What of these pension freedoms

With the introduction of pension freedoms and the end of the tax year many financial advisors like the experienced IFA’s at Enable in Bishop’s Stortford have been busy helping clients look at their options. But there don’t seem to be that many Lamborghinis driving around town so perhaps Steve Webb’s comment has not actually come to much.

If you get down to the nitty gritty the average pension pot from defined contribution schemes is close to £40,000 and from defined benefit schemes about £120,000 are not realistically going to be buying people hoards of luxury goods. Hopefully people generally are much more sensible with the  cash they draw out of their pensions most are still clear that it needs to be used it for its original purpose, to provide a regular income in retirement. What is always hard to truly predict is much cash is needed and for how long?

Some like Kim North who is managing director at Technology and Technical think things maybe improving in the UK, "I believe we are moving away from being one of the worst countries when it comes to saving for retirement. We need to provide as much education as we can on pension choices." She also believes; “ One of the biggest educational challenges is convincing people that pension fund money should not sit in “safe” deposit accounts. With the FTSE at an all-time high and inflation at a record low, this is an economic period where better understanding of basic investment principles is needed, particularly as the average retirement period in the UK is 19 years.” If you are wondering what is best for you Enable’s IFA’s are here 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

Financial Education in Schools

Enables IFA’s in Bishop’s Stortford have followed with interest this government’s delivery of a financial education in schools.  But understandably few teachers have felt fully prepared to teach financial education so there has been a real need to create the right resources.

 It’s interesting to take a look at the Personal Finance Education Groups (PFEG's) website where there are all sorts of resources becoming available to help things in the classrooms.  Chief operating officer Louise Hill had said: “I am a school governor and what became clear last year is that although financial education became part of the curriculum, the Government was not producing a lot of resources to help deliver that content.”  So inevitably other companies had created some of their own education programmes, Nationwide Education, which offers online games for children as well as worksheets and other resources for teachers. RBS has a Money Sense programme for 11-18-year-olds, which it says is used in 56 per cent of secondary schools across the UK and Ireland, including academies and independent schools, which do not have to follow the national curriculum.

But although Enables’ IFA’s in Bishop’s Stortford fully support the importance of financial education as early as possible it still like many thinks it may not be the best thing to have big brands getting in front of school children and it is right to be wary of banks going into schools as a branding exercise.  Many say teaching children how banks work doesn’t necessarily teach them that there’s a competitive market and they need to compare a number of banks and make a whole host of other sensible financial decisions as they grow up so it is good to see what PFEG's are offering.

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 

But I’ll be getting a state pension?

Enables’ experienced Independent Financial advisers often hear people say I’ll be getting a state pension and at the moment most of us will be entitled to a state pension when we are old enough.  So the state does provide a safety net but for most of us this really won't be enough to provide for a comfortable - and enjoyable - retirement. Pensions specialist Dr Ros Altmann says, "If you're thinking of relying on the state pension to fund your retirement, then think again." "The UK state pension is one of the lowest in the developed world and most people will not get that much."

Currently, a full basic state pension provides around £5,000 a year, says Altmann but in 2016 the scheme is set to change to become a flat rate single payment with a full 35-years of National Insurance payments entitling you to around £150 a week to live on, or just over £20 a day." More changes to pensions could come into play overtime.

Currently according to the Department of Work and Pensions, an elderly couple living on less than £215 a week after housing costs, or £125 if you live alone, are considered to be living below the poverty line.  So if you have ideas of wanting  to maintain your existing lifestyle in retirement –eating out or enjoying trips with friends and family let alone travelling the world  you would be wise to start saving for it as soon as possible and that means working your retirement saving into your monthly expenditure.

Saving in this climate might seem like a big challenge, but, over the years Enable’s IFA’s in Bishop’s Stortford know small monthly sacrifices can make a huge difference to your lifestyle at the end of the day.

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

Where could the next cuts fall?

With the general election so close now Enables IFA’s in Bishop’s Stortford have been reflecting on what kinds of policies the Treasury might put into play for savers. Both major parties appear to be seeing pension pots as a legitimate target for revenue-raising.

 What if the recent pensions lifetime allowance changes were also made to apply to ISAs. It's something that has been talked about in government circles for several years as the number of investors with assets in their IASs of £1m or more has grown. The Government could argue, as it has with pensions, that an increase in the annual ISA allowance which currently stands as £15,240 could be justifiably countered by the introduction of a lifetime limit, making the ISA savings strand less attractive. A slightly more tricky area but one in keeping with some of the current proposed changes for pensions could be the introduction of a reduced annual ISA allowance for investors on higher incomes.

In additions both the major parties appear to be heading towards being inclined to claw back allowances from higher earners, as happens with child benefit, maybe this could be extended. The personal allowance, for example, which currently begins to fall away when a person's earnings reach £100,000, could be withdrawn at a lower income

More dramatic, but possible quite popular would be the introduction of extra taxes aimed at Britain's two-million buy-to-let investors. They have already seen a tightening of capital gains tax rules.  Whatever happens on the 7th May Enable’s IFA’s can help you work through the implications for your financial planning.




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 politics

Only recently have this Governments radical changes to pensions come into effect and many who consult Enable’s IFA’s are still trying to work out the best course of action for their pensions but already new policies loom on the horizon. Both of the main parties are talking about limiting pension benefits for the super-rich in their manifestos but the worry is that what’s being proposed could begin to threaten pension decisions across the board.

George Osborne’s March 2014 Budget ushered in pensions changes that saw responsible self-provision savers being rewarded with freedom and choice. But in last month’s Budget in the run-up to the election pension savings appear to be under attack again, the “lifetime allowance”, which limits the total sum anyone can amass within a pension during their life has been earmarked to change from April 2016 so savers whose pension pots rise above that £1m cap will face 55 per cent tax when the money is taken out. 

And to put it in context £1m may seem like a lot but at age 65 £1m will buy a lifetime income starting at just £27,200, (based on a competitive annuity quote today, where the income is set to rise by 3 per cent per year and where your husband or wife gets half on your death). For many earners that level of play out would mean a drastic cut in income. These kinds of return on £1m, is partly why, under the new pension freedoms savers will be trying to do better managing their capital themselves.

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

General election market wobbles

Enable’s experienced IFA’s in Bishop’s Stortford have seen several changes of government and numerous changes of policy. Keeping abreast of changing financial rules and regulations is part of the service.  So it is interesting to see what if any changes investors are making to their investments in the run up to the general election.

 Many savers with ISA’s, pensions and cash invested in wraps or other forms of portfolios might be asking themselves if there is anything they should be doing.  According to a poll from online financial services firm Interactive Investor, when they asked their respondents whether they were planning to make changes to their portfolios, 20.6 per cent of the 11,000 strong poll said they were cutting exposure to some sectors or were increasing exposure to non-sterling earnings and a further 30.4 per cent said they were waiting for the election results before making any changes. But perhaps more significantly over half of those polled said they were investing for the long-term, and that the election blustering is “all just noise”.

Enables’ IFA’s know that most significant financial investments have to be seen as long term and sometimes even the volatility of the short term is not all bad. Interactive Investor head of investment Rebecca O’Keeffe said in response to the poll, “Whilst recent elections have rarely had a long-term impact on markets, there can often be short-term moves and sector changes, which could increase volatility and provide market opportunities”. Pre-election nerves, may be creating some short term concerns about the prospects of the UK but it is important with financial investing to keep your eye on the long-term.


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

Saving for the kids?

It’s the time of year for renewing those Student Loan applications and Enable’s IFA’s in Bishop’s Stortford know that parents who want to be in a position to help their children enter adulthood with sound financial footing; such as help with University fees, a first car or money towards a first home deposit, what ever their requirement it's best to plan.

Supporting the next generation can seem a bit daunting but with a few simple steps you can begin to make a difference.  There are a range of children’s savings plans with minimum investments from as little as £25 per month an affordable, tax-efficient way to build a savings pot for your little ones. If you start early and get time on your side, then as your children grow so can their savings and your peace of mind.

Full flexibility can be part of some plans, unlike the Junior ISA and Child Trust Fund (CTF), you can decide when you gift the money to the child and if you set the plan up in your name or the child’s. In these kinds of schemes you can also make withdrawals related to the child, ideal for childcare costs, school trip funds or even school fees. Some schemes have no investment limit, so you can maximise the tax allowances available to your children by investing up to the maximum limits in the like of Junior ISA and any additional contributions could then be invested into a Children’s Investment Plan.

These can also maximise your inheritance tax advantages - Grandparents who are saving for their grandchildren can reduce their inheritance tax (IHT) liability as sums gifted to the child are free of IHT if the donor survives for seven years after making the gift. It is good to talk through your plans with an IFA as with many investment plans there are risks as well as rewards.




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 I still invest in an annuity?

Since the government pension reforms if you are currently nearing retirement, it is important you take these changes into account. Enable’s IFA’s in Bishop’s Stortford are happy to help you look at how the recent changes impact on your pension planning. For pension planning many are still asking is there still room for normal annuities or income drawdown and some experts think investment-linked annuities offer the best of both worlds.

The reason people still buy annuities despite rates being so low is that they offer the only means of turning a lump sum into an income that’s guaranteed for as long as you live. Your annuity may still be paying you in 40 years time but how inflation will have eroded its value is impossible to tell.

An income drawdown plan solves some of these problems but brings new ones, these schemes, mean your pension fund remains invested and you can withdraw money from it to provide an income. Within limits your income can vary as your needs do. Of course if you keep your fund invested in assets such as shares, they have a reasonable chance of keeping pace with inflation. The problem is that if you use drawdown as a means of getting a better income than an annuity, you risk eating away at the fund itself.

Investment-linked annuities might provide a solution for some here your income will rise if the underlying investments do well (and fall if they don’t), but you get two important guarantees that drawdown doesn’t offer: your income will never fall below a set minimum, no matter how badly the investments perform; and the income will be paid until you die. Enable’s IFA’s are happy to talk through annuity 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

Election promises for Inheritance Tax change...

With the next General on the horizon Enables IFA’s in Bishop’s Stortford are looking out for changes that will impact on Financial Planning. Recently the Prime Minister David Cameron has pledged the Conservatives will create a new threshold for inheritance tax of £1m if they are re-elected.  They say that these changes would come into effect from April 2017.

They say that they will fund these changes by putting restrictions on pension tax relief for those earning more than £150,000. The changes would mean that the annual allowances for savings would be tiered on earnings between £150,000 and £210,000, with those earning £210,000 seeing their annual allowance cut from £40,000 to £10,000.

But David Cameron said “the individual Inheritance Tax threshold will be raised from £325,000 to £500,000 when property is included, giving married couples a shared £1m threshold.” Cameron said: “We will take the family home out of inheritance tax. That home that you have worked and saved for belongs to you and your family. You should be able to pass it on to your children. And with the Conservatives, the taxman will not get his hands on it.”

The Conservatives pledged to raise the limit to £1m in their 2010 manifesto, a move blocked by the Liberal Democrats in coalition. Labour also plans to reduce pension tax relief for those earning over £150,000. Whether these potential changes affect you or not our IFA’s at Enable are happy to talk you through the implications of Inheritance Tax and help you maximise your financial plans for you and your family.

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

Downsizing plan to fund retirement?

Downsizing may seem an attractive part of preparing to fund your retirement for many with substantial properties that are nearly paid off and Enable’s experienced IFA’s in Bishops Stortford know that property can form a significant part of a retirement  plan.  But downsizing may not be plain sailing when you consider all the costs associated with buying and selling form the estate agency fees and the legal fees and the cost of moving not to mention the stamp duty on larger properties sometimes, downsizers may not find themselves able to unlock as much capital as they hoped for– even in a rising market. "If property prices have gone up it means you'll get more for yours when you sell, but it also means you'll have to pay more for whichever property you buy next. Also many people find that when they downsize they can't afford to buy a property they like in an area they like."

And the move might not be as attractive or convenient as you had hoped while you imagine you'll be able to manage with a smaller property after all the children have left home the reality could be different if grandchildren come along, fewer bedrooms, getting used to smaller kitchens, cramped living spaces and no off-road parking could fee to some like a real downshift in your lifestyle at the very time you want to start enjoying it.

Relying on property too heavily can mean putting all your eggs in one basket and it is difficult to get any real diversification when investing in property. For most people the best approach for long-term savings is a combination of pensions and ISA’s. Pensions provide initial tax relief which give your savings an immediate uplift but they are inflexible, whereas ISA’s can still be tax-efficient and you are able to access your money whenever you like. That's not to say that an investment in property cannot form a part of your retirement strategy but maybe not all of 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

A buy-to-let income without being a landlord?

If the hassle of being a buy to let landlord does not appeal to you Enable’s IFA’s in Bishops Stortford have been look at whether “Property ISAs”' offer investors exposure to the housing market in a better way. Have you thought about whether you be looking to invest in property with your ISA allowance this year? Investors currently have a lot broader range of funds to choose from, and for the first time you can invest in the residential property market this way. Up until recently most property investment had to be via a commercial property fund. These funds traditionally either invested directly in bricks and mortar, or held shares in property companies.

However, there are now available specialist tax structures called property authorised investment funds (PAIFs), and real estate investment trusts (Reits) – these are basically a property investment trusts which are listed on the stock market. Essentially that makes them pooled funds that can invest in both commercial and residential property. Investments held within these structures don't have to pay corporate tax on their income or gains, which potentially boosts returns for investors. These can either be bought direct, or purchased via an Isa, protecting investors from capital gains and reducing the tax due on any income received.

Some advisers may still be reluctant to recommend residential property to clients who are already heavily exposed to it through home ownership and continue to favour commercial property, highlighting its ability to pay an attractive income and pointing to historically low correlations with equities and bonds. To see what is best for your investments Enables IFA’s in Bishops Stortford can talk you 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 

Pension freedom is upon us?

With new pension freedoms now available Enable’s IFA’s in Bishop’s Stortford can see that only one thing is really clear and that is that the new world of pensions is unchartered waters for providers, advisers and consumers alike.  In this brave new world finding the right path to generating the income you need from savings to retire is what it is all about. Income, security, access and inheritance are the most common priorities among those nearing retirement in our experience but the most used traditional solution to providing for retirement- the annuity is not proving popular.

In a recent Platforum report, financial advisers were asked how likely it is that they would recommend various retirement savings products in light of the current pension changes. Annuities came off badly, with almost 40 per cent of advisers saying they would not recommend them confirmed by annuity sales figures having plummeted since the pension freedoms were first announced.  This shift presents a huge challenge for providers, particularly as it would seem consumers do not like annuities either the Platforum consumer research also found that only 5 per cent of Telegraph readers would consider an annuity at retirement.

So what will people over 55 choose to do with their pension cash? Non-advised drawdown looks like a particularly risky pension plan many advisors like Enable of Bishops Stortford are looking closely at the options and one very positive outcome is the idea of a multi-asset managed drawdown product, In the Platforum report 60 per cent said they were likely to recommend this route, with only 22 per cent unlikely to do so. A number of fund managers have already brought products to market, most of which look to generate income and offer potential capital growth over the medium to long-term for their clients. If you need help planning your financial future Enable’s IFA’s are happy to talk you 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