Converting capital to income...

Retirement is a key milestone and a time typically when people assess their financial position and make decisions about how best to convert capital into income.  Buying a home has generally been a good financial decision for those now heading into retirement but it could prove an even better one with a bit of foresight.

Recently released data from the last Census showed us the growing importance of property wealth. In 2011 there were 9.2 million people aged 65 or over living in England and Wales – nearly a million more than a decade earlier. Over the same time, the proportion of those older people owning their homes has risen from 68 per cent to 75 per cent. And home prices in that time rose by 78 per cent – more than double the rate of inflation.

It is little surprise therefore that The Smith Institute said that the financial MOT should include advice on how housing assets can be utilised, particularly because of the high number of people whose property wealth outstrips their savings or pensions. It points out that housing wealth is more equally distributed than other forms of wealth such as pensions.

It is also true that as people progress through retirement, housing wealth typically becomes an ever larger proportion of overall wealth.  In a time of squeezed pension incomes and with state benefits under pressure, Enable's IFA’s might be able to help you consider how your property wealth can play a bigger role in delivering financial support as you head into later life.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE.

It is often said that “failing to plan is planning to fail”

As experienced Independent Financial Advisors as Enable of Bishop’s Stortford we know that that putting off pension saving for even a few years can make a massive difference to quality of life later on. Human nature is such that we tend to prioritise the here and now over the uncertainty of the years ahead and it is understandable that when people are busy building careers, buying houses, bringing up families and setting up businesses that is their focus.

But as IFA’s we know that at some point we have to check whether we are on course to meet our retirement aspirations. Britons are generally not good at planning for old age. In a paper on equity release earlier this year, The Smith Institute cited research showing that only 40 per cent of those aged 30 to 60 had a financial plan for retirement.  That is why back in April The Smith Institute was calling on the Government to provide a “financial MOT” when people reach 50 to ensure they are prepared for retirement.

The Smith Institute suggested the Government offer financial advice for low-income workers approaching retirement, who it argues, will not be used to paying for financial advice.

Co-author of the paper Paul Hackett said: “Future generations of low income retired homeowners will increasingly struggle to meet the costs of repairs and adaptations for healthcare needs. “To avoid unnecessary hardship, homeowners must plan ahead, including better utilisation of their housing wealth.”

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE.

Looking to finance a new home?

Enable’s experienced Cambridgeshire IFA’s can help you find the right package for you and your circumstances. This week we note with interest that the Nationwide Building Society has reduced rates across its fixed and tracker mortgages for new and existing customers. This will mean that all two-year fixed rates available up to 60 per cent loan-to-value will be cut by 0.10 per cent, and those up to 70 per cent LTV will be cut by 0.15 per cent for new applications.

They are now offering two fixed and two tracker rate products available for both new and existing customers below 2 per cent and new customers can access rates of 1.94 per cent up to 60 per cent LTV and 1.99 per cent for those two year fixed and tracker products up to 70 per cent LTV. An additional 0.1 per cent reduction is available on all rates for new applications from existing mortgage customers.

Additionally Nationwide has introduced a new 2.29 per cent three-year fixed rate up to 70 per cent LTV, or 2.19 per cent for existing customers. For each of these newly-adjusted products first time buyers will pay a reduced fee of £400 instead of the full £900 product fee.

According to the building society, none of its mortgage rates are being increased. Many other mortgage provides will be looking to follow suit, as you will know if you are looking to buy it is a highly competitive market.  At Enable our experienced IFA’s can help you make sense of the figures.

Your home may be repossessed if you do not keep up repayments on your mortgage. 

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE.

Choosing Annuities

When choosing an annuity there are many things to consider; The need for advice or not; the need to consider factors other than just the initial rate (spouse provision, death benefits and inflation proofing); the crossover point at which an annuitant will get back the full value of their pension fund. Age 82 has been quoted as the age at which full value will be returned and 90 to get good value.

 It is difficult to believe that annuity rates were somewhere around 16 per cent in 1990, with the comparable rate today being something around 5 per cent. Annuities have been around for a long time and for many years they were the only way of converting pension funds into an income stream.

Since 1998 average annuity rates have fallen by more than 65% but it is important to think of annuities are an insurance contract against long life, not an investment contract. With an insurance contract the expectation must be the payment of the sum assured and that is what annuities do.  .

If an annuitant thinks they will live longer than the average life expectancy, then they will receive more than their money back. If they die sooner, then some of this will be allocated to those who live longer.  The oft-quoted example is Henry Allingham, the First World War veteran who died age 113 after having an annuity for 48 years. 

With the growth in enhanced annuities, more and more people are being offered their own specific rate Enable’s IFA’s can help.

ssued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE.

Funding Care in later life

It is becoming more and more of a worry for many how to fund whatever may come along in later life. Our Independent Financial Advisor’s at Enable in Bishops Stortford can help you look at what might be possible to put in place and note with interest what care services minister Norman Lamb has said recently; that he will “strengthen” the role of regulated advisers in long-term care funding reforms in changes to the Care bill. The bill, currently in the House of Lords, would force local authorities to signpost people funding their own long-term care to “independent” financial advice but not regulated advisers.

Speaking at the Liberal Democrat conference in Glasgow, Lamb acknowledged the need for quality financial advice and said he will act on concerns. “For these reforms to work we need to set fire to the role financial services can play in providing additional support. “The two things they have said to us, which they feel are incredibly important to make this work, is firstly raising awareness. Government has to lead the way in getting the public to a much better place in understanding what these reforms are about. The level of understanding is incredibly weak, It comes as a shock to most people that they have to pay for it.

“The second thing the industry asks for is that those people with assets, perhaps with significant assets, are encouraged, not forced, to seek good quality financial advice from an IFA, preferably someone with later life qualifications.”

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE.

Fund Strategy is a world of tools and process

Research from The Platforum showed that as of in the middle of this year, there were 13.7 million investors in the UK, of whom two million leave everything to an adviser, 4.2 million entirely self-serve and 7.4 million dip in and out of advice. About three million clients have assets on an adviser platform. Of this, more than £50bn sit in model portfolios and this is growing as a proportion of assets extremely quickly.

Holly Mackay, is managing director of The Platforum who specialise in research and advice on investment platforms she has said recently that we are moving more and more towards “a world of tools, of tick lists and of process. How many times have I heard the words “robust repeatable processes”.  Risk-profiling tools rule the roost and many fund managers grumble that the risk tail is wagging the investments dog.”

“The use of centralised investment propositions (Cips) is on the up. We have been tracking this with advisers for the past eight quarters. Over the past four quarters, advisers have told us they use model portfolios for 41 per cent of clients. Approximately half will run these models in-house and half will outsource. The widespread use of models is relatively new, facilitated by platforms which gave advisers the tools for bulk switching and rebalancing.”

If you want to talk through the best place for your investments our experienced IFA’s at Enable can help talk you through the options.

Europe set to approve tough new mortgage rules...

The European Parliament has provisionally approved the mortgage credit directive, which will require UK lenders to provide “worst case scenarios” when explaining rates to borrowers.

The purpose of the directive is to “harmonise” mortgage regulation throughout EU member states. A lot of the new rules mirror those being brought in under the Mortgage Market Review, which will be introduced next April, especially around lenders’ obligation to ensure affordability.

Building Societies Association head of mortgage policy Paul Broadhead says the next phase for the UK is for the Treasury, the FCA and the industry to come to an interpretation of the laws and implement them, following the vote. He says: “There will be lots of discussions there about how everyone [the Treasury, FCA and other UK stakeholders] interprets the directive but we have been working together as a group for so long we pretty much all know what we need to do. Now it is making sure we get to a good outcome for UK consumers.”

The UK has also secured four crucial opt-outs to ensure lenders will be able to continue to offer guarantor mortgages, shared equity loans, offset mortgages and endowments. Conservative MEP Vicky Ford says: “I do not believe we ever needed European law on mortgages. However, we have managed to get rid of the worst bits.”

Enable’s experienced IFA’s always try to make sure the borrower understands their mortgage as fully as possible, and are properly risk assessed.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE.

This week lending to first-time buyers was seen to be up 31% ...

In the news this week the value of residential loans advanced to first time buyers has been seen to have increased by £1.9bn over the past year to £8bn, an increase of 31 per cent. Data published recently by the Bank of England and the Financial Conduct Authority also shows gross first-charge mortgage advances were up 26 per cent year-on-year in the second quarter of 2013, from £32.5bn to £41bn.

SPF Private Clients chief executive Mark Harris says: ”More first-time buyers are returning to the market, with a small increase in those borrowing more than 90 per cent LTV. With the Help to Buy scheme guaranteeing loans for buyers with modest deposits, we expect this trend to continue."

"While George Osborne has stated that high loan-to-value mortgages are not ‘exotic weapons of mass destruction’, borrowers must still ensure that they can afford a high LTV mortgage before taking the plunge.”

The proportion of total lending above 90 per cent loan-to-value was 2.5 per cent, while the proportion of lending above 95 per cent LTV was 0.5 per cent. A year ago, total lending above 90 per cent LTV was 2.1 per cent. The number of new loans in arrears in the second quarter totalled 32,520 in the second quarter, down from 34,456 a year earlier, while the total number of accounts in arrears fell from 296,484 to 292,181 over the same period.

As experienced IFA’s at Enable we will help you find the right mortgage for you.

Your home may be repossessed if you do not keep up repayments on your mortgage. 

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE.

Make sure you protect your pension…..

Government Pensions minister Steve Webb this week is considering changes to the law  to tackle pension liberation. Representatives from the Government, regulators and the pensions industry will meet to discuss how to clamp down on pension liberation schemes.

The meeting organised by The Pensions Regulator will be attended by representatives from DWP, the Serious Fraud Office, the FCA and the pensions industry, they will consider ways of tackling liberation schemes, including changes to the law.

Pensions minister Steve Webb says: “Pension liberation fraud is a crime. That is why, as part of our plans to build a fairer society, we are working across government and industry to stamp it out and to raise awareness of the dangers of handing over your pension pot. “By coming together this week we will look at what else could be done, including whether we may need to change the law.

“By signing up to one of these schemes you will destroy your future retirement savings.

“The promise of easy money when times are tough is all too tempting, and there are far too many unscrupulous people who will prey upon this. These people want your pension pot and if you are offered a deal to unlock your pension, don’t touch it.”

The Pensions Regulator has already taken steps to warn people about the dangers of using liberation schemes to access their pension early. As experienced Independent Financial Advisors at Enable we can help you with any pension enquires you may have.