Thursday, 23 February 2012
Use your Cash ISA allowance
Cash savings almost always will do better in a Cash ISA. Generally the interest rates are better and, of course, you get the interest free of tax. Since you can arrange to have immediate access to the cash in an ISA, it makes virtually no sense not to have as much of your cash in possible in Cash ISAs. In this tax year (2011/2012) each individual can put £5,340 into a Cash ISA. After the 6th of April this maximum rises to £5,640. This ISA allowance cannot be carried forward into another tax year. If you do not use your 2011/12 ISA allowance, you have lost it. Aim for an interest rate of between 2.5% and 3.0%. Note: You also have your Stocks and Shares ISA allowance, which is available for you to use if you are willing to take the risk.
Monday, 13 February 2012
Pensions implications
The Autumn Statement from the chancellor of the Exchequer George Osborne, contained only a few measures relating to pensions and retirement, with the UK’s projected £33bn overspend and the resulting extension of the government’s austerity measures offering little room for manoeuvre, particularly in terms of positive news.
On the plus side, the full basic state pension will rise to £107.45 a week in April 2012. However, the state pension age will increase to 67 between April 2026 and April 2028. Research by PWC suggests this increase in the state pension age will cost a 50-year-old £80 per month if they have to fill in these missing two years themselves while a 35-year-old would have to save an additional £35 a month to retire at the same time. This delay in the state pension age is expected to save around £60bn in today’s prices between 2026/27 and 2035/36.
Osborne also introduced a new scheme to help finance infrastructure investment in the UK that may indirectly affect a number of retirees. He is aiming to raise £20bn from UK pension funds to invest in infrastructure projects with a view to boosting the economy.
UK pensions funds have, to date, been reluctant investors in infrastructure, in spite of the long-term, index-linked income stream available on some of these projects. Principally this has been down to a lack of expertise in the asset class. A number of commentators have suggested that, if successful, this infrastructure-spending plan should provide an effective economic stimulus.
On the plus side, the full basic state pension will rise to £107.45 a week in April 2012. However, the state pension age will increase to 67 between April 2026 and April 2028. Research by PWC suggests this increase in the state pension age will cost a 50-year-old £80 per month if they have to fill in these missing two years themselves while a 35-year-old would have to save an additional £35 a month to retire at the same time. This delay in the state pension age is expected to save around £60bn in today’s prices between 2026/27 and 2035/36.
Osborne also introduced a new scheme to help finance infrastructure investment in the UK that may indirectly affect a number of retirees. He is aiming to raise £20bn from UK pension funds to invest in infrastructure projects with a view to boosting the economy.
UK pensions funds have, to date, been reluctant investors in infrastructure, in spite of the long-term, index-linked income stream available on some of these projects. Principally this has been down to a lack of expertise in the asset class. A number of commentators have suggested that, if successful, this infrastructure-spending plan should provide an effective economic stimulus.
Monday, 6 February 2012
Transferring pensions – Transfer or not?
Most people switch jobs several times during their working life; however, when you change employers, it is worth thinking about the pension pot that you have accrued. You might wish to consider combining your pensions into one pot. It is easier to keep an eye on fund performance if your pensions are all under one umbrella; moreover, a single pension pot will incur less paperwork and administration, and could also generate lower costs and better overall performance. Sounds like a no-brainer? In theory yes, however, there are some important issues to consider before taking the plunge.
Most occupational pension schemes and private schemes can be transferred, but there are restrictions and potential pitfalls. It is not usually worth transferring final-salary or public-sector pension schemes; the benefits are too good to lose. You should only transfer if you have actually left a company: if your current employer contributes to your existing occupational pension scheme, you should not switch. Also it is worth noting that the money in your pension can only be transferred from one pension scheme to another (until you have retired), and not every new pension scheme accepts inward transfers. If your pension pot is very small, it may not be worthwhile switching: you will have to pay charges when you transfer, and some providers impose harsh penalties if you leave their scheme. And, if you are relatively close to retirement, you might not have sufficient time to recover the costs incurred by transferring.
According to the Pensions Advisory Service, the Department of Work & Pensions (DWP) is set to publish a consultation paper examining the consolidation of small pension pots. Possible approaches could see your pension pot moving with you when you change your employer; alternatively, when you change your job, your pension pot could be left behind and – unless you decide to opt out – the cash would automatically be transferred to a central aggregator fund. The DWP believes the changes would increase the visibility of pensions saving: instead of seeing several small figures, each individual would be able to view one larger, consolidated figure.
Transferring and aggregating your pension pots might generate significant long-term benefits; however, any decision to do so should be taken for the right reasons. Tread carefully and, above all, take expert advice before making an irreversible decision. We are well placed to help you with this.
Most occupational pension schemes and private schemes can be transferred, but there are restrictions and potential pitfalls. It is not usually worth transferring final-salary or public-sector pension schemes; the benefits are too good to lose. You should only transfer if you have actually left a company: if your current employer contributes to your existing occupational pension scheme, you should not switch. Also it is worth noting that the money in your pension can only be transferred from one pension scheme to another (until you have retired), and not every new pension scheme accepts inward transfers. If your pension pot is very small, it may not be worthwhile switching: you will have to pay charges when you transfer, and some providers impose harsh penalties if you leave their scheme. And, if you are relatively close to retirement, you might not have sufficient time to recover the costs incurred by transferring.
According to the Pensions Advisory Service, the Department of Work & Pensions (DWP) is set to publish a consultation paper examining the consolidation of small pension pots. Possible approaches could see your pension pot moving with you when you change your employer; alternatively, when you change your job, your pension pot could be left behind and – unless you decide to opt out – the cash would automatically be transferred to a central aggregator fund. The DWP believes the changes would increase the visibility of pensions saving: instead of seeing several small figures, each individual would be able to view one larger, consolidated figure.
Transferring and aggregating your pension pots might generate significant long-term benefits; however, any decision to do so should be taken for the right reasons. Tread carefully and, above all, take expert advice before making an irreversible decision. We are well placed to help you with this.
Monday, 30 January 2012
Retirement Issues
We are able to utilise our experience and expertise to assist you in finding the best solutions for financial matters.
1. Sorting out retirement options. From age 55 it is possible to take your retirement benefits. There are quite a few options and we can help you to understand them and assist you in obtaining the solution that best suits your circumstances.
2. Dealing with mortgage/remortgage challenges. Experience and expertise and access to all of the market, enables us to seek out the best available deals. Your mortgage is likely to be your biggest monthly bill, so ensure you are paying the lowest rate possible.
3. ‘Insuring’ all is well. Protection in the form of life assurance, critical illness cover and income replacement are available to ensure you are covered in case of the unexpected. Research has shown that 6 out of 10 families in the UK have no life assurance arrangements. Insurance does not have to be expensive. As independent financial advisers, we can find the cheapest solutions for you.
4. Raising funds or reducing outgoings. There are quite a variety of ways to raise funds or reduce outgoings and we can look at all the options with you.
5. Equity Release Plans. Homeowners with small or no mortgages will have options to access funds via Equity Release Plans. Whether you use them or not, it is good to know what can be done.
6. A variety of other reasons including savings and investment and simply better understanding financial options.
Just give us a ring with whatever you would like to discuss on 01342 313302.
1. Sorting out retirement options. From age 55 it is possible to take your retirement benefits. There are quite a few options and we can help you to understand them and assist you in obtaining the solution that best suits your circumstances.
2. Dealing with mortgage/remortgage challenges. Experience and expertise and access to all of the market, enables us to seek out the best available deals. Your mortgage is likely to be your biggest monthly bill, so ensure you are paying the lowest rate possible.
3. ‘Insuring’ all is well. Protection in the form of life assurance, critical illness cover and income replacement are available to ensure you are covered in case of the unexpected. Research has shown that 6 out of 10 families in the UK have no life assurance arrangements. Insurance does not have to be expensive. As independent financial advisers, we can find the cheapest solutions for you.
4. Raising funds or reducing outgoings. There are quite a variety of ways to raise funds or reduce outgoings and we can look at all the options with you.
5. Equity Release Plans. Homeowners with small or no mortgages will have options to access funds via Equity Release Plans. Whether you use them or not, it is good to know what can be done.
6. A variety of other reasons including savings and investment and simply better understanding financial options.
Just give us a ring with whatever you would like to discuss on 01342 313302.
Monday, 23 January 2012
RETIREMENT OPTIONS AND RISKS
If you are over 55 and wish to take your pension benefits, you should consider the various choices and what the risks are. Annuity rates are continuing to fall as people live longer and there are also items of legislation which are affecting annuity rates such as the EU Gender Directive which requires annuity provides to offer the same rates to men and women, even though women statistically live longer than men. Some pension options include ongoing investment risks while others face risk of inflation.
We would be happy to assist you to understand more about these various options so you can make an educated decision. Do remember that past performance is no guarantee of future performance and the value of your investments can go down as well as up.
We would be happy to assist you to understand more about these various options so you can make an educated decision. Do remember that past performance is no guarantee of future performance and the value of your investments can go down as well as up.
Monday, 9 January 2012
LIFE ASSURANCE – LOOKING AFTER THOSE WHO DEPEND ON YOU
Life assurance is generally an inexpensive way to cover your commitments – whether that be a young family or business associates. Like Buildings Insurance or Car Insurance, it is a vital way of protecting assets (what more important asset is there than you yourself!). We can search the market for you to find the most inexpensive options available. Just give us a ring.
Wednesday, 4 January 2012
SAVINGS – SOME BASICS
Saving and investing money is a very important part of personal finances. Here are some tips:
1. For money you hold on cash deposits, keep watch over the interest rate. Banks and Building Societies, unfortunately, will not necessarily remind you when that lovely introductory rate that attracted you in the first place, drops considerably.
2. Take advantage of tax efficient savings. Your cash savings generally should be in Cash ISAs (Individual Savings Accounts) for both a good rate and so you do not lose part of the interest to the Tax Man.
3. Don’t use credit cards for long term borrowing. Take out a personal loan instead.
4. If you are saving for your children (or grandchildren), find out about the Junior ISA, and also look at the selection for children at the National Savings and Investment website.
1. For money you hold on cash deposits, keep watch over the interest rate. Banks and Building Societies, unfortunately, will not necessarily remind you when that lovely introductory rate that attracted you in the first place, drops considerably.
2. Take advantage of tax efficient savings. Your cash savings generally should be in Cash ISAs (Individual Savings Accounts) for both a good rate and so you do not lose part of the interest to the Tax Man.
3. Don’t use credit cards for long term borrowing. Take out a personal loan instead.
4. If you are saving for your children (or grandchildren), find out about the Junior ISA, and also look at the selection for children at the National Savings and Investment website.
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