The $TRUMP token rose from around $7 on 18 January to a high of nearly $75 a day later before falling back quite sharply.

Following the sudden increase in value of the tokens, there are concerns it could provide a springboard for other celebrities to launch their own cryptocurrencies. As we have highlighted previously, investors would be right to be wary, with plenty of examples of such investments going into the red soon after an initial boom in price.

It is not just the risk of a fast fall in value that UK investors should be mindful of. The temptation to jump into crypto transactions, in particular newly launched coins, can make the tracking and reporting of such investments difficult. However, any taxpayers seeking sympathy from HMRC are likely to be given short shrift should they claim difficulty in assessing their tax position.

HMRC’s view is likely to be that if a taxpayer chooses to invest in cryptocurrencies, then they are doing so in the knowledge that this can be a complex area, and they should be taking reasonable steps to make sure any associated tax liability is declared and paid.

Taking its cue from the government, we could see HMRC take an even firmer stance with taxpayers as they seek to recover more funds for the Treasury. The current 2024/25 tax year will be the first in which taxpayers have to declare crypto disposals separately on their tax returns and many more taxpayers will be required to report their crypto transactions to HMRC for the current tax year.

Most cryptocurrency transactions undertaken by UK taxpayers are subject to capital gains tax (CGT), rather than income tax. In the past, the majority of UK individuals investing into cryptocurrencies will not have had to declare their transactions to HMRC provided any capital gains were lower than the CGT annual exemption.

The CGT annual exemption has fallen dramatically following changes announced in 2022, from £12,300 per year for individuals to just £3,000. With the Financial Conduct Authority estimating that 12% of the UK’s adult population now own some form of cryptocurrency, we could see a surge in individuals having to report and pay CGT.

That could mean more individuals registering for self-assessment, placing a heavier burden on HMRC resources for relatively low levels of tax. There is however a different route that some may choose to explore, using HMRC’s ‘real time’ CGT service, but advisers cannot use this service. Gains made in the current tax year will need to be reported by 31 December 2025 and the associated tax must be paid by 31 January 2026.

The days of crypto investors relying on the safety net of the CGT annual exemption are largely over and many will be met with a hard landing if they do not keep detailed records as they go along.

The tool provides a clear methodology for addressing key questions, such as ‘How much guaranteed income should be purchased?’ and ‘What level of risk should be taken with the remaining pot of invested assets?’

Head of behavioural finance at Oxford Risk, Dr Greg B Davies said: “A common strategy for advised clients entering retirement is to allocate part of their pension pot to provide a guaranteed income for life, while keeping the remaining portion invested to allow flexible withdrawals. This approach not only reduces sequencing risk but can also enhance the investor’s capacity for risk-taking with their remaining investible assets.

“However, financial advisers face a significant challenge: how to demonstrate and evidence that their recommendations on these two components – guaranteed income and the remaining portfolio – are both suitable independently and optimally aligned together.”

Just Group, who specialise in UK retirement products and services, is feeding live data into the new tool developed by Oxford Risk, providing accurate and up to date intelligence on health, mortality and product pricing – enabling advisers to get accurate insight from the Oxford Risk solution on the level of Secure Lifetime Income (SLI) to provide for their clients, taking into account the client’s personal circumstances.

Stuart Slegg, head of retail investment solutions at Just Group said: “We’re very pleased to continue our work with Oxford Risk to support advisers achieve better outcomes for their clients in-retirement. The challenges faced by clients in-retirement are different to those accumulating wealth, so it’s important advisers can evidence how the solution they recommend meets their clients’ individual objectives.

“There’s a growing body of evidence that shows how including a proportion of Secure Lifetime Income within a drawdown portfolio can enhance client outcomes. How much Secure Lifetime Income to purchase for a client and how to adjust the remaining investments in the portfolio is a question that Oxford Risk have been working hard to solve. Its unique methodology provides advisers with a solution to this important question.”

The tool is being introduced against the backdrop of Increasing regulatory scrutiny of retirement advice in the wake of last year’s thematic review (TR 24/1) whoich has thrown down a challenge to advisers grappling with how best to demonstrate and evidence suitability.

Oxford Risk had observed that many firms in the financial advice industry are struggling to meet the FCA’s stricter requirements, particularly in areas like information collection, suitability assessments, and disclosures.

The behavioural finance specialists cite the growing popularity of guaranteed income products as just one example of how retirement income planning is changing and consequently how advisers must adapt.

Annuity sales rose 39% to 82,000 individual contracts sold in 2023/24, the highest since before ‘pension freedom and choice’ reforms in 2015. The £6 billion invested in annuities was more than 49% higher than the previous year.

Regulation (EU) 2022/2554 on digital operational resilience in the financial sector (DORA) applies to most regulated entities in the European financial sector, such as credit institutions and insurers, but also certain third-party ICT service providers.

Critical ICT third-party service providers designated as such by the European supervisory authorities (ESAs) come directly within the scope of DORA. They provide critical or important functions to the financial services sector and must also fulfill many of their own obligations in addition to those stipulated in their regulated clients’ contracts.

DORA also impacts many ICT service providers that are not within this ‘critical’ cohort through the obligations of financial companies to manage third-party risk.

The framework laid down by DORA is intended to strengthen digital operational resilience of the European financial sector as a whole. Amongst other things, it obliges in-scope entities to implement an enhanced resilience framework impacting various levels of their organisation, including cybersecurity risk management, incident management, stress tests and the management of ICT third party suppliers.

DORA is bolstered by regulatory technical standards (RTSs), implementing technical standards (ITSs) and guidelines formulated by the ESAs: EBA, EIOPA and ESMA. Some of these have already been adopted, such as the ITS on the creation of a standard template for the mandated information register, whereas others are yet to be approved.

The reporting obligations required by DORA by means of an information register are also noteworthy. Financial businesses are required to record all contractual agreements with third-party ICT service providers in a register and make details available to their competent authority on request.

“Given that DORA is now upon us, it presents affected businesses with potentially major challenges,” said Florian Elsinghorst, an expert for regulated industries at Pinsent Masons. “In particular, in-scope entities need to put a lot of effort into managing ICT third party risk: the vast majority of IT services are covered by DORA. Financial organisations must adapt their existing contracts with third-party ICT service providers to be DORA-compliant, which may entail a substantial amount of contract management and negotiation work.”

Andreas Carney, a technology and financial services sourcing expert at Pinsent Masons, said: “Now is a good time to take stock of what has been achieved in terms of implementation and assess what more needs to be done to achieve compliance said. The application of DORA from today will no doubt draw it into sharper focus for regulators – they will be interested in the level of compliance that has been achieved.”

Carney highlighted that third party risk management is naturally a key aspect of the DORA framework. DORA’s requirements in this regard apply to outsourcing arrangements but also other ICT services arrangements.

“While entities may have implemented previous regulatory requirements specific to outsourcing or cloud, DORA adds another layer of requirements – as well as the need to look at their entire ICT services environment,” he said. “DORA includes detailed requirements for subcontracting and these should be considered not only by the regulated entities themselves, but also third-party suppliers to those entities in how they contract and manage their own supply chain. Other aspects of DORA will also have a ‘flow down’ effect on IT service providers.”

“Our consulting experience shows that DORA can also mean a major implementation effort for IT service providers,” Daniel Widmann, also of Pinsent Masons, said. “They are asked by their clients from the financial sector to adapt existing contracts, the implementation of which may cause difficulties in practice. This is also due to the fact that IT services are often categorised differently by financial companies in terms of criticality. IT service providers are faced with the challenge of having to adapt an often standardised service for customers in the financial sector. It is therefore all the more important for IT service providers to understand which obligations are mandatory under DORA and where there is room for negotiation.”

“We are seeing different approaches being adopted for implementation by both regulated entities and ICT suppliers,” Carney said. “These vary from clients managing implementation in-house, where we support on developing an understanding of DORA’s requirements, how it applies to their business, and identifying the steps needed to comply, right through to relying on us for full end-to-end support where we advise on all of DORA’s requirements, prepare templates and manage negotiation of ICT service contracts.”

Developed in collaboration with Google Cloud (a partnership established with Allfunds and announced in April 2024), ANA simplifies user interaction with Allfunds’ ecosystem of over 250,000 funds. It empowers clients to track market trends effectively and make better-informed investment decisions.

Key features of ANA include:

• Advanced screening of funds, uncovering investment opportunities across asset classes, data-points and ratings, eliminating the need for manual analysis through its precise filters.

• Intuitive navigation. Allfunds’ Connect platform to effectively assimilate complex data into easily visual and actionable insights, driven by straight forward controls.

• Detailed comparisons. Facilitates side-by-side analysis of multiple funds across a broad spectrum of metrics for informed, data-driven decisions.

The launch of ANA follows the recent roll-out of Allfunds Navigator, a tool that integrates real-time market data, AI, and machine learning to support fund distribution efforts, offering clients a strategic edge through actionable insights.

Allfunds is dedicated to the continuous enhancement of ANA and future updates will expand its capabilities in line with advancements in AI language models, ensuring clients benefit from the latest technological developments to streamline decision-making.

Juan de Palacios, chief strategy and product officer at Allfunds, said: “With ANA, we empower users to make confident, informed decisions by harnessing the full potential of the Allfunds Connect ecosystem. This is just the beginning—our focus remains on combining technological excellence with client-centric innovation to uphold the market-leading service we are known for.”

Demographic shifts, underfunding of defined benefit pension plans, inflation, rising inequalities, and gaps in financial literacy, are creating an increasingly complex pensions environment and more risk of pension inadequacy for retirees.

The research, ‘Pensions in the Age of Artificial Intelligence’. explores whether technology can offer solutions to address key issues across various parts of the value chain in pension management. It includes case studies and expert interviews from markets including Australia, Japan, the United Kingdom and the United States, and surfaces examples of where the integration of new technology can empower pension trustees as well as beneficiaries to make better informed decisions.

Olivier Fines, CFA, head of advocacy for EMEA at CFA Institute, said: “AI can add more than just operational efficiencies. From onboarding new members to account management, plan governance, investment management, and decumulation strategies, AI and machine learning can play a positive role in addressing key issues facing the pensions industry. However, transparency and robust governance in the use of the technology will be vital to build trust and rapport with pension plan members.”

“As investment firms and plan sponsors increasingly integrate the technology in their processes, collaboration with technology providers and regulators will be important to ensure that workflows consider the specifics of individual pension plans, and respect their operating models, fiduciary duty, and the regulatory framework they operate in. This is why we believe AI should support, not replace, human decision-making and why it will be critical to set clear objectives and benchmarks for evaluating model effectiveness.”

“AI and machine-learning technologies may allow providers to offer more personalised services and dynamic support for plan members. We believe AI should play a major role in balancing personalisation and simplicity, accounting for individual needs and varying levels of financial literacy. This should foster increased member engagement and promote financial wellness. AI can also assist trustees and advisors in navigating the crucial decumulation phase for plan members.”

Key Findings

• Enhancing Personalisation, Efficiency, and Accuracy: AI applications are diverse and consideration must be given to how to best use AI to enhance overall retirement security for pension plan members. Enhancements will require targeting specific areas of the pension ecosystem that will contribute the most value for the unique needs of each pension fund.

• Member Engagement and Financial Literacy: Implementing AI for member onboarding, communications, reporting, and retirement planning could enhance overall member engagement, boost financial literacy, and support pension plan members throughout their retirement life cycle.

• Pension Plan Governance: AI technologies can enhance pension plan governance by facilitating multi-stakeholder interactions, reducing administrative tasks, and aiding pension boards with decision-making. This includes improving optimisation of investment strategies and prompt resolution of member issues.

• Investment Management: AI and machine learning models can boost the analytical capacities of portfolio managers, enhance actuarial analyses of pension fund risks, and keep market trend assessments up to date. These technologies may be especially useful for analysing private markets and data related to sustainable investments.

• Predictive Analytics and Actuarial Assumptions: Advanced machine-learning techniques may enhance actuarial assumptions and predictive analytics, improving asset/liability management and pension derisking strategies. Defined contribution plans may benefit from personalised strategies across the lifecycle of each individual investment plan, with accumulation and decumulation strategies based on member behavior predictions.