YOUR STATE PENSION – TIME IS RUNNING OUT

TODAY’S BLOG

YOUR STATE PENSION – TIME IS RUNNING OUT…

When the new State Pension was introduced from 6 April 2016, the Government also provided an easement to the normal six-year window which allows individuals to pay Voluntary (Class 2 or Class 3) National Insurance Contributions (NICs) to fill in gaps as far back as 6 April 2006. However, this easement is coming to an end on 5 April 2023 meaning individuals have a little over nine months to take advantage of this easement. I repeat…

THE EASEMENT TO BACK FILL YOUR NI CONTRIBUTIONS ENDS ON 5 APRIL 2023.

This was picked up in the press:

  • Telegraph (18 June 2022): How to boost your state pension by £55,000.
  • Express (25 June 2022): Pensioners could boost their state pension by up to £55,000 – how you could do it.

The headline grabbing figure of £55,000 is based upon the increase in State Pension following backfilling ten qualifying years, increasing an individual’s State Pension by £52.90 per week and paid for an assumed 20 years from State Pension Age (SPA).

For those of you not yet drawing your State Pension, I regularly remind you to check both your National Insurance record and obtain a proper State Pension forecast. To say that politics has been mucking around with your State Pension would be a significant understatement.  You can also do this via your Personal tax account.

STATE PENSION COUNTDOWN

BEFORE TOPPING UP

However, people considering topping up need to take a range of factors into account. For example:

  • Some years can be ‘cheaper’ to top up than others; for example, people who have worked part-year and have paid some NICs may be able to complete that year more cheaply than buying a completely blank year;
  • Filling blanks for certain years (particularly those before 2016/17) can sometimes have no impact on your State Pension. This is particularly relevant for people who have already paid in 30 years by April 2016 and who were long-term members of a ‘contracted out’ pension arrangement;
  • People who expect to be on benefits in retirement may find that some or all of any improvement in their State Pension may be clawed back in reduced pension credit or housing benefit;
  • People who were self-employed can save money by paying voluntary Class 2 contributions (currently £163.80 per year) rather than Class 3 contributions (£824.20 per year);
  • Before paying voluntary NICs, individuals should see if they can claim NICs credits for a particular year. For example, those looking after grandchildren may be able to claim credits transferred from the child’s parent, and this could be a cost-free way of boosting their State Pension.

THREE KEY GROUPS

There are three groups for whom top-ups may be of particular interest:

  1. Early-retired public servants, or private sector individuals who have been members of a ‘contracted out’ occupational pension scheme; the period of contracting out is likely to reduce their State Pension below the maximum amount, and their early retirement is likely to mean they have ‘gaps’ in their NICs record which can be filled;
  2. The self-employed, who may have gaps in their NICs record and may be able to go back to any year since 2006/07 to top it up; this group is less likely to be affected by complications around ‘contracting out’.
  3. Anyone that took a career break to look after children.

TAKE ACTION:

If YOU haven’t started to receive your State Pension, please do take this as an urgent reminder to check your pension. The State Pension is now roughly £9,660 a year each – which is a guaranteed income for the remainder of your life. Whether you think this is a lot or a little isn’t of concern here – just that you receive what you are entitled to.

For the record, no I don’t think its enough… which is why I do what I do and you pay me to do it.

LINKS:

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

YOUR STATE PENSION – TIME IS RUNNING OUT2022-06-29T10:50:47+01:00

CAPPING CARE COSTS IN ENGLAND

TODAY’S BLOG

CARE COSTS IN ENGLAND

In early September 2021, the Government revealed initial details of its long-awaited plans for funding social care in England. While the other constituent parts of the UK each have their own care funding rules, they are all influenced by the approach adopted in England. A little over two months later some unwelcome clarification on the new English framework emerged.

2014 REVISITED

At the heart of the plan is a reworking of the structure created by the Care Act 2014, itself the product of the Dilnot Report produced in 2011. There are three key aspects of the new regime:

1.     REVISED CAPITAL LIMITS

At present, if your savings and other wealth (potentially including the value of your home) amount to more than £23,250, then you must meet all your long term care costs. However, if your savings and other wealth are below £14,250 you will not have to touch them, although you will still be subject to an income-based means test to assess any personal contributions to your care costs. In between those two capital limits, a sliding scale of capital contribution applies – effectively meaning contributions of 20.8% a year of any capital over £14,250.

Under the new regime, the capital limits will rise to £100,000 and £20,000, with the in-between capital contribution still based on 20.8% of the excess over the lower limit. That could mean a payment of over £14,500 a year if you are assessed to have £90,000 of capital.

2.     CARE COST CAP

Your liability to pay for care will end once an £86,000 (index-linked) ceiling is reached. In September, the Government emphasised that this cap applied only to personal care costs, not ‘hotel costs’ such as accommodation and food. Two months later it confirmed that hotel costs would initially be set at £10,000 a year, regardless of the true cost. Not such good news was the simultaneous announcement that the basis of the cap had changed from that in the Care Act 2014. Instead of the £86,000 total applying to fees paid by the individual and their local authority, only the individual’s outlay would count towards the cap. The implication was that many more people would never see the benefit of the cap, given the average stay in a nursing home is less than three years.

3.     MEETING THE COST

To fund the reform, NICs for employers, employees and the self-employed will increase by 1.25 percentage points, meaning that basic rate taxpaying employees will face an NIC rate of 13.25% – just shy of two thirds of their income tax rate. Dividend tax rates will also rise by 1.25 percentages points, e.g. from 32.5% to 33.75% if you are a higher rate taxpayer.

CARE COSTS REVIEW

DON’T RELY ON IT…

While the new capital limits and care cap for England will not take effect until October 2023, the NICs and dividend increases will bite (throughout the UK) from 6 April 2022. The theory is that, initially, the extra revenue will go to the NHS, but then gradually move across to funding social care as the new regime gets underway. In practice, many commentators have been sceptical that any Government will be able to take money away from the NHS once it has started to flow. Perhaps that explains why, from 2023/24, the extra NIC charge morphs into a separate Health & Social Care Levy.

2023 ONWARDS

Once the new regime is in place, the burden of care costs will be reduced, but the changes are not as significant as some of the election-time rhetoric suggested. There is still a possibility that your home will have to be sold to meet your care costs; the 2023 system will simply defer that sale until after your death and bridge the interim period with a loan from your local authority.

ACTION

The new regime is no reason to assume you can forget about the cost of care.

There are many bar room lawyer stories about how to avoid meeting care costs. Most fall at the first hurdle, the law that prevents ‘deliberate deprivation of assets’ to sidestep the capital test. If care costs concern you, talk to us about how funding can be built into your retirement planning.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

CAPPING CARE COSTS IN ENGLAND2022-03-28T17:03:10+01:00

STATE PENSION GOALPOSTS MOVING AGAIN?

TODAY’S BLOG

SECOND REVIEW OF STATE PENSION AGE

The government has launched a second review into the state pension age via a consultation launched earlier this month. Baroness Neville-Rolfe has been appointed to prepare an independent report and make recommendations to the government on it. She will look at what metrics should be used when setting the state pension age in future.

The call for evidence will gather information to inform the independent report from a number of sources. This could include experts in the fields longevity and aging, older people and labour market, intergenerational fairness and the fiscal challenges associated with an aging population, who will be particularly interested.

The Pensions Act 2014 requires the government to review the state pension age every six years. This consultation opened on 9th February and closes at 11:45pm on 25 April 2022. If you feel up to providing your thoughts you can use this link to the consultation process.

You will doubtless be aware of the problems that various Governments here have had in successfully communicating the changes about the State Pension and indeed the need to save for your own. The current legislation has many flaws, these could be summed up as savers being restricted on how much they can save into a pension and how much their pension fund can be worth without being penalised. To say that its all a bit of a mess, would be… well a bit of an understatement.

Check your current State Pension entitlements with these links (for those not yet drawing a pension).

STATE PENSION REVIEW

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

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Take Survey

STATE PENSION GOALPOSTS MOVING AGAIN?2022-03-24T16:39:04+00:00

STATE PENSION INCREASE

TODAY’S BLOG

STATE PENSION INFLATION INCREASE

You will have noticed the impact of inflation on various goods and services that you have bought lately. Inflation always hits those on a fixed income harder. That mainly means those that are drawing their pensions.

The ONS publish data about inflation every month, but I suspect your actual lived experience of inflation may differ from the general averages for the entire country. There has been much coverage of this in the news, in particular the real inflation on supermarket products.

You can check the official current rate of inflation here (click here)…. Or you could look at your utility bills.

Retirees in Britain face the worst disparity in their state pension payments when set against inflation since the triple lock was introduced over a decade ago, findings warn. In April 2022, state pension pay-outs will rise by 3.1%, and be based on Consumer Price Index figure from last September. But earlier in the month, new official figures revealed that inflation was running at 5.5% in the year to January.

Pensioners would currently see a real term loss of 2.4% in the amount of state pension income they receive from the Government, and the problem could worsen with forecasts of inflation peaking at around 7.25% in April, according to experts at Quilter.

The basic state pension will rise by £4.25 to £141.85 per week, or around £7,370 a year, in April. The full flat rate will rise by £5.55 to £185.15 per week, or around £9,630 a year. Since the triple lock was launched in 2010, there have only been 22 months when inflation stood above the uprating of the state pension for the previous April and five of those months were in 2021, says analysis by Quilter. The previous biggest disparity was 0.6% back in November 2017, when inflation ran higher than the state pension uprating for 11 months, but only on average creating a disparity of 0.4% over the period.

I have no wish to get political, but I would add that this is a difficult situation for any Government. The number of people claiming the State pension is rising and there are fewer “working” people (paying NI) to cover the cost. This is, to be blunt a timebomb. The State Pension is a political punchbag, in theory paid for by the combined employer/employee or self employed National Insurance contributions.

See the links below (for those not yet drawing a State Pension).

Remember that the State Pension is income and taxable, it is simply that for most people it is within the personal allowance for the tax year (the 0% allowance). The personal allowance for 2022/23 remains at £12,570.

STATE PENSION INCREASE

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

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STATE PENSION INCREASE2022-03-23T14:04:31+00:00

WAITING LONGER FOR YOUR PENSION

TODAY’S BLOG

WAITING LONGER FOR YOUR PENSION

The start of the next increase to state pension age (SPA) is still nearly five years away, at which point it will be phased up to 67 by April 2028.In the meantime, the Government has confirmed a rise in pension age for private pension provision that was originally suggested in March 2014.

THE NORMAL MINIMUM PENSION AGE – NMPA

The increase is to be made to the normal minimum pension age (NMPA). This is the earliest age from which non-state pension benefits can be drawn, subject to very limited exceptions. The current NMPA is 55, set in 2010 as 10 years below the then male SPA of 65. The new NMPA from 2028 will be 57, 10 years below what by then will be the SPA for both sexes.

BORN IN 1971 PENSIONS DELAYED

57 IS THE NEW 55

The Government has indicated that there will be exceptions to the higher NMPA covering:

  • Members of the armed forces, police and fire services pension schemes, who will have a ‘protected pension age’ of 55;
  • Anyone who has a protected pension age for scheme benefits arising from the last increase in NMPA; and
  • Anyone who, on 11 February 2021, had a right under a pension scheme to draw benefits before age 57. In this context, the right has to be unqualified, i.e. there must be no requirement for consent from any other person, such as a trustee or employer. It will also apply on an individual scheme basis, so you might find some benefits can be drawn before 57, while others cannot because consent is required.

It would appear that if you have a personal pension established by the February cut-off date, you will generally meet the ‘unqualified right’ requirement, giving you a protected pension age of 55. However, some experts believe this could change when the necessary legislation emerges. When the previous NMPA increase was made, there was no such protection for personal pension owners.

Born between April 1971 and April 1973?

If you were born on 6 April 1973, you are potentially the worst hit by the change, unless you have benefits that are subject to a protected pension age. That is because you will reach your 55th birthday on the very day the NMPA increase to 57 takes effect – unlike the changes to SPA, there is no phasing in of the change. If you were born in the preceding two years, you will be in the odd position of being able to draw benefits at age 55 until 5 April 2028, but then need to wait until you reach age 57 before setting up any new drawings from you pension.

A realistic retirement age?

The idea of retiring at 57, yet alone 55 may sound appealing, but is it at all realistic? Consider these two factors for a start:

1.    At age 57, the average man has 27 years of retirement ahead of him, while the average woman has 30, according to the Office for National Statistics. 1 in 4 of those men will live until age 92, the corresponding age for 25% of women is 94.

2.    From 2028, there will be a gap of at least 10 years before your state pension starts. With the current state pension of £179.60 a week, that means an income hole to fill of at least £93,400 (plus inflationary increases).

A recent report showed that the average age of those ‘retiring’ in 2021 was 60. However, it also revealed:

  • 37% had brought forward their retirement in the past year, with the three main reasons being pandemic related;
  • 27% will work part time to support themselves in retirement;
  • 37% were worried about not having enough money to last through retirement;
  • Two thirds of retirees risked running out of money in retirement according to calculations by the report’s authors, even though the planned average total spend was a modest £21,000 a year.

ACTION

The change to a normal minimum pension age of 57 is largely irrelevant – few people can afford to retire so early – but it might affect you if you plan to draw some benefits early, e.g. to clear a mortgage.

Are you sure your planned retirement age is not going to leave you among those two thirds who might run out of money before they run out of life? Thats the main purpose of proper financial planning – to help ensure that your funds do not run our before you do. The sooner you know where you are, the quicker you can, if necessary, make the necessary adjustments.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

WAITING LONGER FOR YOUR PENSION2021-09-27T19:34:16+01:00

PENSIONS AND DIVORCE

TODAY’S BLOG

PENSIONS AND DIVORCE

In 2020 something like 10,500 people shared their pension as part of divorce settlements. Obviously, those finally settling in a divorce last year are likely to have started the process before 2020, so the impact of pandemic lock-ins on marriages is not yet observable with data.

Pensions used to be a regarded as pretty dull, often a “last on the list” of a divorce, but of course their value has been greatly underappreciated.

As global equity markets have risen, the value of a pension fund has also reflected this (or should have) and they have become an increasingly important asset in divorce settlements, second only to the family home.

If you do receive a spouse’s pension as part of a divorce settlement, it would be wise to make some contributions to your own personal pension rather than using for using it for day-to-day expenditure. As the value of pensions has surged in recent years it has become much more difficult to use spare cash to buy an ex-spouse out of their share of a pension. This is a major reason for 2020s high number of split pensions in divorces.

There are two different ways that a pension can be shared in a settlement. Firstly, a Pension Sharing Order will mean a direct transfer between one pension pot and another. The second, a Pension Attachment Order will mean the pension pot remains in the same hands as before, but the income derived from it is split. Sadly, in an understandable attempt to save money many have turned to DIY law and divorce is no exception. Where settlements are undertaken without legal representation, is often likely to create problems. This is because agreements made today may be reopened tomorrow if paperwork is filed incorrectly or is incomplete. Naturally, this is more likely than when professional lawyers are involved in proceedings. The caution expressed is warranted because these DIY divorces accounted for 58 percent of all divorce settlements in 2020/21 according to the Ministry of Justice. A striking example of the problems that may arise after DIY divorces came in 2016 when a successful green energy entrepreneur was ordered by the Supreme Court to pay his ex-wife £300,000 years after their split. This was the case because both parties had earlier neglected to waive the right to make more claims against each other. While not so bad for the party receiving £300,000, many may be startled to realise that they may be vulnerable to such claims themselves if they went through a DIY divorce. I certainly sympathise with the intention to save money, but there is a good reason why there are professionals. DIY is not without significant risks and complete responsibility.

TWO WAYS TO LEAVE YOUR LOVER

There are two different ways that a pension can be shared in a settlement. Firstly, a Pension Sharing Order will mean a direct transfer between one pension pot and another. The second, a Pension Attachment Order will mean the pension pot remains in the same hands as before, but the income derived from it is split.

Sadly, in an understandable attempt to save money many have turned to DIY law and divorce is no exception. Where settlements are undertaken without legal representation, is often likely to create problems. This is because agreements made today may be reopened tomorrow if paperwork is filed incorrectly or is incomplete.

58% TRY A D-I-Y DIVORCE

Naturally, this is more likely than when professional lawyers are involved in proceedings. The caution expressed is warranted because these DIY divorces accounted for 58 percent of all divorce settlements in 2020/21 according to the Ministry of Justice. A striking example of the problems that may arise after DIY divorces came in 2016 when a successful green energy entrepreneur was ordered by the Supreme Court to pay his ex-wife £300,000 years after their split. This was the case because both parties had earlier neglected to waive the right to make more claims against each other. While not so bad for the party receiving £300,000, many may be startled to realise that they may be vulnerable to such claims themselves if they went through a DIY divorce.

I certainly sympathise with the intention to save money, but there is a good reason why there are professionals. DIY is not without significant risks and complete responsibility.

That said, I remain confounded by the lack of attention to cashflow modelling in a divorce settlement. It would make the agreements easier to achieve with clarity about the needs of each party.

If you have a friend that is contemplating divorce suggest they get a proper cashflow done for them. You know where I am!

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

PENSIONS AND DIVORCE2021-09-07T17:30:28+01:00

GOOD COP STORY

TODAY’S BLOG

GOOD COP STORY

Regulation is a good thing. There are a lot of crooks out there and when it comes to your money, there are loads of ways crooks seek to part you from it. I may get exasperated with the process, find the focus often in the wrong place, but I can assure you that regulation is not easy, there is legal due process. It could and should be easier.

Scams and financial crime, adviser firms ripping people off and going bust end up costing the remaining advisers a lot of money. We are the insurance, or a large part of it, stumping up funds in the form of regulatory fees and levies, which are now at such alarming levels, that there is genuine cause to pause and wonder if any financial adviser is actually sustainable.

So some good news of bad guys getting caught and the FCA able to now get on with their job. Long story short…

Lots of people were ripped off moving their pensions into a SIPP, (there is nothing wrong with a SIPP, but as ever, its about being in the wrong hands). Once the money was in the SIPP, it was invested into what I can only describe as joke/scam investments that promise high returns. They pander to those that don’t understand the stockmarket (or investing) as the “investments” are not listed on the stockmarket. Its junk, simple as that. The “adviser” charged multiple fees, all of which were almost certainly way above a typical adviser fee/charge. These sorts of “non-regulated” investment funds (I struggle to even call it a fund) tend to pay enormous commission (they are not regulated).

Cheers to the FCA

HANG ON DOMINIC, I HAVE A SIPP, SHOULD I WORRY?

Do we move pensions to SIPPs? Yes, often! Because they can be brilliant, cheap to run and offer a vast range of REGULATED retail funds for us to use to grow your money. Some are more expensive than others, but our job is to select one that is suitable for you (if it works, cost effective, value for money, provider financially robust etc). Our fee structure is easy to understand 1% a year.

What rip off advisers do is charge the SIPP all sorts of fees and pick “funds” (not regulated ones) that pay them additonal “fees” as well. The driving motivation is to fleece the investor, not to make good investment decisions, but to take as much money out of your pension for themselves. Let’s call a spade a spade.

TIME FOR A CELEBRATORY DRINK

I am delighted, with the news that these criminals have been caught! I may even pour myself a drink before noon to celebrate. Sadly, it will likely take years to attempt to get money back to investors, most of it won’t be returned, it will leave many in dire straits for their own retirement plans and all of them will understandably think all advisers are untrustworthy and so continue to perpetuate the story that investing is bad, advisers are bad, pensions are bad, the stockmarket is bad… yet it is precisely because they didnt use a proper adviser, or a proper investment that its ended up like this. Very sad, wont help encourage people to save, more likely to cause the reverse!

NOT SOPHISTICATED INVESTORS

Something like 2,000 investors were persuaded to move their pensions into a SIPP and then placed the money into “alternative assets” such as tree plantations, hot pods and property in Brazil. Something like £92m was moved into these “assets”. That’s actually a low average pension size of about £46,000 – so these 2,000 people hadn’t saved much either, it probably was their life savings in pensions. So, whilst I risk generalising, these are not sophisticated investors, they are precisely the opposite and less able to tell a investment duck from a swan.

There is more to it than this (see the links at the bottom) but suffice to say the FCA are now ready to deal with the company, its Directors and will attempt to get client money back. Here I have to admit to cynicism, as £92m will almost certainly never get returned, I imagine 10% of it is more likely.  The Directors of Avacade and Alexandra Associates have already been ordered to pay £10.7m in restitution to investors (averaging £5,300 to each investor). Somehow I suspect to hear “ we don’t have the money, its been spent on legal fees, defending the indefensible, and a Ferrari or two…. Oh and the company is now bust”.

So if you have a friend that has ever had any contact with Alexandra Associates (UK) Ltd, or Avacade Future Solutions (AA) or Craig and Lee Lummis, please urge them to get in touch with the FCA. In truth you probably don’t, because £46,000 in a pension fund is not likely to be the sort of friend you have unless they are quite young.

Well done FCA, very glad to see another one caught. I do however wish you would name and shame the SIPP providers that not simply allowed, but facilitated this to happen.

EVIDENCE & LINKS

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

GOOD COP STORY2021-08-05T12:23:02+01:00

ARE YOU BEING SCAMMED?

TODAY’S BLOG

ARE YOU BEING SCAMMED?

OK I admit that I am often sceptical about surveys, the sample sizes are often too small to infer anything of significance. However, in this instance, even if the survey is bogus it is certainly worth reminding you about scams – and something that you can and ought to pass on to your friends.

A survey for Liverpool Victoria (LV) found that about 14% of the adult population (about 7.6m adults) have been hit by a pension scam. Double this number were concerned that they might fall prey to a scam (a pension scam to be precise). Half admitted that scams were hard to spot and around 41% wanted help knowing how to do so and how to prevent being scammed.

WHY TARGET A PENSION?

Aside from your home, your pension is probably your largest or most valuable asset. Scammers know this, they also know that the majority of people don’t know much about pensions, find them very dull and full of jargon. They often don’t realise how much they are worth and rarely treat them as though they are the family heirlooms that they are.

As your adviser (if not yet, then get in touch) I have been explaining the importance and value of your pension for many years. You know that we focus on using the most modern pensions to take advantage of pension freedoms and evidence based low-cost investment strategies. It is your future source of income (or a current one) and may well be something you leave to your beneficiaries.

ARE YOU BEING SCAMMED?

BEWARE THE FREE LUNCH (REVIEW)

However, for those that do not want an ongoing relationship with their adviser, minimising costs is a significant appeal, having a “free” pension review – well music to their ears rather than any recognition of alarm bells. For most of my working life financial advice has been generally touted as free. It isn’t, it never has been and that is frankly the biggest source of all the problems.

COLD CALLING

A friend of mine, Darren Cooke started a lobby in 2016 to end cold calling. Most advisers joined the movement which resulted in the banning of cold-calling about pensions from 2019. Yet it still happens. It is banned, but there you are.

PENSION LIBERATION

There is no such thing, unless you consider liberating your pension from you a form of liberation – I call it theft. You cannot access your pension before age 55 except for a very, very rare number of instances. Safer to assume you cannot.

Moving your pension to a SIPP (Self-Invested Personal Pension) is absolutely fine BUT only if you are using properly regulated funds within it. Not offshore weird stuff like teak farms or storage boxes, car parks or some other daft “asset” that I can actually set on fire.

NEW FREEDOMS, NEW TEMPTATIONS

Taking your pension is much easier than it used to be. There are new (2015) pension freedoms which have made pensions much better than they were. However, with greater freedom has come greater choice and increased responsibility – yours (and mine). A crook will exploit some basic knowledge (rules have changed) pander to misinformed opinions about stock markets “they are risky and lose you money” and will offer something that sounds altogether better – guarantees, no stock market involvement, high returns -much better than your cash and sometimes money now…. All for free.

Sadly, many do not remember the adage “if its too good to be true, it probably isn’t”, fewer still seek out a financial adviser and if they do, may well be befuddled by what restricted or independent means (invariably a restricted adviser will not mention it, even though they are meant to do so clearly). When a regulated adviser provides advice, he or she is liable for it. I can assure you that we take this very seriously as the liability rather unreasonably, extends beyond the grave.

HANG UP

If you have a friend that you think is being scammed or you are approached yourself, hang up the phone and get in touch with me. I have seen too many people get scammed for one lifetime. A good site to check out is the FCA SCAM SMART site.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

ARE YOU BEING SCAMMED?2021-07-09T18:52:31+01:00

HOW MUCH FOR A HAPPY RETIREMENT?

TODAY’S BLOG

HOW MUCH FOR A HAPPY RETIREMENT?

Doubtless your will have heard of Which? Magazine. They conducted a survey recently in an attempt to understand how much is really enough for people to have a comfortable retirement. They concluded that a two-person household needs an average annual income of £26,000 for a comfortable retirement.

However you have coped with the pandemic, many people have not been able to spend money in the way they normally would. Many have saved the sums that would have been spent on holidays, travel, commuting, work clothes, weekday lunches, meals out and so on. This has given many of us the opportunity to pause for thought and reflect on how much we spend and the lifestyles we lead.

Some people have elected to retire earlier than they had planned, some have had this forced upon them. In practice, the warning signs for higher unemployment have been around for some time. We shall all begin to see the reality of things once the lockdown ends properly and the furlough system comes to an end. I do not see this going well. I implied, no… I stated that the Budget in March worked on the assumption of unemployment rising by 500,000 over the next 2 years with the largest increase in the current 2021/22 tax year.

A BREAD & BUTTER LIFESTYLE

£26,000 OR £19,000

Anyway, many have been giving thought to how much income they are likely to need when they stop earning. In February, Which? asked around 7,000 retirees about their spending.

The findings can be used as a guide to how much people are likely to spend and how much they might need to save, factoring in the state pension and tax bills. Couples need a pot of around £155,000 alongside their state pension to produce the annual income for a comfortable retirement of £26,000 via pension drawdown – or just over £265,000 through a joint-life annuity. Two-person households would need around £442,000 in a drawdown plan to fund the luxury retirement target (£41,000 per year) – or £589,000 if they’ve taken the full 25% tax-free lump sum available at the outset. If you opt for the guaranteed income provided by a joint-life annuity, you’ll require an initial fund of around £757,000.

For single-person households, achieving a comfortable retirement would mean a pot of around £192,290 alongside the state pension to get to an annual income of £19,000 via pension drawdown, or £305,710 through an annuity. For a retirement at the ‘essential’ level, single-person households would need £77,350 in a pension drawdown or £123,365 to buy an annuity plan to meet an annual target income of £13,000. A couple receiving the current average amount of £155 each per week will get just over £16,000 a year to add to private pensions. Pension drawdown figures are based on the savers withdrawing all of their income over 20 years from the age of 65, with investment growth of 3%, inflation at 1% and charges levied at 0.75%.

TWADDLE – THAT THING ABOUT ASSUMPTIONS

So let me respond by clearly saying “twaddle!” but it’s a helpful guide.That is all it is, there are huge holes in the assumptions and thinking, for starters, assuming a 2 decade retirement. Life rarely happens so “neatly”.

Over the years our processes have evolved with the technology that is available. We stress test your financial plan each week. Considering the likelihood of your life expectancy to the tenth percentile… which means the 1 in 10 chance you live a really long time. We consider sustainable income levels that fluctuate with inflation and changing investment returns based upon historical facts rather than regulatory unicorn utopias.

In any event, why would you care about a survey where your lifestyle is dictated? Surely your financial plan should be about protecting and ensuring that your current lifestyle endures as long as you do…. Or do you want less?

That’s why it is important, no – why its vital to have your own plan, based on sensible assumptions that we review together. Unless you have some mind-blowing news for me, you get one life and the clock is ticking. So have your own plan, know what you want and check with us that you are on track.

Need help? Know someone that does? get in touch... share the truth. It won’t hurt.

Its Your Lifestyle: how much is enough?

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

HOW MUCH FOR A HAPPY RETIREMENT?2021-06-23T18:13:55+01:00

RETIREMENT PLANS BEFORE ITS TOO LATE 50+

TODAY’S BLOG

50+ SLEEPWALKING TO RETIREMENT NIGHTMARE

A growing number of people are at risk of being unable to afford a decent standard of living after retirement, according to a new report released this month. The report, ‘What is an adequate retirement income?’ estimates a quarter of people approaching retirement, the equivalent to five million people, are at risk of missing out on the income they need.

The report by the Pensions Policy Institute, sponsored by the Centre for Ageing Better, warns millions of people between the age of 50 and the State Pension Age are running out of time to prepare financially for retirement. That’s about 11 million people.

  • Around 3 million will not receive a minimum income
  • Around 5 million will not receive a personally acceptable income
  • Around 10 million will not receive a comfortable income

As a reminder, someone turning 50 this year would have been born in 1971, the year that T-Rex had a summer hit single “Get It On”, Clive Dunn was number 1 with “Grandad” and Rod Stewart “Maggie May”. The year that Gary Barlow, Clare Balding, Amanda Holden, Charlie Brooker, Ewan McGregor and David Tennant were all born, I doubt any of these will have a pension problem, but the majority of those born before 1971 look set to do so. It was also the year that the great David Hockney (83 and still working) completed one of his most famous works “Mr & Mrs Clark and Percy” (below) You can see Hockney’s work “The Arrival of Spring, Normandy 2020” at the Royal Academy until 26 September 2021.

Hockney 1971 Mr & Mrs Clark & Percy

PAIN IS COMING FOR THE UNPREPARED

The research found a low state pension, increasing unemployment and the transition to workplace pension schemes reliant on employee contributions are all factors leading to this risk. It warns this is an immediate cause of concern for those currently in their 50s and 60s. Not only that, but generations to come also risk being pushed into poverty if action isn’t taken to address financial insecurity in retirement, the report warned. It found 90 percent of people of all ages with Defined Contribution pensions may be at risk of falling short on their expected retirement income.

Despite recent measures such as auto-enrolment having resulted in more people saving into their workplace pensions, savers aged over 50 spend less time in auto-enrolment schemes and consequently benefit less. Most pension contributions remain inadequate, and challenges for savers have been exacerbated by COVID-19. The report also highlighted that those aged over 50 had the highest redundancy rate during the pandemic and warns that this age group is more likely than younger groups to experience long-term unemployment.

Worryingly, increasing job losses and unemployment levels may result in the generation currently approaching retirement being pushed out of work and left with a pension that does not provide them a decent standard of living. The report calls for a new consensus on what adequacy means, urging the Government to build a consensus between employers, industry, unions and individual stakeholders on what an adequate income in retirement is. Furthermore, Ageing Better is calling on employers to match workplace pension contributions at a higher rate, as well as better support for groups at risk of financial insecurity.

Hopefully your financial plan demonstrates that you will have enough or you know what the future looks like and have a plan to do something about it. However, I do want to labour this point… many of your peers, friends and family are unlikely to be as well prepared as you. Whether its Mr & Mrs Clark or Smith, the vet bills for Percy will be fairly unwelcome in retirement. So please urge them to get some advice, send them this blog post in an email and tell them to get in touch with us. I know the pictures of you finally out and about enjoying normal life after lockdown are all good to share, but do your real friends a favour, share our details with them! We can help prepare them for the future, making the most of the remaining time.

Share This Story, Choose Your Platform!

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

RETIREMENT PLANS BEFORE ITS TOO LATE 50+2021-06-23T17:35:16+01:00
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