their own cities or the places they visit with their feet, their restlessness, their urge to explore despite resistance or hostility.

On her walking journey through the Pennines, Sethi encounters a warmer welcome than she or the reader might expect: a hug from a small child on a railway platform, kind advice from an elderly couple. As she takes in details along the way — ancient lichens dating back to the Ice Age, for instance, or the Horton Women’s Holiday Centre, built in 1980 as a place of rest and refuge for women who might not otherwise be able to afford a holiday — Sethi slowly but surely finds her way home.

Join our online book group on Facebook at FT Books Café

Source link

Continue Reading


Chesham and Amersham is the revenge of the Metropolitan Line elite

Chesham and Amersham is the revenge of the Metropolitan Line elite
Chesham and Amersham is the revenge of the Metropolitan Line elite

“Goodbye, high hopes and overconfidence,” John Betjeman lamented, in his Metro-land documentary about the expansion of London’s commuter buckle up to Amersham.

Maybe the same could be said of Boris Johnson, after the Conservatives’ shock by-election defeat in the same area? Certainly the result should temper the idea that the prime minister is an unbeatable political force.

In the 13 previous elections since the seat of Chesham and Amersham was created in 1974, the Conservatives had never received less than 50 per cent of the vote. On Thursday, despite the Johnson magic, they took just 36 per cent — and lost the constituency to the Liberal Democrats.

Like Betjeman, local residents didn’t like new housing developments intruding on this green corner of England. They also didn’t think much of Brexit (55 per cent voted Remain), or HS2, the high-speed rail line that will link London and the Midlands and the north, at the expense of the intervening suburbia. This was the revenge of the Metropolitan Line elite.

The result helps to put into perspective the Conservatives’ supposed triumph in elections in May. Yes, they won Hartlepool, but otherwise the picture was more mixed than the narrative suggested. And incumbents were flattered by a mood of crisis-cum-euphoria, with the successful vaccine rollout and the end of England’s third lockdown. Just six weeks later, politics is normalising.

The question is whether centre-left parties can assemble a majority built around university-educated and younger voters, even while the Conservatives make inroads among older, Brexity voters in the north.

Unhelpfully, Remain voters have been concentrated in cities like London and Manchester (and in Scotland). But as millennials look for family homes they can afford, and as working from home becomes a permanent shift, they are moving into the surrounding towns and countryside. That should balance the electoral geography a little.

Meanwhile, the Lib Dems have begun to return from the wilderness. They finished second in 91 seats in the last general election, up from just 38 in 2017.

Whether they have a coherent platform is unclear. Despite wooing Chesham and Amersham voters, the Lib Dems actually support HS2. They do well in affluent constituencies by opposing new houses. You can argue the Conservatives deserve to be punished by nimbyism. If I wanted to persuade local residents to accept housing developments, I would start by sacking a housing secretary who unlawfully approved one such development after sitting next to the billionaire behind it at a party fundraiser.

But progressives should not lose sight of the fact that homes need to be built somewhere. They should focus on the government’s other vulnerabilities. Johnson has a fragile coalition of big state and small state supporters. He has a levelling-up agenda that leaves the south cold; he sometimes seems happy not just to neglect people who have lived in London, but actively to insult them. It’s economically foolish, it may turn out to be politically foolish, too.

Any progressive revival relies on the Labour party. That is why recent Lib Dem by-election upsets — Richmond Park in 2016 and Brecon and Radnorshire in 2019 — had little lasting effect. At a by-election, voters decide whether to give the government a black eye. At a general election, they decide who they want the government to be. Right now, too few would choose Keir Starmer as prime minister.

Johnson has never been a hugely popular premier. He may even be, in the words of his former adviser Dominic Cummings, “a gaffe machine clueless about policy”. But for a sizeable chunk of the electorate, he just remains more personally palatable than the alternatives. Starmer’s job is to change that.

Source link

Continue Reading


The rise of English sparkling wine — and which to drink this summer

The rise of English sparkling wine — and which to drink this summer
The rise of English sparkling wine — and which to drink this summer

English Wine Week begins on June 19. It has taken quite a while for the country to embrace its native ferments but English sparkling wine is now fully respectable.

The sommelier at The Dorchester, one of London’s grandest hotels, recently chose Rathfinny’s 2015 fizz, grown on the South Downs near Brighton, to precede a special dinner. Those attending a pre-season “friends and family” performance of The Marriage of Figaro at Opera Holland Park were treated to Gusbourne’s 2016 sparkling wine before the overture. And only last March, James Max, the Financial Times’s Rich People’s Problems columnist, suggested it was time to ditch champagne for English fizz.

A recent blind tasting of far too many English sparkling wines — plus three champagnes, to see if we could distinguish them — proved just how competent those who make wine sparkle in England are. There was no aggressively frothy mousse and the balance of the elements was mostly superb. Yet the wines were also delightfully varied.

The teams responsible for Krug and Dom Pérignon tend to limit the number of champagnes they taste in a single session to 10 and 15 respectively, but my English tasting was organised by an obsessive. I knew that Nick Baker of online retailer The Finest Bubble had an inexhaustible thirst for champagne, but it seems that this applies to any good sparkling wine too.

He invited me and fellow Master of Wine Richard Bampfield to help him assess about 90 English sparkling wines because he wants to expand his online range. They have been divided into three sessions and this first one, he assured us, was the most ambitious. We tasted 23 vintage-dated blanc de blancs, followed by 18 vintage-dated rosés — from noon, with only Carr’s water biscuits and some oatcakes to blot them up. At the end, as I beat a hasty retreat, he suggested opening more bottles.

Because of the number of wines, I’ll confine myself to describing the blanc de blancs, from when my taste buds were at their sharpest. I find quite a lot of people are confused by the term blanc de blancs, which simply means a white wine made from pale-skinned grapes, so it could, strictly speaking, be applied to almost all white wines, sparkling or not. But in a sparkling context it is used to distinguish from blanc de noirs, or white wines made from dark-skinned grapes, where the grape skins are kept in contact with the juice for as short a time as possible.

In practice, a blanc de blancs from Champagne or the UK is most likely to be made from Chardonnay, the dominant pale-skinned grape in both places. The biggest surprise of our tasting was how well one exception to this rule performed. Three of the wines were made by veteran English winemaker Peter Hall, who planted Seyval Blanc vines in his Breaky Bottom vineyard near Lewes in 1974. Back then, the imperative was to have grapes that would ripen in much cooler English summers. Seyval Blanc is a hybrid grape specifically bred to ripen early and was the most-planted grape variety in England until the craze for producing sparkling wines in the image of champagne meant Chardonnay and Pinot Noir overtook it.

Seyval table wine can be pretty neutral but Hall conjures effervescent magic from his vines, perhaps helped by their great age. Each of his cuvées is named in memory of a friend or relative, and the star of our tasting was that named after his great-great-uncle Koizumi Yakumo, better known as 19th-century travel writer Lafcadio Hearn, who gave the west early glimpses of Japan. I wrote: “Definitely not trying to taste like champagne but like a superior English fizz. Lots of energy.”

The magnum of Ridgeview Limited Release 2009 was also excellent, even if it seemed absolutely ready to drink, whereas the Breaky Bottom Cuvée Koizumi Yakumo 2010 tasted as though it still had many years ahead of it. Equally good, and more delicate than the Ridgeview magnum, was Blanc de Blancs 2013 from the pioneer of English champagne taste-alikes, Nyetimber, whose very competent fizz I first had in the 1990s.

Since there have been so many new entrants in the sparkling wine business in the past few years, vintage-dated wines are most common. (Two of the blanc de blancs we tasted were as young as 2017.) The extensive Rathfinny estate was first planted in 2012, so the earliest crop will have been in 2015; owners Sarah and Mark Driver have not had time to build up the stocks of reserve wines that are used by many champagne blenders to add depth to wines from the most recent vintage — a common problem among British wine producers.

It is notable, then, that the talented winemakers at Nyetimber were particularly keen to launch non-vintage blends once they had built up reserves of older wines for blending purposes. The first release of their non-vintage Classic Cuvée, based on 2011 blended with ingredients from older vintages, was launched in 2016.

It will be interesting to compare the quality of the vintage-dated wines tasted in this first session with the 17 non-vintage blends lined up for our second session.

The lone blanc de blancs champagne in our blind tasting, a 2012 from grower Yann Alexandre, didn’t stand out from all the English wines and indeed seemed a bit tart and less persistent than many of them. As Bampfield reminded us, average crop levels are much lower in English vineyards than in Champagne, which may well result in more flavourful English wines capable of ageing longer. Certainly one feature of British sparkling wine is its longevity — perhaps boosted by relatively high levels of acidity.

The UK’s comparatively cool climate has traditionally resulted in such tart base wines that winemakers routinely encouraged the conversion of harsh malic acid into softer lactic acid. But in recent balmy years, this so-called malolactic conversion is often avoided as unnecessary.

What is abundantly clear from the collection of wines I tasted is that the UK’s sparkling winemakers have nothing whatsoever to be ashamed of. It doesn’t have to be champagne, folks!

Recommended English blanc de blancs vintage fizz

Like champagne, these wines are around 12% or 12.5% alcohol. I scored all of them at least 17 out of 20. High praise.

• Balfour, Victoria Ash 2012-13 MV Kent

• Breaky Bottom, Cuvée Koizumi Yakumo Seyval Blanc 2010 Sussex

• Chapel Down, Kit’s Coty 2014 Kent

• Fox & Fox, Inspiration 2014 Sussex

• Jenkyn Place 2015 Hampshire

• Nyetimber 2013 West Sussex and Hampshire

• Ridgeview, Limited Release 2009 Sussex (magnum)

• Squerryes 2014 Kent

• Sugrue, Cuvée Boz 2015 Hampshire

Tasting notes on Purple Pages of More stockists from

Follow Jancis on Twitter @JancisRobinson

Follow @FTMag on Twitter to find out about our latest stories first.

Source link

Continue Reading

Recent Posts