Remember to take full advantage of whatever opportunities you can to make pension contributions, with pension plans the government contributes whenever you do, by rebating the income tax on your contributions, and try to increase your regular pensions savings as and when you can; or pay in a lump sum after a windfall such as a bonus.
At Enable our IFA’s will always suggest you use as much of your £10,680 ISA allowance as possible before the end of the tax year. ISA’s are a great way to save for your child's wedding or fund university fees. A cash ISA can be earmarked as an emergency fund to help you and your children with more immediate concerns. While an ISA in equity funds can be there for a rainy day and you have the chance of greater tax efficient growth over the longer term.
Enables’ Independent Financial Advisors also like to check to see if you can save on tax by you and your spouse taking a team approach to your Personal Allowance. The amount you can earn tax-free each year is currently £7,475 a person. If you shift assets to the one of you with the lower income, you could pay income tax or capital gains at a lower rate.
Think about the whole family and remember that children have tax-free allowances too and Junior ISAs are now available. Our IFA’s like to help parents make the most of their hard earned cash.
Thursday, 26 April 2012
The Cost of Parenting
The average parent is apparently forgoing a pension pot of £38,500 in order to financially support each child who is 18 and over, says some recent research by Standard Life. The research finds that parents are supporting their children post 18 for expenses such as university costs, debts, weddings, house deposits and other general finances.
On average, parents estimate they will invest around £15,490 in each adult child. If this sum was invested into a pension instead, it could provide a pension pot of £38,500 in 20 years year's time for a basic rate tax payer. And for a higher rate tax payer, it could provide a pension pot of £51,380.
Standard Life's John Lawson commented:
"A parent's desire to provide for their children even when they become young adults is increasingly coming at a huge cost to their own future financial security. Our research highlights the significant financial challenges facing parents, whether to secure their long term future or meet their family's immediate needs. The high level of unemployment among young people can only be exacerbating the problem. “
Our Independent Financial Advisors at Enable know how parents can feel as if they have very little choice – so we want to make sure that whatever money you have to save for the future is working as hard as it can.
On average, parents estimate they will invest around £15,490 in each adult child. If this sum was invested into a pension instead, it could provide a pension pot of £38,500 in 20 years year's time for a basic rate tax payer. And for a higher rate tax payer, it could provide a pension pot of £51,380.
Standard Life's John Lawson commented:
"A parent's desire to provide for their children even when they become young adults is increasingly coming at a huge cost to their own future financial security. Our research highlights the significant financial challenges facing parents, whether to secure their long term future or meet their family's immediate needs. The high level of unemployment among young people can only be exacerbating the problem. “
Our Independent Financial Advisors at Enable know how parents can feel as if they have very little choice – so we want to make sure that whatever money you have to save for the future is working as hard as it can.
Small Pension Pots
Recently cross-party politicians and industry leaders signed a joint letter calling on the Government and the FSA to address the risk a post-RDR advice gap could pose for people with small pension pots.
The open letter, drafted by ILC-UK chief executive Baroness Sally Greengross and sent to Treasury financial secretary Mark Hoban, pensions minister Steve Webb and FSA chairman Lord Adair Turner, called on ministers and the regulator to convene an urgent retirement income summit to address the issue.
The letter was signed by 16 people, including former Treasury select committee chairman Lord John McFall, MP Frank Field, NAPF chief executive Joanne Segars, Aifa policy director Chris Hannant and Money Marketing editor Paul McMillan. Recent research from MetLife reveals that two-thirds of advisers are already addressing some of the issues and would be willing to reduce fees for clients with pension pots worth less than £50,000. The research, which is based on a survey of 100 IFAs, found that 64 per cent would cut fees in order to provide a service to people with small pension pots.
MetLife UK managing director Dominic Grinstead says: “With the onset of auto-enrolment in October 2012 and the predicted sharp rise in small pension pots, it is encouraging that the majority of advisers would be willing to offer advice at a reduced cost to those with savings worth less than £50,000.”
If you need advice on your pension Independent Financial Advisors Enable are here to take you through the steps what-ever size your pension pot.
The open letter, drafted by ILC-UK chief executive Baroness Sally Greengross and sent to Treasury financial secretary Mark Hoban, pensions minister Steve Webb and FSA chairman Lord Adair Turner, called on ministers and the regulator to convene an urgent retirement income summit to address the issue.
The letter was signed by 16 people, including former Treasury select committee chairman Lord John McFall, MP Frank Field, NAPF chief executive Joanne Segars, Aifa policy director Chris Hannant and Money Marketing editor Paul McMillan. Recent research from MetLife reveals that two-thirds of advisers are already addressing some of the issues and would be willing to reduce fees for clients with pension pots worth less than £50,000. The research, which is based on a survey of 100 IFAs, found that 64 per cent would cut fees in order to provide a service to people with small pension pots.
MetLife UK managing director Dominic Grinstead says: “With the onset of auto-enrolment in October 2012 and the predicted sharp rise in small pension pots, it is encouraging that the majority of advisers would be willing to offer advice at a reduced cost to those with savings worth less than £50,000.”
If you need advice on your pension Independent Financial Advisors Enable are here to take you through the steps what-ever size your pension pot.
Wednesday, 11 April 2012
Mutuals looking good for Mortgages
According to recent Bank’s lending data, the total amount lent by UK financial institutions in February rose 0.8 per cent over the year to £1.2bn. However the number of mortgage approvals fell to 48,986, compared to an average of 53,777 a month in the previous six-month period.
But mortgage lending by building societies and other mutual lenders in February rose by 28 per cent when compared to the same month last year. New mortgage approvals were up 31 per cent on February 2011 and 29 per cent on January 2012.Adrian Coles, director general of the Building Societies Association, said: “Gross lending and new mortgage approvals by mutuals continued to rise year-on-year in February, despite growth across the market as a whole remaining relatively flat. ”
Brian Murphy, head of lending for the Mortgage Advice Bureau, said: “When today’s mortgage approval figures from the BSA are considered in light of those from the Bank, you can clearly see that this sector is looking to grow its share of what is a relatively flat market. “Indeed, they appear to be picking up some of the slack created by a lower appetite for mortgage lending exhibited by some of the traditional high street institutions. “Gross lending by building societies is also up which is excellent news for consumers who are hoping to find competitive good value deals.” If you want help finding the best mortgage deal Enable of Bishop’s Stortford can help you consider the options.
But mortgage lending by building societies and other mutual lenders in February rose by 28 per cent when compared to the same month last year. New mortgage approvals were up 31 per cent on February 2011 and 29 per cent on January 2012.Adrian Coles, director general of the Building Societies Association, said: “Gross lending and new mortgage approvals by mutuals continued to rise year-on-year in February, despite growth across the market as a whole remaining relatively flat. ”
Brian Murphy, head of lending for the Mortgage Advice Bureau, said: “When today’s mortgage approval figures from the BSA are considered in light of those from the Bank, you can clearly see that this sector is looking to grow its share of what is a relatively flat market. “Indeed, they appear to be picking up some of the slack created by a lower appetite for mortgage lending exhibited by some of the traditional high street institutions. “Gross lending by building societies is also up which is excellent news for consumers who are hoping to find competitive good value deals.” If you want help finding the best mortgage deal Enable of Bishop’s Stortford can help you consider the options.
Halifax figures house stability
The average UK house prices was £163,803 in March, almost identical to the £163,765 in July 2011, says the most recent Halifax data. Halifax’s monthly house price index showed house prices increased 2.2 per cent in the month, following February’s 0.4 per cent fall showing that prices continue to fluctuate month on month as transactions levels remain historically low.
However, Halifax’s monthly house price index revealed that house prices in the three months to March were 0.1 per cent less than in the previous three months. Prices in the first three months of 2012 were 0.6 per cent less than in the same period last year. This was the smallest fall in prices on this measure of the annual rate since October 2010. The data showed there were signs of a pick-up in house sales. The number of completed house sales has increased to its highest levels since late 2009. The proportion of house purchasers who are first-time buyers increased between the final quarter of 2011 and the first quarter of 2012.
Martin Ellis, housing economist of Halifax, said: “The underlying trend therefore indicates broad stability in UK house prices. “Efforts by first-time buyers to beat the expiry of the stamp duty holiday at the end of March have probably increased sales in recent months and may have helped to support prices. “We continue to expect little overall movement in prices this year provided that the UK economy does not suffer a pronounced weakening.”
Where ever you are on the housing ladder our experienced IFA’s at Enable of Bishop’s Stortford can help you take that next step.
However, Halifax’s monthly house price index revealed that house prices in the three months to March were 0.1 per cent less than in the previous three months. Prices in the first three months of 2012 were 0.6 per cent less than in the same period last year. This was the smallest fall in prices on this measure of the annual rate since October 2010. The data showed there were signs of a pick-up in house sales. The number of completed house sales has increased to its highest levels since late 2009. The proportion of house purchasers who are first-time buyers increased between the final quarter of 2011 and the first quarter of 2012.
Martin Ellis, housing economist of Halifax, said: “The underlying trend therefore indicates broad stability in UK house prices. “Efforts by first-time buyers to beat the expiry of the stamp duty holiday at the end of March have probably increased sales in recent months and may have helped to support prices. “We continue to expect little overall movement in prices this year provided that the UK economy does not suffer a pronounced weakening.”
Where ever you are on the housing ladder our experienced IFA’s at Enable of Bishop’s Stortford can help you take that next step.
Equity Release...
Recent research by LV found that 98 per cent of Independent Financial advisers believe the equity release market will grow substantially to plug the shortfall in pensions and meet the needs of the UK’s aging population.
A further 30 per cent said equity release will surge as growing numbers of people need to pay off debt in retirement, while just 9 per cent of IFA's said making home improvements would drive demand. Equity release is most commonly used by pensioners as a way to make home improvements or pay for one-off luxuries, such as holidays, while relatively few actually use it as retirement income.
The findings therefore suggest a major shift in the way equity release will be used in the future.
As experience Independent Financial Advisors of Bishop’s Stortford Enable know that the current factors of depleted pension pots, low returns on savings, poor annuity rates and unpaid mortgage debt meant high property prices were often the biggest asset for many people nearing retirement.
As time goes on more and more people will realise they must use their housing wealth.
Lorreine Kennedy, IFA for Hertfordshire-based CareMatters, said: “The equity release market is definitely an area of growth. I am horrified at the number of people I see in their 70s who still have mortgages or interest-only mortgages.
At Enable we believe you should think through any equity release very carefully and make sure it is part of a bigger plan, our IFA’s are able to advise.
A further 30 per cent said equity release will surge as growing numbers of people need to pay off debt in retirement, while just 9 per cent of IFA's said making home improvements would drive demand. Equity release is most commonly used by pensioners as a way to make home improvements or pay for one-off luxuries, such as holidays, while relatively few actually use it as retirement income.
The findings therefore suggest a major shift in the way equity release will be used in the future.
As experience Independent Financial Advisors of Bishop’s Stortford Enable know that the current factors of depleted pension pots, low returns on savings, poor annuity rates and unpaid mortgage debt meant high property prices were often the biggest asset for many people nearing retirement.
As time goes on more and more people will realise they must use their housing wealth.
Lorreine Kennedy, IFA for Hertfordshire-based CareMatters, said: “The equity release market is definitely an area of growth. I am horrified at the number of people I see in their 70s who still have mortgages or interest-only mortgages.
At Enable we believe you should think through any equity release very carefully and make sure it is part of a bigger plan, our IFA’s are able to advise.
The trouble with QE
The theory behind quantitative easing, is that it helps growth by buying government bonds and lowering interest rates. This is achieved by gilt sellers depositing money in banks to increase lending, which should boost the economy. Gilt yields fall, which should lower interest rates across the economy, helping borrowers, and stimulating corporate lending. But some say sellers of gilts often buy overseas assets, so the money does not boost the UK economy and banks are not lending on terms that are attractive to small companies so the new money is stuck in bank balance sheets.
This helps banks become stronger, but consumers get weaker. Low gilt yields do not actually result in better availability or value for small company loans. And institutions which need to hold gilts, such as pension and insurance companies, must pay more to buy their gilts, which diverts money away from other assets. For older people this policy represents a significant transfer of wealth from people who have saved for their retirement, towards younger borrowers and banks.
Buying gilts reduces annuity rates. With record numbers of people reaching age 65 this year, there will be more annuity purchases, as the majority of people with personal pensions buy annuities, to provide a pension income for life, on retirement. Anyone retiring now will receive a permanently lower pension due to falling annuity rates as a result of QE.
It is always best to seek advice on buying an annuity, Enable Independent Financial Advisors in Bishop’s Stortford are happy to take your through your options.
This helps banks become stronger, but consumers get weaker. Low gilt yields do not actually result in better availability or value for small company loans. And institutions which need to hold gilts, such as pension and insurance companies, must pay more to buy their gilts, which diverts money away from other assets. For older people this policy represents a significant transfer of wealth from people who have saved for their retirement, towards younger borrowers and banks.
Buying gilts reduces annuity rates. With record numbers of people reaching age 65 this year, there will be more annuity purchases, as the majority of people with personal pensions buy annuities, to provide a pension income for life, on retirement. Anyone retiring now will receive a permanently lower pension due to falling annuity rates as a result of QE.
It is always best to seek advice on buying an annuity, Enable Independent Financial Advisors in Bishop’s Stortford are happy to take your through your options.
Pension returns 2011
As with most investments for retirement you have to take a long term view but it is good to see that UK pension funds posted better returns for the third consecutive year. According to figures from BNY Mellon Asset Servicing, the average UK pension fund achieved a weighted average return of 4.3 per cent in 2011 making it the third year that UK pension funds have posted a positive annual return since the financial crisis in 2008, which saw funds provide an annual weighted average loss of 13.6 per cent.
“During 2011 pension funds experienced a wide range of individual results, depending on the extent to which they were following liability-driven investment strategies. The top performing funds achieved returns above 12.4 per cent and the bottom performing funds achieved losses of 4.2 per cent.” said their performance and risk analytics manager.
The data also showed that in the past decade UK pension funds have shifted investments from equities to fixed income, although equities still remain the largest single component for portfolios.
During the year investment in bonds did not see any significant overall changes, but in a 10-year period holdings in this sector have increased by 10.1 per cent, according to the data.
Enable IFA’s of Bishop’s Stortford are pleased to be seeing more and more positive returns for clients but we always stress that simply having the tax relief on pension contributions still makes pensions a good saving tool.
“During 2011 pension funds experienced a wide range of individual results, depending on the extent to which they were following liability-driven investment strategies. The top performing funds achieved returns above 12.4 per cent and the bottom performing funds achieved losses of 4.2 per cent.” said their performance and risk analytics manager.
The data also showed that in the past decade UK pension funds have shifted investments from equities to fixed income, although equities still remain the largest single component for portfolios.
During the year investment in bonds did not see any significant overall changes, but in a 10-year period holdings in this sector have increased by 10.1 per cent, according to the data.
Enable IFA’s of Bishop’s Stortford are pleased to be seeing more and more positive returns for clients but we always stress that simply having the tax relief on pension contributions still makes pensions a good saving tool.
Packing in paying the pension? Might not be the best alternative in the long run...
Schroders Haver recently found that a quarter of UK adults with a private pension stopped making payments into their fund since 2008. According to the same research, one-in-five of over 55s have started raiding their pensions savings to meet living expenses.
Robin Stoakley, managing director of Schroders’ UK intermediary business, said: “Millions of Britons are gambling with their financial security in retirement. Worryingly high numbers have stopped paying into their pension, or have drawn on savings earmarked for retirement to fund everyday living expenses. “While this is completely understandable in such tough economic times, people are risking not having sufficient income to fund retirement. Everyone is being squeezed in terms of disposable income, but it is essential people start planning for their retirement at a younger age.
“People need to assess their projected expenditure in retirement and ensure they will have enough income to cover these costs. It is not merely a question of building a big pot of capital; it is about ensuring this is invested so it generates an income to cover living costs once a person has stopped working.”
As Independent Financial Advisors Enable understand that many people have been taking pension holidays as a result of pay cuts or redundancies but paying into your pension should not be seen as a luxury. The recession has continued longer than expected but you still need to try and keep up your pension contributions otherwise there may be the need to face even more difficult decisions later on.
Robin Stoakley, managing director of Schroders’ UK intermediary business, said: “Millions of Britons are gambling with their financial security in retirement. Worryingly high numbers have stopped paying into their pension, or have drawn on savings earmarked for retirement to fund everyday living expenses. “While this is completely understandable in such tough economic times, people are risking not having sufficient income to fund retirement. Everyone is being squeezed in terms of disposable income, but it is essential people start planning for their retirement at a younger age.
“People need to assess their projected expenditure in retirement and ensure they will have enough income to cover these costs. It is not merely a question of building a big pot of capital; it is about ensuring this is invested so it generates an income to cover living costs once a person has stopped working.”
As Independent Financial Advisors Enable understand that many people have been taking pension holidays as a result of pay cuts or redundancies but paying into your pension should not be seen as a luxury. The recession has continued longer than expected but you still need to try and keep up your pension contributions otherwise there may be the need to face even more difficult decisions later on.
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