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State Pension Forecast Forms

These have been mailed to our clients today.

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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State Pension Forecast FormsDominic2023-12-01T15:32:13+00:00

State Pension Forecast

We will be sending clients a BR19 form to complete in order to obtain an up to date State Pension forecast. As you may be aware, the State Pension has become something of a political punchbag over the years with the retirement age increasing for many people.

The State pension is a valuable source of income and I estimate worth nearly £130,000 if it were a pension fund in 2010. Most of us would probably welcome an injection of this sort of sum into our pension pots, so it is important that you know what to expect and be prepared for what may one day become means-tested….though not exactly a vote winning option.

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

State Pension ForecastDominic2023-12-01T15:32:14+00:00

Retirement Age Change

The BBC report today that the fixed age for retirement is to be abolished, meaning that employers do not have “right” to terminate an employment contract at the age of 65. This is good news for those approaching retirement age that wish to continue to work. In practice it is all part of the wider story that the State would prefer retirement to be deferred thereby saving payments and maintaining income tax revenues and keeping the good ship UKplc afloat.

http://www.bbc.co.uk/news/business-10796718

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

Retirement Age ChangeDominic2023-12-01T15:32:32+00:00

Empty NEST Syndrome

The current Government introduced stakeholder pensions in the Welfare Reform and Pensions Act 1999. The main purpose of this was to encourage everyone to contribute towards a low cost pension. Employers with 5 or more employees have to offer a scheme for their staff, with significant fines imposed if they fail to do so. Many pension companies rushed in to provide these “inexpensive” personal pensions. Charges were originally capped at a maximum of 1% but have increased to 1.5%.

Unfortunately the good intentions of the Government have been met by disaster after disaster with pensions. Without any real need to contribute towards a scheme, employers have had little incentive to contribute to a pension, particularly in light of rising National Insurance costs. Stakeholder pensions have been a complete flop. To my mind, the main reason for this has been that the immediate interests of the pension industry at large were not served. Traditional personal pensions (many of which are rubbish) pay commission to advisers, which in practice is often the reason why most people even have a pension. Few of us wake up and think – “I must sort out a pension today” or at least, very few people under the age of 45 think this way (from my 20 years of experience advising clients).

I remember one of the largest pension companies telling me in early 2000, that their stakeholder would not break even for 14 years. When they were beset with administration errors (the main cost) this projection was revised upwards significantly. Essentially, a stakeholder pension pays little or no commission – a fundamental stumbling block for commission-based advisers, but not for those of us that are fee-based. However, that said, stakeholder pensions are generally aimed at those on relatively low incomes. If any sense of a “good job” can be done from an advice perspective, this requires advice time and often research and obvious compliance due diligence.

Aware of the problem, the Government set up Personal Accounts – or at least planned to – as well as introducing “Pensions Simplification” (A-Day) in April 2006. This was meant to make pension rules clearer and simple to follow. Regrettably, the constant moving of the goalposts has provided exactly the opposite effect. “The Plan” then switched to “auto-enrolment” and a mandatory pension for all from 2012 (- it’s not just the Olympics that is happening in London). However, due to the complex nature of “is this right for me?” there are now fears that perhaps auto-enrolment could become a problem – after all, a pension is not right for everyone all of the time.

So with the usual flurry of political feathers, and an expensive recession, we have now had a re-branding of a pension that has not even been launched, equivalent to naming your children before being pregnant. Personal Accounts will now be called the National Employment Savings Trust (NEST). Auto-enrolment is still planned – but will now be gradually wound out from 2012 until 2017. Employers will have to make contributions, as will the individual. As yet though, nothing is actually finalised. It is not as though pension companies are queuing up to offer a NEST having been badly burned on stakeholder. There’s also the matter of the large UK plc national debt to repay, a recession and election in 2010.

So whilst Britons clearly need to be encouraged to save for their future, the incentives provided to aid them have offered little temptation to the masses – who are the real concern as they have very little saved in anything, let alone a pension. I remain hopeful that this will be resolved before I retire and would suggest a few possible options;
1. Redirect something like half of National Insurance contributions into a stakeholder/personal pension/ personal/ NEST type account for both employers and employees, the remaining 50% would be used to continue to build social security benefits.
2. Means-test the State Pension (Harsh, I know, but what is £5,000 to someone that is taxed at 40-50% in retirement with a very good pension already?)
3. Provide tax relief at highest rate, to encourage saving, but restricted to 100% of tax year earning (resulting in abolition of the lifetime allowance and the nonsense of a £20,000 pension restriction if you earn over £150,000).
4. As contributions will be part of National Insurance, this would be mandatory for anyone that is employed or self-employed.

OK, so I don’t have the Government’s books to run their numbers (probably just a well) but surely it is not beyond the wit of man to provide a sensible working solution rather than a constant rehashing of a bad job? Something we learn in childhood is that we have to take the medicine we need. Unfortunately our politicians seem to believe that as adults we have forgotten this truth or are merely incapable of understanding it. It is time for the UK to become rather more adult in its thinking.

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

Empty NEST SyndromeDominic2023-12-01T15:32:37+00:00

Public Sector Final Salary Scheme Warning

The current financial crisis has added fuel to the fire, for those concerned that the large Government backed final salary schemes are “expensive”. In reality the NHS, Teachers, Civil Service, Local and Central Government pension schemes are likely to alter considerably at some point over the next 20 years. The political will to end these final salary schemes has been muted due to the vested interests of politicians and the civil service but also due to the likely anger and protest that such a move would likely generate from the vocal unions and members of such schemes.

The Policy Exchange appears to have proposed replacing public sector pensions with investment based schemes (as is now the norm for the commercial sector). It is estimated that such a move would save around £12bn a year. At the moment, members of most public sector schemes contribute to their pensions – a doctor will pay 6% of salary. This money is not really paying for the pension of the individual, but for those already in retirement or perhaps their widow/er, much like everyone’s National Insurance is not really securing a pension for retirement, but helping to pay for those already retired.

Most of us are taxpayers, irrespective of age, so it is a myth to think that only those that are earning a living are paying tax – those with pensions (including the State pension) are also liable for personal income tax. The new proposals would tackle the issue of payments towards pensions being actually for the future but applied in value in the present. In other words, moving away from the promise of tomorrow based upon assumptions about there being sufficient future employees (and money) to pay towards the scheme.

This would seem to have won approval with the electorate (if well communicated) as there is the sense that once the money is set aside in a given year, for say the NHS pension, no more would be forthcoming. The price is fixed, the deal is done, end of discussion. There would then be no alarm bells asking if there is enough money in the pot at the end of 40 years, you get what is there. Perhaps more importantly, this is the sort of idea that post-modern politicians seem to like (by like, I mean find easy to sell as policy) – fixed sums that don’t become a gaping chasm that needs filling with public funds.

Of course any changes of such magnitude would require all of the political skill available to prevent a potentially huge amount of protest from public sector employees. However, despite the inevitable anger, there are relatively few alternatives and unfortunately the numbers won’t go away.

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

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Public Sector Final Salary Scheme WarningDominic2023-12-01T15:32:57+00:00