bankfield money nov - dec 2013

8/13/2019 Bankfield Money Nov - Dec 2013

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NOVEMBER/DECEMBER 2013

TAX-EFFICIEN

INVESTINMADE EAS

ENJOY THETIME OF

YOUR LIFE

DO YOU HAVE ALONG-TERMINVESTMENTSTRATEGY?

ARE YOU MAKTHE MOST OF YO

FINANCES

MAKE WRITING YOURWILL YOUR TOP 2014

NEW YEAR RESOLUTION

Bankeld Financial Advisers Ltd is an appointed representative of TenetConnect Services Limited, which is authorised and regulated by the Financial Conduct Authority.TenetConnect Services Limited is entered on the FCA register under reference 150643.Bankeld Financial Advisers Ltd. Registered Ofce: The Rutland Centre, 56 Halford Street, Leicester, LE1 1TQ. Registered in England & Wales Company No. 02826451

Bankeld money


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Financialplanning isour business.Were passionate about making sureyour finances are in good shape.

Our range of personal financial planning services isextensive, covering areas from pensions to inheritancematters and tax-efficient investments.

Contact us to discuss your current situation, and wellprovide you with a complete financial wealth check.


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The content of the articles featured in this publication is for your general information and use only and is not intended to address your particular requirements. Articles should not be reliedupon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee thatsuch information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receivingappropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect ofany articles. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts. Levels and bases of, and reliefs from, taxation are subject to change and their valuedepends on the individual circumstances of the investor. The value of your investments can go down as well as up and you may get back less than you invested.

GIFTS OF THE FINANCIAL VARIETYThe best gift you can ever make to your grandchild or grandchildren this festiveperiod will have a longer-lasting impact

ENJOY THE TIME OF YOUR LIFEHave you given full consideration to your long-term pension investment strategy?

WHY IT PAYS TO BE SMART WHEN PLANNING YOUR LEGACYEnsure your inheritance goes to loved ones and not the taxman

PLANNING FOR A COMFORTABLE RETIREMENTDo you know how much income to expect when you retire?

RUSHING INTO MAJOR FINANCIAL DECISIONSAre you investing enough time in retirement and pension planning?

DO YOU HAVE A LONG-TERM INVESTMENT STRATEGY?Keep focused on your end goals and dont let market noise sway you

THE FINANCIAL IMPACT OF LONG-TERM ABSENCE FROM WORKDo you have a back-up plan in place if you are unable to work?

MAKE WRITING YOUR WILL YOUR TOP2014 NEW YEAR RESOLUTIONSave your loved ones from any additional stress at what is likelyto be a very difcult time

THE GENDER SAVINGS GAPPreparing adequately for retirement is at an all-time low

WORKPLACE PENSION PLANNING10 key tips for small and medium-sized businesses implementingauto-enrolment in 2014

EQUATING MONEY WITH HAPPINESS IN RETIREMENTFinancial security outweighs companionship for over-55s

WHAT TO CONSIDER IF YOU ARE APPROACHINGYOUR RETIREMENTMake sure you have enough income to provide for your needs in the future

TAX-EFFICIENT INVESTING MADE EASYDont miss out, start reviewing your options now

ARE YOU MAKING THE MOST OF YOUR FINANCES?Keeping your tax bill to a minimum is not a matter of aggressive orcomplex tax schemes

PROTECTING YOUR INCOMETwo fths of workers admit they couldnt live on Statutory Sick Pay

SAFEGUARDING YOUR INCOME AND FAMILY WEALTH

We can help provide signicant peace of mind to you and your family

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IN THISISSUE

CONTENTS

04

Welcome to the latest issue ofour magazine designed to helpyou make more of your moneyby protecting and growing yourwealth. As the year end approachesand you start to contemplate yourNew Year resolutions, we look atsome of the main areas you shouldbe considering.

Retirement planning involvesthinking about your plans for thefuture now that means investing

your money with the aim ofmaximising its value ready for whenyou retire. On page 06 we considerhow the importance of carefulnancial planning, the right mix ofassets and starting sooner ratherthan later could all help lead to theretirement you are looking for.

The complexity of todayseconomic and global conditions,coupled with uncertainty in Europe,North America and China, havecombined to create a degreeof cautiousness among manyinvestors. Turn to page 13 to readwhy having a long-term investmentstrategy will provide you with a clearadvantage during uncertain times.

As much as we might not wantto think about it, we are all goingto die one day. Most of us knowthat we should write a will, butmost of us never get round to it.Do you fall into this category? Ifthe answer is yes, as the New

Year approaches make writing yourwill your top 2014 resolution. Readmore on page 16. A full list of allthe articles featured in this editionappears on page 03.

WE HOPE YOU ENJOYREADING THIS ISSUE.TO DISCUSS YOURFINANCIAL PLANNINGREQUIREMENTS ORTO OBTAIN FURTHER

INFORMATION, PLEASECONTACT US.

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INVESTMENT

05

GIFTS OF THE FINANCIAL VARIETY

The best gift you can ever make to your grandchild or grandchildrenthis festive period will have a longer-lasting impact

HM Revenue & Customs will currentlygive tax relief of 60 per month ona 240 a month contribution. Themoney is locked away until the

recipient reaches age 55, but it means they cantfritter away their inheritance!

MORE SELF-RELIANTInstead, the money becomes available at atime when they may really need it to pay offa mortgage or fund their lifestyle in retirement.After all, children born today are unlikely to enjoythe same level of retirement funding that thecurrent baby boomers are enjoying. Theyll needto be more self-reliant, as dependence on theState is likely to diminish and company benetssuch as nal salary pension schemes disappear.

TAX-EFFICIENCYTheres another reason why it may makesense for you to do this, and thats tax-efciency. If youve taken your tax-free lumpsum from your own pension, the remainingfund will either be in income drawdown or

you will have purchased an annuity. Whatyou may not realise is that even if you arenot actually taking an income from yourremaining pension fund, its still classed as indrawdown. This means it could be subjectto a 55 per cent tax charge when you die, soyour beneciaries could receive just 45 percent of your remaining pension fund [1].

INHERITANCE TAX PURPOSESUsing income from your drawdown fund couldhelp move the money out of this 55 per cent

death tax environment. Similarly, if youvetaken out an annuity and have surplus income,then putting the money into your grandchildspension may also help move money out ofyour estate for inheritance tax purposes.

Once the contribution is made into thegrandchilds pension, the future investmentgrowth of those contributions belongs to yourgrandchild, creating signicant longer-termvalue compared to leaving the money withinyour estate.

Your grandchild or grandchildren may want the latest toy or gadget this Christmas, but how aboutgiving them a present that can help their nancial future? UK tax laws allow children to receive pension

contributions of up to 3,600 a year from the moment they are born.

[1] Drawdown money is subject to a55 per cent death tax if paid as a lump sum to

beneficiaries.

While annuities are generally guaranteedto be paid, remaining invested and usingdrawdown means that the value of your

pension, and the income from it, can go downas well as up. Therefore there is a chance that

you may not get back as much as you wouldby using an annuity. Drawdown is a high-risk

option which is not suitable for everyone. If themarket moves against you, capital and income

will fall. High withdrawals will also depletethe fund, leaving you short on income later in

retirement. The value of investments and theincome from them can go down as well as up.You may not get back as much as you invested.

THE MOSTVALUABLE GIFT EVER

Opening a pension for your grandchildor grandchildren this festive period couldsignicantly improve the amount theyeventually inherit. With both tax andestate planning benets, together withthe prospect of giving them nancialindependence in their retirement years,this really could be the most valuablegift you ever make to them. To discussthis and any other retirement planningconcerns you may have, please contact us.


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RETIREMENT

ENJOY THE TIME OF YOUR LIFEHave you given full consideration to your long-term pension investment strategy?

REVIEWING YOURRETIREMENT PLANNINGHaving a pension today is recognised as just oneimportant step along the path to achieving yourdreams once you have stopped working. Now, notonly must you carefully consider where you actuallyinvest your pension money and how you are going touse your pension, but if appropriate you should alsoreview other forms of retirement savings. Reviewingyour retirement planning is critical, and probably thesingle most important decision you can make to helpyou realise your long-term goals.

Different investment choices produce differentresults. Its essential that you review all yourretirement investments to make sure they areheading in the right direction. If your circumstanceschange, some investments may no longer beappropriate. Its important to get these things right asyou will be relying on the provisions you make nowto generate income after you retire.

FACTORS THAT WILLDETERMINE YOUR STRATEGYWhen building or reviewing your pension portfoliothere are a number of factors that will determineyour strategy, including the level of risk you arewilling to take. This is likely to change throughoutyour life, which means your investment strategy willalso need to change. Receiving professional nancialadvice plays a vital role in helping to make sure thatyour pension holdings match your risk prole andyour investment goals.

Typically, people in the early years of the term

of their pension may feel they have time to takemore risks with their investments to increase thepotential for higher returns. As they approachretirement and the duration of the investment isshorter, they may prefer more predictability to start

to plan for their future after work. Alternatively, ifthey have reached their pension age and are stillinvesting part of their fund while drawing benets,they may prefer to keep an element of greater riskin return for higher potential growth.

WHEN IT COMESTO RETIREMENT PLANNINGYour 40s is the golden decade when it comes toretirement planning. This is when you should beputting as much as possible into your pension to giveyour contributions time to grow.

In your 50s you may want to start makingdecisions about your retirement. If you aregoing to convert all of your retirement funds intoincome the moment you retire, you may wish tostart reducing risk now. If you expect to keep itmainly invested, you may wish to keep a goodweighting in investments based on shares. Afterall, with the growing trend towards taking work inretirement, many people may feel they can afford

to keep their pension invested for longer whiledrawing an income.

Delaying the start of your retirement provisionwill have an obvious impact on the potential growthof your pension. Not only will the time period forgrowth potential be reduced, but you could also bepassing up the opportunity for valuable tax relief.

STREAMLINED PENSION REGIMEPensions have always provided a highly tax-efcientenvironment for long-term retirement investments.However, in April 2006, a streamlined pension

regime introduced a number of extra benets,including the potential to contribute larger sums intoyour pension fund when the timing is right for you.

Since the rules were simplied, pensions havebecome easier to navigate. Whether you have

Retirement planning involvesthinking about your plansfor the future now thatmeans investing your moneywith the aim of maximisingits value ready for whenyou retire. Careful nancial

planning, the right mix ofassets and starting soonerrather than later could all helplead to the retirement you arelooking for. Many years agothe traditional view of savingfor retirement was to simplyput your money into a pension,with few decisions to make inthe run-up to your retirementdate and no choice over howthe pension was taken.


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occupational pensions, personal pensionsor both, you now have one overall annualand one Lifetime Allowance for pensionsavings. You can save as much as you likeinto any number and type of registeredpension schemes and receive tax relief oncontributions of up to 100 per cent of yourearnings (salary and other earned income)each year, provided you paid the contributionbefore age 75. But the amount you saveeach year towards a pension from whichyou benet from tax relief is subject to theAnnual Allowance. The Annual Allowancefor the tax year 2013/14 is 50,000.

EXCESS TAXED ON INCOMEThe Lifetime Allowance, the amount you cansave in total in all your pensions, is for mostpeople 1.5 million in the current tax year2013/14. It applies to all the pensions you have,excluding your State Pension. In 2014/15 theLifetime Allowance will reduce to 1.25 million.If you save more than this, you will be taxed onincome from the excess at an effective rate of

55 per cent if taken as a cash sum, and25 per cent if taken as pension benets. Thesecharges are on top of any income tax due onthe pension payments.

CONSOLIDATING FUNDSAnother feature of pensions is that you canconsolidate payments from one UK registeredpension scheme to another. This could be eitherto access different benet options or simply toconsolidate your funds in one place. It is importantto note that there are costs involved, and

obtaining professional nancial advice is essentialto ensure that you take the appropriate course ofaction for your specic situation.

If you have more than one pension planin your name, there could be a number of

advantages to consolidating all your plans intoone. Having one pension can make it mucheasier for you to keep track of funds, monitorperformance and change strategy if necessary.Consolidation may also cut down on paperworkand could make estate planning simpler.

Again, its possible that consolidating pensionfunds may not be benecial for your particularcircumstances. You should always receiveprofessional nancial advice before deciding if itis the right course of action for you.

POST-RETIREMENTThe array of post-retirement options is vast and

will need to be considered carefully. The bestoption for you will depend on factors such asthe size of your fund, your ongoing involvement,the risk you are willing to take and the level ofbenet exibility you want.

Annuities have long been the mainstay ofturning your retirement pot into income. Whenit comes to buying a pension annuity you canchoose from any provider in the market, withthe option of ination-proong it or buyinga guarantee so that it continues to pay outfor a set period of time. You might also want

an income to continue for your spouse afteryour death. All these options will reduce theamount you initially receive.

You have other options besides buying anannuity, such as using a drawdown facility and

leaving your pension invested but receiving anincome from the fund. If you do this, you can stilltake your 25 per cent tax-free lump sum out ofyour pension.

There are many choices to make during thepre- and post-retirement years. However, thesechoices are some of the most important you willever make, so careful consideration is essentialin order to safeguard your nancial future andgive you the retirement you are dreaming of.We can provide professional help and adviceon retirement planning, so please contact us toarrange a meeting.

Some occupational schemes may not be ableto offer you all the options referred to within this

article. While annuities are generally guaranteed tobe paid, remaining invested and using drawdown

means that the value of your pension, and theincome from it, can go down as well as up.

Therefore there is a chance that you may not getback as much as you would by using an annuity.

Drawdown is a high-risk option which is not suitablefor everyone. If the market moves against you,

capital and income will fall. High withdrawals willalso deplete the fund, leaving you short on income

later in retirement. The value of investments and theincome from them can go down as well as up. You

may not get back as much as you invested.

RETIREMENT

IN YOUR 50S YOU MAY WANT TO START MAKINGDECISIONS ABOUT YOURRETIREMENT. IF YOU AREGOING TO CONVERT ALLOF YOUR RETIREMENTFUNDS INTO INCOME THEMOMENT YOU RETIRE,YOU MAY WISH TO STARTREDUCING RISK NOW.

YOUR 40S IS THE GOLDEN DECADE WHEN IT COMES TO RETIREMENTPLANNING. THIS IS WHEN YOUSHOULD BE PUTTING AS MUCH ASPOSSIBLE INTO YOUR PENSION TOGIVE YOUR CONTRIBUTIONS TIMETO GROW.

ARE YOU PROACTIVE?

When it comes to planning for yourretirement, time is your friend. Theearlier you start, the longer your moneyhas the potential to grow. But retirementplanning isnt just paying money intoyour pension each month and forgettingabout it you need to be proactive.To review your current situation orrequirements, please contact us formore information.


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Youve

protectedyour mostvaluable assets.But how financially secure areyour dependents?

Timely decisions on how jointly owned assets are held,the mitigation of inheritance tax, the preparation of a

will and the creation of trusts, can all help ensure yourdependents are financially secure.

Contact us to discuss how to safeguard yourdependents, wealth and assets, dont leave it untilits too late.


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WEALTH PRESERVATION

WHY IT PAYS TO BESMART WHEN PLANNING YOUR

ENSURE YOUR INHERITANCE GOES TO LOVED ONES AND NOT THE TAXMAN

IHT is a tax on money or possessionsyou leave behind when you die and onsome gifts you make during your lifetime.However, a certain amount can be passed

on tax-free, utilising your tax-free allowance.This is also known as the nil rate band.

Everyone in the current 2013/14 tax yearhas a tax-free IHT allowance of 325,000. Theallowance has remained the same since 2010/11and will stay frozen until at least 2018.

Failing to think about how to tackle apotential IHT liability could have seriousconsequences for your loved ones. No onewants to leave people they care about withan IHT bill that could have been substantiallyreduced, or even eliminated altogether.

We have provided ve steps to consider ifappropriate to your particular situation:

1. WRITE A WILLIn the UK, if you dont have a will your estatewill be distributed according to rules set out bylaw. These are known as the Rules of Intestacy

(some areas of the law and legal procedures aredifferent in Scotland).

For example, in England and Wales, if youremarried with children, the rst 250,000 of yourestate (plus any personal possessions) wouldpass to your spouse. The remainder would besplit equally, half going to your children whenthey reach the age of 18 and the other half usedto generate an income for your spouse, passingto the children on your spouses death.

If youre not married your estate will go toyour blood relatives, even if youve been living

with someone for several decades. This could befar from what you wish. Think about where youwant your money to go and why. A will makesyour wishes concrete and claries who shouldget what, but can also be reviewed over time.

2. MAKING USE OF LIFE ASSURANCELife assurance can play a big part in your IHTplanning. Rather than reduce the liability, bytaking out a plan to cover your estates potentialIHT liability and writing it in an appropriate trust,the proceeds can be used to meet the IHTamount payable. More importantly, by puttingit in an appropriate trust it will fall outside yourestate so it wont form part of your estate andwill not be liable for IHT currently at 40 per cent.

3. GIVE IT AWAYGiving your wealth away to another individualwhile you are still alive will also save on IHT.Some gifts are immediately outside your estate.You can give as many people as you like up to250 each in any tax year. If you want to givelarger gifts, either to one person or several, therst 3,000 of the total amount you give will beexempt from IHT with the balance after 7 years.

You can also make a regular gift as long as itis out of your income and doesnt affect yourstandard of living. For example, if you dontspend all your salary or pension each month,

you could redirect any funds that are left overto another person. The gift does need to beregular, which could perhaps be a birthday orChristmas present, or a monthly payment.

A wedding can also be a good excuse for anIHT-exempt gift. A parent can give up to 5,000, agrandparent 2,500 and anyone else 1,000.

Legislation stops the tax saving if you continueto benet from whatever is given away.

4. MAKE AN INVESTMENTAND USE A TRUST

This could be useful if you wanted to givesome money to, for example, your children orgrandchildren but fear they might not spendit wisely during their teenage years. Or, if youwanted to give away capital while keeping control

over how it is managed and, in some instances,still being able to receive an income from it.

Tax charges can also come into play on themoney placed in trust, but generally if thisremains below the nil-rate band you wont needto pay any tax. And in many cases the level oftax suffered will be less than the 40 per centheadline IHT rate. Most IHT planning uses a trustarrangement of some sort.

5. MAKE IHT-EXEMPT INVESTMENTSWhere planning to reduce the liability is notpossible, then life assurance is an option. Moreimportantly, by putting it in an appropriate trustit will fall outside your estate so it wont formpart of your estate and will not be liable for IHT,currently chargeable at 40 per cent. Be awarethat premiums must be maintained throughoutyour remaining lifetime and if they lapse, so willthe cover. Its therefore essential that you ensurethe continued affordability of the premiums,which may be payable for the rest of your life.

Investments in unquoted companies usually carryhigher risks and may not be suitable for all investors.Accordingly, professional advice should be obtained

before making an investment. Levels and bases of, andreliefs from, taxation are subject to change and their

value depends on the individual circumstances of theinvestor. The value of your investments can go down aswell as up and you may get back less than you invested.

The Financial Conduct Authority does not regulateTaxation & Trust advice or Will Writing.

Inheritance tax (IHT) is becoming an issue for an increasing number of people in the UK. None of uslikes to entertain the thought of our own death and what would happen to our family after such an

event. However, a nancial plan for your death is vital, especially if you have dependants.

PROTECT YOUR WEALTH

It is essential that you receive thehighest standard of professionalnancial advice to enable you to planeffectively and achieve the most tax-efcient strategy to protect your wealth.We can help you achieve peace of mindfor your nancial future please contactus for further information.


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RETIREMENT

PLANNING FOR A

COMFORTABLERETIREMENTDo you know how much income to expect when you retire?

Only around a quarter (26 per cent) of under-

45s with pensions know what their pensionpots are currently worth, and just one in ve(21 per cent) say they know what income theyare expecting when they retire. Furthermore,many of them (34 per cent) already have morethan one pension pot.

THE RUN-UP TO RETIREMENTThe research shows that most of us dontreally know the value of our pension untilwe are older and in the run-up to retirement,despite the fact that we are likely to bereceiving annual pension statements. By notkeeping a close eye on our pensions in theearlier years, we run the risk of falling behindand leaving any top-ups until the last minute,when it may be too late to catch up.

Alongside our homes, our retirementsavings are likely to be one of our biggestassets. So by not keeping track of the value ofour pension pots and how they are performing,we may be missing out on opportunities totake action and leaving ourselves vulnerable ata later age.

PENSION CONSOLIDATIONThe research has also found that over twofths (43 per cent) of people in the UK withpensions have two plans or more, perhapsbuilt up over time as they move jobs. Andmany of the under-45s (34 per cent) withpensions already have more than one, despitebeing younger.

Having multiple pension pots could makeit more difcult for people to get a clearpicture of the total value; it could also be whypeople totally lose touch with their pensions.

Therefore, consolidating your pension potscould help and is something to consider.

When you consolidate your pensions, youhave just one provider to keep in touch withand one annual statement to look at and

review. Consolidating can also potentially mean

you pay lower charges and possibly have morechoice and buying power when you come toretire too. For example, pension drawdown isgenerally not an option if you have a smallerpot, but combining pots could change that. Alarger combined pot could also help you nd abetter rate when you choose an annuity.

IMPORTANT BENEFITSFollowing the introduction of auto-enrolment,the Government is looking at how to ensurethat pension pots will follow people as theymove around jobs. Going forward, they hopethat people wont have this confusion ofmultiple pension pots. But many people havealready built up several different pensions andconsolidating some or all of them is somethingto consider.

We often consolidate other things like ourutility providers or combine our TV, phoneand broadband packages with one providerto make things simpler to keep tabs on andgenerally cheaper too. The same theory couldpotentially be applied to pension pots. Butbefore consolidating your pensions in one

place, you should always check to make sureyou are not giving up important benets, likedened benets, with prots bonuses andenhanced tax-free cash.

Ten tips to help with pension planning:

1. Develop a plan so that youre clear on whatyour goals are for retirement and how youregoing to achieve them. Keep your plan underreview and make changes when its appropriate.2. Always keep track of your pension savings,

so you know to top-up earlier on if you realiseyou arent saving enough to achieve your goals. 3. Make sure your money is invested in thefunds that reect your attitude to risk. Keepthis under review particularly as you get closer

to the time when you intend to retire.

4. Keep an eye on the Lifetime Allowance(1.25m from 6 April 2014) and whetheryou are likely to breach this limit and risk ahefty tax charge. Remember the LifetimeAllowance may reduce further before youreready to take your pension.5. Remember to take the state pension intoaccount when you work out how much extraincome you will need.6. Its important to start saving for yourretirement early to maximise the time yourmoney is invested.7. Remember that, in most cases, if you are abasic-rate tax payer, for every 80 you invest ina pension it is automatically topped up by20 tax by the Government.8. If you are a higher-rate tax payer, thenyou can receive higher-rate tax relief on yourcontributions - dont miss out, and rememberto claim this through your tax return. If youreinvesting through your workplace, you dontneed to do this as payments are deductedfrom your salary before tax.9. If you have more than one pension plan,then consider bringing them all together into

one pot to make it easier to see how yourpension is doing. But before doing so, makesure you are not giving up important benetssuch as dened benets, with protsbonuses and enhanced tax-free cash.10. Consolidating your pension plans maymean lower annual charges, and you couldalso benet from a discount for having a biggerpension pot.

All gures, unless otherwise stated, are fromYouGov Plc. Total sample size was 2,018 adults,

of which 1,361 have a pension. Fieldwork wasundertaken between 9-12 August 2013. The

survey was carried out online. The gures havebeen weighted and are representative of all GB

adults (aged 18+).

The vast majority of under-45s with pensions are not aware of the total value of their pension pots or theincome they can currently expect to receive in retirement, according to recent research from Standard Life.

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RETIREMENT

RUSHINGINTO MAJORFINANCIALDECISIONSAre you investing enoughtime in retirement andpension planning?

These are among the ndings estimatedfrom a nationally representative survey of2,000 British adults, which was commissionedby NFU Mutual and conducted by ICMResearch during January 2013.

INCREASING DEMANDSSo why do people spend so little time thinkingabout nancial planning? The increasingdemands of modern life mean we are nowexpected to make thousands of decisionsevery day, with an increasingly mind-numbingnumber of options to choose from.

Something as simple as choosing whichTV channel to watch can now involve surngthrough 500+ channels, where only ageneration ago you were lucky to get all veterrestrial channels clearly.

And even something as simple asbuying a cup of coffee can now meanchoosing between countless flavours,sizes and extras.

As many as four million Britonsadmit to rushing into majornancial decisions and thenregretting them afterwards, andthe majority of us put more timeinto planning for Christmas andpicking a satellite TV providerthan we do into thinking aboutour nancial future.

TIME TO TALKABOUT YOUR OPTIONS?

We all want the future taken care of,which is why we combine genuine insightinto your needs and circumstances with

a comprehensive understanding of thedifferent options available. To nd out more,please contact us.

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Isnt it timeyou had afinancial review?Well make sure you get the rightadvice for your individual needs.

We provide professional financial advice coveringmost areas of financial planning, including, tax-efficientsavings, investment advice, retirement planning, estate

& inheritance tax planning, life protection, critical illnesscover and income protection.

To discuss your options, please contact us.


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INVESTMENT

DO YOU HAVE A LONG-TERM INVESTMENTSTRATEGY?

Keep focused on your end goals and dont let market noise sway you

ONE OF THE WORLDSRICHEST INVESTORSWarren Buffett is one of the worlds richestpeople and is a highly successful investor. Hesachieved this partly by identifying companies thathe believed were worth more than their marketvalue, investing in them and, crucially, holdingthat investment for the long term. It soundsremarkably simple, but given the ups and downsof the global markets, it takes a high level ofdiscipline, nerve and conviction in your decisions.

KEEP FOCUSED ON YOUR END GOALSIts important to have in place a soundinvestment strategy to keep you focused onyour end goals and not to let market noise swayyou. If appropriate, consider investing at regularintervals over the long term. Keep on investingthrough market lows when share prices areundervalued, so that you gain more wealth

when markets rise again. This can help smoothsome of the stock market ups and downs andyou avoid investing all of your money when themarket is at a peak.

YOUR ATTITUDE TOWARDSINVESTMENT RISKUnderstand your time horizon and your attitudetowards risk. They affect how you invest. Wereall different, and our personal risk attitude canchange with our circumstances and age. Thenearer you approach retirement, the more

cautious youre likely to become and the keeneryoure likely to be to protect the fund you havealready built. Note that the value of your fundmay uctuate and you may not get back youroriginal investment.

SPREAD RISK THROUGHDIVERSIFICATIONDiversify your portfolio so that when one partof the market does not perform it is balancedout by another part of the market that does.View your investment portfolio as a whole.Asset allocation is the process of dividing yourinvestment among different assets, such ascash, bonds, equities (shares in companies) andproperty. The idea behind allocating your moneyamong different assets is to spread risk throughdiversication the concept of not putting allyour eggs in one basket.

ASSETS THAT BEHAVE DIFFERENTLYBalance your portfolio and maintain a sensiblebalance between different types of investments.To benet from diversication, you need to investin assets that behave differently from each other.Each asset type has a relationship with others

some have very little or no relation to each other(known as a low correlation), whereas othersare inversely connected, meaning that theymove in opposite ways to each other (called anegative correlation).

MIRRORING THE PERFORMANCEOF A PARTICULAR SHARE INDEXThere will always be times when one assetclass outperforms another. Generally, cash andbonds provide stability while shares and propertyprovide growth. Funds are either actively

managed, where managers make decisionsabout the investments, or passively managed(typically called a tracker), where the fund is setup to mirror the performance of a particular shareindex rather than beat it.

BENEFIT FROM COMPOUND GROWTHThink long term. It is time in the market thatcounts not timing the market. The longeryou are invested in the market, the greater thelikelihood of making up for any losses. Whatsmore, the sooner you start investing, the moreyou will benet from compound growth.

INVESTING AS TAX-EFFICIENTLYAS POSSIBLEDifferent investments have different taxtreatments. Tax is consequential to many wealthmanagement decisions. Our understanding andexperience can help you manage and protectyour wealth, whatever form it takes. We canadvise you about the tax treatment of yourcurrent investments, and of any investments youare considering, to ensure that you are investingtax-efciently. Its important to remember thatyour requirements are unique to you. Whatsa good investment for one individual is notautomatically a good investment choice for you,so dont follow the latest investment trendsunless they t with your plan.

Past performance is not necessarily a guideto the future. The value of investments and the

income from them can fall as well as rise as a

result of market and currency uctuations and youmay not get back the amount originally invested.Tax assumptions are subject to statutory change

and the value of tax relief (if any) will depend uponyour individual circumstances.

The complexity of todays economic and global conditions, coupled with

uncertainty in Europe, North America and China, have combined to createa degree of cautiousness among many investors. A long-term investmentstrategy could provide you with a clear advantage during uncertain times.

REQUIRE ADVICE?We offer a range of services thatwe tailor to our clients investmentrequirements. To nd out more abouthow we could help you build and growyour wealth, please contact us todiscuss the options available to you.


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IN THE NEWS

THE FINANCIALIMPACT OF LONG-TERMABSENCE FROM WORK

Do you have a back-up plan in place if you are unable to work?

The rst National Sickness Report fromLV= looks at the current health of the UKworkforce[1], gauges their attitude towardssickness, and looks at how they guard againstthe impact of long-term absence.

STRESS AND DEPRESSIONAccording to the latest gures 131 million daysare lost per year due to sickness absences inthe UK (equivalent to six per worker), and over13 million of these were lost due to stressand depression[2]. LV=s research, conductedamong full-time workers, reveals that stressand depression are two of the most commonlong-term illnesses affecting working Britonstoday. Workers who have suffered from stressor depression during their working lives saythey took an average of two and a half months(81 days) off to recover.

Whilst the emotional and physical impact ofstress and depression is accepted and clearlyhighlighted, the nancial impact which can be

just as signicant often remains untold. Thisreport reveals that more than a third (36 per cent)of workers do not get sick pay cover from theiremployer. This means that more than 7.8 millionworkers would only qualify for Statutory Sick Payof 86.70 per week if they fell ill.

Assuming the average UK wage is26,664[3] an employee suffering from stressand depression who only receives StatutorySick Pay could lose up to 4,671[4] - thats asixth of their salary (18 per cent) if they tookthe average amount of time off to recover.

FEELING THE FINANCIAL PINCHWhilst the average amount of time someonehas off with stress is 81 days, over 650,000

(2.9 per cent) UK workers have been off withstress for more than a year during their career.Indeed, in the last three years 1 in 50 (435,800)workers have been off sick for more than a year.Of those workers who have been off sick, morethan half (57 per cent) underestimated how longthey would take to recover when they fell ill.

Its not just stress that could leave workingBrits feeling the nancial pinch, however. Otherserious ailments, such as a bad back, could costa worker in excess of 3,000 in lost wages.

Being off sick can have a big impact onan individuals nances and lifestyle. The factthat one in three would only receive StatutorySick Pay indicates that many would be out ofpocket and struggling nancially, especially ifthey were off work for a long period of time; itis clear from the report that many people are.

MAKING ENDS MEETWhen asked about their companys sick paypolicy, more than half (52 per cent) of workers

admitted to being in the dark as to what theywould be entitled to and a quarter (26 per cent)admitted they didnt know how they wouldmanage to make ends meet if they were sickand without their regular income.

Over a third (35 per cent) of respondentssaid that they would dip into their savings tobridge an income gap. However, a quarter(23 per cent) said their savings would rundry after just two months, and only one inten said they have enough put by to supportthemselves for more than a year.

A CONTINGENCY PLANAs just one in ten has a policy in place thatwould provide them with a replacement

income if they were unable to work, it is clearthat many Britons would be unable to meettheir nancial commitments if they were outof work for a considerable amount of time.Indeed, almost half (44 per cent) of all workerswho had been off sick admit that they hadreturned to work before they were ready,as they were concerned about the nancialimpact of taking any more time off.

Whilst no one wants to think about gettingill, unfortunately none of us are invincible,and the reality is that some people will needto be off work for a large chunk of time.When we buy a car, a washing machine oreven a phone, we resign ourselves to thefact that at some point it might break down;however, far too few of us have a back-upplan in place that would protect our income ifwe found ourselves unable to work. Having acontingency plan, such as income protection,in place offers peace of mind that if ournancial circumstances change due to illness

we can focus on recovering.

The average Briton spends almost a year (360 days) off sick, a new report unveiled by LV= reveals. With onaverage 252 days in a working year, this equates to almost a year and a half of their working life.

NEED HELP?

The unexpected could happen at anytime, so it is essential that you obtainprofessional advice. Dont hesitate to getin touch to discuss your requirements.

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IN THE NEWS

15

[1] According to the Ofce For NationalStatistics Labour Market Statistics

(September 2013) there are 21,790,000Britons in full-time employment

[2] According to the Ofce For NationalStatistics Sickness Absence in the Labour

Market 2012[3] According to the Ofce For

National Statistics [4] According to the research conducted

by OnePoll on behalf of LV= in September

2013, on average a worker ill with stress/ depression will not return to work for an

average of 81 days. Based on the fact thatStatutory Sick Pay (SSP) of 86.70 per week

is payable from the 4th consecutive day ofabsence average, and would therefore be

paid for 77 days or 11 weeks, an employeewould receive 953.70 whilst they were

off. The average UK salary is 26,664 whichworks out at 73.05 per days, so over 77days an employee would receive 5,625.

An employee on SSP would receive 4,671

less during the time they were on unpaidsick leave. All other calculations and statisticsbased on the research conducted by OnePoll

on behalf of LV= in September 2013.

THE FIVE MOST COMMON AND COSTLY ILLNESSES AFFECTING WORKING BRITONS (ORDERED BY RECOVERY TIME AND COST):

Illness Average time off work Maximum cost to employee

Stress/Depression 81 days 4,671

Bad back 57 days 3,215

Severe migraines 18 days 849

Ear infection 13 days 545

Flu 10 days 363

ACCORDING TO THE LATEST FIGURES131 MILLION DAYS ARE LOST PER

YEAR DUE TO SICKNESS ABSENCESIN THE UK (EQUIVALENT TO SIX PER WORKER), AND OVER 13 MILLION OFTHESE WERE LOST DUE TO STRESSAND DEPRESSION. LV=S RESEARCH,CONDUCTED AMONG FULL-TIME

WORKERS, REVEALS THAT STRESS ANDDEPRESSION ARE TWO OF THE MOSTCOMMON LONG-TERM ILLNESSESAFFECTING WORKING BRITONS TODAY.


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PROTECTION

MAKE WRITING YOURWILL YOUR TOP 2014NEW YEAR RESOLUTION

Save your loved ones from any additional stress at what is likely to be a very difcult time

Writing a will gives you peace ofmind that your wishes will berespected after you die and,by making those wishes clear,

you can save your loved ones any additionalstress at what is likely to be a very difculttime. Not writing your will could have seriousconsequences for those you leave behind. If youdie without getting your nancial affairs in order,your money, personal belongings and even yourhome could go to the person you least want tohave them, and your loved ones could lose out.

GET YOUR FINANCIALAFFAIRS IN ORDER

Specify exactly how you want to divide upyour assets, including any property, savings,business interests, personal effects and evenpets known in legal terms as your estate

Appoint a guardian to care for your children

as well as making specic nancialprovisions to help them do so (otherwise, itwill be up to the courts to decide who looksafter any children under 18 who are leftwithout a parent)

Use your will to save tax and potentiallyreduce or eliminate the amount of inheritancetax that may need to be paid on your estate

Protect your assets for future generations andgive yourself peace of mind that your affairsare in order

HOW WILL YOUR ESTATEBE SHARED OUT?In England or Wales (some areas of the lawand legal procedures are different in Scotland),if you die without a valid will, laws known as

the Rules of Intestacy will determine how yourestate is shared out. Importantly, only spouses orregistered civil partners and certain blood relativescan inherit under these rules unmarried partnerswho are not in a civil partnership cannot benet,nor can relations by marriage or close friends,even if there are no qualifying blood relatives (inwhich case your estate will pass to the Crown).

A DIFFICULT FINANCIAL POSITIONNot having a will can mean lengthy delays indistributing your assets, in some cases years,which could leave your nearest and dearestin a difcult nancial position, depending onyour situation.

Family lives are often now morecomplicated, with more couples divorcing andsecond marriages and second families on therise. In such cases, it is even more importantto have a suitable will in place.

It is also essential you remember to reviewyour will, especially when life changes occur.Life events such as a second marriage willrevoke any previous wills, and a divorce willcancel any benet to a former spouse, unlessthe will specically states that divorce shouldnot affect the entitlement.

REDUCE A POTENTIAL TAX BURDENCurrently, if you leave behind an estate worthmore than 325,000 (2013/14 tax year),inheritance tax (IHT) is levied at 40 per cent on

anything above this threshold. If this is likely toapply to you, writing a will could help you reducethe potential tax burden on your beneciaries.

It makes sense for a married couple to writetheir wills in conjunction with each other as,

usually, the IHT is only an issue on the seconddeath. Careful planning on the rst death can,

however, sometimes reduce the total eventualtax liability

This is because bequests between spousesare exempt from IHT and so it is easily possibleto avoid any tax liability at that stage. The issueis delayed rather than avoided altogether, so thewill of the rst to die should be written with thatin mind.

Also exempt are gifts to charities. Any moneyyou leave to charity is not taxed, and if youleave more than 10 per cent of your estate tocharity, any IHT payable on the remainder will becharged at a reduced rate of 36 per cent.

The Financial Conduct Authority does notregulate Taxation & Trust advice or Will Writing.

As much as we might not want to think about it, we are all going to dieone day. Most of us know that we should write a will, but most of us neverget round to it. Do you fall into this category? If the answer is yes, as theNew Year approaches make writing your will your top 2014 resolution.

WHERE THERES A WILL,THERES A WAY

If you havent written a will, whether youraffairs are straightforward or complex, itsimportant to obtain professional nancialadvice. Or, if you already have a will and aregetting married, divorced or having yourrst child, or more children, make sure thatyour existing will reects this. Ensure that itis properly changed either with an ofcialchange called a codicil if the change is

minor, or by writing a new will. Either way,make sure the changes are witnessed.For more information, please contact us todiscuss your requirements.


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Achieving a

comfortableretirement.Do you need a professionalassessment of your situation tomake this a reality?

If you are unsure whether your pension isperforming in line with your expectations, and thatyouve made the right pension choices dont leaveit to chance.

Contact us to discuss these and other importantquestions, and well help guide you to acomfortable retirement.


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RETIREMENT

THE GENDERSAVINGS GAP

Preparing adequately for retirement is at an all-time low

ADEQUATE PREPARATIONThe ninth annual survey of over 5,000 peoplefound that while over a third (37 per cent)of women have no pension whatsoever, thesame applies for just over a quarter (27 percent) of men. The picture is little better forthose women who are saving, with the reportnding that they are only managing to putaside 182 a month on average, well belowthe average amount of 260 amongst men.This creates a gender pension savings gap ofnearly 1,000 a year.

The number of women preparing adequatelyfor retirement has dropped from last yearto a record low. This growing gender gap inretirement savings means that women arefacing an ever-increasing shortfall when itcomes to retiring and must act now to ensurethey will not be left exposed in later life.

SHORT-TERM FINANCIALPRESSURESThe report found that women are coming upagainst barriers to saving at every stage of life,

with different lifestyle factors taking their tollon women of different ages.

Women in their 20s were found to be tieddown by short-term nancial pressures andare prioritising living expenses (42 per cent),paying off debts (26 per cent), travel andholidays (23 per cent), or saving for a property(18 per cent) over saving for retirement. Overhalf (54 per cent) of 22-29-year-olds dont havea pension, compared to 37 per cent of thegeneral female population.

Perhaps due to family commitments,

only 50 per cent of women in their 30s workfull-time compared with 81 per cent of menof the same age, meaning 30-somethingwomen bring in an average gross incomeof 19,200 way behind the 28,700 that

the average 30-something man takes home.Career breaks and cutting back on hours havea knock-on effect on womens ability to save,with women in their 30s only saving 87 amonth on average towards retirement, outsideof pension and property investments. Thisis compared with the 151 that their malecounterparts are saving each month outside ofpensions and property.

CHANGING PRIORITIESBy the time women reach their 40s, theirnancial priorities have changed, with almost1 in 4 (23 per cent) 40-49-year-olds sayingthey had prioritised nancially supporting theirchildren over retirement saving in the lastve years. 24 per cent also said they expecttheir partners income to help support themin retirement, despite the fact that 79 percent do not know what their partner wouldbe entitled to from their pension fund if theywere to separate.

Despite their proximity to retirement age,paying off debt is still at the forefront of the

minds of women in their 50s, with 1 in 4 (24 percent) women of this age still consideringpaying off debt a bigger priority than saving

for retirement. Women in their 50s still owean average amount of 11,400, slightly higherthan the 11,000 of average debt women intheir 40s have.

DIFFERENT BARRIERSThe report has identied the different barrierspreventing women from saving at every lifestage and shows where this gender savingsgap is coming from.

Of particular concern is the number ofwomen in their 40s who are planning to rely ontheir partner to help support them in retirement,but are unsure of what their pension provisionwould be were they to separate.

The Scottish Widows UK Women andPensions Report is based on an online sample

of 5,200 UK adults and is one of the largestsurveys undertaken into womens attitudes

on pensions. The research was conducted byYouGov and forms part of the Scottish Widows

ongoing consumer research programme,which aims to better understand the context

within which people plan for their retirement.

The number of women preparing adequately for retirement is at an all-time low and remains wellbehind the preparation levels of their male counterparts, according to the Scottish Widows 2013Women and Pensions Report. Just 40 per cent of women, compared to 49 per cent of men, are

preparing adequately for later life, a drop from 42 per cent last year and 50 per cent in 2011.

18

Year Amount of people preparing Amount of men Amount of women adequately for retirement** preparing adequately preparing adequately

2013 45% 49% 40%

2012 46% 49% 42%

2011 51% 53% 50%

2010 48% 52% 43%

2009 54% 59% 47%2008 51% 55% 46%

2007 49% 54% 41%

2006 46% 49% 41%

AMOUNT OF PEOPLE PREPARING ADEQUATELY FOR RETIREMENT, BY GENDER:


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WORKPLACEPENSION

PLANNING10 key tips for small and medium-sized businesses implementing auto-enrolment in 2014As many as four million Britons admit to rushing into major nancial decisions and then regretting themafterwards, and the majority of us put more time into planning for Christmas and picking a satellite TV

provider than we do into thinking about our nancial future.

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1. DONT LEAVE IT TOO LATEThe auto-enrolment to-do list will takesome time to complete so dont leave ittoo late. Collating data can mean sourcinginformation from various systems. In addition,enrolling employees to the pension schemecould involve changes to their contracts ofemployment depending on the joining methodchosen by employers. This would require athree month consultation period, so start early- ideally six to twelve months ahead of yourstaging date.

2. UNDERSTAND YOUR KEY DATESIt is crucial you not only understand when yourstaging date is but also your key companydates such as pay reference period and payrollcut off. Documenting these dates and thenoverlaying them with the new dates of whenactions need to be completed as a result ofpension reform legislation will help you tounderstand the impact on your business. Itwill also help you to make decisions such aswhether you need a waiting period and, if so,how long it should be.

3. ENGAGE EARLY WITHBUSINESS PARTNERSYou are likely to need to support fromnot only your nancial adviser or pensionprovider but payroll providers too. Contactthem early on in the process so everyone isclear on roles and responsibilities.

4. QUALITY OF DATA IS KEYIt is easy to underestimate the complexity ofthe data required. You need to pull together datafor employee eligibility assessment, joining,

contributions and opt-outs. Inevitably this willcome from various sources and systems. It takesa signicant amount of time to do this withinpayroll cycles, and how often that data is neededalso adds a layer of complexity. The quality of

the data and the processes for sourcing the data

for each payment cycle will be crucial to howsmoothly that works each pay period.

5. CHOOSE YOURCONTRIBUTION BASISThere is more than one acceptable contributionbasis so you may need to consider what willwork best for your business. The key point isthat you can decide your contribution basis anddenition of earnings providing you pass oneof the four tests which can be found on thePension Regulators website. Salary Exchangeshould also be considered as this can offersignicant cost saving benets. However,where salary exchange is being used, thisdecision should be made prior to the schemestaging, otherwise it can cause additionaladministration for employers.

6. EXISTING JOINING METHODSMAY BE FIT FOR PURPOSEMany employers believe they will need tochange the way they currently join employeesto their pension scheme; however, yourexisting method and processes for joining may

already be suitable. For example, if employeesalready join the pension scheme via theircontract of employment then there may not beany need to introduce a different method.

7. USE WAITING PERIODSTO FIT YOUR BUSINESSThe majority of employers have used waitingperiods aligned with payroll so employees joinon the rst day of the pay reference period.This avoids having to calculate, explain andmanage part payments. You can also build in a

waiting period to avoid one-off events such asbonus payments. Remember: while you candelay assessment and auto-enrolment, youcannot delay the statutory communications toyour employees.

8. COMMUNICATE WITH

EMPLOYEES EARLYEngaging with employees and clearlycommunicating the changes in advance of auto-enrolment will make sure that, when it happens,employees understand why money is beingdeducted from their pay. This will also ensurethey appreciate the value your contribution isadding while also reducing employee questions.

9. REVIEW YOUR EXISTINGDEFAULT INVESTMENT FUNDEmployers have a regulatory responsibilityto make sure the auto-enrolment defaultinvestment option is suitable for thoseemployees that will be enrolled to the scheme,so you shouldnt assume that your existinginvestment solution will be appropriate. Youalso have a responsibility to have an ongoinginvestment governance framework in place, soyou should speak with your adviser or providerregarding how they can support you with this.

10. REMEMBER TO REGISTER WITHTHE PENSIONS REGULATORYou must register your scheme with the

Pensions Regulator within four months of yourstaging date. You must give details of yourqualifying workplace pension scheme and howyou have gone about enrolling employees tothe scheme.

CREATING BESPOKESOLUTIONS

We understand the importance of creatingbespoke solutions. Compliance with auto-enrolment doesnt have to be heavy duty.

If you would like to nd out more abouthow we can help, please contact us forfurther information.

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RETIREMENT

EQUATING MONEYWITH HAPPINESSIN RETIREMENT

Financial security outweighs companionship for over-55s

The autumn 2013 edition of the report examinesthe nancial pressures affecting the UKs threeages of retirement 55-64s (pre-retirees), 65-74s(the retiring) and over-75s (the long-term retired) and explores the perspective they have gainedon money matters. The ndings show the over-55s value nancial stability second only to goodhealth (38 per cent) in retirement.

LIVING COMFORTABLYThe importance of being able to afford to livecomfortably in retirement transcends age,gender and income differences. It is the secondmost pressing priority after good health for bothsexes and all three age groups over the age of55 regardless of their actual income.

Among over-55s with annual incomes ofup to 15,000, almost three times as manyplace greater value on having enough moneyto live comfortably than sharing retirementwith a partner (34.1 per cent vs. 12.4 percent). While the gap closes further up theincome scale, even those receiving more than30,000 annually put nancial stability on aslightly higher pedestal than companionship(20.4 per cent vs. 19.9 per cent).

A shared retirement becomes moreimportant with age and is the main priority

for 23 per cent of over-75s compared with13 per cent of 55-64s. More of the youngerdemographic prioritise nances than any otherage group (32 per cent). This suggests that therecession and savings squeeze has increased

the importance of money for those currentlyapproaching retirement.

CHANGING CAREERChanging priorities during their working livesadds to the impression that the over-55s arebecoming more nancially motivated. Just15 per cent say they chose their original ormain career because of the salary, with menfar more likely than women to have done so(19 per cent vs. 10 per cent).

In comparison, 27 per cent of over-55s wereinspired down a particular career path by agenuine passion for it (including 30 per cent ofmen and 23 per cent of women.)

However, when it comes to changing career

a move made by 57 per cent of over-55s salary considerations surpass personal interestsor passions as a primary motive (17 per centvs. 14 per cent). Men are again more likelythan women to have moved in pursuit of moremoney (20 per cent vs. 14 per cent).

Construction and property is the careerpath where salary features as the biggestmotivation (29 per cent). It is also the sectorwhere a need for money is most likely tohave prompted those who work in it to seek achange of career (29 per cent).

A SIMPLE MESSAGEWith hindsight, over-55s identify paying off amortgage or buying their home outright as thebest nancial decision they have made: 60 per

cent have done and 96 per cent of those areglad they did.

Taking a break from work to raise theirfamily is the second best decision made, with95 per cent of those who have done (36 percent of over-55s) pleased with their choice inretrospect. Similarly, 94 per cent of those whotook out a workplace pension are glad they did.

When it comes to less prudent decisionmaking, investing in the stock marketqualies as the most widely regrettedchoice. Nearly one in ve over-55s have done(19 per cent) typically between the ages of35 and 39 and nearly a third of those regretit (29 per cent).

One in twelve over-55s have emigrated at

some point in their lives (8 per cent) but overa quarter (27 per cent) regret doing so, whileamong the 24 per cent of over-55s whostarted their own business, nearly one in ve(18 per cent) now see this as a mistake.

On reection, over-55s have a simplemessage about nancial planning forretirement: save more on a monthly basis.Exactly half (50 per cent) would give theiryounger self this advice, with 40 per centemphasising the importance of making betteruse of savings products such as ISAs.

Another common theme is the importanceof contributing earlier to a pension: 39 per centwould recommend starting a personal pensionearlier than they did (only 13 per cent openedone before they were 30), while 38 per cent

Money trumps companionship when it comes to happiness in retirement, according to Avivas latest RealRetirement Report. Having enough money to live comfortably emerges as the single most important factorfor over a quarter of over-55s (27 per cent) more so than sharing retirement with a partner (17 per cent), a

happy family life (12 per cent) or devoting more time to hobbies and interests (3 per cent).

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RETIREMENT

Firstly, youll need to check yourpersonal, company and StatePensions. You must make sure youhave enough income to provide for

your needs in the future. If you are planningon using your pension to buy an annuitywhen you retire, it is essential that you dontjust accept the deal offered by your pensionprovider, as you could potentially lose out on asignicant amount of money over the lifetimeof the annuity.

EXERCISE YOUROPEN MARKET OPTIONYou should always exercise your OpenMarket Option that will enable you to getthe best possible deal for your pensionfund. Comparing the different rates available

instead of buying an annuity from thecompany with whom you have built up yourpension savings could result in an increaseto your retirement income of up to 40 percent depending on your circumstances.

You can buy your annuity from any providerand it certainly doesnt have to be with thecompany you had your pension with. Theamount of income you will receive from yourannuity will vary between different insurancecompanies, so its essential that you receiveprofessional nancial advice before making

your decision.

DONT FORGET ABOUT INFLATIONAs you are likely to spend around 20 or even30 years in retirement, remember that inationcould have a serious impact on the purchasingpower of your savings. If you have opted foran ination-linked annuity rather than a levelannuity, then you will have protection againstthe rising cost of living.

WORK OUT CAREFULLY HOW MUCHINCOME YOU NEED TO DRAWWhen you retire, you dont have to go downthe route of purchasing an annuity. Analternative to purchasing an annuity is to leaveyour pension invested and take a portion of thepension pot each year as an income, hencethe phrase income drawdown. This optionmay also mean that you could possibly leave

your family some legacy when you die, as yourpension pot, after tax of 55 per cent, passeson to your family according to your wishes.However, if you take out too much, your capitalcould soon be eaten away. But the upside ofnot buying an annuity is that your funds remaininvested with the potential for further growth.

ANOTHER ROUTE WORTHCONSIDERING IS FLEXIBLEDRAWDOWNTo qualify for exible drawdown you must

have a guaranteed pension income of20,000, known as the Minimum Income

Requirement. If you are eligible, then you canwithdraw the rest of your pension fund in amanner that best suits your circumstances,whether thats in its entirety or in partwithdrawals. It is often sensible to makewithdrawals over several years though, as youstill pay income tax on any withdrawals, so thelarger the withdrawal the more tax youll pay.

HAVE YOU FORGOTTEN ABOUTANY OTHER PENSIONS?It can be easy to lose track of pensions overtime, especially if you move from job to job,but you can locate a lost pension by contactingthe Pension Tracing Service online atwww.gov.uk/nd-lost-pension. This service isfree, and if they locate your pension theyll giveyou the address of your scheme provider.

While annuities are generally guaranteed to bepaid, remaining invested and using drawdownmeans that the value of your pension, and the

income from it, can go down as well as up.Therefore there is a chance that you may not

get back as much as you would by using anannuity. Drawdown is a high-risk option which is

not suitable for everyone. If the market moves

against you, capital and income will fall. Highwithdrawals will also deplete the fund, leaving

you short on income later in retirement.

RETIRING SOON?

Not sure about your retirement options?There is a lot to think about as youapproach your retirement. Contact us to

discuss your retirement options and wellhelp you decide whats right for you. Welook forward to hearing from you.

Sooner or later we will retire, and the decisions we make today are the onesthat will determine the standard of living we will enjoy in the future. If you areapproaching your retirement there are some very important choices you needto make that will determine how much income you live on once retired.


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INVESTMENT

TAX-EFFICIENT

INVESTINGMADE EASYDont miss out, start reviewing your options now


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INVESTMENT

SPLITTING THE INVESTMENTThe crucial thing to remember is that in everytax year which runs from 6 April one year to5 April the next year youre only allowed to investa certain amount in your ISA. In this 2013/14 taxyear, which ends on 5 April 2014, you can investa total of 11,520 made up from just the moneyyou pay in, not the interest or growth earned.

This amount can be split in a few differentways. For example, you could save up to amaximum of 5,760 in one Cash ISA. The other5,760 could be invested into a Stocks & SharesISA with the same provider, or a different one.

Alternatively, you may wish to invest up to the full11,520 in just a Stocks & Shares ISA.

TAX-EFFICIENT RETURNSAny ISA investment growth, no matter howmuch, is free from income and capital gainstax (a 10 per cent tax credit is still payable onUK share dividends and cannot be reclaimed).

Make sure that you dont miss out ontax-efcient returns and start reviewing youroptions now.

TRANSFERRING OTHER ISASAs well as currently being able to invest yourfull ISA allowance of 11,520 in a Stocks &Shares ISA, you can also transfer some or allof the money held in previous tax year Cash

JUNIOR ISASA Junior ISA (JISA) is a long-term, tax-efcientsavings account for children. Your child can havea JISA if they are under 18, live in the UK andwerent entitled to a Child Trust Fund account.

There are two types of JISA: a Cash JISA,

and a Stocks & Shares JISA. Your child canhave one or both types of JISA. Childrenaged 16 and 17 can open their own JISA, orit can be opened by the person with parentalresponsibility for the child.

ISAs into a Stocks & Shares ISA. A Stocks &Shares investment is a medium- to long-term investment, but remember t he valueof your investment can go down as wellas up and you may get back less than youoriginally invested.

Anyone can pay money into a JISA, butthe total amount cant exceed 3,720 in thecurrent tax year. For example, if your childhas 1,000 paid into their Cash JISA from6 April 2013 to 5 April 2014, only2,720 could be paid into their Stocks &Shares JISA in the same tax year.

Past performance is not necessarily a guideto the future. The value of investments

and the income from them can fall as wellas rise as a result of market and currency

uctuations and you may not get back theamount originally invested. Tax assumptions

are subject to statutory change and the valueof tax relief (if any) will depend upon your

individual circumstances.

WHAT DO YOUNEED TO DO NEXT?

Our financial planning service can

help to ensure that your holdings arestructured in a tax-efficient mannerand a clear plan is established thatwill help you meet your objectives.To review or discuss your particularsituation, please do not hesitate tocontact us.

An Individual Savings Account (ISA) is a tax-efcient wrapper designed to go around aninvestment. Youve got until 5 April 2014 to use your current 2013/14 tax year annual ISA

allowance before you lose it forever.

ANY ISA INVESTMENT GROWTH,NO MATTER HOW MUCH, IS FREEFROM INCOME AND CAPITALGAINS TAX (A 10 PER CENT TAXCREDIT IS STILL PAYABLE ON UKSHARE DIVIDENDS AND CANNOTBE RECLAIMED).


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TAX MATTERS

ARE YOU MAKING THEMOST OF YOUR FINANCES?Keeping your tax bill to a minimum is not a matter of aggressive or complex tax schemes

During this period of austerity, why pay more tax than you need to? Sensibletax planning is an essential tool in making the most of your nances.Keeping your tax bill to a minimum is not a matter of aggressive or complextax schemes, but rather of identifying which of the many tax reliefs andallowances specically granted by law are available to you.

Here are some ways to help you keep holdof more of your hard-earned money:

CHECK YOUR TAX CODEIf applicable, look at your pay slip or ask yourtax ofce for a coding notice. This details yourallowances and any deductions due to statebenets or taxable employee benets. If youre notsure its accurate, query it. Errors will affect howmuch you pay and may result in a large tax demandif youre paying too little. You may be paying toomuch if, say, you change jobs and your correct taxcode isnt used or if you have more than one job.You can claim back overpaid tax for up to four years.

MAXIMISE PERSONAL ALLOWANCESEnsure that you are making the most of yourindividual tax-free personal allowance (PA), whichfor 2013/14 is 9,440 for those aged under65, or the age-related allowances which are worthup to 10,660 assuming your maximum incomedoesnt exceed 26,100, after which your PAwould reduce by 1 for each 2 earned abovethis gure, until it reached 9,440.

If your spouse or registered civil partner haslittle or no income, consider transferring income(or income-producing assets) to them to ensurethat they are able to make full use of their PA.

Care should be taken to avoid falling foul ofthe settlements legislation governing incomeshifting. Any transfer must be an outright giftwith no strings attached.

MAKE THE MOST OF YOURINDIVIDUAL SAVINGS ACCOUNT(ISA) ALLOWANCEUp to 11,520 can be invested in an ISA thistax year, of which up to 5,760 can be investedin a Cash ISA. Most income accrues tax-free,although the tax credit on UK dividend income

cannot be recovered.All investments held in ISAs are free of CGT.

And dont forget, the new Junior ISA (JISA), forthose aged under 18 who do not have a ChildTrust Fund account, allows investment of up to

3,720 in 2013/14. 16 to 17-year-olds can alsoinvest up to 5,760 in an adult Cash ISA, evenif they already have a JISA.

USE YOUR CAPITAL GAINS TAX(CGT) ALLOWANCEMake the most of your CGT exemption limit eachyear (10,900 in 2013/14). It may be possible totransfer assets to a spouse or registered civil partner,or hold them in joint names prior to any sale to makefull use of exemptions. Individuals with a particularlylarge gain may want to realise it gradually to take fulladvantage of more than one tax years allowance.(You should only consider spreading a disposal of, forexample, shares if you will not be putting your gain atrisk in the meantime.)

USE YOUR OCCUPATIONALPENSION SCHEMEOpting out of your occupational pension schemecould mean that you are missing out on valuablepension contributions from your employer. If you areoffered a pension scheme by your employer, then itis worth considering joining. If your employer makesa contribution to your pension, this is like receivingadditional pay. Some employers may even be willingto match the contributions that you make, doublingthe amount saved towards your retirement.

GET A TAX BOOST FOR YOURPENSION CONTRIBUTIONSIf youre a UK taxpayer, in the current 2013/14tax year youll receive tax relief on pensioncontributions of up to 100 per cent of yourearnings or a 50,000 annual allowance,whichever is lower. For example,

if you earn 60,000 and want to put thatamount in your pension scheme in a singleyear, youll only get tax relief on 50,000. Anycontributions you make over this limit will besubject to Income Tax at the highest rate youpay. However, you can carry forward unusedallowances from the previous three years,as long as you were a member of a pensionscheme during those years. The annualallowance is reducing from 50,000 to

40,000 in the tax year 2014/15.

NON-TAXPAYER? DONT PAY TAXAT SOURCE ON YOUR SAVINGSAs a non-taxpayer, you can pay too much tax onyour savings, as tax on interest is deducted atsource. If this has happened, complete an R40 TaxRepayment Form for each year youve paid toomuch. A form R85 from your building society orbank will stop future interest being taxed. Oftennon-taxpayers fail either to elect to have interestpaid gross or to reclaim any overpayment fromHMRC. This could result in you paying unnecessarytax and reduces the value of your savings.

Levels and bases of, and reliefs from, taxation

are subject to change and their value depends onthe individual circumstances of the investor. The

value of your investments can go down as well asup and you may get back less than you invested.

WHAT DO YOUNEED TO DO NEXT?

If you require advice in relation tomitigating tax, and saving and investingtax-efciently, please get in touch withus to discuss your requirements welook forward to hearing from you.


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IN THE NEWS

PROTECTINGYOUR INCOMETwo fths of workers admit they couldnt live on Statutory Sick Pay

The nationwide study shows 32 per cent ofworkers have suffered redundancy at somestage in their career which equates to morethan 9.3 million staff - while 23 per cent, or6.7 million people, have been off work forperiods longer than four weeks.

Men are more likely to have sufferedredundancy, with 36 per cent of maleemployees losing their jobs compared to27 per cent of female staff. Women,meanwhile, are more likely to have sufferedlong-term illness, with 26 per cent of femalestaff being forced to take time off comparedwith 21 per cent of men.

TOUGH ECONOMIC CLIMATEMetLife believes the research highlightsthe value of insurance to protect income -particularly as its research shows 41 per centof workers admit they could not afford tolive on Statutory Sick Pay, which is currently86.70 a week. Another 18 per cent believethey could survive a month.

The ongoing tough economic climatehas increased the nancial pressures on allworkers and the risk of redundancy is real,with a third of workers suffering redundancyduring their working career.

The risk of long-term ill health during aworking life is also an issue that employeesneed to be aware of and to guard againstwhere possible. Many employers are generousbut it is clear that Statutory Sick Pay would bea nancial shock for millions.

BENEFITS PACKAGEInsurance that protects against uncertainties isessential and can be very valuable as part of awell-designed employee benets package.

Across the country, workers in Scotlandreported the highest rate of long-term illhealth at 28 per cent, falling to 18 per cent -the lowest rate - for those living in Yorkshireand Lincolnshire.

But workers in Yorkshire and Lincolnshire arethe most likely to have suffered redundancy,

with 39 per cent reporting losing their jobs,while employees in London are the least likelyto be made redundant at 21 per cent.

[1] Research conducted by Vision Criticalamong a nationally representative sample of

1,067 employed adults aged from 18 upwardsbetween 25-28 January 2013.

More than half of all employees have been made redundant or suffered long-term illnessduring their working life, highlighting the value of insurance to protect income, new

research[1] by MetLife Employee Benets shows.

MAKE AN INFORMED CHOICE

To discuss how we can help protectyour income and make an informedchoice based on your individualcircumstances, please contact us today- dont leave it to chance.

29


30/30

PROTECTION

We can help provide signicant peace of mind to you and your family

SAFEGUARDING YOURINCOME AND FAMILY WEALTH

What would happen to your family if something were to happen to you or your partner?We all want to protect whats important to us. And while most people recognise theimportance of taking out insurance to cover valuable possessions such as their homesand cars even pets far fewer have sufcient protection in place to protect themselvesor their families should something unexpected happen to stop them earning income.

FINANCIAL PROTECTIONCould you and your loved ones cope nancially ifyou had an accident or fell ill and couldnt work?According to gures from the Ofce of NationalStatistics in 2010 [1], 20 per cent of British men

and 10 per cent of British women died beforetheir 60th birthdays. Thousands of Britons underthe age of 60 are also diagnosed with a criticalillness every year and even more are involved inaccidents that affect their ability to work.

Many of us expect the Government orour employers, if applicable to step in shouldwe become unable to work. However, evenif you are employed full-time, your employerwill generally stop paying your full salary after aperiod of time and the State benets you qualifyfor can offer only limited help particularly if youhave a mortgage. While most major life eventscant be foreseen, they can be planned for, andhere we explain some of the different types ofprotection available that could help support youor your family in times of crisis.

LIFE INSURANCEIf the worst should happen, life insurance willprovide your family with a guaranteed cash lumpsum or income to help them cope nancially inthe event of your premature death.

You can choose between cover that paysout the same amount no matter when you die,cover that increases in line with ination, orperhaps cover thats related to your mortgage,decreasing in line with any outstanding balance.

It is worth checking whether your employmentcontract includes a death in service benet thatwill go to your family should you die.

CRITICAL ILLNESS INSURANCEMore than eight in ten cancer patients ndthemselves in a difcult nancial position,according to charity Macmillan Cancer Support[2], who estimate that cancer costs theaverage patient 570 a month due to hospitaltravel and loss of earnings.

Critical illness cover can offer a nancial lifelineto people who develop a serious medical condition.It pays out a tax-free lump sum if the policyholderis diagnosed with a life-threatening speciedillness covered by their plan and you can use anypayment you receive any way you want.

While most of us tend to worry about themost common serious illnesses such as heartattack, cancer and multiple sclerosis, criticalillness cover can also protect you against a muchwider range of specied conditions.

It also makes sense for individuals with nodependants to consider critical illness cover tohelp maintain their current standard of living.

INCOME PROTECTION INSURANCEIncome protection insurance is designed to helpcover your outgoings while you are unable towork right up to your chosen retirement age.

It essentially pays a selected percentage of yourmonthly income. Depending on the provider, youcan choose to receive up to 75 per cent of yourgross salary, but again, you will pay less for coverif you think you can survive on a lower percentage.

Payments usually start after a specied period,for example, 4 or 13 weeks. Many people willdefer the start of payments until after any sick

pay they are entitled to with their company hasnished - most insurers would reduce a claim byany sick pay you are entitled to anyway.

You could even choose to defer the benetpayments for up to two years, perhaps basedon having other plans that could support in theinterim, such as critical illness cover.

ENSURE THAT YOU ANDYOUR FAMILY ARE FULLYPROTECTED

Life insurance, critical illness insurance andincome protection insurance are designedto protect you in different nancial andemotional situations. For many, having acombination of the three is the best way toensure that you and your family are fullyprotected should the unexpected happen. Ifyou have no dependants, a combination ofcritical illness cover and income protectionmay be more appropriate. To review yourparticular protection requirements, pleasecontact us for more information.

[1] Ofce of National Statistics: Mortality in theUnited Kingdom 2010, released 20 January 2012

[2] Macmillan Cancer Support CancersHidden Price Tag 2013 report

bankfield money nov - dec 2013

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