HOW TO FIND THAT LOST PENSION

TODAY’S BLOG

HOW TO FIND THAT LOST PENSION

I make no apology for pinching this really helpful piece from Henry Tapper and People’s Pension. I have a very high regard for Henry who constantly attempts to bring clarity and insight in plain language to anyone that comes into contact with the world of financial services. Henry set up Age Wage Ltd which hopes to revolutionise pension advice for smaller investors. His blog is hugely successful (if the number of visits is any indication). A former Bryanston pupil and Cambridge Graduate with a penchant for messing around in boats, here is his post from Wednesday. Over to Henry…

The DWP tell us that we’ll have lost 50m pension pots by 2050, unless we do better at tracking them down than we’re doing at the moment! There’s £20,000,000,000 of lost money in the pension system at the moment so let’s get finding! The dashboard ‘s going to help but – why wait for the dashboard!

Here are some handy tips from our friends at People’s Pension about how we can find our pensions today.

How to find lost pensions

HOW ARE PENSIONS LOST?

People Pension’s  research found that 1 in 5 people have lost track of a pension and 3 in 5 adults don’t know where all their pension savings details are.

So, why are people losing track of their pension pots?

Not sure who you’ve got pension savings with?

You may have changed jobs several times by the time you retire, so you could find yourself having to look for all your lost pension savings when you need it the most.
You may have moved house, misplaced the details and no longer receiving annual pension statements from your provider(s).
Pension scheme information can become lost as many people now choose to go paperless, so there’s emails to keep track of as well as paperwork.

How to trace lost pension savings

Finding the details of a lost workplace pension can be a little easier than finding the details of a personal pension. Often your employer, or former employer (if they are still in existence), should have the details of their pension provider.

It can often be a little bit more difficult finding the details of a lost personal pension. A good place to start would be to contact the pension provider that you set up the personal pension with.

Next steps

Start at home – dig out as much paperwork as you can and see if you can find the details of any pensions you have forgotten about.
Take a look at any previous employment contract and old payslips and check if there were any pension contribution deductions. If so, and you haven’t taken a refund, you could have a pension you’ve forgotten about.
Contact your previous employers and ask for the details of their pension schemes. They’ll be able to give you the pension provider’s contact details, so you can contact them directly to find out if you were a member of a pension scheme.
And you can use the Companies House website – they hold the names of all closed and existing companies registered in the UK.
If you are still having difficulty finding the details of a lost pension, you can use the government’s online pension tracing service.

Visit their website www.gov.uk/find-lost-pension or call them on 0845 6002 537.

Check if your pension contributions were refunded

In the past when leaving an employer, you could have had a refund of your pension contributions after only being in a pension for a short time.

So, it’s important to consider whether your pension is actually lost, or if your pension contributions could have already been refunded.

There are several key dates to help you check whether this applies to you:

If you left your employer before 1975: it’s almost certain that you’d have had a refund of your pension contributions. If you did not pay into the pension scheme, then the chances are you will not be entitled to anything – the only exception will be if you worked there for a considerable amount of time, usually over 15 years.
If you left your employer between April 1975 and April 1988: you may have a pension if you were over the age of 26 and had completed over 5 years’ service. If not, it’s almost certain that you’d have received a refund of your pension contributions.
If you left your employer after 1988: you may be entitled to a pension, as long as you completed over two years’ service for your employer. If you left before completing two years, it’s almost certain that you’d have received a refund of your pension contributions.

If in any doubt you should contact any previous employer(s) for absolute clarification.

Take a look at the steps below if you think you have a lost pension and don’t think you’ve received a refund.

Once you’ve found a lost pension provider’s details

You’ll need to contact them to give them as many details about yourself, so they can trace your lost pension savings quickly and easily. They’ll need:

  • your name (current and previous, if different) date of birth and National Insurance number
  • your address (current and where you resided when you think you had the lost pension)
  • the date you joined and left the pension scheme (if known).

And if it’s a workplace pension:

  • the name of the company you worked for
  • the address of the company you worked for (in case your company had multiple branches/outlets)
  • the date you began working for the company and the date you left the company.

Find out as much information as you can

It’s important to find out as much information as possible about any pension scheme you may be part of. For example, you should ask:

  • what’s the current value of the pension pot, and the estimated value on your expected retirement date?
  • are there any management charges, and if so, how much?
  • is there a nominated beneficiary?
  • is it a defined benefit scheme or a defined contribution scheme?
  • would there be any charges if I wanted to transfer the pension pot to another provider?
  • are there any pension guarantees included e.g. Guaranteed Annuity Rates?

Once you have the full details about your lost pension savings, you may wish to get advice.  You could choose to leave it as it is until you reach retirement age or, if you have other pensions, you could consider combining them into one pot –  making it easier to manage and keep track of.

Henry Tapper
Age Wage Ltd

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

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

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

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

SOLOMON’S FINANCIAL PLANNING APP

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To get started download and use password – solomons

   

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HOW TO FIND THAT LOST PENSION2019-09-18T14:06:21+01:00

WHAT IS THE CURRENT STATE PENSION AGE?

TODAY’S BLOG

WHAT IS THE CURRENT STATE PENSION AGE?

It sounds an easy question, but right now it is a moving target. If you answered 65, you are wrong because that stopped being the State Pension Age (SPA) last December. Until 6 October 2020 SPA is in a transitional period where there is no specific age, just a set of dates, each separated by two months, on which it arrives, depending upon date of birth. So, for example, if you were born between 6 February 1954 and 5 March 1954, you reach your SPA on 6 July 2019. From 6 October 2020 until 5 April 2026, SPA will remain at 66, before starting another two-year transitional period, en route to 67. To provide an example… John Travolta was born 18 February 1954. You will remember him as a 20 year-old Danny Zuko in the 1978 movie “Grease” (about the summer of ’58). He played opposite Olivia Newton-John, who is now 70.

And the result is…

Source: National Statistics

The SPA has been on the rise since 2010, when the process of equalising state pension ages for men and women began. The effect of that controversial reform can already be seen in UK labour market statistics. In April 2010, at the start of the equalisation process, 58.5% of women aged between 50 and 64 were in the work. By January 2019 that proportion had risen to 68.1% – an increase of almost a sixth. As the graph shows, in that age band there are still proportionately more men in work, but the gap between the sexes has been narrowing since 2010.

Beyond 65, too

The trend of increased working life extends beyond age 65, as the two lower lines on the graph indicate. In January 2019, 7.9% of women aged 65 and over were still working, as were 14.2% of men. Many of the jobs involved are part-time.

The rise in SPA is not the only driver to the changing age profile of the workforce. Legislation that largely prohibits mandatory retirement ages has made it easier for employees to keep in harness. Tight labour markets – UK unemployment is under 4% – has encouraged employers to hang on to staff, on a full or part-time basis, rather than compete for new employees.

The income factor

Probably the main reason for the growing grey-haired workforce is a financial one: they need the earnings. The state pension (theoretically £168.60 a week in 2019/20) hardly offers a comfortable retirement. Another factor is the gradual demise of final salary pension schemes, which most private sector employers have now closed to existing employees as well as new recruits. Such schemes often made it easier to take early retirement, especially if the employer added redundancy incentives. Workplace pension ages have also been rising too, often tracking the move in SPA.

Action

When you retire should be a decision you make, not a timing effectively set by the state or financial pressure. The only way to have that freedom of choice is to build up sufficient resources before you retire, by way of pensions and/or other investments

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

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

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

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

SOLOMON’S FINANCIAL PLANNING APP

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To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

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WHAT IS THE CURRENT STATE PENSION AGE?2019-06-26T19:46:27+01:00

TALKING MONEY – MARCH 2019

TODAY’S BLOG

TALKING MONEY – MARCH 2019

By now you will have recieved the postal copy of Talking Money. It has all the usual informative pieces. I would value your thoughts on this, do you even read it? I know some do and seem to find it helpful, but I’m not daft enough to believe that everyone reads it cover to cover. The reason for the question is that we have launched a new client publication – which we have called Spotlight. This has arrived at the office from the printers today and I’m pleased with how it looks.

You can access a digital version of Talking Money here.

Talking Money March 2019

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

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

SOLOMON’S FINANCIAL PLANNING APP

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WHAT WE’RE ALL ABOUT

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

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

SOLOMON’S FINANCIAL PLANNING APP

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To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

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TALKING MONEY – MARCH 20192019-03-26T15:44:40+01:00

WITHDRAWING MONEY FROM YOUR PENSION

TODAY’S BLOG

WITHDRAWING MONEY FROM YOUR PENSION

I was recently asked to contribute to a piece that appeared in The Telegraph on 15/02/2019. The journalist, Jonathan Jones had heard of me and asked if I would offer some insight into the maths that he was posed with.

The short version is that a 69-year old reader had a pension pot of about £500,000 and wanted £35,000 a year as income, which is about 7% of the fund. The crunch question is was this sustainable?

Sustainable Withdrawal Rate

The short answer is no it isn’t likely to be. However, it is all about context, for starters, the investors other assets, state of health, lifestyle, marital and family circumstances. However, I was asked to ignore this. In the real world of financial planning, no good adviser would ignore these important elements, but certainly for the sake of maths, I was and remain happy to provide the basic outline.

It is historically “good advice” to assume a 4% income as sustainable. This can increase with inflation each year and ensure that the original fund remains alive. All of this is subject to the real world of investment returns, charges and taxes and to put it bluntly, investor behaviour.

Ringmaster

REVIEWS ARE VITAL

I don’t know any adviser that would set up an investment and a withdrawal of 4% a year and never review this. I imagine there are a few out there, just not those that I meet or have any sort of professional relationship with. All financial planning is based on the premise that life changes and plans need reviewing. Whilst I advocate cash flow modelling, which is a brilliant tool, it is a very good aid to understanding the future, but not predicting it. Life and investment returns are not linear. Stuff happens, things change.

I stand by everything in the article, but would caveat it with some real world experience and impress the need to review. The certainty of outcomes is myth. There is no way that someone can say with certainty, that taking £20,000 a year from a £500,000 will last for another 50 years. Its ought to, based upon historic data, it would have done, but that’s why we review.

High Equity Content

Certainly, more exposure to the real engine of a portfolio (equities / stocks) is vital and the more you have the more likely you are to have a rising income for life, but a far more volatile experience. In the real-world investors behave badly, anxiety turns to fear which turns to panic, which turns into a request to “sell, sell, sell” yet this is almost certainly, always the wrong thing to do in a portfolio of globally diverse holdings. I demonstrated this using our software, showing the historic sustainable withdrawal rates for different portfolios and the chance of future success. We also revealed the impact of life expectancy. Of course Jonathan didn’t have the page space to go into depth on the fullness of our conversation and he may also have been heavily edited. That is the difficult life of any journalist, who must create something to catch attention and fill space. The job of a financial planner is explanation, understanding and constructing a robust, reviewed ongoing service.

The art of self-delusion

This is something that many investors, particularly DIY investors believe that they are immune to (lack of fear). Most end up chasing returns, usually buying the current hot tips or best performers. However, this is not the Premier League, it is the real world of investing, past performance guarantees nothing and is certainly no indicator of the future when it comes to stock selection “success”. See Dalbar.com for information about how badly investors underperform.

I think the article is a good overview, but please do not infer advice from it. Context is everything. For all I know, the investor concerned was born in 1950 with a life expectancy of a few months and may have a much younger spouse with three or four children. The advice should always be suitable to the circumstances of the investor.

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

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

SOLOMON’S FINANCIAL PLANNING APP

Our free powerful new Finance & Tax app.
To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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GET IN TOUCH

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

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

SOLOMON’S FINANCIAL PLANNING APP

Our free powerful new Finance & Tax app.
To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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WITHDRAWING MONEY FROM YOUR PENSION2019-02-20T17:28:29+01:00

THE F-WORD

TODAY’S BLOG

THE F WORD

The F-word in my world is fees. Today we received news that the Financial Services Compensation Scheme (FSCS) has increased its “levy” on financial advisers to a whopping £516m which is a hefty increase on the £468m previously.

There are many reasons for the increase, but the main one is that many investors have been duped into moving their pension into a SIPP (a Self-Invested Personal Pension). There is nothing wrong with a SIPP in principle, it is just another pension wrapper and the vast majority are perfectly good, indeed arguably rather brilliant. However, it’s also what is inside.

A SIPP can hold lots of investments, remember in 2005 Gordon Brown opening the way and then back-tracking on allowing people to put a private residence in a SIPP (thank goodness!). The “Self-Invested” bit of the SIPP really is an opening to put anything into a pension that “qualifies”. Anyway, some “advisers” have encouraged people to use all manner of weird investments, everything from storage pods, to teak farms in Thailand, car parking spaces to any hairbrained idea. These are “unregulated” investments – clue on the tin.

Solomons IFA Blog: Sorry to bother you

The backstop agreement

These investors have a genuine grievance for bad advice. Well… more scamming than advice. Therefore, they can turn to the FSCS, who in turn “approaches” (demands) payment from the rest of us upright advisers to cover the cost of the miscreants that peddle this rubbish. There are about 5,300 adviser firms in the UK, one or two huge ones and the rest are small businesses. The bill is shared between us (feel free to do the sums). In short that means we cannot keep stomaching the lion-share of a bill for which we are not culpable and so it is reflected in our charges to clients. Hardly a fair system, indeed, like others it is miserable and broken.

Look inside

For the record we arrange SIPPS for our clients, with proper SIPP companies and ONLY hold regulated investments within them. You hold properly listed funds which are composed of shares and bonds of great companies of the world.

If you are a client with a SIPP arranged through us, do not panic, all that’s in your pension is good stuff (unless you mucked around with it or “gave the keys” to another adviser). I recently took on a client who has a SIPP, but his adviser put some awful stuff in it. We have been able to unpick some of it, but not all. Totally unnecessary, unhelpful and illiquid.

Cold Calling Ban – Stop them at the gate

As a final note, anyone (you don’t know) that calls or emails you out of the blue is breaking the law – NO COLD CALLING. Some of you helped us with this initiative, started by another decent adviser (Darren Cooke) in Derbyshire and this eventually became law on Wednesday 9th January 2019. So hopefully this will reduce cold calling (I’m not naive enough to assume it will end). Some interesting issues about cold calling, greed, ethnicity and capitalism were raised in the film “Sorry to bother you”..  it went a little off point and lost its potential purpose, well that’s what I thought. Here is the trailer, it raised some interesting questions. WARNING: its rude.

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

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

SOLOMON’S FINANCIAL PLANNING APP

Our free powerful new Finance & Tax app.
To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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GET IN TOUCH

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

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

SOLOMON’S FINANCIAL PLANNING APP

Our free powerful new Finance & Tax app.
To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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THE F-WORD2019-01-31T17:56:06+01:00

ANOTHER FINE MESS

TODAY’S BLOG

ANOTHER FINE MESS

New movie Stan and Ollie is a real treat to those who have an affection for Laurel and Hardy. What could have been “another fine mess” was a moving tribute to one of the ground-breaking comedy double acts of cinematic history. As a child, in the 1970s I watched their films often on a Saturday morning on the 3-channel television. Whilst the cars were a bit odd and shot in black and white, they didn’t seem particularly dated, at least no more than others – as the television diet for children also included a fair amount of black and white 1950s American syndicated shows like Whirlybirds, Champion the Wonder Horse, Flash Gordon, Zorro and Lassie.

I have to admit I had reservations about the film but Steve Coogan’s performance or perhaps impression of Stan Laurel was fantastic. John C Reilly also provides an impressive performance of Oliver Hardy. The movie itself is charming and shouldn’t disappoint any fans. It reveals a deep friendship between the pair and provides an insight into their working partnership and some of its difficulties. Notably the different manner in which they approached their contracts at work and the way money should be handled.

SOLOMONS IFA - STAN AND OLLIE MOVIE REVIEW FOR BLOG

Wrong end of the contract

Mr Hardy seemed to have something of a gambling habit, it isn’t clear from the story if this was problematic, but it is inferred. What I had not realised was that unlike the movie stars of today, they were employees of Hal Roach. He was a ground-breaking film maker of the day, but also a shrewd businessman. there was no bonus scheme or royalties and if a film failed or succeeded, they were paid the same. Laurel was clearly more financially astute, demanding that his contract be properly revised, Hardy’s contract still had time to run. The contracts were deliberately established this way by Roach, precisely to prevent them from negotiating together. Hardy seems not to have appreciated the implications and also lacked the courage to stand up to Roach, perhaps (I don’t know) because his gambling required the certainty of a regular income, not least to provide for his 3 ex-wives.

Here today, gone tomorrow 

Laurel and Hardy movies were shown around the world and Roach made them shoot each in several major European languages. They were coached and read from out-of-sight blackboards, phonetically, all to maximise revenue for Roach. Laurel and Hardy were consequently never financially secure, at least not by today’s Hollywood standards. The movie picks up at the end of their career, when they are mainly forgotten and having to earn a crust. Many are surprised that they are not retired, but this is a case of having to work.

Genius at work? 

As much as Laurel and Hardy loved their work and working together, clearly, as a financial planner, the aim is to ensure that you have the choice about whether to work or not. Retirement is a poor word; a better phrase is “financial Freedom Day” – the day you choose to work because you want to rather than have to.

In any partnership, speaking the same language and having shared goals is vital to financial wellbeing. Your financial planning really doesn’t need to be comedic, it is your life’s work so invest in the right counsel with a proper financial planner.

Here is the trailer. I’m confident it will make you smile.

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

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

SOLOMON’S FINANCIAL PLANNING APP

Our free powerful new Finance & Tax app.
To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

=

GET IN TOUCH

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

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

SOLOMON’S FINANCIAL PLANNING APP

Our free powerful new Finance & Tax app.
To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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ANOTHER FINE MESS2019-01-21T21:16:18+01:00

ANNUAL ALLOWANCE EXCESS

The Annual Allowance Charge

Arguably the most dreadful bit of recent pension changes is the annual allowance charge. This arises for anyone that contributes more than the annual allowance towards pensions during a tax year. To most people £40,000 a year into pensions is a lot of money so on the surface this is nothing short of yet another raid on higher-earners.

The annual allowance is really £40,000 or 100% of your earned income, whichever is lower. However, if your income is over £150,000 then the allowance reduces gradually down to £10,000 for anyone earning £210,000 or more, this is termed the Tapered Annual Allowance. Just for some context anyone earning over £150,000 has lost their personal allowance (income before any tax is paid) and pays a tax rate of 45% on income above £150,000.

Excessive Tax? Not Enough Voters

You can exceed the annual allowance in various ways – the amount for those investing money to build a pension is straight-forward. If you and your employer pay more than your annual allowance into pensions, you suffer an income tax charge on the excess at 45%. Easy, maybe not fair, but easy.

However, if you are a member of a good old-fashioned final salary (defined benefit) pension, well it’s a little more complex. The annual allowance is not calculated based upon how much you paid into a scheme, but on how much your pension improved by. So if you had a pay rise… this makes life more complex. If your pension increased by more than £2,500 a year (which admittedly is a very good pension for another year of employment) then you are likely to exceed the annual allowance of £40,000. If you have the minimum annual allowance as a high earner, then your pension only needs to improve by probably £527 – £625 a year.

£561m Extra Tax

This all became the new norm from the 2015/16 tax year. HMRC collected £179m in extra tax revenue as a result. However, this has now jumped massively as the reality sinks home for many high earners, rising to £561m for 2016/17.

Some people can get their employer pension scheme to pay the “fine” (tax) most cannot. In 2016/17 only 2,340 people achieved this which accounted for £44m (8%) of the tax however the clear majority had to pay up themselves – all 16,590 of those that realised!

I might call this a disincentive to save for your retirement, or daylight robbery…. Take your pick, but fair and sensible is most certainly is not.

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

ANNUAL ALLOWANCE EXCESS2018-10-02T16:42:39+01:00

DOCTOR, DOCTOR… IN THE TELEGRAPH

TODAY’S BLOG

DOCTOR DOCTOR… IN THE TELEGRAPH

You may have come across my details in a piece in The Telegraph on Monday 10 September 2018 by financial journalist Laura Miller. Laura outlines a problem that is being observed in hospitals around the UK, in that some doctors are in the ludicrous position of effectively being forced to reduce their available hours due to the additional taxes that they will suffer for additional income. This has the inevitable potential to create longer waiting lists.

Before we go any further, let me say that Laura asked me to check some sums from a Consultant doctor who was making the point about the annual allowance excess taxes. I have made no secret of the fact that I believe the tapered annual allowance is an utterly stupid Government policy. It isn’t the first and of course will not be the last.

THIS IS GOING TO HURT

My only concern is that some may interpret the information as “greedy doctors worry about tax and so work less”. So I wish to make one point crystal clear. I have advised medics for over 25 years. I have met hundreds of them. I have never, NEVER, not even once met one that was motivated by money as a career choice. The early career of a junior doctor is particularly traumatic and frankly the NHS and Department of Health should be ashamed of the working pressures and timetables that they put them under. If you need any convincing, simply have a look at Adam Kay’s Book – “This is Going To Hurt”. Yet the system continues, because it is always under strain and there are not enough doctors to do the work within “normal” working hours or shifts.

DOCTORS EARNINGS

It is true that some doctors can earn very good incomes. The £10,000 annual allowance only applies to those with income over £210,000 – which is a lot of money by most standards. However, these are people that are highly skilled and at the top of their profession, have given way more than their pound of flesh and are constantly scrutinised for errors and lambasted by politicians and media whenever it suits. For the record, this is not Laura’s intent.

The rather ludicrous rules also impact any doctor whose pension income improves by more than £2,106 in a year. This too would push them over the standard annual allowance and potentially suffer excess tax charges. The tax charge is treated effectively as income tax at the highest rate, despite the fact that the pension has not actually been paid to them, conceivably might never be paid to them if they were to die before retirement. In essence a tax on future, yet to be received income. This sort of rise in pension benefit could come from something as innocuous as moving up the grades, or perhaps for impressive work in the form of Clinical Excellence Awards – or even returning to a full-time post.

HEARING PROBLEM

This is all to do with the way in which the Annual Allowance is calculated for those in final salary schemes. I wrote to the previous Chancellor, twice, without reply on this subject when he presided over the introduced rules. Perhaps Laura will have more success.

Suffice to say this is a complex piece of pension planning, a headache that neither the doctor, nor the NHS really should have to waste time on. Yet my advice is to all doctors is to request a Pension Annual Savings Statement as well as their Total Rewards Statement and ensure all payslips are carefully retained – as well as information about any and every form of income they receive from all possible sources. This is more unpaid work, increased stress and bureaucracy to satisfy some utterly numpty thinking at HM Treasury…. Nothing new in that though is there.

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

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

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GET IN TOUCH

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

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

SOLOMON’S FINANCIAL PLANNING APP

Our free powerful new Finance & Tax app.
To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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DOCTOR, DOCTOR… IN THE TELEGRAPH2018-10-10T16:44:32+01:00

THREE DECADES OF RETIREMENT

Three Decades of Retirement

Three decades of retirement is the prospect that many people face if you believe that longevity is improving in general. That’s three decades to live off your investments, pensions and savings combined with any other forms of income from your State Pension and perhaps an employer’s final salary (defined benefit) pension which typically begin payments at 60, 65 or 67.

Three decades is a long time, with a lot of living to be done. To put this into perspective, it is now 2018, 30 years ago was 1988, which frankly does not seem that long ago does it? You remember 1988. It was the year the SDP merged with the Liberals, Margaret Thatcher became the longest serving PM and Comic Relief was launched. Nurses went on strike over pay. Red Nose Day raised £15m within a month the £1 note became obsolete and the Chancellor of the day Nigel Lawson cut the basic rate of tax to just 25%.

If you are into your sport, well Liverpool were beaten in the FA Cup final by Wimbledon. Graeme Hick scored a record 405 runs in a county match. Sandy Lyle won the US Masters. “Gaza” became the first £2m footballer moving from Newcastle to Spurs. The Seoul Olympics saw Team GB win 5 gold medals (hockey, swimming, rowing, shooting and sailing).

Released in 1987, Faith was the top selling album of 1988.

Another year, just like any other…

As with every year, it had its share of horror and disaster, Piper Alpha, Pan Am 103 exploding over Lockerbie, killing 207 people and a train crash at Clapham Junction killed 35 people. Edwina Currie managed to create an egg crisis. British films released included “Buster”, “A Fish Called Wanda” and “A Handful of Dust”. Michael Douglas won best actor for his role in “Wall Street” ad “The Last Emperor” picked up a stack of awards. Kylie Minogue started her pop career with “I Should Be So Lucky” (she was) and life was “Perfect” for Fairground Attraction. I was one of 80,000 at Wembley for the “Free Nelson Mandela Concert” and his 70th birthday. He was still imprisoned (not released until 1990).

Then and Now

If you are over the age of 40 this may jog a few memories of 30 years ago. The UK population was   about 56m today its about 66.5m. There were about 55,000 first-time graduates, now the number is around 414,000. The Bank of England’s base rate began 1988 at 8.37% but ended at 12.87% (yesterday the Bank increased the rate from 0.50% to 0.75% and some got worried). The FTSE100 closed the year at 1,793 yesterday it closed at 7,575 and that excludes all income from dividends over 30 years. A 10-year UK Government Bond paid about 9.79% in 1988, today around 1.23%. In short equities have gone up, Bonds have gone down. £100 in 1988 would need to be £260.44 in 2018 simply to be “worth” the same because of inflation. That’s an average rate of about 3.24%, in short, the value of your pound has more than halved.

Multiple Choices, Make them Count

This is history, a version of it. If you are now in your mid 40s or older, this is time spent. Who knows how long any of us have left but making the most of life and getting our money to last, whatever it brings is the prospect that you face. We work with clients taking a long-term perspective of life and money. We regularly review progress and make adjustments to ensure that your financial planning remains on course. Change is the constant that we all live with, but many investment principles are timeless, knowing what to adjust is probably more important than knowing you need to.

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

THREE DECADES OF RETIREMENT2018-09-25T09:58:19+01:00

FREEDOM BRINGS RESPONSIBILITY

Freedom Brings Responsibility

I hope that you are aware that since April 2015 pensions have had considerable improvements. Rather than having to buy an annuity anyone with a pension can simply take income from age 55 however they want (note that this age is gradually rising to be within 10 years of your State Pension Age which you can check here). As income it is taxable, but your pension fund has the benefit of 25% of anything “crystallised” being tax free. This you may remember, concerned some that there would be a rush on Lamborghini’s… which didn’t materialise. Mind you at £270,000 for a new Aventador, you would need to withdraw around double that to be able to pay the net price.

Many of you have been accessing your pensions under these new conditions. According to the latest HMRC data in Q2 (April to end June) of 2018 the number of individuals to whom payments were made reached 264,000. A total of £2,269m was paid out to them. The system has now been in place for 3 years and the value of all payments is now nearly £20,000m (some would say that’s £20bn).

Gone in 0-60 Seconds?

The basic caveat is that once your pension fund is spent, well… its gone. There have been many mistakes made – particularly in terms of taking too much money out and paying tax unnecessarily. As the income from the pension is assessed as income, those that believe that they can simply have their money are right, but invariably forget that the amount means that they must pay 40% or 45% income tax. Clever, or rather sensible planning can keep tax at 20% or less.

The Government and HMRC are probably rather pleased with this, it means that they are taking way more tax than they would have done, particularly as many of those drawing money from pensions are doing so before they are even retired.

Tax First, Ask Questions Later

HMRC also apply their own brand of logic, which is tax first, ask questions later. In other words, you must reclaim tax when too much has been taken. Despite lobbying by financial advisers and the pension industry generally, HMRC aren’t budging on changing their approach, claiming that people are better off paying too much than too little and then having to find money to pay their tax. Since the start of pension freedoms this “over-taxing” has amounted to more than £280m. So hardly a surprise that they won’t budge. Of course, this ought to be reclaimed… but therein lies the problem of theory and practice and in any event the Office of Tax Simplification recently warned that pension freedom withdrawals are poorly understood… one might be forgiven for wondering what on earth the OTS achieve.

To put your mind at ease, you need to complete the snappy titled “P55”to reclaim overpaid tax on your flexible pension. You can find the form here.

Here’s a video of an Aventador being tested by Autocar… no need to form a queue.

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

FREEDOM BRINGS RESPONSIBILITY2018-09-25T10:22:31+01:00