THE YEAR OF THE PENSION - 2015!

With the start of 2015 Sovereign enters its 34th year of trading and we look forward

to an exciting and challenging 2015 – particularly with the changes in pensions and

the coming Election!

2014 was generally a more stable year than the previous one with the UK economy

performing better than most. From a financial services viewpoint 2015 will really be a

Year of the Pension. The number of changes to pension rules due to take place from April

2015 are record breaking. They include removing many of the access rules to pensions

so that most individuals will be able to reach into their pension and take out as much as

they want. In another major change, people dying before age 75 will be able to leave their

pensions to anyone they want – and the beneficiaries will receive the lump sum or income

free of any tax!

And pensions are also a focal point of mortgage affordability calculations – with many

lenders going where previous lending approaches have not gone before – reducing the

amount you can borrow based on the amount of pension contribution you make, i.e.

treating it in the same way as a loan payment or credit card payment would be dealt with.

Pensions in 2015 will be the focal point of most smaller businesses as they feel the hot

breath of The Pensions Regulator on their neck. Tens of thousands of businesses will have

to deal with the compulsory Auto-Enrolment Workplace Pensions as they hit their Staging

Date (start date) in 2015, and hundreds of thousands of small businesses in 2016!

2015 - The Year Of The Pension !

(not the year of the Sheep as the Chinese would have us believe)

There are many changes to the pension rules coming up including accessing your pension pot, compulsory Auto-Enrolment and more.

 Watch this space as we unravel the mystery of pensions.

Tax Discs

A small point but worth knowing about is the coming change with Tax Discs for your car. From the 1st of October 2014 paper Tax Discs will no longer be issued. That saves you having to successfully negotiate the perforations without tearing it!

STRIVING TO MEET EXPECTATIONS!

By survey what our clients value, and why they continue to come back to us, is our independent and unbiased advice on financial matters and mortgages, utilising our extensive knowledge and know-how gained over the last 30 plus years. If this newsletter has started you thinking or raised any questions, please do give us a ring whether it is about a mortgage, pension arrangements, investments, life assurance or any other financial matter. The telephone number is 01342 313302 and the email address is info@sovereignfinance.org.

LIFE ASSURANCE – THE VALUE OF EXPERIENCE AND EXPERTISE!

Not unusually, we were recently contacted by a couple who needed to increase the level of their life assurance, as they had moved and substantially increased their mortgage. This meant the level of cover they took out in 2006 was no longer sufficient. While it would have been easy to simply take out a new policy immediately, we found out from our “fact find” that the wife had contracted cancer in 2009 which she eventually was able to recover from. With this in mind, we made enquiries about her existing policy to see what options it might provide them as in some cases life policies allow the policyholders to increase their cover without any medical enquiries when they are increasing their cover due to a move, or similar circumstances.

From these enquiries we found out that, in fact, the old policy provided cover against incurring certain critical illnesses as well as in the event of one of them dying. We advised the clients that we should see if they were entitled to claim even though the cancer dated back to 2009. We obtained details of the cancer and established that it was the kind of cancer that should be covered. We then assisted the clients to make a claim. The claim was eventually accepted and the clients were obviously more than pleased to find that they were receiving over £100,000 from the claim.

A less professional approach could have missed that completely and just arranged a new policy. The result was certainly in line with our company purpose – “To help individuals achieve their objectives and enjoy financial security.” To cap it off we advised them of the need for a new policy to cover what was still at risk, as the claim on the old policy meant that it had ceased to provide cover.

UTILISING THE VALUE IN YOUR HOUSE — EQUITY RELEASE!

The ability to release some of the equity in a residential property has been important in more and more situations currently, such as dealing with interest only mortgages that will not be cleared otherwise, or providing support for children or grandchildren for education or for purchasing a property.

The most popular of the equity release options has been the Lifetime Mortgage whereby money is borrowed as with a standard mortgage, but instead of payments being made monthly, the interest is added to the amount borrowed and is paid off on the sale of the property. For those who do not want to see interest continuing to accumulate there are now options which allow voluntary payments to be made without penalty – usually up to 10% of the amount borrowed each year.

There are also options to take out guarantees to cover a portion of the property so that you can be certain that part of the value of the property will be passed on regardless of what occurs with the rest of the value of the property. Do give us a ring and we can work out what might be available for you.

CHANGES IN THE LAW ABOUT WILLS

The new Inheritance and Trustees Powers Act 2014 takes a number of sensible steps to modernise the way someone’s estate is treated on death when there is no will. This includes the requirement of the court to consider not just spouses, but ex-spouses and co-habitants of the deceased, people who have been treated as ‘children of the family’ and people who were wholly or partly financially dependent on the deceased. While this does bring the legislation more in line with modern life, it is still best to have a will. It is only with a will that you can be sure that your intentions are carried out as to who you want to have what. The lack of a will almost always leads to disputes which are both unpleasant and can be costly.