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  • 1. AUTUMN 2012 | ISSUE 1InvestmentViewpointIncreasing yourretirement incomeRecent research What is an Enhanced Annuity? Boost your retirement incomesuggests more thanAn Enhanced Annuity pays a higher income The amount of extra income you could earnin retirement if you have a medical conditionin retirement depends on your actual statetwo-thirds of usthat may reduce your life expectancy.of health, or your lifestyle.could benefit fromThis is because an annuity is, in essence,a bet with the annuity provider about howIf you have high blood pressure or higha higher income long you will live.cholesterol, you could receive around 9%when we retire,more income than from a conventionalHow does it work?by applying for an annuity. If you are a smoker, you may get up to 13% more income. If you are veryEnhanced Annuity1.When you invest in an annuity, the providerconverts your pension pot (the total amount seriously ill, the extra income will be significantly higher.youve accumulated within your pension) intoContact us todayincome payments, which are paid for the Latest figures show the difference between theto discuss your remainder of your life. average conventional and enhanced annuityretirement options.rates is 18.7%. Over the average retirement,If you die before your predicted life with a pension pot of 50,000, this would amountexpectancy, the insurance company will make to 8,912.76 for men and 10,290 for women2.a profit, which is used to pay the incomes ofthose who live longer than predicted. If you These significant differences highlight thelive longer than your predicted life expectancy, importance of getting good quality adviceyou will have won the bet with the insurance before you take out an annuity.1 MGM Advantage, 2012company and received a higher pension2 nnuity rates are based on analysis of data from Athan you would have otherwise received. Investment Life and Pensions Moneyfacts by MGM Advantage (June 2012). The analysis looked at level annuities without a guarantee and income levels are based on a pension pot of 50,000 and 50,000AverageAveragePercentageDifference overDifference a retirement age of 65. To create total retirement pension potConventional Enhanced Differencethe first five years over average income figures the Index multiplied annual annuityAnnuity (per year) Annuity (per year) of retirementretirement income by 17 years in the case of men and 20 years in the case of women. Enhanced rate figuresMen2,853.34 3,377.6218.37% 2,621.408,912.76 are from a sample of smoker rates and enhanced rates based on health conditions.Women2,703.50 3,218.0019.03% 2,572.5010,290.00

2. Reducing the risk2001 2002200320042005200620072008200920102011 PropertyCommodities Euro equities PropertyCommodities Euro equities Commodities Global bonds UK equitiesCommodities Gilts 7.1%11.2%29.8% 18.9%37.0%20.1%18.5%45.1% 30.1%27.4%15.7% UK corp Property UK equitiess Euro equities Euro equities PropertyEuro equities Gilts Euro equitiesUS equitiesPropertybonds10.4%20.9%13.8% 24.1% 18.1% 15.7% 12.8% 20.1% 20.0%8.3% 6.1% UK corp GiltsUS equities UK equities UK equities UK equitiesGlobal bondsCommodities CommoditiesUK equitiesGlobal bondsbonds 3.0% 15.7% 12.8% 22.0% 16.8%9.5% 5.6% 19.8%14.5%7.4%10.0% UK corp UK corp UK corpGlobal bondsGiltsPropertyProperty US equities UK equities US equitiesPropertybonds bonds bonds1.8%9.3%11.2% 18.8%1.6%5.3% 12.6% 14.3% 6.7% -4.1%6.9% UK corp UK corp UK corp US equities Global bonds Gilts US equities Gilts US equitiesGlobal bonds US equitiesbonds bonds bonds-9.6%7.9% 6.6%17.3% 5.3%-12.8% 9.8%2.5% 5.4%0.7% 10.8% UK corp UK corp UK equitiesUK equitiesGlobal bondsGlobal bonds Gilts US equitiesPropertyProperty UK equitiesbonds bonds -13.3% -27.1% 4.0%4.3% 0.7% 3.7% -22.5% 2.2% -3.5% 9.0%8.4% UK corpCommoditiesEuro equitiesGiltsCommoditiesGiltsCommodities Euro equities GiltsGiltsCommoditiesbonds-14.1%-27.1%2.1%3.7%7.9%-0.4% -24.0%-1.2% 7.2%-6.7% 1.8% Euro equitiesUS equitiesCommoditiesUS equitiesGlobal bondsGlobal bondsProperty UK equitiesGlobal bondsEuro equities Euro equities-20.1%-29.6%-2.1%3.4%7.3% -4.7%-5.5%-29.9%-7.6%5.8% -14.7%The events of the past Why does multi-assetAn unpredictable picturefew years have madeinvesting work? The table above shows how different assetinvestors more aware The principle behind this strategy is to invest classes have performed over the last 10 years. in a variety of assets, each of which reactsIts clear that its almost impossible to predictof the risks posed by differently to changes in the economic andwhich asset class will generate the highestmarket volatility. market background. A drop in the value of returns in an individual year.While investing always one asset may then be offset by increasescarries risk, there arein other asset classes, leading to smoother For example, Gilts was the second worst overall performance.performing asset class in both 2009 andways to help reduce it. 2010. But, in 2011 it was the top performer. Recent market history has illustrated theOne of the most effectivebenefits of taking a diversified approach toCommodities went in the opposite direction,strategies is known as investing. It is a technique that has been used going from top performer in 2010 to second- to good effect by experienced investors worst performer in 2011.multi-asset investingover the years, and can add value to large or, put simply, notand small investments alike.Putting your eggs in more than one basketputting all your eggscan help to reduce risk. Whatever your level of investment experience, you can benefit fromin one basket. professional advice. If youd like to discuss the investment options we can offer you, please get in touch. 3. Makingfinancialadvice clearerFrom 31 December 2012, changes arebeing made to the way you receive andpay for investment advice.These changes are happening becausethe industry regulator, the FinancialServices Authority (FSA), wants to makethe process of financial advice clearer,in what can be a very complex area ofthe market.Higher standards More controlBy the end of the year, all pensions All of these changes will culminateand investment advisers will need to in higher professional standards and,meet a higher qualification standard ultimately, a better service for order to continue advising you in Thats because youll be morethat area. They will also need toconfident in the advice youre givenkeep their knowledge up-to-date (thanks to the higher qualifications)a process that will be independently and youll know exactly what youreassessed and verified. paying for from the outset (thanks to clearer charges).Clearer charges Importantly, youll also have greaterThe cost of advice will be clearer. peace of mind when it comes toInstead of receiving commission from managing your money, becauseproduct providers, the cost of the your adviser will be in touch moreadvice you receive will be agreed often to let you know how yourwith you upfront. This agreement investments are doing.will also include a description ofany ongoing services youll receive How will it affect you?in return. Weve already started preparingClearer descriptionfor the changes so that were ready ahead of the 31 Decemberof services deadline.The way financial advisers describethe services they offer, and whether To find out what werethey advise across the whole of the doing, and how it will affectmarket or from a select range ofproviders, will also be clearer. you, please get in touch. You can also find out more about the changes online at 4. The cost of equalityFrom 21 December, EU law changes could meanyou pay more for personal insurance1. For less than a daily coffeeIf you drive a car, youll probablyDo I need Family Protection?With food and fuelknow that insurers take your Unlike Car Insurance, which you have to buy costs rising, its nice togender into consideration when every year, Family Protection is somethingfind something thatquoting your premium.most people buy when they take on new orremains affordable. additional financial responsibilities.Life Insurance prices,But you may not be aware that the same logic for example, havealso applies to the pricing of other types ofIf you have financial responsibilities (such aspersonal insurance. This includes things likea mortgage), or a family to provide for, Family decreased steadilyLife Insurance, Critical Illness Cover and IncomeProtection should be considered essential.over the past decade,Protection Cover - often collectively referred as average lifeto as Family Protection. It can provide a regular income or lump sum expectancy has should you become unable to work throughgone up.At the end of this year, changes to the EU illness, accident or unemployment. It canGender Directive will outlaw the use of gender also ensure a cash payout if you were to a pricing factor for all personal insurance. That Prices are now at a levelmeans men and women could find themselvesWhat can I do about where you can protectpaying more for Family Protection. the pricing changes?your loved ones for less than the price of aCounting the costThe next couple of months provide a window daily takeaway coffee1, of opportunity to secure Family ProtectionAs well as the law change detailed above,at todays rates. meaning peace oflife insurance companies will also be forced mind is within yourto pay more tax from the start of next year. Insurers are likely to experience a flood ofreach even in theseThe combined impact of these changes applications towards the end of the yearcould mean youll soon pay an extra days of austerity. some of which they may struggle to process20% or more for Family Protection1.before the price increases take effect. 1 30 year-old non-smoker, 200k decreasing life assurance and critical illness cover, 25 year term, Guaranteed If you want to find out how these rates. Male: 30.07 per month (1.00Based on industry estimates from LV= (June 2012)1 price changes could affect you,