COMPULSORY WORKPLACE PENSION

This problem of lack of saving towards retirement is not a new discovery and the Government has sought to help address this with a compulsory workplace pension for all who are employed. This was established as a legal requirement in October 2012 but will take about 5 years to roll out to reach all employers. They have started with the larger employees and between now and 2017 all employers will have to set up a company pension scheme and this will include mandatory contributions by both employers and employees to the employees’ pensions. In many cases employers already have a company pension which can be adapted to the requirements of the Compulsory Enrolment legislation. If a company does not have a pension scheme, it will need to make its own arrangements. The requirements are very precise and employers will need to allow adequate time and resources for putting them in place. It is recommended that an employer starts dealing with this 12 months before their “Staging Date” – the date at which they are required to have the Workplace Pension up and running. Note: an employer can find out when it’s Staging Date is by going on-line to: www.thepensionsregulator.gov.uk/employers

PENSIONS – THINKING AHEAD

A survey done recently by the consumer group, “Which”, has provided some useful information about thinking ahead to retirement by establishing what a minimum level of pension income provision would be in retirement and how much savings would be needed to achieve it. The survey showed that 59% of people who are not yet retired do not know how much pension they need to accumulate in order to live comfortably in retirement. By further survey they established that the average minimum level of pension income people estimated they would require in retirement at today’s values would be about £15,136 per annum. With the basic State Pension currently providing £110.15 per week, that would leave a shortfall of about £9,408 per annum - £784 per month. As a guideline the survey shows how much per month would be needed to make up this shortfall depending on the starting age. For a 25-year-old it is £214 per month, a 35-year-old £324 per month, and a 45-year-old £581 per month. Sadly the survey also showed that 46% of people who have not yet retired are making no effort to save for retirement.

The Value of Experience and Expertise!

By survey what you want from us is our advice on financial matters, utilising our extensive knowledge and long experience going back over 30 years. We enjoy helping in this way and continuing to assist our clients and their friends and their children. Those that have used us do know they can rely on us again and again. In recent service questionnaires when asked why they chose to use Sovereign Finance we received answers such as the following: “We dealt with Sovereign Finance before and found them of good service, reliable and honest. Always.” Mr GS of Ashford “Thank you so much for making it all happen so fast. Brilliant!” Mrs SR of London “Mr Shuster is dedicated to getting the right result.” Mrs HT of West Sussex “We had previously used Sovereign and had confidence in the advice given. We expected a good service and that’s what we got.” Mr KH of Eastbourne “The service I received was excellent with regular correspondence and home visits. Good work. Keep it up”! Mr MB of Pembury

Savings/Investment Tips

1. Don’t put all your eggs in one basket. 2. Do your homework. 3. Don’t gamble with money you can’t afford to lose. 4. Don’t be greedy. Expecting very high returns can expose you to very high risks. 5. Invest for the Long-Term. 6. Include tax planning in working out your savings and investments.

Financial Checklist

When reviewing your finances, here are some points to consider: 1. You need to arrange your income and expenditure to ensure you have more coming in than going out! 2. Save for a rainy day. You need to build up a surplus. 3. Virtually everyone should make a will. It is estimated that 30 million people in the UK have not done so! 4. Review your finances (including your mortgage rate and your savings interest rates) at least once a year. 5. Plan ahead. The odds are that you are going to live a long life and you need to plan how you will pay your bills when you no longer are able/want to work. 6. Take professional advice when dealing with major financial decisions – house-buying, pension arrangements, long term savings.

Pension Notes

There were fewer changes to do with pensions this year in the Budget, but it is worth reviewing the key facts regarding pensions:

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 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 pots (less than £2000 in each pot), from age 60 you can take these all 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 (higher income) if you have serious medical issues;
b) taking just your Tax Free Cash and leaving the balance invested until later and with the option of taking an income from your pension fund annually;
c) taking an annuity which guarantees an income for as long as you live – level or increasing payments.

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

How Much is a Mum or Dad Worth?

Those who have children should certainly consider having life assurance. Recent research showed that only 53% of parents in the UK had life assurance and this level is decreasing. The research looked at what it would cost if a family lost a parent and had to replace all of the work they do. The value of replacing a Mum worked out at £30,032 and a Dad at £21,306 (Dads take note!). Contact us and we can provide quotes speedily.