Planning your pension in advance?

There are currently 1.38 million people aged over 85, a figure forecast to double in the next 20 years. Dementia also affects one in six people over 80 and one in three over 95, and is a growing priority for the NHS. Even before the promised overhaul of the rules surrounding pensions next April, many people are failing to get the best deals. Earlier this year, the Financial Conduct Authority (FCA) concluded that 80pc of savers who buy their annuity from their existing provider could get a better deal on the open market.

Nest said failings in the annuity market show that even if people feel confident, they are still capable of making mistakes, or “suboptimal” decisions. As experience financial planners at Enable in Bishop’s Stortford we know people tend to lose confidence with money as they get older.  Mark Fawcett, chief investment officer at Nest, has suggested people should maybe aim to plan how they will finance their retirement in their 50s, while their mental capacity to manage money is likely to be in a “sweet spot”.

Drawing upon Pensions Institute research the best time to buy an annuity is when people are in their 70s and 80s. Mr Fawcett also said there should be more financial products that allow people to select options in their 50s and 60s. These would be chosen in advance, ready for when people reach the point at which it makes most economic sense to tie their money up in an annuity, which could be at least a decade later. Such products are not yet available, but there are a number of things people in their 50s can do now to plan for their retirement and Enables’ IFA’s in Bishop’s Stortford can help you lay the foundations of your retirement plan whatever your age.

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 does a Pension 'bank account' mean?

In his Budget in March, Chancellor George Osborne announced a set of radical changes to pensions to allow pensioners greater freedom over how they draw their pension in retirement. The biggest reform is that from next April no-one has to buy an annuity, and people will be able to take their pension pots as cash.

The new rules will, almost allow people to use their company schemes like bank accounts, from age 55, they will be able to dip in and out of their money as they like. All pensions, even under today's rules, allow 25pc of pension money to be taken free of tax. Under the current rules most people have to take their 25pc tax-free pension lump sum within 18 months of them becoming eligible for their pension income. The Treasury also plans to remove this restriction.

What will this means for the future is that savers could take monthly payments from their pension where 25pc was tax free, with the balance taxed at their usual income tax rate. The benefits would be that people could take less of their pension early therefore leaving more invested. This would mean there would be more time for the whole pot - including the 25pc tax-free portion - to grow.

People will still be allowed to take all their tax-free money as a 25pc lump sum if they choose, or, if they decide to take it in uneven chunks (for example if they wanted to take a 15pc lump sum in their first year of retirement, followed by 3pc tax-free lump sums thereafter), they can arrange for their pension pot to be split in two. If you need help making sense of your pension options Enable’s IFA’s in Bishop’s Stortford will be able 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 

More Autumn Statement details

One loop hole that the Chancellor has closed off in his Autumn Statement was not so fully reported but he has decided to close off the final loophole enabling investment in subsidised renewables within a tax shelter like enterprise investment schemes or venture capital trusts. Some think this could trigger a last minute dash of funds coming into renewables before the Government ends the existing tax arrangements next year.

The new rules were buried deep within the statement’s supporting documents and indicate that community energy projects and anaerobic energy plants will cease to benefit from EIS, seed enterprise investment scheme and VCT eligibility from next April and   “All other companies benefiting substantially from subsidies for the generation of renewable energy will be excluded from also benefiting from EIS, SEIS and VCTs with effect from 6 April 2015.” 

The rules follow the announcement in the Budget that VCT and EIS could not invest in solar or wind projects. This left hydro and anaerobic digestion, where waste is broken down to produce energy, as the remaining renewable alternatives eligible for VCT and EIS investment.  Robertson Hare partner Philip Hare says the latest announcement could trigger a surge of money coming in before the curtain comes down on them on 6 April. “I suspect there will be a mad rush into these investments up until 5 April a bit like when solar and hydro were excluded in the Budget.

The change is no surprise to Tilney Bestinvest managing director Jason Hollands, who says HM Revenue & Customs was concerned at the double tax breaks and the fact there was no real risk involved. “These are essentially underpinned by Government subsidy and are obviously attractive to investors because you are able to access tax efficient investments which are relatively low risk.” Enables IFA’s are concerned to be on top of changes that may affect wealth management and are happy to help you look at helping you make your long term investments as low risk as possible.


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

Pensions and the Autumn Statement

At Enable in Bishop’s Stortford the current changes around pensions have been much on the minds of many of our clients. The chancellor did not offer any more radical change in pensions but did announce the return of Pensioner Bonds or “Granny Bonds” as they used to be known. The Pensioner Bonds will be issued in January, and are expected to be hugely popular, as ever. They will be available to the more than 11 million people in the UK over the age of 65. The announcement said “there will be a one-year bond, which is expected to pay around 2.8% in interest, and a three-year bond, which is expected to pay around 4%.” Pensioners will be able to save a maximum of £10,000 in each bond – giving them another option for £20,000. The Treasury has also said that only a total of £10bn of the bonds will be issued, suggesting they could sell out very quickly.

The other thing that had clearly been in the pipe line is the Tax free status announced for annuities for dependents of people who die under the age of 75. This means that thousands of retirees who have pension annuities will be able to pass on the benefits free of tax, if their spouse dies before the age of 75. Previously they would have been liable for a 55% "death tax" on money in annuities now they will be able to receive the income from such policies without paying tax.

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

Stamp Duty changes not so welcome for a few...

Stamp duty on residential property was reformed and came into effect last week so that rates apply only to that part of the property price that falls within each band 0% paid for the first £125,000 then 2% on the portion up to £250,000 5% up to £925,000, then 10% up to £1.5m; 12% on anything above.

Enable’s IFA’s of Bishop’s Stortford can see that for many this is a fairer welcome change to an unpopular and outdated approach which had proved very uncomfortable for buyers around the thresholds. However, the new rates reveal that anyone purchasing a property with a value above £937,500 will be worse off, in some cases by a considerable amount.   For example, a £1.5m property will now attract stamp duty of £93,750, which is £18,750 more than under the old system. In contrast, a £510,000 property will see a 24% reduction in stamp duty and buyers of £210,000 properties would pay 19% less.



 “The Chancellor’s announcement on the changes to stamp duty is excellent news for buyers of properties valued under £950,000, although it is not so good news for ‘squeezed professional middle’ buying above the £1m-mark and is a real blow for all buyers at the top-end of the market.” Said Robert Bartlett, Chestertons’ CEO, “My real concern is how this move has the potential to damage London’s standing as a global city by discouraging wealthy international buyers from investing here and the knock-on effects that this could have to the broader London economy.” Enable’s Mortgage brokers in Bishop’s Stortford are happy to advise on property investments in London and its environs.

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 

Savings in the Autumn Statement

It would have been hard to miss that Chancellor George Osborne had updated the Houses of Parliament about the state of the economy and adjusted various tax provisions in his last Autumn Statement last week.  But Stamp Duty rather took center stage in the press and you might have missed some of his adjustments in savings.

Enable's independent Financial Advisors in Bishop’s Stortford often recommend ISA’s as a saving vehicle and from next April 2015 the ISA threshold will increase  again from £15,000 to £15,250 a modest but useful tax free addition for savers.  Whatever platforms you save across it is nearly always worth your while to max out your ISA allowance as savers who take out an ISA pay no tax on capital appreciation or income.

But perhaps a more interesting decision has been made by the Treasury to enable spouses to inherit their partners ISA’s tax free on their death. In previous years a spouse or civil partner inheriting an ISA would have been liable for tax on the savings. From next April the 6th 2015, however partners who have been bereaved will be able to add their late spouse's ISA’s to their own, without any tax to be paid. The treasury estimate that as many as 150 000 married partners will be affected by the change and George Osborne told MPs, "Pass on your Isa tax free. Pass on your pension tax free. We are delivering fairness for savers."  Enable’s IFA’s in Bishop’s Stortford are happy to help you make the most of your savings.

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

Should you cash in your pension in 2015?

New pension rules as many of us are now aware will allow you to cash in your retirement pots from April next year if you are over 55 but understanding what to do with the money is tricky. Enable's IFA’s in Bishop’s Stortford are here to help investors consider whether keeping pensions invested might actually result in higher returns.

So if you are 55 and have a pension you will soon be able to take out your whole defined contribution pension but remember income tax will be payable at your marginal rate on any withdrawals in excess of the 25pc tax-free cash sum allowed. Withdrawing a large sum and having that added to any other income that you receive in the tax year could really push up your tax bill so understandably many will want to consider keeping their pensions invested after retirement to avoid any sudden big tax bills.

If you decide to keep your pension invested, you need to ensure a good mix of investments reflecting; safety, inflation-proofing and growth. Asset allocation is key when it comes to building a balanced pension portfolio. Diversifying your investments between the main asset classes – cash, fixed interest securities, commercial property and equities spreads your assets and help reduces the overall level of this risk. Of course delaying taking your pension itself is not without risk, the stock market will inevitably continue to move up and down and can have an effect on your retirement income but Enable's IFA’s are here to offer retirement planning advice to help you find the right order of risk or security 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

Starting a pension plan?

Whatever the current changes in accessing your pension fund Enable's Independent Advisors in Bishop’s Stortford know it is important to have one in the first place. Basically a pension plan is a form of saving to provide an income in your retirement. There are broadly two types of pension plan available.

One is a Defined Benefit pension, often referred to as a ‘final salary' scheme, this kind of scheme pays out a proportion of your salary as income payments when you retire. The other type of pension is a Defined Contribution pension, often referred to as a 'money purchase' scheme. This is where a certain amount is paid into a pension fund (an investment vehicle for your money) and accumulates throughout your working life to provide you with a pot of money to secure a retirement income. A personal pension is a type of defined-contribution pension where you choose the provider and make arrangements for your contributions to be paid. If you haven't got a workplace pension and with many more people working for themselves this is more and more common form of pension.

For the vast majority of people the best way to save for retirement is with a pension but the complexity and cost can make starting something that is constantly put off.  Putting off starting a pension however can be an expensive mistake – a Standard Life survey recently found that UK savers' biggest financial regret was not saving enough for a pension. Starting a pension early means you benefit from compound interest i.e. interest being paid upon interest effectively means the longer you have to save the less you have to put away. The other key advantage to pensions saving is that they are very tax advantageous, in plain English if a basic rate taxpayer invests £80, or a higher rate taxpayer invests £60, the government will top up that contribution to £100. Deciding how to save for your retirement is a vital part of any financial planning and Enable’s IFA’s in Bishop’s Stortford can help you explore your options.


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

Too old to manage your money?

A set of controversial scientific findings by university professors in America have made their way to Britain recently.  The Harvard University research suggests people’s ability to make good financial decisions peaks at age 53 and then starts to decline.

The results come from measuring two types of intelligence that help people manage their money. The first is “crystallised intelligence”, which is based on skills acquired through experience, and therefore improves with age. The second is “fluid intelligence” which is based on the ability to solve new problems, and declines with age.  According to the Harvard academics, overall cognitive performance declines after mid-50s. This is because the ageing process causes the brain to approach a tipping point at which their “crystallised intelligence” stops offsetting the decline in their “fluid intelligence”.

They warn that by the time people get into their 80s, approximately half the population suffer from a significant cognitive impairment, which may make them incapable of making important financial choices. Nest, the government-run occupational pension scheme for British workers, is so concerned by the findings that it has called upon the industry to develop financial products which let people plan their pensions in their 50s, saying that financial decision-making above this age could become “increasingly problematic”.

But Ros Altmann, the Government’s older workers champion, who also studied at Harvard, has branded the research “ageist”. She said: “Everybody is different so there is no point in making stereotypes. There are plenty of people in their 80s who are still very mentally capable.” Whatever your cognitive capacity 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