With more people changing jobs over their working lifetime, the average saver can have multiple pension pots and have no idea how to track them down. What’s more, people move homes and can lose track of paperwork over the years.
As a result, the Department for Work and Pensions (DWP) has estimated there are over £400m in unclaimed pension savings in the UK.
If you’re in this position, then there are various steps you can take. Contacting old employers for details can be a good first step, and then there’s the free Pension Tracing Service provided by the DWP. This service was launched back in May 2016 and has been used more than a million times by savers.
What do you do if you have multiple pension schemes
You may want to consider consolidating your various pensions into just one plan. Potential reasons for moving a pension could include seeking better investment performance, looking for lower charges to boost your retirement income and pursuing access to a wider range of investments. But before you make your move, there are downsides that you need to consider.
If you’re in a final salary company pension, also known as a defined benefits scheme, it will often be best advice to stay put because of the guarantees attached to your pension. Some money purchase schemes, referred to as defined contribution plans, also offer guarantees that need to be fully evaluated before transferring to an alternative scheme.
Here are some tips to help you get organised:
- Keep a record of all your pension pots, so you don’t lose out at retirement
- Make pension saving a priority. Consider topping up your contributions whenever your financial circumstances allow, remember, within limits, they attract valuable tax relief
- Know your state pension age and get a forecast of how much you’ll receive
- Speak to us about arranging a regular review to help ensure your retirement plans remain on track.
Don’t foget we are happy to meet with you at your home or in our office in Sale. We are only a phonecall away – 0161 718 8328 – and happy to help to guide you through.
The Pensions and Lifetime Savings Association (PLSA) has come up with a suggestion to help people keep their pension plans on track. It has called for savings targets to be put in place to help individuals save enough for a good pension for their retirement years.
According to their research1, 13 million people haven’t made sufficient pension provision and 78% of those aged between 18 and 64 don’t know how to go about finding out how much pension they will receive when they retire.
The PLSA is considering developing a new set of benchmarks that will help savers by providing target figures for them to aim for.
Retirement income targets are commonly used in Australia, and can help people become more informed about their pension by explaining how much they need to save to achieve different standards of living in retirement – such as minimum, modest and comfortable.
GETTING THE RIGHT ADVICE
Whilst most people know that they should save regularly throughout their working lives to accumulate enough to retire on, fewer people are aware of how much they might need to live on, or whether their current pension arrangements are on track to achieve their goals.
Research2 has shown that the average person in the UK thinks that they will need an income of £29,700 a year when they retire; what they are often not so clear about is that to achieve this level of income, they would need to have accumulated a pension pot of around £364,000 on top of a full state pension.
This is where getting advice can really help. We can provide valuable insight into how much your current pension savings are worth, what level of income you can expect to retire on, and what steps you can take to improve your standard of living in your later years.
So dig out your pension paperwork and annual statement and contact us now to arrange an initial meeting. There is no charge for this and it will be the first step to you taking control! Our office number is 0161 718 8328 or you can contact us at email@example.com
1Pensions and Lifetime Savings Association, Nov 2017
2One Family, Nov 2017
The Financial Conduct Authority recently carried out research1 into the financial arrangements of just under 13,000 consumers in the UK. The results make for worrying reading. One of the findings that really stands out is that 31% of UK adults have no private pension provision, meaning they may have to rely solely on their state pension in retirement.
The report highlights that many people find pensions very confusing and have no idea what they will have to live on when they retire. The full state pension is currently £159.55 per week, but is only available to those who have a complete record of National Insurance contributions. The study also revealed that only 35% of 45 to 54-year-olds have given serious thought to how they will manage in retirement. The sad fact is that the longer people leave it before addressing their pension needs, the harder it is to achieve a reasonable level of income in retirement.
Putting pensions into perspective
Pensions auto-enrolment has been a very positive initiative that has resulted in far more young people paying into a pension than ever before. However, if workers only put in the minimum amount, this is unlikely to be enough to build up a sizeable pension.
The self-employed often regard their business as their pension, or say that they plan to keep working as long as possible. However, this is a high-risk strategy, as they might not find a buyer when they want to sell, or may find that ill-health prevents them soldiering on.
So, if you’re self-employed, an employee, work part-time, run your own business or have accumulated pension pots with past employers, we can offer you advice about saving for a pension. After all, retirement should be an enjoyable and fulfilling stage of life, not a time spent worrying about money.
Pensions don’t have to be confusing – at Platinum we take the pressure off and don’t bombard you with unnecessary jargon or terminology but we guide you through the process. Call us now on 0161 718 8328 to arrange an initial meeting.
1FCA, Financial Lives Survey, Oct 2017
Individual Savings Accounts (ISAs) are a great way to invest free of tax on the income and any capital gains. The amount you can put in each year has gradually increased. A growing number of people are becoming ‘ISA millionaires’ as a result of rising stock market prices, and the steady increase in the annual ISA allowance.
Generous Annual Limits
The allowance for the 2017-18 tax year is set at £20,000, meaning that couples can put away up to £40,000. Sadly, it seems that the ISA message hasn’t filtered through to everyone. HMRC has produced data that shows only two thirds of those earning more than £150,000 a year use up their ISA allowance each year.
With pension contributions subject to annual and lifetime limits, ISAs represent an excellent way of topping up retirement income, although the cash or shares could be subject to inheritance tax on death, unlike the types of pension that can be passed on to beneficiaries more tax-efficiently.
Making it to a million
If you were able to invest your full ISA allowance in a stocks and shares ISA every year, the ISA limit increased by around 2% each year, and your investments made an annualised return of 5% after fees, you too could join the elite band of ISA millionaires in 22 years (purely an example for illustrative purposes). Of course, we must underline that this is not guaranteed, because stock markets can and do go down as well as up.
Planning for the future
If you’re planning to invest this tax year, it’s a good idea to put plans in place as early as possible. The longer your money is invested, the more time it has to produce tax-free returns.
You can’t carry any unused ISA allowance into the next tax year, so don’t risk missing out on the valuable tax breaks available. We can help you investigate the choices on offer, and help ensure you use your allowance wisely.
Taking financial advice
It is essential to seek financial advice for tax planning purposes as you save for your future. On the run up to the tax year end we welcome you to get in touch for a financial review to ensure you have taken advantage of tax incentives available to you.
We look forward to working with you.
2018 is well underway and the first few weeks of the year have seen record high levels of the FTSE 100 index, as well as the Dow Jones.
The main concern is whether this optimism is based upon solid foundations, or it is a bubble about to burst.
Within the UK there are lots of reasons for the buoyant markets. The weak Pound, especially against the Dollar and Euro, has certainly helped, as evidenced by increasing yields from the FTSE 100 companies.
There are though other positive stories, such as the pick-up in manufacturing productivity. This is arguably most encouraging as it shows the UK economy is moving forward and not totally reliant on exchange rates and overseas earnings.
The US continues to defy expectations as their financial markets buoyed by the relaxed taxation rules.
Looking ahead we are fairly realistic in that the main indices such as the FTSE 100 in the UK and the Dow Jones in the US, will ultimately suffer a correction and fall back from their highs.
But for our clients who hold truly diversified investments this isn’t a concern as their exposure is fairly modest.
The majority of our clients investments include numerous asset classes and funds which cover almost all geographies and sizes of companies, not just the largest 100 as in the FTSE 100 index.
The year ahead is looking encouraging for investors. Brexit negotiations continue and the media hype is unlikely to distract stock markets too much in 2018.
Investors holding a varied and well distributed portfolio will hopefully see steady growth even allowing for any short-term blips in the FTSE 100 or main US indices.
As with previous market updates, we encourage our clients to keep in touch.
Contact us should you have any queries or worries. Our team are always happy to have a chat. Whether it is a review driven by concerns in financial markets, a change in legislation or simply an alteration in your situation or priorities, please contact us.
In the past week, as we make our way through February, we have seen the corrections alluded to in the recent market update.
The positive news is that most pundits and investment managers consider this dip a short term blip and something which has been a long term coming as the US continues to strengthen as an economy.
This strengthening has an impact on potential interest rates and exchange rates, all of which have a knock on effect to stockmarket fluctuations.
Overall, longer term investment opportunities continue to present themselves and investors with balanced portfolios could benefit from the recent volatility.
With the New Year fast approaching – why not start thinking about your 2018 finances?
A successful financial strategy means not leaving your saving and investments to chance so our Top Ten Financial Planning Tips are:
Consider your goals
Review your short and long-term financial goals – are they still relevant and attainable?
Consider your Inheritance Tax (IHT) position
You don’t need to be wealthy to find your estate liable to Inheritance Tax (IHT), taking advice can ensure your heirs don’t pay too much tax
With the tax-year end approaching you still have time to use your ISA allowance
Revisit your mortgage
If you haven’t reviewed your mortgage, there could be a better, more cost-effective deal available
Check your state pension position
Check your retirement date and the amount of state pension you will receive, go to the gov.uk website
Have a will in place
Having a valid Will in place should be a top priority. If you die intestate your estate might not go to your nearest and dearest
Review your pension planning
Keep your pension planning under regular review to ensure you’re on track for a comfortable retirement, there’s valuable tax relief on offer too
Think about a Lasting Power of Attorney (LPA)
With dementia and Alzheimer’s a major cause of death in the UK, more people are writing a Lasting Power of Attorney (LPA).
Refresh your investment portfolio
Reviews of your investment portfolio are a good opportunity to take a closer look at the underlying assets
Review your protection policies
Life insurance and other forms of protection should form a vital part of everyone’s financial planning
We are happy to motivate you to set the ball rolling – contact us to arrange an initial meeting. There is no charge for this and it will be the first step to you taking control!
Our office number is 0161 718 8328 or you can contact us at firstname.lastname@example.org
We look forward to hearing from you.
In Philip Hammond’s first Autumn Budget, the second Budget of 2017, the Chancellor of the Exchequer promised that his Government would, “invest to secure a bright future for Britain”.
Despite much hype in the run up, the actual Budget was to some extent a non event, with no major changes.
The abolition of stamp duty for most first-time buyers was the most prominent announcement. This, alongside a couple of other key announcements, are likely to impact on our clients.
Within his budget, Philip Hammond caught many by surprise by announcing the abolition of stamp duty for first-time buyers on homes up to £300,000 and in very high-priced areas, such as London, offering a stamp-duty exemption on the first £300,000 purchase price on properties valued up to £500,000; the additional amount up to £200,000 will incur 5% duty. To take effect immediately in England, Wales and Northern Ireland. It will not apply to Scotland, unless they decide to adopt the measure.
On the tax front, the income tax personal allowance will be increased to £11,850 with effect from April 2018, with the higher rate tax band threshold increasing to £46,350. (Rates and bands may differ in Scotland, where a Draft Budget is due on 14 December.)
SAVINGS & INVESTMENTS
The ISA savings allowance for 2018/19 will remain at £20,000. The allowance for JISAs and Child Trust Funds will be uprated in line with CPI to £4,260.
For the first time in seven years, April 2018 will see the pension lifetime allowance increase, by £30,000 to £1,030,000.
The basic State Pension will increase by the triple-lock formula. Therefore, April 2018 will see it rising by 3% (£3.65 per week) – for the full basic pension. The full new State Pension will, likewise increase via the triple lock by £4.80 a week.
If you have any questions about the Autumn Budget 2017 please do call us on 0161 718 8328.
In the first major study to be conducted since the introduction of the new pension rules in 2015, the Financial Conduct Authority (FCA)1 reviewed the actions taken by pensioners who chose not to receive advice when accessing their pension pots. They flagged up several areas of concern.
The FCA found that many people simply took the pension income drawdown that was offered by their pension operator, perhaps without realising that they would have been well within their rights to shop around to see if there was a better deal available from an alternative provider.
Before the introduction of the pension freedoms, 5% of drawdown plans were bought without seeking advice, but since the introduction of the new rules, this figure has risen to 30%. Drawdown can be complex in its operation, so taking advice that takes full account of a pensioner’s financial circumstances can help ensure that the right decisions about retirement income are taken. After all, retirement should be enjoyed and not endured; today’s pensioners can look forward to several decades in retirement and no-one wants to face the prospect of running out of money later in life.
The report also found that in 52% of cases where pension pots had been fully withdrawn, the money hadn’t been spent but had been moved into other savings and investments. Research by Citizens Advice showed that, in such cases, one in three put their entire pension savings into a bank account.
Pensioners who took this course of action risked paying too much tax, losing out on the possible but not guaranteed investment growth they could have enjoyed if they had left the money invested in their pension fund, and in some instances lost other benefits too.
Making the right choice
Today, pensions offer flexibility. However, freedom of choice brings with it the responsibility of making the right decisions. So, if you’re approaching retirement and would like some good advice, get in touch with us on 0161 718 8328 to arrange your financial review. There is no charge for our initial meeting and we are happy to meet with you at your home, workplace or in our office.
We look forward to hearing from you.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.
1 FCA, Jul 2017
Moving can be an exciting but expensive time. Drawing up a budget will help you work out how much cash you will need for the fees you can expect to pay. The exact figure will depend on which rung of the housing ladder you’re on, whether you’re buying and selling, and which part of the country you live in.
There are costs involved with arranging a mortgage and your adviser will talk you through these in detail and confirm them in writing.
You’ll need a solicitor or a conveyancer to carry out the legal work. Typically, they will charge between £500 and £1,500, and will provide an up-front estimate of their fees. If you’re selling a property at the same time, you may be able to negotiate a package deal to cover both.
The cost of selling
If you’re buying, you don’t have to pay estate agents’ fees, but if you’re selling you can expect to pay a percentage fee which can range between 0.75% and 3%, plus VAT, of the agreed selling price of your home, depending on the type of contract you opt for. Alternatively, you can adopt the DIY approach and put your property onto a website, in which case your costs will be lower, but you’ll need to do a lot of the work yourself, including arranging viewings.
You should also consider getting a survey done to ensure you aren’t buying somewhere that could end up costing you a lot of money in repairs. Depending on the type you choose, you could be paying anything from £250 for a basic report to around £1,000 for a more detailed structural survey.
Then there’s stamp duty (Lands & Building Tax or LBTT in Scotland). This is payable on properties bought for over £125,000 in England and Wales and £145,000 in Scotland, and goes up in bands. For example, it would be £5,000 on a £300,000 property in England and Wales (0% on the first £125,000, 2% on the next £125,000 and 5% on the last £50,000). Don’t forget you may also need to book a removal firm, so there are a whole myriad of costs to budget for.
As a mortgage is secured against your home, it could be repossessed if you do not keep up mortgage repayments.
Our mortgage adviser Nick is happy to help guide you through the mortgage process. If you have any questions please contact him on 0161 718 8328.