Very low interest rate shame

As with all things Enable’s IFAs in Bishops Stortford would always recommend shopping around. Recently a report drew attention to banks paying ultra-low interest rates to loyal savers and regulators suggest strongly that customers shop around for the best deals in a move to get banks to do more to help their long-term depositors get a better return on their hard earned cash. The results of the so-called "Sunlight" study show that on some easy access accounts, rates can be as low as zero and 0.01pc.

The Financial Conduct Authority, headed by interim boss Tracey McDermott, wants people with savings accounts to shop around for the best deals. From next year, banks and building societies will have to offer clear information on interest rates that is displayed prominently alongside a customer's account balance The Financial Conduct Authority (FCA) is also forcing banks to make it easier for customers to switch to a new savings account, under rules which will come into force in December 2016.

“We are publishing this information to raise awareness of firms’ strategies towards their longstanding customers. This should also encourage firms to offer better value products to existing customers, especially those with products no longer on sale,” the FCA said. “We have called this publication the ‘sunlight’ remedy because we are shining a light on interest rates that are not prominently displayed, but that may be earned by some customers. These customers stand to lose out by not switching to a different account.” If you would like Enable’s IFAs in Bishops Stortford to try and shed more light on your savings options we are always happy to talk.

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 

Source : The Telegraph

Mortgage controls to continue

The Bank of England Enable’s experienced IFA’s in Bishops Stortford notice is preparing for some new mortgage controls in a bid to dampen what it worries is the potential volatility of the buy to let sector. Jefferies investment consultancy has written to investors saying: “More Buy to Let lending controls may be on the cards” in the form of more stringent testing of affordability when landlords apply for loans.

A recent Financial Stability Report says the Bank is not going to look favourably on any relaxation of the lending criteria being offered by mortgage companies, such as reducing the size of deposits or income requirements. "The committee remains alert to the rapid growth of the UK buy-to-let market, and potential developments in underwriting standards as the sector could pose a risk to broader financial stability," the Bank of England says in its report.  Lending to landlords has been a key factor in the mortgage market in the past two years and some reports suggest it is now close to its pre-crisis peak.

In the first nine months of 2015, buy-to-let lending rose by 10 per cent and last year regulations limiting the number of owner-occupier mortgages worth more than 4.5 times the borrower's income and implementing stress tests on the borrower's ability to repay came in but these rules do not apply to buy to let. “The Bank of England reports that Buy to Let investors are often subject to less stringent affordability tests than owner occupiers. Affordability is typically tested by ensuring that rental income exceeds 125 per cent of loan interest, assuming mortgage rates in the range of five to six per cent, whereas owner occupier’s affordability is typically tested at seven per cent” says Jefferies.

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 

Source: Letting agent today

Can expats take money from their UK home?

Enable’s IFAs in Bishops Stortford can see that at this time of year spending time in the sun can seem really appealing. If your dream is to live more abroad for the Winters it can sometimes be hard to work out your finances. But there are more and more ways of being able to release money from a UK home using equity release.

Equity release is a form or borrowing for those over 55 who want to get money out of their UK properties without selling. There are two types of equity release in the UK lifetime mortgages and home reversion plans. The lifetime mortgage is not like a traditional mortgage because the homeowners do not make any repayments on the sum they borrow. Instead, the interest due is rolled up and the loan and interest is paid back when the property is sold after their death. Home reversion plans enable you to sell a proportion of the property in return for the cash, and when you have died and the property is sold, that money is repaid from your estate. You retain the right to live in the property rent-free for life, and there is no impact on the way you use your home as a private residence.

The average UK pensioner is using equity release is getting nearly £75,000 from their property according to data from the Key Retirement and as property prices are still going up it only increases  the amount available. If you have a property in the UK that is still your main residence  meaning you to spend more time here than abroad you should be able to get an equity release loan on that property, according to Dean Mirfin of Key Retirement. Enable’s IFAs can help you think through 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 

Average UK house prices up by 6.1%

House prices in the UK have increased in value by 6.1% annually in the year to September 2015, according to the Office for National Statistics (ONS). This is a larger increase than the 5.5% rise recorded in August and the 5.2% one in July. This brings the average house price across England to £286,000.

Although an impressive increase in value, it does not match the price rise seen a year earlier of 12%.

As always, there were wide regional variations, with price increases in Northern Ireland topping the list at 10.2%, whilst Wales and

 

Scotland could only record a modest 1.1% rise. In average house price terms, London, as usual, topped the list with houses there now averaging £531,000 and recording an average increase of 7.2%.

Overall, the increase in house prices in England was driven by the annual increases in London (as above), in the East by 8.4% and the South East rising by 7.4%. At the other end of the scale, houses in the North East of England averaged £158,000 with a more modest annual increase of 1.8%.

In September 2015, prices paid by first time buyers were 4.3% higher on average, against the same time last year, while owner-occupiers (existing owners) also saw an annual increase of 6.9%.

Commenting on these figures, a former Chairman of the Royal Institute of Chartered Surveyors (Rics), Jeremy Leaf, was reported to have said: “With the average property price in London now £531,000, unless you earn way above the national average salary, you have precious little hope of being in a position to buy.

“Generation Rent is being left out in the cold; they have aspirations to buy but are being pushed further away from their goal.”

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 

OBR gives Chancellor room to manoeuvre...

With a surprise major U-turn over his intended Tax Credit cuts, George Osborne, the Chancellor of the Exchequer, delivered his joint Spending Review and Autumn Statement.

Despite this setback to his finances, from which he had hoped to save £4.4bn in welfare costs, he still maintains that he will be able to achieve £12bn of welfare saving each year up to 2020.

 

His main announcements were a pledge to bring the UK’s budget into a surplus of £10.1bn by tax year 2019/20, increase spending on the NHS by £6bn in 2016, whilst defence spending will meet NATO’s recommended 2% of GDP with a total spend of £178bn over the next decade. He will maintain the current budgets allocated to education, overseas aid, and the police force.

Housing will get a huge boost with him promising the building of 400,000 new homes, 200,000 of which will be ‘starter homes’. House builders and developers will be offered grants to achieve this target and incentives to regenerate brown-field sites for such development.

The basic State Pension will rise by £3.35 a week to £119.30, whilst the maximum flat rate New State Pension will be set at £155.65 per week. The newly introduced Automatic Enrolment pensions for all employees, will see the proposed increase in employer contributions to 2% of payroll, pushed back from 2017-18 to 2018-19.

Tax avoidance is to be targeted with the ambition of recouping £5bn of tax annually. They will introduce a General Anti-Abuse Rule with penalties imposed for disguised remuneration schemes, blatant stamp duty avoidance and the abuse of the intangible fixed assets regime and capital allowances. In future all tax returns for individuals will be digitalised and handled on-line by the end of the decade. As a result of this the HMRC will close 177 local tax offices.




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 

MARKETS: (Data compiled by The Outsourced Marketing Department)

Despite tragic terrorist activity in Paris, resulting in the death of 130 innocent civilians, and the shooting down of a Russian bomber across the Syrian/Turkish border, the equity markets, surprisingly, maintained their composure.


 

Despite incurring large losses in mid-November, the FTSE100 rallied to close at 6,356.1, down just 0.08% on the month and up 1.7% on the quarter. The wider FTSE250 fared even better gaining 1.77% in November to finish at 17,420.7, whilst the junior AIM market matched the FTSE100 performance to lose 0.08% at 737.3.

In the USA the Dow Jones trod water, closing out November at 17,719.92 for a marginal gain of 0.32%, with the Nasdaq index rising 1.09% to end at 5,108.67.

As reported last month, the prospect of renewed fiscal stimulus from the European Central Bank, allowed the Eurostoxx50 to maintain its positive momentum, as it gained just under 45 points to 3,488.99 for a 2.07% improvement on the month.
Likewise, the Japanese Nikkei225 index also remained in positive territory, finishing at 19,747.47 an improvement of 3.48%.

The foreign exchange markets saw the US Dollar powering ahead of the Euro currency, breaking parity to $0.94 for a 14.5% uplift, whilst the Euro also slipped against Sterling to €1.42 a fall of 1.43%. Given the bullish sentiment in the US Dollar, due to the anticipation that the US Fed will raise interest rates soon, Sterling slipped 1.43% to $1.51.

Gold lost its recent momentum falling $76 in the month to $1,065.8 an ounce and recording a 6.62% fall.

Oil, as measured by the Brent Crude benchmark, fell yet again - as a result of continuing oversupply - to $44.61 a barrel and compounding its year- to-date fall to 22.19%.

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 

UK's Service sector sees improvement

The UK service sector saw growth in October; the first time in four months that the growth rate has improved. The closely followed ‘Markit/CIPS Service Sector Purchasing Managers Index’ (PMI) improved from the 53.3 level, seen in the previous month, to 54.9 – any figure above the 50 mark represents growth in the sector.



Whilst this data was welcomed, Markit did state that the pace of improvement was still “relatively subdued”.

The PMI went on to say that within the sector there was strong jobs growth, as it hit a five-month high.

This good news follows similar bullish results, released recently by PMI, from both the ‘manufacturing’ and ‘construction’ sectors.

Chris Williamson, the Chief Economist of Markit, was reported as saying: “Such an improvement, together with the revival in hiring signalled by the three surveys... may coax more policymakers into (voting to raise) interest rates before the end of the year.”

However, he reportedly went on to add: “Dovish policymakers will note the ongoing lack of inflationary pressures in October, suggesting that there is no need to rush into raising rates.”

The Government itself will be very pleased to see more business sectors seeing improved performance, as the Chancellor of the Exchequer, George Osborne, has stated that he is committed to seeing a far more balanced economy evolving across the country, with less reliance on any one sector to drive GDP growth.

Editor’s note: The future direction and timing of interest rates remains a contentious subject, given the Governor of the Bank of England, Mark Carney’s recent comments on the subject. See ‘The Bank of England’s inflation report’ article.

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 

The Bank of England's inflation report...

In early November the Bank of England released its Inflation Report, as recorded by their Monetary Policy Committee (MPC). The committee decided, by an 8-1 majority, to leave the Bank Rate at its historical low of 0.5%. There was one dissenting MPC member, Ian McCafferty, who would have preferred to see a 25 basis point (1/4%) increase. They did, however, unanimously vote to leave their purchase of assets at the current level of £375 billion. This is also colloquially known as their ‘Quantitative Easing’ programme.




As at the end of September, the Consumer Prices Index (CPI) stood at -0.1%, which is marginally more than 2% below the Bank’s own inflation target. They cite lower prices in food, imported goods and energy as the major factors here, with lower domestic cost growth as a lesser influence. The wider core inflation rate currently stands at 1%.

Whilst they believe that CPI will remain subdued at around the 1% level until Q3 or Q4 of 2016, the Bank did confirm that they are determined to return inflation to the 2% target range within two years in a careful and sustainable way, avoiding the danger of it overshooting, should the current disinflationary factors diminish. They also believe domestic momentum is strong, consumer confidence is high and wage growth is continuing to improve.

Given that the MPC believes that the Bank Rate will rise in due course, as inflationary factors reverse, it also expects any such rise to be more gradual and to a lower level than seen in previous economic cycles.

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 

Tax rise on buy-to-let and second homes

Enable’s experienced IFA’s in Bishop’s Stortford know that many have been turning to buy to let as an investment and some of us have second homes. But the Chancellor is clearly concerned for those squeezed out by house price rises but many analysts warn that undeterred investors will simply pass the cost on in higher rents.



Chancellor George Osborne, unveiled a raft of measures in his spending review to help boost revenues and cut spending, he plans to introduce an additional 3 percent on the stamp duty property tax for second homes and buy-to-let properties from next April. "People buying a home to let should not be squeezing out families who can’t afford a home to buy," he told parliament.  But the chief executive of the Federation of Master Builders, Brian Berry, is unsure the extra tax would dissuade investors from buying, instead he suggests tenants will end up footing the bill. "I think buy-to-let buyers will offset the cost and the danger is that might be passed on in terms of higher rents."

Stamp duty, which is levied in bands according to the market value of a property, and an increase on buy to let properties, adds to the woes of landlords as earlier in the year, the government also said that it also intends to restrict the amount of income tax relief landlords could get on residential property mortgages. These changes will not affect larger firms but hit smaller investors as those buying six or more residential properties in one transaction have a lower stamp duty based on the value of all the properties added together unlike small investors who tend to pay per home.

Source: Reuters

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 

The real new state pension gap

The current pension system as Enable’s IFAs in Bishops Stortford agree, has been far too complex, for far too long and its replacement by a simpler, although still complicated system has many benefits.  But it has also thrown up numerous anomalies and sources of unfairness and the disparity gap in the basic entitlement is perhaps one of the worst.

 

The Chancellor announced in the recent spending review that the basic state pension paid to current pensioners would rise by £3.35 to £119.30 a week in April. The “single-tier” pension paid to those who retire after that date will be £155.65 a week, he said.  So the difference between the amounts paid by the two systems will be £36.35 a week, or just under £1,900 a year.  This difference between the new and old state pension is finally clear and amounts to a significant about of money that is different in the basic entitlement.

Malcolm McLean, a former head of the Pensions Advisory Service said pensioners were waking up to the fact that only those who reached state pension age after the introduction of the flat rate in 2016 would receive it. Anyone who reaches retirement age before then will receive the existing state pension for the rest of their life. Ros Altmann, the pensions minister, said back in 2012: 'I would call on the Government to consider extending the flat-rate system to those who have already retired' but she has not been forthcoming yet. Rather than be wholly dependent on a state pension make sure you start saving as early as you can. Enable’s IFAs can help you look into the right kind of saving plan for you.

Source: The telegraph


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 

November house prices slowed

Enable’s Independent Financial Advisors note that mortgage lender Nationwide stated that house prices rose by a less-than-expected 0.1 percent in November compared with a 0.5 percent increase in October. 

 

British house price growth slowed according to their survey published recently which suggested the recovery in the housing market, which recently pushed prices to new record highs, might now be advancing at only a modest pace. November was the weakest monthly performance since June, Nationwide said as house prices rose 3.7 percent in year-on-year terms, slowing from 3.9 percent in October.

Robert Gardner, Nationwide's chief economist, said; "The annual rate of house price growth has fluctuated in a fairly narrow range between 3 and 4 percent over the past six months, which is broadly consistent with earnings growth over the longer term."  The Nationwide survey tends to estimate slower price growth than other measures of house prices. An index compiled by rival mortgage lender Halifax suggested that prices rose by nearly 10 percent in yearly terms in the three months to October.

Whatever the actually fluctuations in house prices most would agree that prices are still supported by a shortage of properties on the market for sale. Nationwide said 135,000 new homes were built in England in the 12 months to September, a long way below the estimated 220,000 new households that are projected to be built each year over the next decade. If you or another member of your family are looking to get onto the ladder Enable’s IFAs can help you consider your options.

Source: Reuters

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 

Succesful Investing...

Enable’s IFA’s in Bishop’s Stortford have helped numerous investors over the years but when it comes to financial markets the only thing you know for certain is that no one really knows where they are heading. This does not mean you should not use them to build your wealth but no one can tell you exactly what to do for sure. But there are some steps that seem to contribute greatly to successful investing.

Over the years and even in difficult times you need to have quite a good reason not to use a tracker fund. If there really was a way to guarantee an extra 1pc return every single year, investors would go all out to find it but many ordinary investors ignore the chance to get exactly that because they overpay for investments they could get elsewhere for less. One of the cheapest ways for investors to access a market is through a “tracker” that buys all the stocks in an index according to their size.
And there’s plenty of evidence to suggest doing this gets you a better total return in the long run.
This approach suits those who are happy to make their investment and forget about it. It will rise and fall with the market, of course, but there’s no chance they’ll languish in a badly underperforming fund.

But then there are more active managers that can boast a history of beating their market of course these bets won’t come good all the time but sometimes they can get lucky in solid companies form areas they know well and avoid overpriced, bad ones that trackers will blindly buy. It is impossible to know exactly what to do but Enable’s IFA’s in Bishop’s Stortford can help work with your attitude to risk.

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 

Source - The Telegraph

Life Insurance...

If you have a family and are the major bread winner Enable’s IFA’s in Bishop’s Stortford agree that it is a sobering statistic that around one child in 30 loses a parent before they grow up. The grief and trauma can all too often be compounded by a loss of income causing financial crisis for the family.  Luckily life insurance is widely available and one of the cheapest ways to protect your family's finances if the unthinkable happens.

But it can be easy to pay £1,000s more than you need to over the life of the policy if you are not careful so it is wise to work out if life insurance is right for you, but also how to get it the cheapest way. There are also lots of different types of life insurance to protect an array of different things some protect a mortgage others all your dependents, while some can provide a way to mitigate inheritance tax. But the main insurance every parent, partner, or person with dependent needs to consider is called 'level term' life insurance or assurance.

With level term insurance you insure something that may happen, while you assure something that will happen. Sadly death is assured for all of us at some time, but "will you die within a set time?" is what  insurance is interested in. Level term life insurance pays out a set amount if you die within a fixed term and the pay-out doesn't vary regardless of when you die during the term.  If you are looking to make sure you have the right insurance 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 

Source – Money Saving Expert

The interest rate balancing act

Enable’s experienced Independent Financial Advisors in Bishop’s Stortford regularly discuss the direction of house prices with clients along with the direction of travel for interest rates for borrowers and savers.

In a recent conference, the Governor of the Bank of England Mr Carney was asked about the continued rise of house prices and unsecured credit growth. He said ' he was "conscious" of those moves, although he pointed out that standards of lending in the housing market had improved and the number of distressed households had continued to go down.’

But some at the Institute of Directors (IoD) say there is a need to be vigilance, “there is genuine apprehension over asset prices, the misallocation of capital and consumer debt," said the IoD's chief economist, James Sproule, but "borrowing is comfortably below the unsustainable pre-crisis levels, but with debt once against rising there is a need for vigilance. "The question is, will the Bank look back on this unprecedented period of extraordinary monetary policy and wish they had acted sooner?” he said.

Despite these concerns, most do not see a rate rise until well into 2016. Howard Archer, chief UK economist at IHS Global Insight said: "The first interest rate hike from 0.50% to 0.75% is still most likely to happen in May 2016 - but the risks now seem to be that the increase could be later than this rather than before it. As things currently stand, an interest rate hike in the first quarter of 2016 looks unlikely."

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  


Source - BBC news

Early UK rate rise?

Enable’s IFA’s in Bishop’s Stortford note that once again the Bank of England has held UK interest rates at the record low of 0.5%. Forecasts for the first change in interest rates since 2009 have again been pushed further into the future, as the outlook for global growth had weakened, which was depressing the risk of inflation. UK interest rates have now remained on hold for six-and-a-half years.

The Bank of England said, "the outlook for global growth has weakened since August."It blamed emerging market economies for that weakness, saying growth in those regions had "slowed markedly." While the Bank expects inflation to rise above its 2% target in two years, it says that risks "lie slightly to the downside" during that time period meaning inflation may not rise as quickly as the Bank forecasts.

BBC economics editor Robert Preston said, “Mark Carney gave what many would see as a bum steer in July that interest rates would be going up around the turn of the year. The implication was unambiguous: we should prepare for the end of the era of near-zero interest rates that has prevailed since early 2009.”

Other economists are saying that the latest reports indicate that the Bank of England remains relaxed over an interest rate rise. "That magic first rate rise has been kicked into the long grass once again. Only a few months ago, the Bank was saying that inflation wasn't picking up because of the low oil price. Now it's emerging markets. You have to wonder what their next reason will be," said Paul Diggle from Aberdeen Asset 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  



Source - BBC news

Do you have an endowment mortgage?

Enable’s IFA’s in Bishop’s Stortford have started to talk to more and more borrowers who took out an endowment mortgage towards the end of the last century that will soon be facing a shortfall at the end of their term. According to the Financial Conduct authority, the first sizeable wave of these cases is expected to appear in 2017-18, when endowments sold in the 1990s reach their peak period of maturity.

The problem is that endowment policies are failing to generate enough returns to clear the mortgage debt at the end of the term has been exacerbated by the failure of many homeowners to prepare for this very possibility. Citizens Advice has estimated that more than 930,000 borrowers on interest-only mortgages have no savings plan in place to repay their loans. Many of these borrowers will have of course built up their equity through house price growth – but moving to a full capital repayment mortgage is simply not affordable.

This is likely to be an area in which more mortgage lenders start to become involved as borrowers look to convert some or all of their mortgage balance from interest only to repayment in the next few years.  Leeds building society have been leading the way and have seen uptake from re-mortgage borrowers who are keen to make inroads into their debt on a gradual basis since launching its part capital and part interest-only mortgage product.  It is offering a way for borrowers to flexibly starting to pay down their loan in a more manageable way. Enable’s IFA’s may be able to help you find a solutions. Remember your home could be at risk if you do not keep up your mortgage or re-mortgage 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 

Source – Sage Equity Release Service

Poppy Bonds

The poppy Bond is a way of saving and giving at the same time. The Coventry has continued its tradition of Poppy Bonds, supporting the Royal British Legion by issuing fixed rate bonds that donate a stated percentage of the total amount invested to the charity. The society says it has donated millions of pounds to the Legion's Poppy Appeal. The three-year fixed-rate bond has been available from October 23 and is only available for limited amount of time.

 Coventry Building Societies’ latest Poppy Bond pays 2.35pc fixed until 2018 plus 0.15pc to The Royal British Legion which is less than the market leading rate, but customers have the bonus of donating to a worthy cause.  The building society makes a donation to The Royal British Legion on overall bond balances as of December 31 2015. Since it launched this range in 2008 the Coventry Building Society has so far donated £12m to The Royal British Legion.

The account can be opened with £1 and the maximum investment is £250,000. The Poppy Bond is a no access account which means savers cannot touch their money for the three year term.  The latest Poppy Bond pays a fair bit less than the market leading fixed rate bonds however, it’s still a competitive rate and savers have the added bonus of donating to a charitable cause. If you like to give as you save Enable’s experienced IFA’s in Bishop’s Stortford can help you find a bond that could work 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 

Source - Moneywise

Loosing track of your savings

Enable’s IFA’s in Bishop’s Stortford know that many of us spend significant amounts of our lives trying to build up savings so it seems extraordinary that some savers lose track of finances after retirement according to the research for Fidelity Worldwide Investment.

The findings were drawn from a survey of more than 1,000 people, roughly two-thirds of those who were retired and a third who were still working in a full or part-time capacity. Those surveyed had some form of retirement savings on top of a state pension, although their money was not necessarily held in a pension scheme. Clearly the people surveyed had been interested in saving but it seems, as the research suggests, that savers are more likely to lose track of their finances once they are in retirement. One in five (20%) people aged over 55 who were still working did not know the value of their pension savings, this increased to 30% among those who had retired.

The study found evidence to suggest that 13% of over-55s did not know how they were going to fund essential outgoings.  Over-55s in the Midlands were found to be the most out of touch with their retirement savings, with more than one in three (35%) saying they did not know how much their combined savings were worth. Nearly a third (31%) in Scotland and a similar proportion (30%) in Wales did not know the overall value of their pension savings. People in London were the most engaged with their pension savings, with almost four-fifths (78%) knowing the value of their pots.

It may be easy to slip in to apathy as you approach retirement feeling like you do not have too many resources and clearly saving more earlier is better but Enable’s IFA’s in Bishop’s Stortford may be able to help you make the best of what you have.

Source - AOL Press Association

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 

When's the right time to pay off your mortgage?

For many paying off the mortgage is one of the things that Enable's IFA's in Bishop's Stortford  regularly see people aiming for so they can enjoy their later years.  But a study, by the Saga Equity Release Service, has recently  discovered that one in three people over the age of 50, and one in seven over the age of 70, still have a mortgage. And that on average those who still have a mortgage in their 70s will have £40,000 left to repay.

There can be lots of reasons for still having a mortgage to pay in your later years many over the years take out an interest only mortgage so at the end of the mortgage period are not in a positon to repay the debt some have tapped into the equity in their home over the years, in order to maintain a lifestyle that was maybe beyond their means hoping that house price rises would help wipe out their debt. And not everybody buys property when they are young, and gradually pays it off, life can end up being a bit more complicated and issues like unexpected debt and divorced can get in the way and mean some people have to start all over again.

The Saga research also found that a third of people over 50 had never tried to renegotiate their mortgage, so for some there could be serious savings to be made from shopping around for a cheaper deal. Enable’s IFA’s in Bishop’s Stortford might be able to help you find the right deal for you.

Remember your home could be at risk if you do not keep up your mortgage or re-mortgage 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 

Source - Saga Equity Release Service

Are you confused about single tier pensions?

Enable's IFA's in Bishop's Stortford know that many of us hoped that a single tier pension would iron out confusion about state pensions and would offer a simple solution. A new study from Hymans Robertson suggests that it's not simple, and it's not that generous. They say that “in fact, most people will be worse off under the new system.”

Sue Waites, Partner at Hymans Robertson, said: "There's a widespread expectation that everyone who reaches state pension age from April 2016 will move from a basic state pension of £115 to a new flat rate of £151 per week. The reality is quite different. The transition to the new State pension brings many complications, particularly for those approaching State Pension Age. Some will be very surprised at how much they actually get."

The study suggests that fewer than half of those reaching the right age soon after 2016 will qualify. The number of people with fewer than 35 years of National Insurance contributions will be partly responsible for this. However, the big problem is the number of people who have opted out of the state second pension at some point in their career - which the government will reflect in lower state pension payments. Waites says anyone approaching their state pension age should contact the DWP, explaining: "Get in touch with the DWP to find out what you're likely to receive and avoid any unpleasant surprises."

If you want to make sure your retirement is a comfortable as you hope it will be Enable’s IFA’s in Bishop’s Stortford can help you look at the whole picture including your State pensions.

Source -Hymans Roberson

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 this the time to remortgage?

Rising house prices and mortgage regulations are making it harder for first-time buyers, but if you already are a borrower there has probably never been a better time to look in to remortgaging. "The appetite for remortgages began to gather pace in the second quarter of 2015, with an increase in the value of applications of 14 per cent year on year.” Said Martin Richardson, director of business development at Leeds building society, and "The value of remortgage applications started to accelerate rapidly during late summer, soaring by almost 60 per cent in August compared with a year earlier.”

These figures are being driven by a couple of key factors – the remortgaging market offers relatively low risks so lenders are happy to address this area of the market meaning that compared to last year, there are now 300 more remortgage products to choose from.  This competition has a positive knock-on effect, with the price of the loans having fallen in recent months. In some cases there are even some excellent fixed-rate deals are available, whether you've got equity of 40 per cent or 10 per cent in your home.

Enable’s experienced IFA’s in Bishop’s Stortford are regularly discussing how the combination of very low interest rates, and the wide choice of remortgage products, especially for those who are interest- only borrowers make it an interesting time to consider change.

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 

Helping the kids save

When parents ask Enable’s IFA’s in Bishop’s Stortford to help them save for their children one of the easiest ways is through a simple trust or "bare trust”, but some argue that this method often gives the child too much control over the money. When they reach 18, they have full rights to the income and capital and they can decide where to invest that money. "The child has no say in the investments before this time, but when they're 18 they can blow it on whatever they want," said Patrick Connolly of Chase de Vere.

Another option is a "discretionary trust," as the name suggests the trustees have discretion over how to use the money, and you can stipulate an age restriction. But unlike a bare trust, where the child can use their own tax-free allowance, the rules are different for discretionary trusts. With a discretionary trust, the first £1,000 of investment growth is only ever taxed at the basic rate. Any growth above this is taxed at 45pc. Any increase on the original amount you invested, after costs and any losses is taxable. On top of this, if you dispose of shares the trustees will be able to use an annual capital gains tax exemption of £5,500, so capital gains could become an issue.

To be as tax-efficient as possible it makes sense to structure investments towards "growth" rather than "income", so that you limit the dividend income - and therefore the tax. If you need help working out if a trust fund is right for saving for your child Enable’s experienced IFA’s in Bishop’s Stortford can 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

What’s your life expectancy?

More and more people are receiving their 100th birthday cards from the Queen these days according to the Office for National Statistics. Enable’s experienced IFA’s in Bishop’s Stortford note that back in 1981 only 2,420 got a card, and if you go back to 1901 you would have been lucky to have made it to age 50.  But a girl born in 2011 has a one in three chance of making it to 100 and the odds are only slightly lower for a boy at one in four.

The problems posed by an ageing population are obvious with fewer people of working age and more people in retirement, which means that tax increases are necessary as the pressure on the welfare state grows. The Kings Fund think tank predicts the number of people aged between 65 and 84 will increase by 39%, between 2012 and 2032 and the number of 85 pluses will soar by 106% while the number of people aged 14 to 64 will increase by a tiny 7%.

This can pose real challenges for pensions as Dr Ros Altmann explains: " With all the developments in healthcare, medicine and working practices, people are living longer and staying healthier, being able to live well with illnesses that people used to be disabled by or die of. But that means retirement is lasting longer too - so your pension savings have to cover you for many more years than you might have expected when you started." Enable’s IFA’s in Bishop’s Stortford can help you make plans.




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

The 4pc rule for drawdown

Another question central to financial planning and often discussed by Enable’s IFAs in Bishops Stortford relates to amounts to draw down on savings.  For pension savers now that retirees have greater control over their assets and are not required to buy an income-paying annuity it is important to work out how to draw income. Generations of investors have pondered the problem, and some claim to have developed strategies that solve it.

One “rule” widely used by pension’s savers in America is the 4pc rule.  It is not a magic formula but it could be considered well respected and popular with many financial advisers here in Britain. The idea is that 4pc is the maximum amount that can be safely withdrawn from a pension each year over any 30-year retirement. Although in this period your portfolio’s capital value might fall as well as rise, your income payments – starting at 4pc of your initial capital and increasing yearly in line with inflation thereafter – will always be met, at least for those three decades.

This number was based on work undertaken two decades ago by an American former financial planner, William Bengen, and designed purely to help pensioners maximise their retirement savings while minimising the risk of running out of cash. The theory was given the thumbs up by another academic paper a couple of years later, which put the chances of success at 95pc. This assumed that savers would split their pension portfolios into two, with half in shares and half in bonds.  Both studies arrived at their conclusions following analysis of US stock market and bond returns over almost 100 years. If you want to talk about where this American model might work for you Enable’s IFA's would be happy to talk things through.

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 age should you plan to retire?

Enable’s IFA’s in Bishops Stortford often find themselves discussing when people would like to plan to retire. In recent years the government has steadily increased the state pension age to 68 and it could go higher. Pensions minister Steve Webb said “working past 65 will benefit individuals and the state, on the one hand giving people more time to build up sufficient pension funds, while keeping a lid on the bill for the state pension, which is expected to quadruple by the mid-2060s to £420 billion from £98 billion this year.”

Pensions expert Ros Altmann however suggests that working late into life even to 80 is unfeasible but that individuals should no longer expect to retire at 55 which is currently the earliest age at which pension funds can be accessed. On average people are actually retiring earlier than they did in the 1950’s. ‘In the 1950s, the average age of retirement for men was 67,’ says Altman. ‘At that time life expectancy was much lower than it is today, yet people are retiring earlier. This means that lifetime income is lower, especially as they often start work much later too, and they have less chance to save for a good later life income. ’It is only since the 1980s that ‘an expectation had developed that people should aspire to retire in their 50s’. ‘This is simply not sensible or sustainable, especially as life expectancy has risen significantly, general health has improved and the physical demands of most types of work have eased.’

Perhaps for younger generations the idea of a ‘retirement age’ will be an outdated concept with individual choice, and importantly economic means, determining when a person stops working. If you need help planning your pension Enables IFA’s in Bishop’s Stortford can help you look at the 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

Are you part of the lost generation of savers?

Recently Enable’s IFA’s in Bishops Stortford noticed articles drawing attention to “A lost generation of savers aged 35-to-45” - some believe that are going to be the worst prepared for retirement.  This is the swathe of people stuck between “millennials” and “babyboomers.” Babyboomers have retirement sorted out owing to historically more generous workplace pensions and defined benefit (DB) schemes that pay out a multiple of years worked and a percentage of final salary as income for the rest of an employees’ life. And the younger generation of millennials are saving early thanks to auto-enrolment, so they should be in a strong financial position when they reach retirement with decades of savings behind them.

But Holly Mackay of Boring Money, has warned that those aged 35-to-45 are not saving enough considering the reduced amount of time they have until retirement. Her survey found that of the 35-to-45 age group, just 22% were saving into a private pension. ‘There is a lost generation of 35-to-45 year olds who are rubbish with money,’ she said. ‘You have the swotty millennials who are saving money and planning, and the babyboomers, [but those in the middle] assume that the job is done because they are making workplace contributions but the contribution rates are too low.’

Jamie Jenkins, pension expert at Standard Life, agreed that there is an emerging ‘lost generation’’ he also said, “that prior to auto-enrolment, the Department for Work and Pensions estimated 10 million were not saving for retirement and now, despite more people saving, there are between 10 million and 13 million people who are not saving enough even with auto-enrolment.”  Enables IFA’s in Bishops Stortford know that the only solution for those who fall into this gap between the two generations is to save more into workplace pensions now, top up later, or work longer, we can help you talk through saving more.


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

Understanding the New state pension

Enable’s IFAs in Bishops Stortford have been keeping tabs on Pension minister, Ros Altmann since she launched a drive to explain the changes under the tagline ‘our state pension is changing.’ Alongside your other pensions or savings effective from April 2016 will be the new state pension.  It will move from the current ‘two-tier’ system, which is made up of ‘basic’ and ‘additional’ rates to the ‘single-tier’ flat rate pension of no less than £151.25.

Enable’s IFAs know that many people will be basing some of their financial decisions on the likely state pension amount they will receive. Back in July it was revealed that just one in three will receive the full flat-rate state pension - 100,000 fewer than expected, according to government figures. The Labour party accused the government of an “unacceptable failure” in transparency with people over their state pension entitlement.

Altmann admitted that the job of explaining the new state pension ‘hasn’t been done well enough,’ but said ‘Huge efforts have been put into reforming the mind-blowingly complicated state pension system that exists today into something that, over time, will be clearer and fairer for everybody,’ ‘But the job of explaining to people how the reforms will affect them hasn’t been done well enough.’ ‘People need to understand, so they can make the right decisions about saving and preparing for later life.’

If you need help making the right decisions about savings and pensions to prepare for later life, Enable’s independent Financial Advisors in Bishop's Stortford can help you think it through.

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

Off shore bonds

If you are in the fortunate position to have more than one lump sum to invest and have the ability to defer paying tax on growth and withdrawals, you might have been wondering about offshore bonds and the benefits of “gross roll-up”.  Essentially this means gains are not subject to tax at source, apart from an element of withholding tax. So taxation is deferred until the bond is surrendered, in full or in part.

Another advantage of off shore bonds is 'top slicing relief’, which can in some circumstances reduce your higher-rate tax if there has been a gain at the time of a 'chargeable event. In the broadest of terms this means that the total gain made by the bond is divided by the number of years the investment has been held and referred to as the 'slice’. It is this that can then be added to your other income and tax is paid on it accordingly. If the slice was all within your basic-rate tax band, 20pc tax would be payable on the whole gain. If the whole slice is in the 40pc bracket, higher-rate tax would be payable on the whole gain. In cases where the slice crosses tax bands, the tax charged is a blended rate.

Off shore bonds may look attractive but before investing in them you should make use of your ISA and possibly pension allowances fully as an allowance is like an offshore bond, and ISA’s allow your funds to grow free of tax. Enable’s IFAs can help you find the best place for 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

Is a possible ISA pension a good idea?

Enable’s IFA's in Bishop's Stortford have spotted that the government is still thinking of tinkering with the structure of pensions as another consultation, we look at changes to tax relief offered on pension contributions and a more radical option to scrap pensions in favour of a pension-ISAs with a new tax regime.  Under the mooted plans pensions could be moved from the current system of taxation, as exempt-exempt-taxed (EET), which means contributions are tax-free and so is growth in the pension but withdrawals are taxed as income, to an ISA-style regime. ISA-style taxes are known as taxed-exempt-exempt (TEE): contributions are taxed but growth and withdrawals are tax-free.

At first glance it might look like a simplified way of taxing pension savings by doing it in the same way as ISAs are, but  Hugh Pemberton of the University of Bristol said over the long-term savers would lose out by up to 17%.  The main problem identified by Pemberton with the TEE system is the loss of compound interest on the tax relief paid.

Current Tax relief boosts pension contributions by the highest rate of income tax paid by the saver, so either by 20%, 40% or 45%, meaning more money is put in the pot at the outset. Then this tax relief is invested along with the rest of the contributions boosting the pot further. And the Investment returns made on existing returns is known as compounding – which Pemberton said “was described by Einstein as the eighth wonder of the world thanks to its ability to turn small sums of money into much larger sums over time.”


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

Pension Penalty charges

At Enable in Bishop’s Stortford our IFA’s know that over 200,000 retirees accessed their pension in the first three months of the new freedoms, and more are doing the same. A good 84% of people who did this experienced no exit charges for moving their money into drawdown and making use of the new pension freedoms. But that means that some 32,000 retirees were hit by penalties, some up to 5% of their pension pot.

The good thing is that these charges relate to older pensions. Laith Khalaf at Hargreaves Lansdown said it is the older contracts from the 1980s and 1990s that are more likely to have exit charges; modern contracts no longer allocate ‘capital units’. He continued: “Capital units’ were extra funds allocated to savers to cover the cost of commission paid out to advisers. Exit charges effectively claw back of these extra units when a pension is transferred. Capital units are no longer allocated as advisers are not allowed to receive commission in this way anymore.” Khalaf also added that even these pensions should be able to be transferred without penalty if they were held to maturity, typically age 60 or 65.  However, those wishing to transfer before the maturity date will have to decide whether the increased flexibility and accessibility of pension cash is worth the fee they will pay.”

Enable’s IFAs in Bishops Stortford can help you look at you existing pensions and help you find ways to provide for your retirement.

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

Making sure you have Independent Financial Advice

As experienced IFA’s at Enable in Bishop’sStortford we are clear that good financial advice is not free. We also acknowledge that there are a lot of DIY solutions available on line and you can work some things out for yourself, but if you're looking at getting a complex financial product that is a core part of your future financial stability, even the most cynical can see the value of paying for an adviser to make sure you have the right product for your needs. 

 

If you are not clear it is important to remember that generally there are two types of financial advice independent or restricted.  An Independent financial adviser or and IFA is 'independent' and that means that they are able to advise and sell products from any provider right across the market. By talking to and IFA about your needs you should get the very best advice and products tailored much more for you. In contrast restricted advisors can only recommend certain products or product providers.

 So if you're looking at complex financial products, it can pay to get advice. If you're not sure or not confident doing the research yourself talking to an independent financial adviser can really help. It is also sensible, even if you're going to use an IFA to read up on what you're hoping to achieve and what financial tools might be available before you meet your IFA. That way you'll feel more in control of the decision-making process.

 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    

Don’t stick your head in the sand with pensions

Enable’s IFAs in Bishop’s Stortford always recommend starting a pension as early as possible, some research by Retirement Advantage shows that even when people have saved, many still burrow their heads in the sand when it comes to the size of their pension pots.

Apparently as many as a quarter of people don’t know how much they have saved, and those that can estimate how much they think they have in a pension recon its just over £110,000, with a fifth having less than £50,000, and 12% think their pension ranges between £50,000 and £100,000.
 

Andrew Tully of Retirement Advantage thinks,“ retirees underestimated how much they would need in order to benefit from drawdown - and £100,000 may not even be enough to pay for retirement income.” He suggests a very basic calculation to try and work out how much you need in you’re pension pot. ‘Ask yourself what income you would like in retirement, people may say £10,000 a year, and if you expect to live for 20 years, then do some basic arithmetics, the figure you need isn’t going to be less than £200,000.’ It can be a bit of a surprise for some people.
 

Another tricky issue is that no one knows how long they are going to live, so even if this simple equation could be wrong if you end up living for 25 or 30 years in retirement. Enable’s IFAs in Bishop’s Stortford can help you look at what you might need in retirement and how to work towards saving it.

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  

Can you afford drawdown?

The pension freedoms that have been given to everyone aged 55 or over, offer the chance to use drawdown, once the preserve of wealthier retirees, no matter how much has been saved.  This ability to dip into your pension for cash lump sums as well as to use it to provide a retirement income is open to everyone but it’s only realistic if you’ve saved £100,000 or more.

Just because everyone can now access drawdown it doesn’t mean that everyone can actually afford to do it. Many independent financial advisors have real concerns that individuals don’t understand how long their retirements could be being a bit rash in accessing cash in the early years, leaving them with a meagre income in later years.

Simon Massey, wealth management director of MetLife, a pension provider, says ‘There is a key question about…how long your money will last,’ he said, ‘ a man aged 65 has a one-in-four chance of living to 90 and a one-in-10 chance of living to 100.’ Massey believes that in order to be able to benefit from drawdown, someone needed savings of ‘between £100,000 and £150,000’ as a minimum. ‘Unfettered drawdown is right for some clients if they have the capacity for loss and they can take a long-run view but not a lot of customers are in that position,’ he said.  In short, many people have not saved enough to be able to raid their pension for lump sums and also expect it to provide an income.

Massey said recent stock market turbulence had added to the problems of drawdown cash running out as some people who had their money invested through a drawdown plan ‘will be feeling the effects of the downturn right now’. If you need help looking at your drawdown options Enable’s IFA’s in Bishop’s Stortford are happy to look at the options with 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