October 2010 - Page 2 of 3 - Financial Planning in Wimbledon

There’s Still Life In Health

BUPA have been bought for a few pounds… £102 million of them to be precise. The buyer? well in times like these only a few options are likely – those within the industry will be aware that Resolution have made a habit of buying up insurance companies.

Resolution also bought AXA’s UK life insurance arm this year, and is buying Bupa via Friends Provident Life and Pensions Limited, which it bought in 2009. The deal is funded by surplus cash from Friends Provident’s life operating business.

Bupa will be run along their current lines for around a year or so before Friends Provident swallow up their branding into their own, existing group income protection business.

Michael Biggs, chairman of Resolution, said the deal was consistent with Resolution’s strategy. ‘Both the terms of the transaction and the synergies to be gained from it will create value for shareholders. It will also enhance Friends’ proposition as a focused and disciplined writer of new business in key product areas.’

Trevor Matthews, the chief executive of Friends Provident, said: ‘This acquisition will strengthen our group risk business product range and improve the profitability of our individual protection business. The BHA management team led by Steve Payne will bring additional highly valued expertise to the Friends team.’

All good for keeping the printing presses running, but not great for your postman.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
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There’s Still Life In HealthDominic2023-12-01T12:52:57+00:00

Spending Review

George Osborne delivered the coalition Government’s spending review today, the first since taking office. There will be more reviews – notably the Economic and Fiscal Spending Review (which is to take place on 29 November 2010), this review confirmed the main changes to taxation (Capital Gains Tax, VAT etc) that had already been delivered in the June Emergency Budget, before going on to identify the three main principles in delivering the savings required – Reform, Fairness and Growth. However, there were no ‘real’ surprises to report and the main points as they relate to the world of financial services are summarised below.

Banks

UK banks will face a permanent financial services levy to replace the previous ‘bonus tax’ and must sign up to a code of practice by the end of the month. Currently, only four out of the 15 major banks operating in the UK had signed up to the code.

NEST

The National Employment Savings Trust (Nest) has been given the go ahead in delivering auto-enrolment and will be ready to launch in low volumes in 2011.

Public Sector Pensions

The public service pension review carried out by Lord Hutton has been welcomed by the chancellor who noted that the highest earners in the public sector should contribute substantially more to the previously unfunded schemes, but that civil servants on lower wages should be protected. The changes to funding are expected to be progressive and final recommendations will be made in the early part of next year.

On a similar note, the current final salary pension arrangements enjoyed by MPs will be replaced.

State Pension

The state pension age (SPA) will rise to 66 by 2020 for both men and women over a phased period between December 2018 and April 2020.

This means that the rate of rises for women will be accelerated. The women’s SPA will reach 65 by November 2018. This will be done by imposing increases at a rate of three months in every four as opposed to the current one in every two.

Following the faster increase to 66, the government is also considering future increases to the SPA in order to address the rise in longevity. The extra revenue raised will be used to increase the state pension.

Equitable Life

Compensation for the victims of the collapse of Equitable Life is expected to be in the region of £1.5 billion and policyholders will begin to receive payments next year.

Compensation will be based on the difference between what policyholders actually received and what they would have received elsewhere.

It was also announced that the government will make regular payments over the lifetime of with-profits annuitants replacing the income stream that they had lost.

Tax Evasion

£900 million has been promised to address tax evasion. HMRC estimates that an additional £7 billion per year in tax revenues could be clawed back by 2014/15 using the added resource.
The investment will include;
• A five-fold increase in criminal prosecutions to act as a deterrent to others
• A new dedicated team of investigators to crack down on offshore evasion
• More resources for the prevention of tobacco and alcohol fraud
• An increase in registration checks, and a cyber team to address repayment fraud
• Dedicated tax experts to extend HMRC’s coverage of large businesses, focused on providing resources to tackle high risk areas
• Improving the scope of in house debt collection and placing up to £1 billion per year of tax debt to private sector debt collection agencies.

Other highlights in brief
• Public Sector employment is set to fall by 490k in the next 4 years
• Welfare – an additional £7bn. of savings identified on top of the £11bn already targeted
• No change on the child benefit abolition for high rate earners – but an emphasis that the £2.5 billion raised allows them to maintain benefit until the child leaves full-time education
• Have identified £6bn. scope for reduction in the administrative costs of government departments (against initial target of £3bn cuts)
• Schools budget will increase by 2015 from £35bn. to £39bn.
• Scotland: the overall block budget allocation will rise but beneath the rate of inflation; 6.8% cumulative real terms reduction by the end of the period, and 38% reduction in capital funds available to the Scottish Government

Thanks to 360 for this helpful summary.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
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Spending ReviewDominic2023-12-01T12:52:58+00:00

Looking Ahead

Over the weekend I was reminded to look ahead, not to focus on the very short term, the things that can distract, detract and grab our attention, but to focus on the bigger picture.

I was given one of those driving experiences as a gift from my daughters a while back and on Sunday afternoon I finally got to drive an Aston Martin DB9 around a racetrack. The instructor in the passenger seat was advising me to look beyond the next car (I was held up by some plodders) to the furthest point on the track, to see through what is immediatley ahead. I’m not sure if this is what Lewis Hamilton or Jenson Button do, but I took his advice.

The metaphor might also be applied with the coming announcements over the next few days about the Government’s spending review. The media will undoubtedly focus on the immediate, short-term – yet in practice the best laid plans are those that do indeed look ahead with a clear vision.

We all know that we have to tighten the belt of UK plc and of course how this is done is a political decision, let us hope that those in charge have a clear vision for the future of Britain beyond repayment of debt. I hope that we won’t be needing the assistance of 007 to get us out of the jam!

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Looking AheadDominic2023-12-01T12:52:58+00:00

Gold Report

Gold Bullion

1 week +3.3%
1 month +8.4%
3 months + 13.2%
6 months + 18.9%

FTSE Gold Mines

1 week +2.6%
1 month +7.1%
3 months +16.8%
6 months +21.1%

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Gold ReportDominic2023-12-01T12:52:59+00:00

Important News About Your Pension

The Government appear to have come out stating their short-term intentions with pensions. In many senses the proposals almost revert back to pre-A-Day rules.

In short, (and I admit to not having yet seen a proper document on this, so please treat with caution) contributions towards pensions are capped at a value worth £50,000. As a direct result most of the population will not see any problem as most do not pay £50,000 into pensions.

Tax relief remains in place at your highest rate of tax. In essence basic rate (20%)is given automatically so £10,000 invested (gross) is a cheque for £8,000 (net) from the investor. Employers would pay the full gross £10,000 and treat this as an expense. Higher rate taxpayer reclaim the difference – another 20% or perhaps 30%) of the gross contribution. The way this is paid back to the taxpayer is to increase the level of income on which they pay 20% tax… thereby reducing the amount of income they pay 40% or 50% tax. Let me know if you would like a worked example.

However, the Government also seem to be reducing the lifetime allowance from £1.8m to £1.5m. This is frankly a very stupid thing to do and looks like playing to the media to me. It will hit people with large unprotected pension funds. The excess (above the allowance) is taxed at up to 85%. True, most people don’t have £1.8m in a pension pot, but some do. I also fail to see the logic in attacking a pension at both ends – where is the incentive to save?

Anyhow, I imagine that this rather daft measure will be altered wihtin a few years and perhaps won’t make much difference in the short term if the Government think investment returns are going sideways or negative… perhaps they know something after all..

Where this bites is for people in Defined Benefit schemes, the gold-plated pensions of yesteryear such as the NHS. I look after a lot of Consultant doctors that are now caught by this. As the amount paid to the NHS (for example) MUST be linked to salary and might be varied (by the employer) the payments to a defined benefit pension scheme are not calculated based upon how much is paid in, but in terms of what the extra year of membership is worth. If this were to increase by more than £3,125 for the year a tax charge would be levied against the member of the pension. This requires careful calculation. Consultants that suddenly find an increase in their pensionable pay (due to Awards etc) may find themselves caught out. So need the NHS to supply a Special Annual Allowance Statement. I won’t go into detail here.

What I’m reminded of is the pre-A-Day (06-04-2006) rules that restricted payments to pensions based upon age and the earnings cap (which we still have, though largely forgotten and irrelevant to most, now at £123,600). So the new £50,000 limit is almost bang on 40% of the earnings cap. You might remember this table

under 35 17.5%
36 – 45 20%
46 – 50 25%
51 – 55 30%
56 – 60 35%
61 or more 40%

So if it feels a little like rolling back the clock…. that’s because… well, it is.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Important News About Your PensionDominic2023-12-01T12:53:00+00:00

Love it or hate it, social media’s here to stay

If you run your own business or work for one, this is a timely reminder that the world is changing. I have been working hard at improving our social media position and our client service. Increasingly we are moving towards full online client servicing. We have also paid significant attention to improving our own service to clients.

That said, there is always benefit in one to one / face to face within my type of work. I prefer an in-person meeting but have been impressed by the advantages of Skype meetings with clients. Ok these aren’t as good and I still don’t know the correct social greeting in such a scenario (other than verbal) does one wave? Anyhow, this is an 8 minute video from Gary Vaynerchuk provided by Success Magazine (something I subscribe to). I know it seems very un-British to do so, but its a great magazine for those running a business.

Love it or hate it, social media’s here to stay

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Love it or hate it, social media’s here to stayDominic2023-12-01T12:53:00+00:00

Funds: Aegon Ethical Equity Fund

For those of you using our Good Life or Purity portfolios you may be interested in a webcast by the Fund Manager Audrey Ryan. Its a bit dry (understatement) but for those that have never heard a Fund Manager, this is a useful insight to their role and approach.

Audrey Ryan has a commendable track record you can click here for general overview of the fund and how it works.

Click here for the audio link for her report on September 2010.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Funds: Aegon Ethical Equity FundDominic2023-12-01T12:53:01+00:00

Discounting Students

Today the funding of Universities is centre stage. Of relevance to me as my eldest daughter is expecting to head off to University next year (yes I know, surely I’m not old enough – regrettably I am!). Anyway, long story short a fairly bitter fight has been raging between Universities who argue that they are seriously underfunded and the students (and their parents) who by and large have increasingly become educational consumers/customers who have a growing desire for value for money.

I’m probably a traditionalist, but to my mind education is a good thing and its function is probably almost as important as the subject studied. So I’m in favour of studying and arguably it is a good part of personal development to leave home and become independent.

The short message is that students will have to pay more for their courses, Universities have been granted permission to charge more, but only the first £6,000 will be completely underwritten (paid for) by the Government. I estimate that we will quickly see tuition fees rise pushing the £6,000 price tag over the next 3 years. The proposals also go on to alter Student loans, which will now have a market rate of interest applied when the student begins repayment, but until they can afford to do so the debt will also increase in line with inflation. The loan will only be repaid if the student finds work that generates an income of over £21,000 (a first year teacher, doctor..).

The final detail is due to be released later next week, but most Universities and students can expect costs to rise – considerably. The NUS (National Union of Students) are pretty fed up as you might imagine and argue that many students will end up making decisions for their course based upon cost rather than content. I understand the sentiment, but frankly this applies to all walks of life doesn’t it?

The lesson for UKplc… regrettably we cannot have everything we want, there are limited resources. However, this is not new and frankly is a little patronising. The better questions to ask are surely, what sort of society and people do we wish to be? and how is this best achieved? Making everything about individual choice merely limits us to a nation of individuals and not a collective force for improved society.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Discounting StudentsDominic2023-12-01T12:53:01+00:00

Money Never Sleeps

The new Oliver Stone film “Money Never Sleeps” is now on general release and I’m hoping to get along to see it. This is a follow up to the original film “Wall Street” which seemed to capture all that was the 1980’s – Liars Poker etc. This film is set in 2008 and the backdrop is the credit crunch, offering insight into how we got here. If you get to see it let me know your thoughts. Here’s the trailer that appears on You Tube.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Money Never SleepsDominic2023-12-01T12:53:02+00:00

Your Market Round Up

We have prepared a market report document which shows performance for all of the major stockmarkets. Data junkies will love it, but most of will merely find it revealing. What this tends to reveal is that there are no obvious pattern in stockmarkets, although this is precisely what all investment managers look for.

We intend to update this each month as a free resource in the news section of our website. I hope that it is obvious that this does not imply any investment advice.

One of the most important aspects of successful investing is to have a well diversified portfolio, across markets and asset classes. This will reduce the impact of volatility.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Your Market Round UpDominic2023-12-01T12:53:02+00:00