Monday 26 November 2012
Advance Warning
Some significant changes in financial services are to come into effect at the end of 2012. The Financial Services Authority will be replaced by two(!) new regulators – the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). Along with this change are requirements for higher standards for financial advisers and a move away from commission being paid for investment advice to advisers charging fees. Firms of advisers also need to decide whether they will provide advice from the whole market and qualify thereby as "independent" or will work with a specified set of suppliers and then be termed as providing "restricted advice". We will continue to provide independent advice. Contact us on 01342 313302.
Monday 19 November 2012
Life Assurance Likely To Get More Expensive!
Life assurance has been around for a few hundred years, dating back to times when groups first worked out that they could buy some piece of mind for themselves and their families by each making a contribution to a pooled fund which would be available to help other members of that group or their families in the case the wage earner died early.
While it has become more popular, and thus cheaper, it still remains primarily a way to buy peace of mind for those with commitments such as family or business. The cost of life assurance is based on risk. To help in assessing this risk the life assurance companies have all of the records of people dying and from what cause (the Mortality Tables) and also details of a person’s medical history. If one is young and in good health, life assurance is very cheap indeed. As one grows older, and where there are medical problems (past or present), the risk, and thus the cost, goes up.
At the end of December 2012 a European Court decision will come into force affecting all insurance companies. It basically dictates that all premiums for insurances must be the same for men and women who are otherwise of equal risk. Historically, as per the records, women live longer than men and life assurance for women has usually been cheaper for a man of the same age. Despite these facts the European Court has decided that equates to sex discrimination! Frankly we think that is nuts, but it will not be the first piece of nutty European legislation. The result will be more expensive life assurance for women. One would think it would also mean somewhat cheaper life assurance for men, but at the same time the life assurance companies are being required to hold more reserves, which will make it more expensive for them to trade. This will almost certainly drive life assurance costs up for both men and women. In short then, it is probably a good time to review your life assurance and make any changes needed. We are likely to look back and see this as having been a particularly cheap time to take out life assurance. And remember the research indicates the cost of taking on people to do the work of a Mum works out at about £30,000 and a Dad at about £21,000! We can quickly provide you with any life assurance quotes you may need. Contact us on 01342 313302 or info@sovereignfinance.org
While it has become more popular, and thus cheaper, it still remains primarily a way to buy peace of mind for those with commitments such as family or business. The cost of life assurance is based on risk. To help in assessing this risk the life assurance companies have all of the records of people dying and from what cause (the Mortality Tables) and also details of a person’s medical history. If one is young and in good health, life assurance is very cheap indeed. As one grows older, and where there are medical problems (past or present), the risk, and thus the cost, goes up.
At the end of December 2012 a European Court decision will come into force affecting all insurance companies. It basically dictates that all premiums for insurances must be the same for men and women who are otherwise of equal risk. Historically, as per the records, women live longer than men and life assurance for women has usually been cheaper for a man of the same age. Despite these facts the European Court has decided that equates to sex discrimination! Frankly we think that is nuts, but it will not be the first piece of nutty European legislation. The result will be more expensive life assurance for women. One would think it would also mean somewhat cheaper life assurance for men, but at the same time the life assurance companies are being required to hold more reserves, which will make it more expensive for them to trade. This will almost certainly drive life assurance costs up for both men and women. In short then, it is probably a good time to review your life assurance and make any changes needed. We are likely to look back and see this as having been a particularly cheap time to take out life assurance. And remember the research indicates the cost of taking on people to do the work of a Mum works out at about £30,000 and a Dad at about £21,000! We can quickly provide you with any life assurance quotes you may need. Contact us on 01342 313302 or info@sovereignfinance.org
Monday 12 November 2012
Pensions – Looking For A Better Income
INCOME PLEASE – (after you have taken your tax-free cash)
Option 1: Take a guaranteed income for life (Annuity).
Option 2: Receive a higher guaranteed income for life due to an adverse medical condition or medical history or history of smoking (Enhanced Annuity).
Option 3: Take a fixed income for a period of time (usually 5 years) and have a guaranteed amount left at the end so you can then review your options (Temporary Annuity).
Option 4: Get an income which can possibly increase depending on the underlying investments (Investment Based Annuity).
Option 5: Leave your monies invested with the option to draw an income from the fund itself (Drawdown). There are two possibilities here. The first is called Capped Drawdown. With this one the maximum you can take is based on your age and the value of the pension fund. The second is called Flexible Drawdown. This allows you to take out as much as you want from your pension fund – but only if you already have a guaranteed pension income of at least £20,000 per annum (this can be made up of the State Pension and Private Pension income, but cannot be made up of other earned income or investment income.)
Option 1: Take a guaranteed income for life (Annuity).
Option 2: Receive a higher guaranteed income for life due to an adverse medical condition or medical history or history of smoking (Enhanced Annuity).
Option 3: Take a fixed income for a period of time (usually 5 years) and have a guaranteed amount left at the end so you can then review your options (Temporary Annuity).
Option 4: Get an income which can possibly increase depending on the underlying investments (Investment Based Annuity).
Option 5: Leave your monies invested with the option to draw an income from the fund itself (Drawdown). There are two possibilities here. The first is called Capped Drawdown. With this one the maximum you can take is based on your age and the value of the pension fund. The second is called Flexible Drawdown. This allows you to take out as much as you want from your pension fund – but only if you already have a guaranteed pension income of at least £20,000 per annum (this can be made up of the State Pension and Private Pension income, but cannot be made up of other earned income or investment income.)
Monday 5 November 2012
Pensions – Looking For A Better Income
ALL AS CASH PLEASE!
If you are aged 60 or older and the total value of all your pensions is less than £18,000, you can take it all as cash. 25% is tax-free and the balance is taxed as if it were income you had earned in that tax year. If you cannot take advantage of that option, but have a couple of very small pension pots (£2,000 or less), you can do the same with them – up to two such small pots per person.
If you are aged 60 or older and the total value of all your pensions is less than £18,000, you can take it all as cash. 25% is tax-free and the balance is taxed as if it were income you had earned in that tax year. If you cannot take advantage of that option, but have a couple of very small pension pots (£2,000 or less), you can do the same with them – up to two such small pots per person.
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