Pensions: What happens to my annual pension allowance once I take money out?

From next April 2015, the chancellor wants you to be able to do what you like with your pension savings once you reach age 55. With the new freedoms come a set of new rules that can be confusing. Enable’s retirement planning advisors in Bishop’s Stortford want you to be aware of any pitfalls in the new system.  Another thing to be aware of is that once you have taken money out of your pension savings beyond just the tax-free lump sum, the amount you will be allowed to put into pensions in future will be significantly reduced. If you take only your tax-free cash and nothing else, then your annual allowance stays at £40,000 a year. However, as soon as you take money out of a flexi-access drawdown account, or make just one bank-account style withdrawal, you will not be allowed to put more than £10,000 a year into a defined contributions pension scheme again.  (NB Those who have a final salary-type pension will still be able to contribute £30,000).

The new pension rules may seem exciting but as with everything they come with conditions and if you don't really need to take the funds out  or your pension and want to have the chance to build up more pension, Enable's IFA’s of Bishop’s Stortford would suggest thinking very carefully before you take more than your tax-free cash lump sum. There is much to think about in the brave new world of pensions Enables IFA’s wan to help you make the best decisions for you.



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

What tax will I pay for my new pension freedoms?

The new pension reforms announced by Chancellor George Osborne will give people a lot more freedom over how they invest their life savings from April 2015. The new freedoms may introduce more freedom but they also introduce more complexity to the market Enables independent Financial Advisors in Bishops Stortford could see many people could finding themselves unnecessarily pushed into higher tax brackets without good retirement planning.

Perhaps one of the most important things in the new pension world is to beware of inadvertently tipping yourself into top-rate tax. Any money that you withdraw from your pension fund, apart from your tax-free lump sum will be counted as income in the tax year that you take it.  So if you are still working or have other income of, say, £40,000 a year and you cash in a £40,000 pension fund, £10,000 will be tax free, but the remainder will be taxed, meaning you would have a total income of £70,000 in that year, pushing you into the 40 per cent tax band for much of your pension withdrawal.  If you took £150,000 from a pension fund then you would push yourself into the 45 per cent tax bracket.

Enable’s pension advisors are concerned that many will inadvertently overpay tax – it is  essential to be aware how much tax you will lose if you cash in your pension fund early or take out a large amount. If you delay taking your pension money until your other income falls, or if you plan to take out smaller sums at a time, the tax you pay should be much lower.

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 

What should I do with my pension savings? Changes you need to know about

From next April, the chancellor wants you to be able to do what you like with your pension savings once you reach age 55, new rules mean if you want to spend your whole fund you can; if you want to take out a bit at a time, you can; if you want to use your pension fund like a bank account, you should be able to do so.

But you don’t have to do anything! Many people approaching retirement age will have personal pension plans started in the 1980s or 1990s. When setting up these funds, you would have been asked to select a retirement date and many would have chosen a birth date between 55 and 65.

About six months before your chosen pension age, the pension company will send out a 'wake-up pack', offering you an annuity. When you get this kind of pack, you may think you have to do something, but you don’t have to and if you are still working, or if you have other pension income, you may benefit from leaving the fund alone to earn extra tax-free investment returns, rather than buying a product, or transferring it or withdrawing the money.

In the past people have tended to believe they had to automatically buy an annuity or income drawdown product, but you don’t and there are lots of other thing you may want to do with your pension. The 'do nothing' option may still be a good one, Enables IFA’s in Bishop’s Stortford can help you with your retirement planning if you're not sure what's best.

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

Mortgages taken out at highest level since 2007

As experienced Mortgage Brokers in Bishop’s Stortford Enables independent financial advisors have seen lots of changes in the housing market over time. Recently it is interesting to note that despite signs of a slowdown in late summer, figures from mortgage lenders showed that from July to September 188,000 mortgages worth a total of £32.4bn were advanced to first-time buyers and home movers. The Council of Mortgage Lenders said that this was “the highest totals since the final three months of 2007 when the housing market downturn was just beginning”.

It is also the case however, that although rising house prices mean the value of those loans has almost returned to its pre-crisis level, the number was still below the 223,900 recorded in quarter four of 2007, and lower than in any quarter between 1996 and 2008. And the number of borrowers re-mortgaging has picked up, rising by 20% during the month, although despite a fierce price war breaking out between lenders, it was still down by 12% on September 2013.

Paul Smee, director general of the Council of Mortgage Lenders said it had been a year of change, transition and growth as banks and building societies have got to grips with new rules on lending.
He added: “The lending market is healthier than it was a year ago, and set to remain so. Re-mortgaging has returned as a driver of lending volume in the buy-to-let sector. But any fears of over-heating in the housing market are now dissipating as house purchase lending activity seems to be softening.” Whatever your mortgage requirements Enable’s IFA’s in Bishop’s Stortford are here to help.

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

Know your terms

As Financial Life Planners Enable’s IFA in Bishop’s Stortford know the old adage for investing well, don’t put all your eggs in one basket’. For long term gains from any investment it is always wise to spread risk and try and diversify across a range of companies, asset classes and geographical regions.

In wealth management there are a ‘traditional’ set of asset classes to make the most of; cash, equities or shares and bonds. There are also a host of ‘alternative’ asset classes that have become much more available to private investors which include commercial property and private equity trusts. Many wealth management companies now use financial wraps to help further mitigate risk but maximise long term gain.

None the less it is always helpful to know some of the terms to understand better the asset classes involve in your wealth management.  So back to basics a share (often referred to as equity) is a unit in a company listed on a stock exchange. If a company is worth £100 million and has issued 100 million shares then each share is valued at £1. The overall value of the company fluctuates based on a variety of factors including demand and supply for the goods or service the company is offering, merger and acquisition activity, competitor activity and the economic environment to name a few, all of which can impact the share price.

Investing in shares can have good long term returns - equities have historically delivered better returns over the long-term than other asset classes such as bonds or cash. But equally there are risks by their very nature stock markets fall. Typically investing in the stock market should be taken as a ten year view, Enable’s IFAs can help you see what is right for you.

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

Town or Country?

As experienced mortgage brokers in Bishop’s Stortford Enables IFA’s know that it its life style choices that often determine whether we want to live in the town or the country.  But a recent survey indicates that a home in the country costs a quarter more than a home in an urban area, on average at the moment.

Interestingly research conducted by Halifax one of the UK’s leading mortgage lenders found the least affordable rural area was Chiltern district, between London and Oxford, where at an average of £477,526 homes cost 9.5 times local average earnings. The Cotswold district was next, with an average house price of 9.4 times the local salary, at £339,052.

On average homes in rural Britain attracted a premium of £46,475, selling for £225,217 against the typical cost of £178,641 in urban areas outside Greater London. Inevitably the least affordable rural areas were all further south. Across rural Britain, Halifax said, homes cost 6.8 times the typical salary, against 5.6 times salary across urban areas outside London. As a result, first-time buyers are struggling to afford them.

Martin Ellis, housing economist at Halifax, said: “It typically costs significantly more to buy in rural areas with a substantial premium existing in all the regions of Great Britain. This reflects the aspiration of many to own a property in the countryside. As one of the leading mortgages brokers in Bishop’s Stortford Enables experienced IFA’s can help people wanting to move either from town to country or country to town to suit their current life style choices or needs.

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 

How will the mansion tax effect financial planning?

Mortgage brokers Enable of Bishop’s Stortford have been reflecting on the details of the Labour party’s proposals for a mansion tax were more fully revealed this Autumn,  the so called Mansion tax seems as if it might not be quite as bad as originally promised – although if it came into play it  could still have significant impact on owners of top end homes.

If we have a Labour government after next year’s general election in May the chances of a Mansion Tax are pretty high. The proposed tax seems to be quite popular across the electorate, it is seen as a tax that only a small group, concentrated in London and the South-east would have to pay with enormous benefits for the NHS. The mansion tax was perhaps named to appear to apply to unreasonably large properties, in its current form however it will apply to any residential property worth more than £2m. Savills estimates about 40,000 residential properties are worth between £2m and £3m and about 57,000 homes are worth over £3m. So quite a few clients could be affected.
The proposed tax would operate on a slab basis with a flat-rate charge applying to each slab or band of property value. The bottom band would be £2m–£3m and shadow chancellor Ed Balls has announced the flat-rate charge for anyone in that slab would be £250 a month or £3,000 a year.

A client with this kind of property might also be reasonably concerned about whether a Mansion tax would have a significant impact on the value of their home for inheritance tax purposes. The effect on values could also be important when considering downsizing. Enable's IFA’s are here to help you anticipate any possible changes on the horizon that may affect your wealth management.

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

Wealth management of property

As leading mortgage brokers in Bishop’s Stortford Enables IFA’s have witnessed alongside the rest of the UK that investing directly in bricks and mortar can clearly lead to significant capital growth and has done for many in the UK over recent years. Property investment often starts with borrowing to buy a home and then paying down the mortgage.

And investors in property over the years have seen huge returns over the years investment in bricks and mortar has proved to be a reliable investment.  Property prices of course are influenced primarily by supply and demand and with supply short in the UK and problems with supply and credit, property has boomed but it can equally fall sharply.

Property tends to perform differently to other asset classes and as ever, the experienced wealth managers at Enable would always recommend diversification across asset classes when considering investing. Historically this is undoubtedly why property has been a corner stone of any portfolio or investment for many years.
 
Investing in property on an individual basis once you have secured your home, can be enormously beneficial but also very risky. In a downturn property can drop dramatically it can also be very slow and expensive to buy and sell. If you are wanting to make sure property is part of your portfolio, beyond your home,  a collective investment in the property sector may be a better bet. Why invest in just one property when you could invest in many. There are lots of diversified property or real estate funds available

Interest rates will change

As experienced Independent Financial Advisors Enable's mortgage brokers in Bishop’s Stortford know it is only a matter of time before interest rates go up.  As the economy continues to gain strength and shows more and more signs of a sustained recovery, the interest on borrowing particularly mortgages will inevitably have to change, in an upward direction.

Although there is still much speculation, and it is clear that even a small increase in interest rates could lead to many more households struggling with their debts, interest rates cannot stay at this long running all –time low of 0.5% for ever. To reassure the Bank of England’s governor Mark Carney has repeatedly emphasised that increases will be “gradual and limited”.  But many believe the first changes are just around the corner and expected to be announced in the first half of next year. Again Mark Carney says the Bank of England has “no pre-set course” and that, “rates will go up only as far and fast as is consistent with price stability as part of a durable expansion with the maximum sustainable level of employment.”

Inevitably the debate as to when will go on and the policy makers will continue to monitor the data and signals indicated with each new release of economic data.  But Enables experienced mortgage brokers of Bishop’s Stortford are sure a rise in interest rates will come and are happy to help you review your borrowing  to try and help you be in the very best financial position you can be when the changes come.

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

Is the government Help to Buy scheme helping you?

As experienced mortgage brokers in Bishop’s Stortford Enables IFA’s we glad to see the government scheme to help first-time buyers, come into the mortgage market to start with. It’s a scheme that offers up to 20 per cent of the value of a mortgage on a property as government assistance to help those trying to buy a new-build home. The buyer must have a cash deposit of at least 5 per cent and a mortgage lender must provide a loan of at least 75 per cent.

The criticism or the scheme has suggested it helps to fuel rampant house-price inflation. But in a recent report published by the Bank of England they said the scheme was not driving house prices up. The Bank said if you believe the figures, “the average house price in the Help to Buy mortgage-guarantee scheme was £153,800, significantly below the national average” but these mortgage figures were based on June mortgage date, published at the beginning of September. But the latest government statistics on Help to Buy also published recently include data to the end of August. That mortgage date shows that the average price in the first 17 months of the scheme was actually £210,269, significantly higher than the national average property price of £188,374, according to the Nationwide. 

Enables’ IFA’s experience as mortgage brokers in Bishop’s Stortford tells them that it can often be hard to read the date to prove the benefits of mortgage schemes and if you need help making sense of it all we are here to help.

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

Property as part of your portfolio

As experienced wealth managers and mortgage brokers in Bishop’s Stortford Enables Independent Financial Advisors often discuss property as part of people’s portfolios either as an investment in a home or as part of a more commercial property fund.



There is much argument as to whether or not favourable conditions in UK property look set to continue but many believe they can. Last year was a turning point in the economy as far as investment in commercial property was concerned. After three to five years of uncertainty and as a result of this market hiatus UK government bonds became increasingly popular as investors looked for wealth preservation. But over the past 18 months, the UK has been increasingly viewed as economically stable and commercial property looks good value on a yield basis relative to other asset classes, which has attracted both domestic and international interest.


The property part of a wealth management portfolio aims to give investors an attractive level of income, at the same time as providing an element of growth in income and capital.  Many property fund’s have historical yields around 4 per cent, which many think is sustainable especially if portfolios focus on high quality buildings in good locations, with strong tenants and with certain assets in London and the South East experiencing  significant rental growth. Sadly the economic recovery is not uniform across the UK so property funds tend to be more focused on the income line produced from properties in other regions. Enable's IFA’s in Bishop’s Stortford can help you make property part of your wealth management plans.



Your home could be at risk if you do not keep up the repayments.

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 

What is an offset mortgage?

Enable’s IFAs who act as mortgage brokers in Bishop's Stortford can help you investigate it it is a smart and tax-efficient way to cut your mortgage costs.  Only around ten per cent of borrowers currently take advantage of this type of home loan. It works by simply combining your savings and mortgage balances helping to save thousands of pounds in mortgage interest costs at the same time as reducing the term of your home loan when interest rates are low.

For higher rate-tax payers in particular the other key benefit, is that there’s no tax to pay on your savings interest and the equivalent return is the same as your mortgage rate. At the moment with interest rates on instant access and 1-year savings accounts stuck around the 2 per cent park, for many people even if they are not higher rate tax payers, there’s still more to be gained by offsetting your nest egg against your mortgage balance, which in many cases is being charged at upwards of 3.5 per cent.

Bishop’s Stortford mortgage brokers at Enable can see why many people do not necessarily take up the mortgage product as it is a more complex product than many other mortgage products and can be perceived as only suitable for those with large savings balances, but sometimes it pays to really nut out the sums. For example with some mortgage products , someone with savings of £5,000, offsetting this balance against a £100,000 mortgage at 4.00 per cent would save interest charges of £8,016 and take 1 year and 3 months off the term of a 25-year mortgage. Enables mortgage brokers in Bishop’s Stortford can help you work out the best mortgage product for you.




Your home could be at risk if you do not keep up repayments.

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