STATE PENSION – HOW MUCH WILL I GET?

There is also help in answering the "How much?" question. You can go on-line or telephone the State Pension Forecast team and obtain a forecast which will give you an estimate of the State Pension that you may get at State Pension age. If you live in the UK you can get a forecast online by visiting the website www.direct.gov.uk/pensionforecast and following the links, or by calling the Future Pension Centre who will take your application over the phone. Their telephone number is 0845 3000168.

STATE PENSION – WILL I GET IT?

How do you qualify for it? The amount of basic State Pension you are entitled to is based on your National Insurance contributions record over your working life from age 16 until State Pension age. A minimum amount of contributions and/or credits is required to make a year count as a “qualifying year” towards your overall contributions record. The rules are a bit complex but the new rules basically require that a man or woman needs to have built up 30 qualifying years or more before their State Retirement Age to qualify for the full basic State Pension. Normally a qualifying year is one in which you have paid the full required National Insurance payments for your employment or self-employment. In some cases, however, you can build up qualifying year “credits” without having to have paid National Insurance payments, e.g. those getting Child Benefit or caring for someone who is sick or disabled, or those who are ill or unemployed.


So the obvious questions are “When will I get it?” and “How much will I get?” To find out when you will get it, you can go on-line to www.direct.gov.uk/en/pensionsandretirementplanning and go to “Calculating Your State Pension Age”. You input your date of birth and you will find out what your State Retirement Age will be. Unfortunately the previous retirement ages of 60 for women and 65 for men are changing – for the worse.

STATE PENSION – WORTH KNOWING ABOUT!

There is much discussion in the media about people having to work longer because they will not have built up an adequate pension. We do see this failure to make adequate provision on virtually a daily basis. Sometimes it is because the person’s income will just not stretch to it and in other cases, people simply prefer not to worry about saving for the long term. In any case there is at least one area where virtually everyone who works can rely on as regards a pension income – the State Pension. It may not be huge but it is still worth having! Many people lack information about the State Pension and how it might affect them, so we decided to cover the basic points here.

In 2012/2013 the Basic State Pension payment for those who qualify is up to £107.45 per week. This payment goes up annually in line with inflation. This may not sound a great deal, but to get a similar pension income from a personal pension you would need to have saved up over £100,000. It is worth having! You might be interested to know that the concept of a UK State Pension did not come about until 1908. At that time you needed to be 70 or over and you would receive £31.50 per year!

THE PROPERTY MARKET

The property market generally does not look to be rising or falling to any great degree. It has largely been Landlords buying and selling buy-to-let properties that have kept some life in the market. In the first quarter of 2012 there was an increase in mortgages completing due to the March deadline for the Stamp Duty reduction for First Time Buyers. The Government and builders are seeking to continue to encourage First Time Buyers with a number of options for buying new-build properties. There are also still some part-buy/part-let solutions. However, the real problem with the property market is that segment who are locked into their present mortgage arrangements due to the changes in the mortgage market over the past several years. We have seen various options virtually disappear, including 95% and 100% mortgage, self-certification mortgages for the self-employed, and mortgage options for those with past credit problems. However, the mortgage market is starting to become a bit more flexible and it is worth staying in touch in case options open up.

INVESTMENT – BE GUIDED BY THE RISK YOU ARE WILLING TO TAKE!

The various Stock Markets are providing something of a roller-coaster ride with their ups and downs. While generally there has been a recovery over the last 6 months or so, the main problems of creating growth and repaying large national debts are likely to be with us for some time to come. Those investing in the Stock Markets should make sure they are comfortable with the risks and also understand that they should be investing for the medium to long term. Those approaching retirement in the next year or two, and who still have investments in managed funds through their pension funds, should consider moving to lower risk options, even Deposit Funds, to avoid being caught out by a sudden drop in the market just at the time when they want to take their pension benefits. If you are still interested in seeking a better return on your money even after considering the risks, and with 10 years plus until your expected retirement, then you should consider investing, or staying invested, in the Markets. There are a variety of Managed Funds that allow you to spread your investments both as regards types of businesses and geographical sectors. The Markets generally tend to take their lead from the United States but it remains our view that any meaningful growth is still likely to come from what are called Emerging Economies. In the past this has included China and India as well as other countries like Brazil and Russia and some Asian countries. Because of currency exchange rates and questions about political stability, such investments have to be considered higher risk. So do make sure the risk is one you are willing to take. Contact us if you would like to discuss your options – 01342 313302.

PENSION NOTES!

1. The usual minimum age to take pension benefits is 55 – male or female.


2. Normally you can take up to 25% of your pension fund as Tax Free Cash.

3. You do not have to retire in order to be able to take your pension benefits.

4. If the total of your pension funds is less than £18,000, from age 60 you can take it all as cash (25% Tax Free and the balance taxed as earned income).

5. If you have a couple of very small pension pots (less than £2000 in each pot), from age 60 you can take those as cash (25% Tax Free and the rest taxed as income).

6. You have various options when you take your pension benefits including:

a) An enhanced annuity if you have serious medical issues;

b) Taking your Tax Free Cash and leaving the balance invested until later with the option to draw income each year;

c) Taking an annuity that guarantees an income for as long as you live – level or increasing.

We can help advise on all of your choices so as to customise your pension benefits to meet your circumstances. Give us a ring on 01342 313302.

DON’T BE CAUGHT OUT BY MORTGAGE RATE INCREASES

A number of lenders including the Halifax and the Bank of Scotland are taking the opportunity to raise their Standard Variable Rates. They can make these changes even though the Bank of England Base Rate has not changed. This will mean an extra 0.25% to 0.5% added to the mortgage rate. The solution for the borrowers affected is either to switch to a Tracker Rate which can only move when the Bank of England rate changes, or a Fixed Rate which cannot move at all during the period over which the rate is fixed. We are of the view that a 3 to 5 year fix is a good strategy, with 5 year fixed rates below 4.0% for those with a low loan to value mortgage. For a review of your options, do contact us now on 01342 313302!