Chief executive Jane Platt says: 'Since 2007 we have been working to simplify and modernise our range of savings and to encourage our customers to invest with us directly. At the same time, the Post Office has grown its own range of savings products. 'We're very proud of the service we deliver to savers by post, online and, in particular, via our UK call centres where staff have an average of over 24 years' experience and are available seven days a week, 365 days a year. 'We believe their expert knowledge of NS&I's savings and investments will help our customers transfer to dealing with NS&I directly and we will work with our colleagues at the Post Office to support our customers through the changes.'
A spokesman said just 16 per cent of the 2.3million Investment Account customers used the Post Office to make a transaction in the last year; around 146,000 Easy Access customers did.
When asked about the low rates, NS&I said that it's a necessary part of the 'balancing act' it undertakes every year. The state savings arm is only allowed to bring in a certain level of net deposits - £2billion this tax year - so as not to distort the savings market.
At Enable we know that looking after the pennies is what enables people to save up their pounds, it is difficult to know what to do with cash savings at the moment but looking to diversify and have a balance range of options before you is what Enable IFA’s of Bishop’s Stortford specialise in providing.
Monday, 12 December 2011
Leaving your cash in the Post Office no longer a safe bet…
Around 2.5million NS&I savers are getting paid less than 0.7 per cent on their savings, the government's savings arm admitted recently. The worst hit 2.3million sits in a National Savings & Investments 'Investment Account' that pays a maximum of just 0.3 per cent. That means that the government-backed body is paying great swathes of the population less than the Bank of England's base rate – supposedly a minimum standard – of 0.5 per cent.
The alarming figures emerged as NS&I pulled some of its services out of the Post Office, it will stop offering its Investment Account and Easy Access Savings Account, which has 260,000 savers, through Post Office branches. The move will leave just Premium Bonds and one other savings account on offer via Post Office branches.
Of it’s remaining accounts the Investment Account, first launched in 1966 and is getting a makeover and a 'higher rate' in May next year when it converts into a postal-only account with statements rather than a passbook. The Easy Access Savings Account, launched in 2004, recently closed to new savers on 28 November and in July 2012 it will shut down completely. NS&I has been encouraging customers to switch out of the account that pays a sliding scale 0.2 – 0.7 per cent and into its Direct Saver which pays 1.75 per cent.
IFA Enable specialise in helping savers find the best returns for their cash. Independent financial advice is always worth considering when trying to assess risk and best returns for your hard earned savings.
The alarming figures emerged as NS&I pulled some of its services out of the Post Office, it will stop offering its Investment Account and Easy Access Savings Account, which has 260,000 savers, through Post Office branches. The move will leave just Premium Bonds and one other savings account on offer via Post Office branches.
Of it’s remaining accounts the Investment Account, first launched in 1966 and is getting a makeover and a 'higher rate' in May next year when it converts into a postal-only account with statements rather than a passbook. The Easy Access Savings Account, launched in 2004, recently closed to new savers on 28 November and in July 2012 it will shut down completely. NS&I has been encouraging customers to switch out of the account that pays a sliding scale 0.2 – 0.7 per cent and into its Direct Saver which pays 1.75 per cent.
IFA Enable specialise in helping savers find the best returns for their cash. Independent financial advice is always worth considering when trying to assess risk and best returns for your hard earned savings.
Inflation UK - Keeping tabs on Inflation
Experienced Independent financial advisors at Enable know how worrying inflation is to so many savers. Just at the moment some savers are throwing money at inflation-linked bonds in a bid to protect their money but they could miss out on thousands of pounds over the next five years, analysts are warning.
Banks, building societies, and even the likes of Tesco are targeting Britons with tempting savings and investments that play on fears over escalating food and fuel prices, and its true soaring inflation hit its highest level in 20 years in September: 5.6 per cent on the official Retail Prices Index (RPI).. But a saver with £50,000 to deposit could end up more than £2,500 out of pocket if inflation drops.
Some current savings deals and retail corporate bonds promise to pay as much as 1 percentage point above RPI each year, providing at first glance a 6 per cent-plus return that protects the value of savers' cash. But it might be wise to think carefully about the official figures before tying your cash up.
The latest official count in October showed RPI inflation had dropped back to 5.4 per cent. All of the leading economic forecasters say it will continue to slacken during the coming half-decade.
The average of 21 independent predictions collected by the Treasury from major institutions like Citigroup and the ITEM Club suggest inflation will fall to 3.5 per cent next year, 2.9 per cent in 2013, before rising back to 3.3 per cent in 2014 and 3.4 per cent in 2015.
Banks, building societies, and even the likes of Tesco are targeting Britons with tempting savings and investments that play on fears over escalating food and fuel prices, and its true soaring inflation hit its highest level in 20 years in September: 5.6 per cent on the official Retail Prices Index (RPI).. But a saver with £50,000 to deposit could end up more than £2,500 out of pocket if inflation drops.
Some current savings deals and retail corporate bonds promise to pay as much as 1 percentage point above RPI each year, providing at first glance a 6 per cent-plus return that protects the value of savers' cash. But it might be wise to think carefully about the official figures before tying your cash up.
The latest official count in October showed RPI inflation had dropped back to 5.4 per cent. All of the leading economic forecasters say it will continue to slacken during the coming half-decade.
The average of 21 independent predictions collected by the Treasury from major institutions like Citigroup and the ITEM Club suggest inflation will fall to 3.5 per cent next year, 2.9 per cent in 2013, before rising back to 3.3 per cent in 2014 and 3.4 per cent in 2015.
Wednesday, 7 December 2011
Home Properties - Property is a vital cog in recovery
According to the latest RICS UK Commercial Market Survey, improvements in the commercial property market in the first half of the year faltered during Q3 2011 as occupier demand fell back for the first time in 12 months.
In would seem falling demand and rising availability has impacted on rental expectations, which weakened over the quarter, moving deeper into negative territory. The one area which continues to show a positive trend for future rents, albeit a flatter one than earlier in the year, is the central London office market. Simon Rubinsohn, RICS’ chief economist says: “While the London commercial market is still holding up relatively well, some of the positive momentum appears to have faded in the capital over the last few months - reflecting the wave of negative news flow surrounding both the prospects for the UK economy and the sovereign debt crisis in Europe.”
But property is still a vital cog in the whole of the economy. A new study from the Property Industry Alliance, the Property Data report, has found that the property industry contributes £46bn per year to the UK’s GDP. Robert Finch, chairman of the Property Industry Alliance, says: “The report shows the importance of the commercial property industry to the overall UK economy should not be underestimated and the crucial role it will play in our economic recovery. From providing places for people to work, shop and play through to playing a major role in funding retirement, the sector is a crucial cog in the UK economy. In legislating, the Government must be mindful of this.”
Enable of Bishop’s Stortford can offer independent financial advice on your property investments.
In would seem falling demand and rising availability has impacted on rental expectations, which weakened over the quarter, moving deeper into negative territory. The one area which continues to show a positive trend for future rents, albeit a flatter one than earlier in the year, is the central London office market. Simon Rubinsohn, RICS’ chief economist says: “While the London commercial market is still holding up relatively well, some of the positive momentum appears to have faded in the capital over the last few months - reflecting the wave of negative news flow surrounding both the prospects for the UK economy and the sovereign debt crisis in Europe.”
But property is still a vital cog in the whole of the economy. A new study from the Property Industry Alliance, the Property Data report, has found that the property industry contributes £46bn per year to the UK’s GDP. Robert Finch, chairman of the Property Industry Alliance, says: “The report shows the importance of the commercial property industry to the overall UK economy should not be underestimated and the crucial role it will play in our economic recovery. From providing places for people to work, shop and play through to playing a major role in funding retirement, the sector is a crucial cog in the UK economy. In legislating, the Government must be mindful of this.”
Enable of Bishop’s Stortford can offer independent financial advice on your property investments.
Prices of property - Commercial Property clearly linked to growth
Clearly commercial property does not operate in a vacuum. The fundamental factors in occupier demand for commercial property are tied directly to employment growth (or decline) and the level of consumer spending. Over the years experienced IFA’s like Enable of Bishop’s Stortford have also seen that there is a strong historic relationship between rental income growth and GDP growth.
In addition, commercial property tends to reflect local market conditions including available supply and the characteristics of individual buildings themselves, as demonstrated by the outperformance in 2011 by central London markets, both office and retail, in comparison to the wider UK. Investors need to be aware of these fundamentals and some say investors “cannot rely on a yield arbitrage play against emergency gilt yields as a means of achieving sustainable investment performance. The margin, or risk premium, at the present time should be seen as a buffer against a weak economic outlook which will be tested, severely, in the short to medium term.”
In the past experiences IFA’s like Enable have seen returns forinvestors in Commercial properties because rental income payments from tenants have, historically, been protected by long lease terms, upward review clauses and over-renting, where the contracted rents tenants are obliged to pay exceed the open market rental value at the time. During periods of economic weakness however, the market, logically, re-prices tenant default risk and growth prospects. This feeds into more volatile market rental values and capital values. Enable Independent Financial Advisors can help you review your portfolio.
Managing your money is a vital skill...
At all times spreading your assets and diversifying is good financial advice. Experienced IFA’s like Enable have seen the benefits of diversification over the years. Property has always been part of that diversification. Most portfolios contain property in some form even if it is just the house you live in but many also have money in Commercial Property.
But it is useful to note that the investment performance of UK commercial property over the longer term has been driven to a great extent by income return, reflecting rental payments received from tenants rather than capital appreciation. Over the 20 years to December 2010, commercial property delivered annualised total returns of 8 per cent per year, with the income return contributing 6.9 per cent per year.
In the nine months up to the end of September 2011, UK commercial property reported a total return of 6.4 per cent, comprising income return of 5.1 per cent and capital growth of 1.2 per cent suggesting, perhaps, that property had been delivering its ‘natural’ level of performance at the present time.
Property yields retain a considerable margin over dividend yields and an even more pronounced premium over 10 year gilt yields which have fallen as low as 2.5 per cent in recent weeks as concerns over the Eurozone sovereign debt crisis and whether the UK was heading towards a ‘double dip’ recession pushed investors towards extreme risk aversion.
The net income return delivered by property is however still proving attractive to investors for both investment performance and diversification benefits. Enable IFA’s of Bishops Stortford are happy to help you evaluate your diversification in these volatile times.
But it is useful to note that the investment performance of UK commercial property over the longer term has been driven to a great extent by income return, reflecting rental payments received from tenants rather than capital appreciation. Over the 20 years to December 2010, commercial property delivered annualised total returns of 8 per cent per year, with the income return contributing 6.9 per cent per year.
In the nine months up to the end of September 2011, UK commercial property reported a total return of 6.4 per cent, comprising income return of 5.1 per cent and capital growth of 1.2 per cent suggesting, perhaps, that property had been delivering its ‘natural’ level of performance at the present time.
Property yields retain a considerable margin over dividend yields and an even more pronounced premium over 10 year gilt yields which have fallen as low as 2.5 per cent in recent weeks as concerns over the Eurozone sovereign debt crisis and whether the UK was heading towards a ‘double dip’ recession pushed investors towards extreme risk aversion.
The net income return delivered by property is however still proving attractive to investors for both investment performance and diversification benefits. Enable IFA’s of Bishops Stortford are happy to help you evaluate your diversification in these volatile times.
Tuesday, 29 November 2011
Pensions Drawdown. Do not delay on pensions
This week pension’s minister Steve Webb has confirmed the Government will delay automatic enrolment for small employers until after 2015. Details of the revised schedule will be published early next year. Webb said: “We will be going ahead with auto-enrolment as planned and I can confirm all businesses remain in scope. We have however decided to extend the current five year implementation period so that small businesses will not have to start enrolling their workers until the start of the next parliament. Never the less these revised plans will still result in more than half of all workers enrolled before the end of this parliament.”
Legal & General pension’s strategy director Adrian Boulding, who was part of the three man ‘Making automatic enrolment work’ review commissioned by the DWP last year, says the delay is a “huge mistake”. He says: “Demographically this is completely the wrong thing for the Government to be doing. “The point of getting people to save for their retirement is that the baby boom generation are still in work, so this is their opportunity to save for retirement. “If we delay, defer or miss this opportunity then the costs for providing pensions for that big generation are being landed on the much smaller generations following them. It is a huge mistake.”
As you already know Enable of Bishop’s Stortford don’t like to see any delay on signing up for your pension. If you need Independent Financial Advice on what is best for your pension provision do not hesitate to call reputable IFAs of Bishop’s Stortford Enable.
Legal & General pension’s strategy director Adrian Boulding, who was part of the three man ‘Making automatic enrolment work’ review commissioned by the DWP last year, says the delay is a “huge mistake”. He says: “Demographically this is completely the wrong thing for the Government to be doing. “The point of getting people to save for their retirement is that the baby boom generation are still in work, so this is their opportunity to save for retirement. “If we delay, defer or miss this opportunity then the costs for providing pensions for that big generation are being landed on the much smaller generations following them. It is a huge mistake.”
As you already know Enable of Bishop’s Stortford don’t like to see any delay on signing up for your pension. If you need Independent Financial Advice on what is best for your pension provision do not hesitate to call reputable IFAs of Bishop’s Stortford Enable.
What is VAT? Clarity about what qualifies as VATable services for IFA's
Even experiences IFAs like Enable of Bishop’s Stortford can find it very confusing at to what is and what is not client services or advice that is VATable - The latest HM Revenue & Customs draft guidance states that “VAT will not apply where a customer agrees to take out an investment product following a financial adviser’s recommendation. Investment management or portfolio advice services where an adviser suggests particular transactions will be subject to VAT. Ongoing advice, such as regular reviews, will be subject to VAT but if the ongoing advice includes portfolio rebalancing, it will be exempt. It also states that investment management or portfolio advice services where an adviser suggests particular transactions will be VATable.”
Portfolio rebalancing is simply buying and selling investments. What if an investment recommendation is made that then makes it a VAT-exempt transaction when the fee is charged but then the client’s situation changes and they do not invest? Would the client be re-invoiced to include 20 per cent VAT as the professional service provided was pure advice as there was no transaction?
Kim North thinks “Now is the time to include more discerning IFAs in HMRC and FSA policymaking to ensure all the remaining confusion is cleared up well before the introduction of the RDR.
If this happens, rules will be made that are in the best interests of the financial adviser and the investing public and therefore match what goes on in the real world.” IFAs Enable of Bishop’s Stortford are happy to help you work out what is VATable.
Portfolio rebalancing is simply buying and selling investments. What if an investment recommendation is made that then makes it a VAT-exempt transaction when the fee is charged but then the client’s situation changes and they do not invest? Would the client be re-invoiced to include 20 per cent VAT as the professional service provided was pure advice as there was no transaction?
Kim North thinks “Now is the time to include more discerning IFAs in HMRC and FSA policymaking to ensure all the remaining confusion is cleared up well before the introduction of the RDR.
If this happens, rules will be made that are in the best interests of the financial adviser and the investing public and therefore match what goes on in the real world.” IFAs Enable of Bishop’s Stortford are happy to help you work out what is VATable.
Uk investments, New regulations for renewal or trail commission
Kim North managing director of Technology & Technical was at this month’s Personal Finance Society conference and spoke to many of the top IFA's. It was good to hear that other top IFA's like Enable of Bishop’s Stortford are generally optimistic about business but she spotted a couple of general frustrations with some of the new rules not matching the real world.
She noted that “The regulator issued another draft guidance paper last week covering legacy commission. It sets out whether various situations will amount to advising on investments under article 53 of the regulated activities order. It contains a rather interesting table explaining when commission can be taken or not when advising on investments.”
“This makes little sense to me” she said “as where a client receives no advice on their investments, the adviser can receive trail commission but where advice is provided on the investments clients may have taken out previously, the adviser cannot receive any trail commission. Does the FSA understand that trail commission does not affect investment advice as trail is paid by the majority of investment funds and products? Trail helps with cash flow for adviser businesses and advisers work hard to keep existing clients and attract new clients with previous investments to bring together a portfolio under the advice of one professional IFA. If existing investments are not advised upon, what happens if the fund manager or team leaves or the fund starts to underperform? Surely advisers should have incentives to provide regulated advice on legacy business.”
Tuesday, 22 November 2011
Not all property is a safe bet
In the news it was stated recently that investors, since 2007, may exceed £30 million in landbanking.
The Insolvency Service is warning the public to be alert to the unscrupulous practice of landbanking as figures indicate that these scams are on the increase. Since 2007 Company Investigations, part of The Insolvency Service, has closed down 49 landbanking companies in England and Wales that have collectively caused the public to lose over £30 million.
Reputable IFA’s of Bishop’s Stortford like Enable would like to bring this disreputable practice to the attention anyone thinking of investing in land. Landbanking involves a plot of land - often green or brown belt - being bought by "developers" and then being sub-divided into a number of smaller plots which are then marketed, often under the false pretext that planning permission will be granted for development.
The Insolvency Service has seen a 33 per cent increase in the number of complaints it has received (2009-2011) against companies involved in these scams and a 100 per cent increase over two years in the number of complaints about landbanking scams accepted for investigation.
Robert Burns, Head of Investigations at The Insolvency Service, said:
"It's clear that landbanking scams are designed to target the more vulnerable investor, many of them trusting pensioners who are eager to see a greater return on their savings or pension lump sum than they could ever expect from traditional savings and investments. Tragically this often leads them to rashly invest in what seems to be, on the face of it, safe 'get-rich-quick' schemes."
"We need to alert people to the warning signs and the fact that if a scheme seems 'too good to be true', that's usually because it is. ‘’
The Insolvency Service is warning the public to be alert to the unscrupulous practice of landbanking as figures indicate that these scams are on the increase. Since 2007 Company Investigations, part of The Insolvency Service, has closed down 49 landbanking companies in England and Wales that have collectively caused the public to lose over £30 million.
Reputable IFA’s of Bishop’s Stortford like Enable would like to bring this disreputable practice to the attention anyone thinking of investing in land. Landbanking involves a plot of land - often green or brown belt - being bought by "developers" and then being sub-divided into a number of smaller plots which are then marketed, often under the false pretext that planning permission will be granted for development.
The Insolvency Service has seen a 33 per cent increase in the number of complaints it has received (2009-2011) against companies involved in these scams and a 100 per cent increase over two years in the number of complaints about landbanking scams accepted for investigation.
Robert Burns, Head of Investigations at The Insolvency Service, said:
"It's clear that landbanking scams are designed to target the more vulnerable investor, many of them trusting pensioners who are eager to see a greater return on their savings or pension lump sum than they could ever expect from traditional savings and investments. Tragically this often leads them to rashly invest in what seems to be, on the face of it, safe 'get-rich-quick' schemes."
"We need to alert people to the warning signs and the fact that if a scheme seems 'too good to be true', that's usually because it is. ‘’
Rental Properties - your rental portfolio
The new from the Association of Residential Lettings Agents (ARLA) states that increased demand for rental property is sparking a renewed interest in the PRS in parts of the UK. If you are looking to invest in property achievable rent levels on residential property have risen in the last six months, according to 60 percent of ARLA member agents, and have outperformed other investment classes consistently for the past two years.
The average period for which a rental property is empty in between lets is just 2.7 weeks per year, down from an average four weeks two years ago. Ian Potter, Operations Manager at ARLA, said: “Three quarters of our members are reporting that demand for rental property is outstripping supply and, with rental returns currently at 5 percent, anyone thinking about investing a property to rent could be well-placed to consider their options in the coming months.”
“Our research shows that prudent landlords are moving quickly to expand their portfolios, with almost a quarter (23 percent) reporting that they have bought properties in the last year. The most popular regions for investment are the North West, Midlands and Central London. In contrast the Rest of London saw the fewest landlords buying property.
Reputable IFA’s like Enable of Bishop’s Stortford could help you look at your investment portfolio with a view to a buy to let mortgage even if it was appropriate to your means and plans. Not everyone is cut out to be a landlord, but at the same time a good letting agent should be able to help you navigate the market should you choose to invest.
The average period for which a rental property is empty in between lets is just 2.7 weeks per year, down from an average four weeks two years ago. Ian Potter, Operations Manager at ARLA, said: “Three quarters of our members are reporting that demand for rental property is outstripping supply and, with rental returns currently at 5 percent, anyone thinking about investing a property to rent could be well-placed to consider their options in the coming months.”
“Our research shows that prudent landlords are moving quickly to expand their portfolios, with almost a quarter (23 percent) reporting that they have bought properties in the last year. The most popular regions for investment are the North West, Midlands and Central London. In contrast the Rest of London saw the fewest landlords buying property.
Reputable IFA’s like Enable of Bishop’s Stortford could help you look at your investment portfolio with a view to a buy to let mortgage even if it was appropriate to your means and plans. Not everyone is cut out to be a landlord, but at the same time a good letting agent should be able to help you navigate the market should you choose to invest.
Safe as houses...
Recent industry data seems to indicate that buy to let property investment continues to be one of the best ways to invest at the moment.
Statistics from the Halifax reveal house prices increased by 1.2 per cent in October with the average home in the UK now valued at around £163,311 and the rental market has continued to go from strength to strength as first time buyers struggle to get on the property ladder.
Almost four million homes were designated in the Private Rented Sector (PRS) in 2010, providing homes for one in six households and the Countrywide agency says rental properties now take an average of just 12.7 days to be let, with an average of five prospective tenants competing for each property.
Ray Withers, director of buy to let experts Property Frontiers, added: “With demand outstripping supply in the buy to let market, those with enough capital to invest in the growing buy to let arena are benefiting from some of the highest monthly returns on record.”
Perhaps unexpectedly the North West has enjoyed a 20 percent rise in rental rates this year alone and in Liverpool demand is outstripping supply probably due to the reduction in home ownership and the number of new homes being built (well below the Government target of 250,000 per annum). Meanwhile, demand for accommodation in and around the city centre also continues to rise as more students and young professionals enter the area.
Independent Financial Advisors like Enable of Bishop’s Stortford can help you look at your investment portfolio.
Statistics from the Halifax reveal house prices increased by 1.2 per cent in October with the average home in the UK now valued at around £163,311 and the rental market has continued to go from strength to strength as first time buyers struggle to get on the property ladder.
Almost four million homes were designated in the Private Rented Sector (PRS) in 2010, providing homes for one in six households and the Countrywide agency says rental properties now take an average of just 12.7 days to be let, with an average of five prospective tenants competing for each property.
Ray Withers, director of buy to let experts Property Frontiers, added: “With demand outstripping supply in the buy to let market, those with enough capital to invest in the growing buy to let arena are benefiting from some of the highest monthly returns on record.”
Perhaps unexpectedly the North West has enjoyed a 20 percent rise in rental rates this year alone and in Liverpool demand is outstripping supply probably due to the reduction in home ownership and the number of new homes being built (well below the Government target of 250,000 per annum). Meanwhile, demand for accommodation in and around the city centre also continues to rise as more students and young professionals enter the area.
Independent Financial Advisors like Enable of Bishop’s Stortford can help you look at your investment portfolio.
Monday, 14 November 2011
Pensions in safe hands...
A key part of June Mulroy’s work will be a blueprint for DC provision which will outline 11 basic principles that trustees, providers and employers will need to follow.
The regulator’s initial discussion paper, entitled, Enabling good outcomes in DC pension provision, published in January, identified six elements which it believes are important for achieving good outcomes for savers; appropriate decisions with regards pension contributions, appropriate investment decisions, efficient and effective administration of DC schemes, protection of scheme assets, value for money, appropriate decisions on converting private pension savings into a retirement income.
The Pensions Regulator will produce 11 principles for good quality defined contribution provision building on these six key elements.
Mulroy says: “We have tried to capture the principles in simple language, so the opposite should obviously be wrong. So, for example, we will say ’assets should be safeguarded’ the concept of assets not being safeguarded is obviously not right. “We will also outline a couple of principles about charging around transparency and simplicity.”
While the amount providers charge on pension products has inevitably grabbed the headlines in recent weeks, the regulator is equally focused on the costs incurred by providers. Mulroy says: “. We need to get disclosure of what it is costing because we do not have a proper comparative market. Getting to that point is not going to be easy but it is absolutely doable.”
Whatever kind of provision you have made for retirement Independent Financial advice from reputable IFA’s like Enable of Bishop’s Stortford can help put your mind at rest.
The regulator’s initial discussion paper, entitled, Enabling good outcomes in DC pension provision, published in January, identified six elements which it believes are important for achieving good outcomes for savers; appropriate decisions with regards pension contributions, appropriate investment decisions, efficient and effective administration of DC schemes, protection of scheme assets, value for money, appropriate decisions on converting private pension savings into a retirement income.
The Pensions Regulator will produce 11 principles for good quality defined contribution provision building on these six key elements.
Mulroy says: “We have tried to capture the principles in simple language, so the opposite should obviously be wrong. So, for example, we will say ’assets should be safeguarded’ the concept of assets not being safeguarded is obviously not right. “We will also outline a couple of principles about charging around transparency and simplicity.”
While the amount providers charge on pension products has inevitably grabbed the headlines in recent weeks, the regulator is equally focused on the costs incurred by providers. Mulroy says: “. We need to get disclosure of what it is costing because we do not have a proper comparative market. Getting to that point is not going to be easy but it is absolutely doable.”
Whatever kind of provision you have made for retirement Independent Financial advice from reputable IFA’s like Enable of Bishop’s Stortford can help put your mind at rest.
Unconventional pension regulation...
It’s hard not to notice the Pensions Regulator executive director for defined-contribution June Mulroy she is not exactly your stereotypical regulatory official. To start with she is a woman and she dresses in quite an unusually flamboyant way, her hair is dyed pink and she is plain talking. She has been tasked with kicking the pensions industry into action on some pretty sensitive and entrenched issues, such as pension charges and the disclosure of costs.
She says: “We have had some very interesting conversations with people about what their charges are. Interesting in the Chinese sense. Nobody can really tell us what their charges are. We have done a lot of research, so we know some of the things that are underneath the charges. But we really had to dig to get people to be honest and open”.
“There is an awful lot of Tommy Cooper that goes on when people try to describe charges but I do not think it is as complicated as certain people in the industry try to make out. It is no more complicated than forms of pricing are in any financial product.”
Mulroy is attempting to break through some of the jargon and complexity of the pension industry as she looks to improve both the quality and the comparability of DC schemes.
Your pension requirements might not be as flamboyant as June Mulroy but plain talking is what Enable like and reputable Independent Financial Advisors like Enable of Bishop’s Stortford are happy to talk through your pension provision with you.
She says: “We have had some very interesting conversations with people about what their charges are. Interesting in the Chinese sense. Nobody can really tell us what their charges are. We have done a lot of research, so we know some of the things that are underneath the charges. But we really had to dig to get people to be honest and open”.
“There is an awful lot of Tommy Cooper that goes on when people try to describe charges but I do not think it is as complicated as certain people in the industry try to make out. It is no more complicated than forms of pricing are in any financial product.”
Mulroy is attempting to break through some of the jargon and complexity of the pension industry as she looks to improve both the quality and the comparability of DC schemes.
Your pension requirements might not be as flamboyant as June Mulroy but plain talking is what Enable like and reputable Independent Financial Advisors like Enable of Bishop’s Stortford are happy to talk through your pension provision with you.
Clarity for charges…
Clarity is always a good thing and it is particularly important in the management of wealth and the charges applied for IFA’s and their services. But it has been widely acknowledged for the RDR reforms to be successful, the regulator must ensure its new charging rules are implemented effectively for independent and restricted advice. The FSA has been clear that, “for both independent and restricted advice, no payments can be made from provider to adviser relating to product distribution. The only payment an adviser can receive will come from a client-agreed charge.”
Independent Financial advisors like Enable welcome the clarity provided by the new reforms but like many acknowledge the difficulties, even the regulator has acknowledged the difficulties of ensuring its rules are followed by vertically integrated firms and the Treasury select committee has urged the regulator to conduct regular reviews to ensure the RDR is not circumvented.
But the FSA must also keep a close eye on ensuring that tied arrangements between big distributors and providers comply with its new adviser-charging rules. The FSA must give clarity and reassurance about what will and will not be acceptable after the RDR to ensure its reforms are not undermined. It would also be good to hear the regulator’s views on a potential rush to sign long-term distribution deals in the run-up to 2013.
If you want to know more about the RDR reforms and if they have any impact on the management of your wealth, IFA’s of bishop’s Stortford Enable would be happy to talk it through.
Independent Financial advisors like Enable welcome the clarity provided by the new reforms but like many acknowledge the difficulties, even the regulator has acknowledged the difficulties of ensuring its rules are followed by vertically integrated firms and the Treasury select committee has urged the regulator to conduct regular reviews to ensure the RDR is not circumvented.
But the FSA must also keep a close eye on ensuring that tied arrangements between big distributors and providers comply with its new adviser-charging rules. The FSA must give clarity and reassurance about what will and will not be acceptable after the RDR to ensure its reforms are not undermined. It would also be good to hear the regulator’s views on a potential rush to sign long-term distribution deals in the run-up to 2013.
If you want to know more about the RDR reforms and if they have any impact on the management of your wealth, IFA’s of bishop’s Stortford Enable would be happy to talk it through.
Wednesday, 9 November 2011
Eurozone crisis – it’s hard not to worry
It’s hard not to worry about how a break-up of the Eurozone would affect all of us, but ultimately some believe it could help the UK after the short-term pain from the event. Enable, experienced independent financial advisors know that it often pays to take the longer term view.
Research by the Centre for Economics and Business Research says the demise of the European currency would drive down the UK’s GDP growth in the year following the event but argues that the overall consequences would be less severe than many commentators suggest.
The study predicts that within five years of the euro’s break-up, the UK would be “at least as well off” as it would be if the region survived its ongoing debt crisis intact. Although the ‘think tank’ concedes that the collapse could drive the UK back into recession, the following growth is likely to be stronger than before.
In its assessment of the cost of a euro break-up, the Centre for Economics and Business Research (CEBR) said the UK would experience a 0.5 per cent reduction in gross domestic product (GDP), based on GDP in the Eurozone contracting 2 per cent as a whole. “If it breaks up the immediate pain is much more intense, but then there is a more stable basis and we would expect that within about 30 months growth will actually be faster than if the Eurozone survives in its current form,” states the CEBR.
Research by the Centre for Economics and Business Research says the demise of the European currency would drive down the UK’s GDP growth in the year following the event but argues that the overall consequences would be less severe than many commentators suggest.
The study predicts that within five years of the euro’s break-up, the UK would be “at least as well off” as it would be if the region survived its ongoing debt crisis intact. Although the ‘think tank’ concedes that the collapse could drive the UK back into recession, the following growth is likely to be stronger than before.
In its assessment of the cost of a euro break-up, the Centre for Economics and Business Research (CEBR) said the UK would experience a 0.5 per cent reduction in gross domestic product (GDP), based on GDP in the Eurozone contracting 2 per cent as a whole. “If it breaks up the immediate pain is much more intense, but then there is a more stable basis and we would expect that within about 30 months growth will actually be faster than if the Eurozone survives in its current form,” states the CEBR.
House Prices barely changed over 2011
House price averages seem to spike and fall month on month but with all of these things it is best to take a longer view of things, it might looks as if house price jumped 1.2% in October but a more reliable view would be the quarterly figures that showed a downward trend, according to Halifax. The lender said the average price of a UK home had risen for the first time in three months, to £163,311 however, this followed falls of 0.5% in September of 0.5% and 1.1% in August, and over the quarter prices actually dropped by 0.3%.
This is the first time since June that the quarterly figure was negative. But on an annual basis, comparing the three months to October 2011 with the same period in 2010, prices were down by 1.8%. It might not come as great news if you are trying to sell your house but this is the lowest annual fall since December 2010 and is markedly less than the 4.2% annual drop recorded in May 2011. However there is always a North, South divide and in some places like Bishop’s Stortford house prices have increased in this period.
Halifax's housing economist, Martin Ellis, said that over the course of 2011 prices had barely changed, and the market had been supported by low interest rates and a steady supply of homes coming up for sale." The housing market has proved highly resilient in recent months despite the weak economic recovery and the deterioration in the outlook for both the UK and global economies," he said.
Property is always a valuable part of any portfolio reputable IFA’s like Enable can help you consider how to make the best use of it.
Wondering when to take out your annuity
“A life annuity is a financial contract in the form of an insurance product according to which a seller (issuer) - typically a financial institution such as a life insurance company — makes a series of future payments to a buyer (annuitant) in exchange for the immediate payment of a lump sum (single-payment annuity) or a series of regular payments (regular-payment annuity), prior to the onset of the annuity. The payment stream from the issuer to the annuitant has an unknown duration based principally upon the date of death of the annuitant.”
A lifetime annuity is supposed to be a kind of longevity insurance where the uncertainty of an individual's lifespan is transferred from the individual to the insurer, which reduces its own uncertainty by pooling many clients, the difficulty is deciding when to take one out so it is good to see that some different annuity products are coming on to the market.
LV have launched a guaranteed annuity product which allows investors to lock-in investment growth. The Pension Income Plus Annuity allows clients to select an assumed investment return of between 0 and 4 per cent on their policy. Investors are protected from falls in investment returns by a minimum income guarantee. If investment yields improve the guaranteed minimum income level increases, locking-in a proportion of the investment returns received.
Head of annuities at LV Matt Trott says: “Investment-linked annuities are increasingly popular in the UK market, with advisers and clients alike looking for more flexible and cost effective alternative solutions to standard lifetime annuities.“ Experienced IFA’s like Enable can help you assess your options.
Thursday, 3 November 2011
Need to make sense of changes to pensions?
The Department for Work and Pensions has amended the Pensions Bill and has redefined money purchase schemes and defined benefit schemes as a result of a recent High Court case.
According to John Lawson, head of pensions policy at Standard Life,” the case focused on dividing the line between DB and DC schemes”. The scheme at the centre of the challenge, Home Decor Pension Scheme, was, according to the DWP, promoted in the “same way as a money purchase scheme but it did not have any means to fulfil its promises”.
The DWP argued that it was a money purchase scheme, which the scheme denied. The Supreme Court found in the scheme’s favour. Mr Lawson said: “Money purchases schemes such as personal pensions [and/or] DC occupational schemes where funds go up or down in the market can only become an annuity with an insurance company or income drawdown. “Schemepensions have been left out of the reclassification, which implies they are DB. DWP wants to make sure trustees are funding these schemes properly.”
According to Mr Lawson, currently those in scheme pensions can reduce the level of income they are taking if their fund is running low or investments are performing badly. However the DB rules mean the provider would have to make up any deficit or risk the scheme falling onto pension lifeboat scheme the Pension Protection Fund, meaning schemes having to pay PPF levies.
Sounds too complicated, let Enable IFA’s of Bishop’s Stortford help you make sense of it.
Own your own house - Making your house work for you
One of the things you can do if you own your own house is release some of the equity. “The equity release market is seeing a rise in the number of plans sold with more pensioners opting for drawdown products which enable them to benefit from lower borrowing costs today, allowing for increased flexibility to access further funds over time as and when required.”
Jon King, who works in this area has seen it’s continued rapid growth in the third quarter of 2011 with a 9.3 per cent market share. He said “the lender has now nearly trebled its share of new business from the 3.5 per cent market share it achieved in the last three months of 2010, which was its first full quarter of operation.”
Around 60 per cent of customers are qualifying for the highest level of enhanced LTVs ranging from 34 per cent at age 65 to 44 per cent at age 75 as brokers focus on health issues in their equity release fact find, according to Mr King. He said: “The success of enhanced equity release demonstrates the need for innovation in the market.
“Equity release has a bright future based on demographic trends but the industry needs to offer products which are suited to the needs of retired people. “Enhanced equity release recognises and meets immediate customer needs to maximise capital from their property wealth when they need it.”
If you want to look at equity release as an option for you, reputable IFA’s like Enable of Bishop’s Stortford can help you consider all the options.
Safe as houses in your retirement...
It has recently been reported that retiredhomeowners have total property wealth owned outright of £756.6bn despite continuing housing market volatility. This figure comes from research from equity release provider.
Homeowners aged 65-plus have gained a total of £4.4bn in the last three months, equivalent to around £962 each, according to the Pensioner Property Equity index.While overall housing wealth has increased there is a growing divide between winners and losers with six regions showing increases and five suffering declines.
Over-65 homeowners in Scotland were by far the biggest winners seeing average gains of £10,070 whereas over-65s in London and the east of England also benefited with gains of £3,867 and £3,548.
However over-65 homeowners in the north west, East Midlands plus Yorkshire and Humberside suffered average losses of £1,420, £1,203 and £1,111 respectively.
The figures show a third of property equity is owned by pensioners in London and the south east of England – in London over-65s own property without any mortgages worth £127.2bn while in the south east pensioners own £122.24bn of property without mortgages.
Dean Mirfin, group director of Key Retirement Solutions, said: “While the gains of the past three months are welcome the picture is not at all clear and, as the figures reveal, the recovery is very patchy. “ However the over-65s own considerable property wealth which still represents a massive investment success as they no longer have mortgages and will in most cases have bought more than 25 years ago."
If you are one of these investors and want to explore what your house can provide for you Enable Independent, IFA’s in Bishop’sStortford can help you think it through.
Tuesday, 20 September 2011
The best steps to take to improve your pensions prospects
“Recent research by consultants Aon Hewitt found that DC members retiring today had pensions that were 18pc smaller than those of people retiring just three years ago, thanks largely to declining annuity rates. The average DC pension pot is worth just £56,000 today. If 25pc is taken as a tax-free lump sum, this leaves only £42,000 with which to buy an annuity.
Three years ago this would have bought an income of £1,400 a year for a 60-year-old man; today it secures just under £1,200 a year.”
To improve your pension prospects possibly the most important thing to do is to regularly check your contribution rate. The bottom line is the more you put into your pension the more you should get out of it.
What happens a lot is that people choose the lowest contribution level when the join a pension scheme and then never review it or change it.
“On average, private sector workers put around 9pc of their salary into a DC scheme (this includes their own and their employer's contribution). This compares with contribution rates of around 20pc in a final salary scheme.
Tom McPhail of Hargreaves Lansdown said: "Everyone should find out how much is being paid into their pension – if it is less than 12pc of your salary, it is not enough."
A good rule of thumb is to take the age at which you starting contributing to a pension, then halve it; this is the percentage of your salary that should be going into a pension each month.”
To review if you are getting the best out of your pension contributions Enable, IFA’s in Bishop's Stortford can help.
Three years ago this would have bought an income of £1,400 a year for a 60-year-old man; today it secures just under £1,200 a year.”
To improve your pension prospects possibly the most important thing to do is to regularly check your contribution rate. The bottom line is the more you put into your pension the more you should get out of it.
What happens a lot is that people choose the lowest contribution level when the join a pension scheme and then never review it or change it.
“On average, private sector workers put around 9pc of their salary into a DC scheme (this includes their own and their employer's contribution). This compares with contribution rates of around 20pc in a final salary scheme.
Tom McPhail of Hargreaves Lansdown said: "Everyone should find out how much is being paid into their pension – if it is less than 12pc of your salary, it is not enough."
A good rule of thumb is to take the age at which you starting contributing to a pension, then halve it; this is the percentage of your salary that should be going into a pension each month.”
To review if you are getting the best out of your pension contributions Enable, IFA’s in Bishop's Stortford can help.
Don’t put your head in the sand about your pension
There is much in the news currently about public sector pensions and all the talk of strike action to protect them but the irony is that many in the private sector would be quite happy with some of the pension provision, even that currently on offer to public sector workers. Pensions outside the public sector are much more patchy in their provision and might not be offering the kind of pensions people would have hoped for in the long run – a recent survey by Prudential showed that one in three workers didn't have any pension at all, which could lead to an impoverished old age if action is not taken to avert the situation.
Even of those who do have private sector pensions in place we at Enable, IFA’s based in Bishop's Stortford, would agree with the thoughts expressed this week in The Telegraph, “the two thirds who have joined their workplace scheme need to take an active interest in how their money is being managed. If not, it could cost them in the long run.
A combination of low contribution levels, poor investment returns and falling annuity rates means many of these DC schemes will produce far smaller pensions than those paid through final salary schemes, where people typically expect to retire on half their salary.”
If you have concerns about how your pension is being managed or simply want to understand what it is you have let Enable explore it with you.
Even of those who do have private sector pensions in place we at Enable, IFA’s based in Bishop's Stortford, would agree with the thoughts expressed this week in The Telegraph, “the two thirds who have joined their workplace scheme need to take an active interest in how their money is being managed. If not, it could cost them in the long run.
A combination of low contribution levels, poor investment returns and falling annuity rates means many of these DC schemes will produce far smaller pensions than those paid through final salary schemes, where people typically expect to retire on half their salary.”
If you have concerns about how your pension is being managed or simply want to understand what it is you have let Enable explore it with you.
How is your pension performing?
In the news this week “New research, seen exclusively by The Telegraph, shows that more than two thirds of the people who run private sector pension schemes admit that their members do not face "good outcomes" in retirement.
In other words, the trustees, consultants and advisers who set up and administer defined contributions (DC) schemes – the most common type of workplace pension – fear they won't provide sufficient income for a comfortable retirement.
The research, conducted by the insurance company Partnership, showed that there was widespread disengagement with pensions among the 2.5 million members of DC schemes – where a person's retirement income is based on contributions, investment returns and annuity rates, rather than earnings.
In total, eight in 10 of those surveyed said the average worker did not understand their pension. The professionals interviewed cited three main problems: apathy, a lack of education about retirement options and a "general fear of pensions".
All three things that we at Enable want to make sure you avoid by getting the best independent Financial advice with reputable IFA's in Bishop Stortford.
The Telegraph go on to report “This lack of engagement is less of a problem if you are still a member of a final salary or "defined benefit" scheme – where your pension is based on your earnings. Here, there are far fewer choices to make: members don't have to choose between different investment options or take out an annuity on retirement. It is the schemes' trustees that shoulder both the investment and longevity risks. If they make the wrong decisions, the scheme can suffer, but it is still obliged to pay out the promised pensions to members.”
If you not are in this more fortunate position Enable IFA's can help you plan for the future.
In other words, the trustees, consultants and advisers who set up and administer defined contributions (DC) schemes – the most common type of workplace pension – fear they won't provide sufficient income for a comfortable retirement.
The research, conducted by the insurance company Partnership, showed that there was widespread disengagement with pensions among the 2.5 million members of DC schemes – where a person's retirement income is based on contributions, investment returns and annuity rates, rather than earnings.
In total, eight in 10 of those surveyed said the average worker did not understand their pension. The professionals interviewed cited three main problems: apathy, a lack of education about retirement options and a "general fear of pensions".
All three things that we at Enable want to make sure you avoid by getting the best independent Financial advice with reputable IFA's in Bishop Stortford.
The Telegraph go on to report “This lack of engagement is less of a problem if you are still a member of a final salary or "defined benefit" scheme – where your pension is based on your earnings. Here, there are far fewer choices to make: members don't have to choose between different investment options or take out an annuity on retirement. It is the schemes' trustees that shoulder both the investment and longevity risks. If they make the wrong decisions, the scheme can suffer, but it is still obliged to pay out the promised pensions to members.”
If you not are in this more fortunate position Enable IFA's can help you plan for the future.
Thursday, 15 September 2011
Which Mortgage? What about offsetting your mortgage
The reality for most borrowers is the fact that their monthly mortgage payment is probably at the top end of what they can afford and they either do not have the spare cash to overpay, or they are using any spare money available for savings, to pay other debts or fund other purchases.
And with most lenders once that spare cash is paid into the mortgage, it is gone and cannot be used for anything else. This is probably why many borrowers prefer to keep their spare cash ‘liquid’ in savings accounts where they can access it for whatever they wish.
But for those who want the benefits of overpayment without technically overpaying, there is always the option of an offset mortgage. Here, instead of putting your savings into a separate account or ISA, you choose to put them in an offset pot alongside the mortgage. Instead of earning interest on the savings you offset the interest you would have earned against your mortgage, effectively overpaying.
With normal savings rates being particularly low, many borrowers with significant savings would benefit from offsetting as they would earn the equivalent of the mortgage rate on their savings. This method of overpaying also allows the borrower to keep their savings ‘liquid’ as they can always access the money from the offset pot at any time.
It is also worth bearing in mind that any interest you earn on your savings is taxable at your highest rate of income tax, which might be 20%, 40% or, as of April 50% for the highest earners. If you use your savings to overpay your mortgage instead, not only are you effectively earning interest on them at the mortgage rate, but because they no longer technically exist as ‘savings’ you do not pay any tax. Enable can help your look at your mortgage options again.
And with most lenders once that spare cash is paid into the mortgage, it is gone and cannot be used for anything else. This is probably why many borrowers prefer to keep their spare cash ‘liquid’ in savings accounts where they can access it for whatever they wish.
But for those who want the benefits of overpayment without technically overpaying, there is always the option of an offset mortgage. Here, instead of putting your savings into a separate account or ISA, you choose to put them in an offset pot alongside the mortgage. Instead of earning interest on the savings you offset the interest you would have earned against your mortgage, effectively overpaying.
With normal savings rates being particularly low, many borrowers with significant savings would benefit from offsetting as they would earn the equivalent of the mortgage rate on their savings. This method of overpaying also allows the borrower to keep their savings ‘liquid’ as they can always access the money from the offset pot at any time.
It is also worth bearing in mind that any interest you earn on your savings is taxable at your highest rate of income tax, which might be 20%, 40% or, as of April 50% for the highest earners. If you use your savings to overpay your mortgage instead, not only are you effectively earning interest on them at the mortgage rate, but because they no longer technically exist as ‘savings’ you do not pay any tax. Enable can help your look at your mortgage options again.
How to reduce your mortgage-overpay...
In these ‘money saving’ times, when advice about financial matters is more sought after than ever before and everyone considers all manner of ways to save cash on every expense, it is surprising how few people concentrate on the biggest financial burden they are ever likely to have: their mortgage.
The monthly mortgage payment is often viewed as a ‘given’; it can’t be changed so people continue to let it run as always and in that sense, borrowers are accepting that they’ll probably have the debt for at least 25 years and there’s nothing they can do about it. Of course, this is very far from the truth; one only has to consider the simple act of overpaying the mortgage each month to find a highly suitable way to save large sums over the life of the mortgage.
The benefits to be had from overpaying your mortgage can be so significant that it is often surprising how few borrowers actually do it. With the mortgage being the most long-term financial responsibility an individual will have, anything that cuts the number of years you will have your mortgage for and also decreases the overall amount you will have to pay through saving on the interest payable is obviously a good thing.
Overpaying also increases the amount of equity you have in the property, thus allowing you to access far more competitive mortgage deals when you come to look for new mortgage finance. If you are looking to make any changes in your mortgage Enable Indpendent IFA’s of Bishop Stortford are here to help.
The monthly mortgage payment is often viewed as a ‘given’; it can’t be changed so people continue to let it run as always and in that sense, borrowers are accepting that they’ll probably have the debt for at least 25 years and there’s nothing they can do about it. Of course, this is very far from the truth; one only has to consider the simple act of overpaying the mortgage each month to find a highly suitable way to save large sums over the life of the mortgage.
The benefits to be had from overpaying your mortgage can be so significant that it is often surprising how few borrowers actually do it. With the mortgage being the most long-term financial responsibility an individual will have, anything that cuts the number of years you will have your mortgage for and also decreases the overall amount you will have to pay through saving on the interest payable is obviously a good thing.
Overpaying also increases the amount of equity you have in the property, thus allowing you to access far more competitive mortgage deals when you come to look for new mortgage finance. If you are looking to make any changes in your mortgage Enable Indpendent IFA’s of Bishop Stortford are here to help.
Local Building Society's are doing there bit….
Couple of items I’ve noted recently: Cambridge Building Society has launched a five-year fixed rate mortgage at 4.19% specifically for large loans of between £500,000 and £2m. The mutual will accept loans of up to £750,000 on an interest-only basis. The five-year fixed is available up to 75% LTV, with an arrangement fee of 0.2% or a minimum of £2,000.
Carole Charter, marketing manager at the Cambridge Building Society, said: "Larger loans are not suitable for everyone, but there are people out there who would benefit from this unique product."
She added: "The Cambridge is committed to offering a range of options for borrowers and the larger loan mortgage is a product that we feel we need to be able to offer our wealthier customers looking to purchase a house in this price range."
Also, the Cambridge Inflation Linked Bond Receives Surge in Interest. All applications for the five year bond must be received by 15th September 2011*. The Cambridge Inflation Linked Bond pays customers a return, at maturity, that tracks the annual rate of inflation, as measured by the Retail Prices Index (RPI), plus a guaranteed 1.00% gross p.a./AER** fixed for five years.
Andy Lucas, Head of Cambridge Direct at The Cambridge Building Society says: “We have seen surge in customer interest following the recent withdrawal of the NS&I index-linked certificate.
“Customers who want to take the opportunity to invest in a product that offers protection against the effects of inflation need to take advantage of the inflation linked products that are left in the market whilst they are still available.”
Enable Independent, IFA’s of Bishop's Stortford are here to help with savings and mortgages anytime you want to re-think your finances
Carole Charter, marketing manager at the Cambridge Building Society, said: "Larger loans are not suitable for everyone, but there are people out there who would benefit from this unique product."
She added: "The Cambridge is committed to offering a range of options for borrowers and the larger loan mortgage is a product that we feel we need to be able to offer our wealthier customers looking to purchase a house in this price range."
Also, the Cambridge Inflation Linked Bond Receives Surge in Interest. All applications for the five year bond must be received by 15th September 2011*. The Cambridge Inflation Linked Bond pays customers a return, at maturity, that tracks the annual rate of inflation, as measured by the Retail Prices Index (RPI), plus a guaranteed 1.00% gross p.a./AER** fixed for five years.
Andy Lucas, Head of Cambridge Direct at The Cambridge Building Society says: “We have seen surge in customer interest following the recent withdrawal of the NS&I index-linked certificate.
“Customers who want to take the opportunity to invest in a product that offers protection against the effects of inflation need to take advantage of the inflation linked products that are left in the market whilst they are still available.”
Enable Independent, IFA’s of Bishop's Stortford are here to help with savings and mortgages anytime you want to re-think your finances
Tuesday, 6 September 2011
Would like to be in your own home by Christmas?
Then contact us for a mortgage - we are not tied down to one mortgage provider, which means we can always find the best mortgage product from across the whole market place.
“The level of house prices, the need for larger deposits and stricter lending criteria set by banks, has combined to cut first-time buyers out of the market” says the National Housing Federation. “People need much bigger deposits now, and typically people can only get mortgages of about 75% of the price of the home.”
Getting onto the property ladder may seem like an enormous task in the current climate but it is not impossible and given all the upward pressures on the housing market it still seems like the only sensible thing to try and do. Experienced IFA’s like Enable of Bishop Stortford help you look at what can seem like overwhelming mortgage data to help you find the deal that works for you.
In the news this week Accord Mortgages, the intermediary arm of Yorkshire Building Society, has cut up to 0.45% from the cost of its 85% loan-to-value (LTV) fixed rate mortgages.
Its deals now include a two-year fixed rate at 3.74% and a five-year fixed rate at 4.64%, both available up to 85% LTV with a £995 fee. Accord has also reduced the interest rates on its 75% LTV products by up to 0.25%.
Steve McAvan, group intermediary product manager at Accord, said: "Our new range still includes offset options, products suitable for first-time buyers and our popular tracker and fixed hybrid deals ensuring we provide brokers with a broad range of competitive products to suit the needs of their clients whilst still providing some of the best rates on the market."
Just one of many of the options Enable Independent can help you consider to meet your housing needs - we are what it says on the tin - Independent.
“The level of house prices, the need for larger deposits and stricter lending criteria set by banks, has combined to cut first-time buyers out of the market” says the National Housing Federation. “People need much bigger deposits now, and typically people can only get mortgages of about 75% of the price of the home.”
Getting onto the property ladder may seem like an enormous task in the current climate but it is not impossible and given all the upward pressures on the housing market it still seems like the only sensible thing to try and do. Experienced IFA’s like Enable of Bishop Stortford help you look at what can seem like overwhelming mortgage data to help you find the deal that works for you.
In the news this week Accord Mortgages, the intermediary arm of Yorkshire Building Society, has cut up to 0.45% from the cost of its 85% loan-to-value (LTV) fixed rate mortgages.
Its deals now include a two-year fixed rate at 3.74% and a five-year fixed rate at 4.64%, both available up to 85% LTV with a £995 fee. Accord has also reduced the interest rates on its 75% LTV products by up to 0.25%.
Steve McAvan, group intermediary product manager at Accord, said: "Our new range still includes offset options, products suitable for first-time buyers and our popular tracker and fixed hybrid deals ensuring we provide brokers with a broad range of competitive products to suit the needs of their clients whilst still providing some of the best rates on the market."
Just one of many of the options Enable Independent can help you consider to meet your housing needs - we are what it says on the tin - Independent.
Property house prices - it's time to review your property investments
It may not be the most ground breaking news but it confirms what many have long suspected. The National Housing Federation (NHF) report says that the UK faces an unprecedented “chronic under-supply of homes” in England. It claimed the acute shortage was a result of the difficult economic climate making mortgages difficult to obtain but that at the heart of the problem remains a chronic under-supply of new homes.
In 2010/11 just 105,000 homes were built in England – the lowest level since the 1920s.
More government investment in affordable housing would stimulate a wider, faster economic recovery and help fix our broken housing markets, according to the Federation.
It is calling for suitable surplus public land to be made available for the building of affordable homes, for local authorities to regularly assess housing need and for ministers to make a renewed commitment to building the homes the country needs. Minister Grant Shapps said government says it is making more land available for building and is investing £4.5bn in lower-cost homes that would “get Britain building again”. Shapps said: “That’s why I’ve announced plans to release thousands of acres of public land for house building.” But the NHF said Government plans represented a cut of 63% on the previous programme of government spending on homes to rent or buy. NHF campaigns director Ruth Davison said: “What we need to do is to build new homes.”
What to talk it through? Come and talk over your property investments with an IFA at Enable Independent Ltd.
In 2010/11 just 105,000 homes were built in England – the lowest level since the 1920s.
More government investment in affordable housing would stimulate a wider, faster economic recovery and help fix our broken housing markets, according to the Federation.
It is calling for suitable surplus public land to be made available for the building of affordable homes, for local authorities to regularly assess housing need and for ministers to make a renewed commitment to building the homes the country needs. Minister Grant Shapps said government says it is making more land available for building and is investing £4.5bn in lower-cost homes that would “get Britain building again”. Shapps said: “That’s why I’ve announced plans to release thousands of acres of public land for house building.” But the NHF said Government plans represented a cut of 63% on the previous programme of government spending on homes to rent or buy. NHF campaigns director Ruth Davison said: “What we need to do is to build new homes.”
What to talk it through? Come and talk over your property investments with an IFA at Enable Independent Ltd.
When to buy a house - Safe as Houses
In the news recently the National Housing Federation’s independently-commissioned Oxford Economics Report predicts: Home ownership in England will slump to just 63.8% over the next decade - the lowest level since the mid 1980s – locking an entire generation out of the housing market. According to a new study, huge deposits, combined with high house prices and strict lending criteria, have sent home ownership into decline in recent years and the downward trend will continue for the foreseeable future.
The Federation warned the housing market will be plunged into an unprecedented crisis as it forecast steep rises in the private rental sector, huge social housing waiting lists, and a house price boom – all fueled by a chronic under-supply of homes.
According to Oxford Economics, who were commissioned to produce the forecasts:
In England, the proportion of people living in owner occupied homes will fall from a peak of 72.5% in 2001 to 63.8% in 2021.
In London, the majority of people living in the capital will rent by 2021 with the number of owner occupiers falling from 51.6% in 2010 to 44% by 2021.
The North East will be the only English region to see any increase in owner occupier numbers over the next decade, rising marginally from 66.2% to 67.4%.
The average house price in England will meanwhile rise by 21.3% over the next five years from £214,647 in 2011, to £260,304 in 2016,
As investors what should you do? If you own a property hold on to it if you have the capital maybe buy to let is not such a bad idea again? Enable IFA's in Bishop Stortford can help you talk through what to do.
The Federation warned the housing market will be plunged into an unprecedented crisis as it forecast steep rises in the private rental sector, huge social housing waiting lists, and a house price boom – all fueled by a chronic under-supply of homes.
According to Oxford Economics, who were commissioned to produce the forecasts:
In England, the proportion of people living in owner occupied homes will fall from a peak of 72.5% in 2001 to 63.8% in 2021.
In London, the majority of people living in the capital will rent by 2021 with the number of owner occupiers falling from 51.6% in 2010 to 44% by 2021.
The North East will be the only English region to see any increase in owner occupier numbers over the next decade, rising marginally from 66.2% to 67.4%.
The average house price in England will meanwhile rise by 21.3% over the next five years from £214,647 in 2011, to £260,304 in 2016,
As investors what should you do? If you own a property hold on to it if you have the capital maybe buy to let is not such a bad idea again? Enable IFA's in Bishop Stortford can help you talk through what to do.
Wednesday, 31 August 2011
The knock on effect on mortgages – mortgage approvals on the up
The British Bankers’ Association (BBA)reports that the number of mortgage approvals increased around 4% on a monthly and yearly basis in July to 74,590, as gross mortgage lending remained flat for a third consecutive month at £7.6bn.
Its figures, represent two-thirds of UK mortgage lending by the main high street banking groups, they show that gross mortgage lending was down 8% year-on-year from £8.3bn in July 2010.
Annual net mortgage lending grew 1.7% in July to £0.9bn up from £0.5bn in June, ahead of the increase of 0.7% for the whole mortgage market, the BBA said. Yet, net mortgage lending was down from £1.3bn in July 2010.
While house purchase and re-mortgage approvals remained weak in July, both showed growth on a monthly and yearly basis, with total approvals up around 4% on June and July 2010.
House purchase approvals reached a 12-month high of 33,417, up from 32,123 in June and modestly up on July 2010. The average value of approvals was 2% higher than July last year at £151,500.
Re-mortgage approvals in July rose 14% on last year to 26,043 and up from 24,311 in June, which could be a result of the growth in the buy-to-let sector, the BBA said.
Meanwhile, approvals for any equity withdrawal remained flat, the BBA reported, with homeowners using the rise in value of their homes as security for borrowing.
If you want to relook at your mortgage before the saving for Christmas commences we will be happy to offer you independent financial advice at Enable.
Its figures, represent two-thirds of UK mortgage lending by the main high street banking groups, they show that gross mortgage lending was down 8% year-on-year from £8.3bn in July 2010.
Annual net mortgage lending grew 1.7% in July to £0.9bn up from £0.5bn in June, ahead of the increase of 0.7% for the whole mortgage market, the BBA said. Yet, net mortgage lending was down from £1.3bn in July 2010.
While house purchase and re-mortgage approvals remained weak in July, both showed growth on a monthly and yearly basis, with total approvals up around 4% on June and July 2010.
House purchase approvals reached a 12-month high of 33,417, up from 32,123 in June and modestly up on July 2010. The average value of approvals was 2% higher than July last year at £151,500.
Re-mortgage approvals in July rose 14% on last year to 26,043 and up from 24,311 in June, which could be a result of the growth in the buy-to-let sector, the BBA said.
Meanwhile, approvals for any equity withdrawal remained flat, the BBA reported, with homeowners using the rise in value of their homes as security for borrowing.
If you want to relook at your mortgage before the saving for Christmas commences we will be happy to offer you independent financial advice at Enable.
What is the Government going to do about the banks? They need to lend more…
UK banks need to focus on lending and paying back taxpayers and should not be distracted by more regulation, the head of the British Bankers' Association has said.
Speaking ahead of the Independent Commission on Banking's final recommendations due next month, Angela Knight said regulatory change could undermine the recovery. She said in light of the on-going Eurozone debt crisis and stock market volatility, the focus for banks should be on the recovery, not on dealing with more regulation, the BBC reported Knight saying, "From now on, the UK's efforts must be focused on the economic recovery……this means allowing the banks to finance the recovery first, pay back the taxpayer next, and only then turn to further regulatory change……..if more regulation remains at the top of the list then this will only have the effect of risking the recovery which is so essential to our future."
The commission has already recommended ring-fencing banks' retail operations from their investment banking arms.
Last month, business secretary Vince Cable indicated banks could still be forced to separate entirely their High Street businesses from their investment divisions.
There is little we can do to influence these decisions and the government may not have many options but if you want to reconsider any of your investments in the light of any possible future changes talking to an IFA is a good way to assess your options. Enable of Bishop Stortford are here to help.
Speaking ahead of the Independent Commission on Banking's final recommendations due next month, Angela Knight said regulatory change could undermine the recovery. She said in light of the on-going Eurozone debt crisis and stock market volatility, the focus for banks should be on the recovery, not on dealing with more regulation, the BBC reported Knight saying, "From now on, the UK's efforts must be focused on the economic recovery……this means allowing the banks to finance the recovery first, pay back the taxpayer next, and only then turn to further regulatory change……..if more regulation remains at the top of the list then this will only have the effect of risking the recovery which is so essential to our future."
The commission has already recommended ring-fencing banks' retail operations from their investment banking arms.
Last month, business secretary Vince Cable indicated banks could still be forced to separate entirely their High Street businesses from their investment divisions.
There is little we can do to influence these decisions and the government may not have many options but if you want to reconsider any of your investments in the light of any possible future changes talking to an IFA is a good way to assess your options. Enable of Bishop Stortford are here to help.
Back to school back to banks…
So it’s time to return to routine and reality. The most recent official figures show that Britain's bank are directly responsible for more than a third of the country's economic slump since September 2008. They say the UK economy is currently 4% smaller than its peak in March 2008 and 2.8% smaller than in September 2008 when Lehman Brothers collapsed.
The Telegraph reports of the 2.8% fall, the contraction in banking activity has accounted for one percentage point, analysis of Office for National Statistics (ONS) figures shows.
The impact banks have had on the economy is completely disproportionate to the industry's size, the paper reports. Banks account for just 5.1% of national output, but are to blame for around 35% of the national decline even excluding the knock-on effect of tighter credit on businesses and households.
So far this year, the banking industry has shrunk by 2.6%, which follows a 5.1% fall in 2010 and 7% drop in 2009. However, despite the banking industry's massive decline, an estimated £6.7bn of bonuses were paid in the City of London in the 2010-2011 financial year, according to the Centre for Economic & Business Research (CEBR). That was a fall of 8% on the previous year, but basic pay jumped 7%.
Not sure what to make of it all? It is not clear or simple but we need banks to provide for the flow of money though our global economy. What can be very unclear is how to make the most of your money and your capacity for investment. Enable IFA’s in Bishop Stortford specialise in trying to make sense of it all come and talk it through with us, if nothing else you will be able to get bashing banks off your chest!
The Telegraph reports of the 2.8% fall, the contraction in banking activity has accounted for one percentage point, analysis of Office for National Statistics (ONS) figures shows.
The impact banks have had on the economy is completely disproportionate to the industry's size, the paper reports. Banks account for just 5.1% of national output, but are to blame for around 35% of the national decline even excluding the knock-on effect of tighter credit on businesses and households.
So far this year, the banking industry has shrunk by 2.6%, which follows a 5.1% fall in 2010 and 7% drop in 2009. However, despite the banking industry's massive decline, an estimated £6.7bn of bonuses were paid in the City of London in the 2010-2011 financial year, according to the Centre for Economic & Business Research (CEBR). That was a fall of 8% on the previous year, but basic pay jumped 7%.
Not sure what to make of it all? It is not clear or simple but we need banks to provide for the flow of money though our global economy. What can be very unclear is how to make the most of your money and your capacity for investment. Enable IFA’s in Bishop Stortford specialise in trying to make sense of it all come and talk it through with us, if nothing else you will be able to get bashing banks off your chest!
Friday, 26 August 2011
Investments...we can help you to decipher complex financial information
Enable Independent can help you decipher overly complex financial derivatives.
“Despite concerns about their role in the financial crisis, many experts are worried about the re-emergence of increasingly opaque investment products”, says File on 4. “Warren Buffett famously called them weapons of mass destruction and policymakers damned them for their part in the 2008 crash. But in Britain and elsewhere, complex financial derivatives are once again thriving. Take one of the fastest growing and most popular ways for people to invest their savings, the "exchange traded fund" (ETF).
ETFs began as a simple enough product - a cheap and convenient way for individuals or pension funds to invest in the performance of a stock market index such as the FTSE100. Early ETFs needed little financial engineering. Investors bought shares in an ETF, and the ETFs' managers bought shares of the companies in the index their ETF had promised to track. Just over half the ETFs sold in Britain are still like that.
In the trade these are known as "plain vanilla". Saker Nusseibeh Head of investment, Hermes
But, following the 2008 crash, large investment banks - mostly European - started heavily promoting ETFs of a very different flavour, called "synthetic" ETFs. To all appearances, synthetic ETFs look much the same as the original kind. But inside, they are completely different because they are based on complex derivatives. At Hermes Fund Managers, one of the biggest pension fund advisers in Britain, the head of investment Saker Nusseibeh told File on 4, "I think synthetic ETFs look too good to be true".
If something “looks too good to be true”, it usually is, Enable, an IFAin Bishop’s Stortford have the experience to help you make educated financial decisions about all financial matters.
What are bonds? And how to protect your bonds
The UK's Financial Services Compensation Scheme (FSCS) now protects up to £85,000 per saver per institution if a bank goes under.
The UK cover roses to the sterling equivalent of the first 100,000 euros on 1 January 2011, with the Republic's "eligible liabilities guarantee" (ELG) covering sums above that until 30 June 2011.
The ELG protection may be extended beyond that date.
If you have a fixed term bond you might wonder how that is protected. If taken out before 11 January 2010, then the following bonds now benefit from the UK's 100% protection of the first £85,000 of savers' money:
Growth Bond
FiveYear Saver
Guaranteed Equity Bond
Guaranteed Capital Bond
Loyalty Bond
Fixed Rate
Cash ISA
Exclusive Saver
Online Bond
Guaranteed Capital Bond Cash ISA
Things are different for the following fixed-term bonds opened between 11 January 2010 and 30 June 2011.
Growth Bond
Loyalty Bond
Fixed Rate Cash ISA
Online Bond
From 1 January 2011 the FSCS cover was increased to 100% of the first £85,000 (100,000 euros) while the ELG will guarantee investments above that level.
There is some complexity to these rules. Experts like Enable Independent tend to advise consumers to spread their savings over various institutions - especially if they have significant sums. But Independent Financial Advisers can help talk you through the complexities to find the right place for you to have your investments.
The UK cover roses to the sterling equivalent of the first 100,000 euros on 1 January 2011, with the Republic's "eligible liabilities guarantee" (ELG) covering sums above that until 30 June 2011.
The ELG protection may be extended beyond that date.
If you have a fixed term bond you might wonder how that is protected. If taken out before 11 January 2010, then the following bonds now benefit from the UK's 100% protection of the first £85,000 of savers' money:
Growth Bond
FiveYear Saver
Guaranteed Equity Bond
Guaranteed Capital Bond
Loyalty Bond
Fixed Rate
Cash ISA
Exclusive Saver
Online Bond
Guaranteed Capital Bond Cash ISA
Things are different for the following fixed-term bonds opened between 11 January 2010 and 30 June 2011.
Growth Bond
Loyalty Bond
Fixed Rate Cash ISA
Online Bond
From 1 January 2011 the FSCS cover was increased to 100% of the first £85,000 (100,000 euros) while the ELG will guarantee investments above that level.
There is some complexity to these rules. Experts like Enable Independent tend to advise consumers to spread their savings over various institutions - especially if they have significant sums. But Independent Financial Advisers can help talk you through the complexities to find the right place for you to have your investments.
Post office money - Are my Post Office savings safe?
During the global financial crisis, savers have understandably shown concern over the safety of their savings. I would like to draw your attention to the fact that the Bank of Ireland also provides savings products for the Post Office. More than two million people in the UK have invested in banks in the Republic - mostly through the Post Office.
The latest financial upheavals facing Europe and the Euro have to include the Irish Republic. Fortunately savers have greater protection of their deposits than was the case a couple of years ago.
As the Bank of Ireland provides savings products for the Post Office - these products are now covered by the UK's safety net. So if you ask is my money safe in the Post Office the answer in a nutshell is yes up to a certain amount.
Up until 1 November, 2010, this was done under a licence in the Republic, but since then it has been run through a UK subsidiary.
As a result, all Post Office savings are now covered by the UK's Financial Services Compensation Scheme (FSCS).
Those who have deposited money in the Irish Republic are covered by the Irish Deposit Guarantee Scheme. This covers all savings up to 100,000 euros (£86,000) if a bank folds.
Banking expert Ralph Silva, of Silva Research Network, said: "It is inconceivable that banks would fail in relation to the retail or High Street investor." Enable IFA’s in BishopsStortford are always available for advice.
Tuesday, 16 August 2011
Retiring? When is the best time to cash in your pension?
Personal pensions are usually cashed in at the point of retirement and having a personal pension has no impact on your entitlement to a basic state pension.
Whenever you make contributions into your pension pot, the government offers tax relief on these contributions. This means that for each pound you contribute to your pension policy, your pension provider claims tax back from the government at the basic rate of 20%. In practice, this means that for every £80 you pay into your pension, you end up with £100 in your pension pot. If you are a higher rate (40%) taxpayer, it is up to you to apply for the additional 20% tax relief, the difference between basic and higher rate.
When you do retire, there are several different pension options available to you and your IFA can help you exchange your pension fund into a lifetime income by purchasing an annuity, whereby at least 75% of your pension fund is handed over in return for a regular income payable normally until your death.
Alternatively, you can choose to go into income drawdown until you reach 75, when government legislation means you must convert your pension fund into an annuity.
Income drawdown allows you to draw an income directly from your pension fund, while the balance of the fund remains invested.
How much your pension fund is worth at retirement will depend entirely on how much you have put in since taking out your policy and how the investments have performed.
Your pension provider will send you a pension forecast every year that will tell you how much your fund is worth and how much you can expect to receive when you retire if you continue to contribute at your current level.
If you need any help and advice on your pension then get in touch with us, we are a team of Independent Financial Advisors.
Whenever you make contributions into your pension pot, the government offers tax relief on these contributions. This means that for each pound you contribute to your pension policy, your pension provider claims tax back from the government at the basic rate of 20%. In practice, this means that for every £80 you pay into your pension, you end up with £100 in your pension pot. If you are a higher rate (40%) taxpayer, it is up to you to apply for the additional 20% tax relief, the difference between basic and higher rate.
When you do retire, there are several different pension options available to you and your IFA can help you exchange your pension fund into a lifetime income by purchasing an annuity, whereby at least 75% of your pension fund is handed over in return for a regular income payable normally until your death.
Alternatively, you can choose to go into income drawdown until you reach 75, when government legislation means you must convert your pension fund into an annuity.
Income drawdown allows you to draw an income directly from your pension fund, while the balance of the fund remains invested.
How much your pension fund is worth at retirement will depend entirely on how much you have put in since taking out your policy and how the investments have performed.
Your pension provider will send you a pension forecast every year that will tell you how much your fund is worth and how much you can expect to receive when you retire if you continue to contribute at your current level.
If you need any help and advice on your pension then get in touch with us, we are a team of Independent Financial Advisors.
Which Pensions? So how much will you make?
Returns are based on the level of risk and fluctuation you are willing to take in pursuit of financial gain. For this reason, it is wise to alter your asset allocation over time by lowering your risk levels as you draw closer to retirement. This could be done by turning to either cash or fixed interests, such as gilts, Independent Financial Advice can help you with your risk assessment.
If you are investing in a collective investment scheme, every time you contribute to your pension pot, your money is pooled into an overall pension fund of which you own certain units or shares. You can think of it as a huge layer cake with hundreds of different assets stacked on top of each other and each time you invest, you are buying a small slice of it.
If you want to be a little more selective over which slice you buy and exercise some personal control over the investments in your personal pension can choose to invest in a self-invested personal pension (Sipp).
Sipps provide wide access to most funds and assets, as well as access to buying individual shares, commercial property and many other investment opportunities.
There are two key differences you will need to consider before choosing the additional option of self-investment for your personal pension; to utilise a wider and more flexible investment choice, you will pay higher charges for a Sipp than an investor who simply wants access to a cheaper index tracker or an insurance company managed fund in a stakeholder plan.
Most schemes allow full flexibility to stop contributions or move accumulated savings or future contributions to another fund, and there should not typically be any penalties for this. However, before you change your pension, you should always check the details in advance with an IFA.
If you are investing in a collective investment scheme, every time you contribute to your pension pot, your money is pooled into an overall pension fund of which you own certain units or shares. You can think of it as a huge layer cake with hundreds of different assets stacked on top of each other and each time you invest, you are buying a small slice of it.
If you want to be a little more selective over which slice you buy and exercise some personal control over the investments in your personal pension can choose to invest in a self-invested personal pension (Sipp).
Sipps provide wide access to most funds and assets, as well as access to buying individual shares, commercial property and many other investment opportunities.
There are two key differences you will need to consider before choosing the additional option of self-investment for your personal pension; to utilise a wider and more flexible investment choice, you will pay higher charges for a Sipp than an investor who simply wants access to a cheaper index tracker or an insurance company managed fund in a stakeholder plan.
Most schemes allow full flexibility to stop contributions or move accumulated savings or future contributions to another fund, and there should not typically be any penalties for this. However, before you change your pension, you should always check the details in advance with an IFA.
An IFA - All you know is that personal pensions exist but you don’t have one
So a clear option is find out more about a personal pensions. This is an investment policy designed to provide a lump sum at retirement and an income for life.
A stakeholder pension is also a type of personal pension, operating in a similar way, except it has to conform to certain minimum standards set by the government. This means they must have lower charges and clear terms.
Personal pensions are "money purchase arrangements", meaning you regularly contribute to the policy and the money you save is put into investments for you such as bonds or stocks and shares.
Personal pensions are purchased from a provider such as an insurance company, High Street bank, building society or most typically, a pension company. They are far more complex than other financial products so do not appear on comparison websites as often.
Consumers are best off finding an independent financial adviser (IFA) who will have qualitative research on the different offers from providers.
Personal pension contributions can be invested in most asset classes. In other words, they can go into UK and overseas equities, fixed interest, cash and commercial property.
When you invest in your personal pension, there are no guarantees of returns and the value of your investments can fall as well as rise something worth talking through with Enable if you live in Bishop's Stortford or nearby.
A stakeholder pension is also a type of personal pension, operating in a similar way, except it has to conform to certain minimum standards set by the government. This means they must have lower charges and clear terms.
Personal pensions are "money purchase arrangements", meaning you regularly contribute to the policy and the money you save is put into investments for you such as bonds or stocks and shares.
Personal pensions are purchased from a provider such as an insurance company, High Street bank, building society or most typically, a pension company. They are far more complex than other financial products so do not appear on comparison websites as often.
Consumers are best off finding an independent financial adviser (IFA) who will have qualitative research on the different offers from providers.
Personal pension contributions can be invested in most asset classes. In other words, they can go into UK and overseas equities, fixed interest, cash and commercial property.
When you invest in your personal pension, there are no guarantees of returns and the value of your investments can fall as well as rise something worth talking through with Enable if you live in Bishop's Stortford or nearby.
Tuesday, 9 August 2011
It's important to remember that we all invested for the long term and not to panic...
Dear Investors
You will no doubt have been observing with interest (all be it morbid) the latest developments on the world markets (not to mention the riots).
Significant falls in the value of shares has proven to be something of a worry to all.
I thought I’d send a brief message intended to reassure.
It is important to remember that we are all invested for the long term and that this means riding out fluctuations when they come.
It is a common mistake for investors to run for the hills when trouble strikes, meaning that when the inevitable recovery comes, they miss out....and often these reactions mean we leave the market after the horse has bolted. Hence there is a danger that people turn to cash investments when the market has already fallen - only then to be out of the market when the inevitable rally comes.
If anything, these falls in prices represent an opportunity for those with long term plans to place further money into the market and therefore benefit in the long run.
I have taken the text below from Citywire which seems to suggest that we have reached the bottom. Of course I do not know whether this is the case but I found this information encouraging and hope you do to.
If you have any worries or concerns about the current situation please do not hesitate to get in touch.
After enduring their worst session since the depths of the financial crisis, US equities are poised for lift, with futures pointing towards a rally on the opening bell.
The Dow Jones Industrial Average - a key indicator of the future direction of trade - is hinting the sell-off will halt during Tuesday's trade as fearful investors await a decision from the Federal Reserve on rates and additional easing.
With around two hours before the opening bell the index is pointing towards a 1.8% rise when trading begins on hopes that the US rates will include details on a new round of quantitative easing. Also consumer sentiment was given a boost by oil's dip beneath $100 a barrel, a six month low.
The prospect of a more upbeat session across the pond has also raised hopes of an end to the equities sell-off in the UK, leading the FTSE 100 to climb to 5,051 after spending much of the session below the 4,900 for most of the day and 20% below its July peak.
You will no doubt have been observing with interest (all be it morbid) the latest developments on the world markets (not to mention the riots).
Significant falls in the value of shares has proven to be something of a worry to all.
I thought I’d send a brief message intended to reassure.
It is important to remember that we are all invested for the long term and that this means riding out fluctuations when they come.
It is a common mistake for investors to run for the hills when trouble strikes, meaning that when the inevitable recovery comes, they miss out....and often these reactions mean we leave the market after the horse has bolted. Hence there is a danger that people turn to cash investments when the market has already fallen - only then to be out of the market when the inevitable rally comes.
If anything, these falls in prices represent an opportunity for those with long term plans to place further money into the market and therefore benefit in the long run.
I have taken the text below from Citywire which seems to suggest that we have reached the bottom. Of course I do not know whether this is the case but I found this information encouraging and hope you do to.
If you have any worries or concerns about the current situation please do not hesitate to get in touch.
After enduring their worst session since the depths of the financial crisis, US equities are poised for lift, with futures pointing towards a rally on the opening bell.
The Dow Jones Industrial Average - a key indicator of the future direction of trade - is hinting the sell-off will halt during Tuesday's trade as fearful investors await a decision from the Federal Reserve on rates and additional easing.
With around two hours before the opening bell the index is pointing towards a 1.8% rise when trading begins on hopes that the US rates will include details on a new round of quantitative easing. Also consumer sentiment was given a boost by oil's dip beneath $100 a barrel, a six month low.
The prospect of a more upbeat session across the pond has also raised hopes of an end to the equities sell-off in the UK, leading the FTSE 100 to climb to 5,051 after spending much of the session below the 4,900 for most of the day and 20% below its July peak.
Monday, 25 July 2011
Which Pensions? - Personal pension options
With more and more of the workforce having to be flexible and fewer and fewer young people heading for a job for life or even a career directions for life remind them about personal pension options.
The alternative private pension or personal pension, is offered by a provider such as an insurance company, High Street bank, building society or most typically, a pension company. You do not get any contribution into this from your employer, but it may offer more flexibility over how and where the money is invested.
The success of the investment and the fees charged by the provider will determine how much you get on retirement.
Remind them that at the moment you have to do most of the legwork especially if they are self-employed.
They will have to go and sort this out but you can also inform them that from 2012, the government wants all firms to offer a pension to their workers and they will be enrolled automatically unless staff opt out.
If employers do not offer membership of a pension scheme, they will have to enrole their staff into the new National Employment Savings Trust (Nest) set up by the government. To be enrolled, staff must be aged 22 or above, earn more than £5,715 a year, and have been in the job for at least 13 weeks.
Pensions experts have suggested that contributions into this scheme will still not be enough for today's young people to have a comfortable old age, but the Pensions Minister Steve Webb says it will get youngsters into the habit of saving for retirement.
If like many young people they are not so keen to heed the advice of their parents why not put them in touch with an IFA. Enable Independent of Bishop's Stortford will happily give advice to any young person wanting to plan for their future.
The alternative private pension or personal pension, is offered by a provider such as an insurance company, High Street bank, building society or most typically, a pension company. You do not get any contribution into this from your employer, but it may offer more flexibility over how and where the money is invested.
The success of the investment and the fees charged by the provider will determine how much you get on retirement.
Remind them that at the moment you have to do most of the legwork especially if they are self-employed.
They will have to go and sort this out but you can also inform them that from 2012, the government wants all firms to offer a pension to their workers and they will be enrolled automatically unless staff opt out.
If employers do not offer membership of a pension scheme, they will have to enrole their staff into the new National Employment Savings Trust (Nest) set up by the government. To be enrolled, staff must be aged 22 or above, earn more than £5,715 a year, and have been in the job for at least 13 weeks.
Pensions experts have suggested that contributions into this scheme will still not be enough for today's young people to have a comfortable old age, but the Pensions Minister Steve Webb says it will get youngsters into the habit of saving for retirement.
If like many young people they are not so keen to heed the advice of their parents why not put them in touch with an IFA. Enable Independent of Bishop's Stortford will happily give advice to any young person wanting to plan for their future.
State Pensions - that doesn't sound like much to live on?
Any self respecting teenager let alone 20 something will be able to figure out that current state pensions do not sound like much to live on. Pensioners can also get money from the benefits system but this still means money can be tight for many years, even if you have worked for your whole life.
The latest figures from the Office for National Statistics show that 53% of single UK pensioners had an income of less than £10,000 in 2008-9.
So you really need to hammer home that it really does count to start saving early. Teach them about compound interest because compound interest means if you save regularly from a young age, you will be better off than if you save more later in life.
Most pensions experts say that you should top-up the pension provision from the state with a workplace pension or a private pension.
Explain to them that In a final-salary scheme, the investment risk is taken by the employer and you are guaranteed a retirement income based on pay and length of service.
But generally a pension is a long-term investment. Remember investments, unlike savings, can go down or up in value depending on the success of the investment - such as shares on the stock market.
Explain to them that you will not be able to spend the money you put in now until you retire. However you do not have to pay much tax on this investment.
Let them know that if you join a workplace pension scheme, money comes out of your pay packet and into a pension pot. Your employer also puts money in, and there is tax relief on all this from the government.
You can then tell them that when you retire, the pot of money that you have built up can be used to buy a regular income in retirement, called an annuity.You are never too young to start saving for a pension, get your children to talk to an IFA about planning and saving for their futures
The latest figures from the Office for National Statistics show that 53% of single UK pensioners had an income of less than £10,000 in 2008-9.
So you really need to hammer home that it really does count to start saving early. Teach them about compound interest because compound interest means if you save regularly from a young age, you will be better off than if you save more later in life.
Most pensions experts say that you should top-up the pension provision from the state with a workplace pension or a private pension.
Explain to them that In a final-salary scheme, the investment risk is taken by the employer and you are guaranteed a retirement income based on pay and length of service.
But generally a pension is a long-term investment. Remember investments, unlike savings, can go down or up in value depending on the success of the investment - such as shares on the stock market.
Explain to them that you will not be able to spend the money you put in now until you retire. However you do not have to pay much tax on this investment.
Let them know that if you join a workplace pension scheme, money comes out of your pay packet and into a pension pot. Your employer also puts money in, and there is tax relief on all this from the government.
You can then tell them that when you retire, the pot of money that you have built up can be used to buy a regular income in retirement, called an annuity.You are never too young to start saving for a pension, get your children to talk to an IFA about planning and saving for their futures
It's best to talk to your children about pensions...
Parents are twice as likely to talk to their children about the birds and the bees than they are about pensions, according to a government survey.
A lack of awareness about saving for retirement is among the reasons for millions of people not saving enough to pay for the lifestyle their expect when they grow old. Experts suggest that debt pressures and confusion about pension provision also lead to fewer than 40% of workers aged 22 to 29 putting money away for their old age.
The fist thing to say is that it is better to start saving for a pension as early as possible.
Make sure your children know about the state pension, that it provides for people who have reached the pensionable age. This is the income which the state provides to people who have reached pension age.
At the moment, it is up to £97.65 a week for men aged 65 and above and women aged 60 and above.
But, as we are all living for longer, the pension age is going to change and is likely to reach at least 68 for all men and women just setting out on their working life now.
To get a full state pension tell them that they need to have paid National Insurance contributions - usually deducted from your pay packet - for 30 years. A state pension profiler will explain how much you have built up, and the date when you can claim the state pension.
SOS campaign for better interest rates
It’s shocking news that, “The value of UK savings has been eroded by £50bn in the past year because of inflation and low interest rates”, say the Save Our Savers a campaign group. It is particularly galling if you have worked, saved, paid your taxes, worked, saved and paid your taxes to find that you are bailing out those who didn’t.
Save Our Savers wrote to each member of the Bank of England's rate-setting committee urging them to raise the Bank rate recently to help pensioners and encourage saving. But the Monetary Policy Committee kept the rate on hold at 0.5%, allowing borrowers to continue to benefit from rates remaining at the record low.
In a plea to all nine members of the MPC ahead of the recent decision, Save Our Savers said that "a country without savings is a country without a future", the holding of interest rates at a record low could have a permanent impact. It warned that those on fixed incomes, such as pensioners, were suffering terribly from the combination of extremely low interest rates and above target inflation. "For many this is not a temporary setback. Its effect will permanently reduce the value of their future income," the letter said.
If you are one of the savers who are being hit hard by the record low interest rates IFA’s like Bishop Stortford’s Enable Independent might be able to help you rethink your investments and balance the books in these turbulent times.
Save Our Savers wrote to each member of the Bank of England's rate-setting committee urging them to raise the Bank rate recently to help pensioners and encourage saving. But the Monetary Policy Committee kept the rate on hold at 0.5%, allowing borrowers to continue to benefit from rates remaining at the record low.
In a plea to all nine members of the MPC ahead of the recent decision, Save Our Savers said that "a country without savings is a country without a future", the holding of interest rates at a record low could have a permanent impact. It warned that those on fixed incomes, such as pensioners, were suffering terribly from the combination of extremely low interest rates and above target inflation. "For many this is not a temporary setback. Its effect will permanently reduce the value of their future income," the letter said.
If you are one of the savers who are being hit hard by the record low interest rates IFA’s like Bishop Stortford’s Enable Independent might be able to help you rethink your investments and balance the books in these turbulent times.
Best Mortgage for the moment
Howard Archer, the chief UK economist at IHS Global Insight has said: "The overall marked softening in house prices from their late 2007 peak levels has made housing equity withdrawal less attractive." Clearly many of us feel that way but ironically the number of different mortgage deals has climbed to its highest level for more than two-and-a-half years and the majority of the products are aimed at existing homeowners.
The price comparison website Moneyfacts has calculated that there are more mortgage deals now available than at any time since November 2008. However, the rise in the number of offers is unlikely to help the housing market as. Some 808 mortgage products require a deposit of at least 25 per cent.
Completely understandably in the same period homeowners have turned their backs on lenders' offers, choosing instead to reduce their mortgage debts. Many homeowners had a "strong desire and perceived need" to reduce mortgage debt "to improve their personal financial balance sheets given high debt levels and serious concerns over the economic situation".
Sadly first-time buyers will still struggle to get a deal. There are only a handful of mortgages available to those with a deposit of less than 10 per cent and they often have other restrictions. However, there is some hope for younger potential borrowers, according to Moneyfact's figures: the number of mortgage deals requiring a 10 per cent deposit has climbed from 176 a year ago to 261 at the start of July.
Enable Independent - IFA’s in Bishop Stortford can help you navigate your mortgage needs in these changing times.
Readers might also be interested in this relevant article:
Getting rid of debts is a good place to start financial planning
The price comparison website Moneyfacts has calculated that there are more mortgage deals now available than at any time since November 2008. However, the rise in the number of offers is unlikely to help the housing market as. Some 808 mortgage products require a deposit of at least 25 per cent.
Completely understandably in the same period homeowners have turned their backs on lenders' offers, choosing instead to reduce their mortgage debts. Many homeowners had a "strong desire and perceived need" to reduce mortgage debt "to improve their personal financial balance sheets given high debt levels and serious concerns over the economic situation".
Sadly first-time buyers will still struggle to get a deal. There are only a handful of mortgages available to those with a deposit of less than 10 per cent and they often have other restrictions. However, there is some hope for younger potential borrowers, according to Moneyfact's figures: the number of mortgage deals requiring a 10 per cent deposit has climbed from 176 a year ago to 261 at the start of July.
Enable Independent - IFA’s in Bishop Stortford can help you navigate your mortgage needs in these changing times.
Readers might also be interested in this relevant article:
Getting rid of debts is a good place to start financial planning
Getting rid of debts is a good place to start financial planning
Of course before you can really start to save it is best to pay down any debts. This month The Bank of England reported that homeowners paid £5.8bn off their mortgages in the first quarter of 2011. That followed a record £7.1bn reduction in housing debt in the last three months of 2010.
The Bank of England's housing equity withdrawal figures revealed that householders have now been paying down their average mortgage debt for three years in a row. It means that, since the middle of 2008, homeowners have invested a total of £63.7bn in their properties.
Before the credit crunch the opposite situation was the norm, with persistent housing equity withdrawal between 1997 and the first quarter of 2008. In fact, the record quarterly housing equity withdrawal was the £13.4bn recorded in the first three months of 2007
But the paying down of mortgages is bad news for the high street, David Birne, an insolvency practitioner at HW Fishe. "The reduction of mortgage debt is always a good thing for the individual household but when it happens on such a scale and over such a time period it can have major ramifications for business, as less money makes it on to the high street.
With so much uncertaintly around interest rates and employment it is hardly surprising individuals are protecting their own interest first. If you want to review the best way to reduce your mortgage and save, IFA’s in Bishop Stortford are here to help.
The Bank of England's housing equity withdrawal figures revealed that householders have now been paying down their average mortgage debt for three years in a row. It means that, since the middle of 2008, homeowners have invested a total of £63.7bn in their properties.
Before the credit crunch the opposite situation was the norm, with persistent housing equity withdrawal between 1997 and the first quarter of 2008. In fact, the record quarterly housing equity withdrawal was the £13.4bn recorded in the first three months of 2007
But the paying down of mortgages is bad news for the high street, David Birne, an insolvency practitioner at HW Fishe. "The reduction of mortgage debt is always a good thing for the individual household but when it happens on such a scale and over such a time period it can have major ramifications for business, as less money makes it on to the high street.
With so much uncertaintly around interest rates and employment it is hardly surprising individuals are protecting their own interest first. If you want to review the best way to reduce your mortgage and save, IFA’s in Bishop Stortford are here to help.
Tuesday, 19 July 2011
News on pensions - Link pensions and ISAs
"Previous generations typically spent 10 to 15 years in retirement but current life expectancy for a man at state pension age is 21 years, which means many may live for 30 years or more in retirement."
Another way to encourage longer term saving could be to link ISAs and pensions, suggests Fidelity International, by linking the new £50,000 annual pension limit and the ISA limit of £10,680 to form a single annual tax-advantaged savings limit.
Up to £30,000 per year could be placed in the ISA, and the remainder in the pension. At any point, when an individual feels comfortable not having access to their savings until retirement, they could transfer their ISA savings into the pension, netting tax relief. "Behavioural economics research shows that if you want to get investors to take an interest in long-term savings, you have to make it very, very easy for them," agrees Tom McPhail, head of pensions research at financial adviser Hargreaves Lansdown.
"Every time you introduce a pointless bureaucratic rule it just puts people off. If the Treasury allowed investment assets to be moved between different tax shelters it would help reinvigorate retirement saving at no cost to the taxpayer."
It is getting easier and IFA’s can make it even easier to make sure your savings are working for you for as long as you may need them to.
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