MRA Money May June 2013

7/30/2019 MRA Money May June 2013

1/12

Mike Robertson Associates Ltd

30a High Steet, High Street, Battle, East Sussex, TN33 0EA

Tel: 01424 777156 Fax: 01424 775668

Email: [email protected] Web: www.mraltd.com


2/12

IN THIS

ISSUE

Investment

02

As we move into summer, in this

issue we examine new research rom

Standard Lie that has ound UK

adults have many money regrets.

But when asked what one thing, i

anything, they most wish they had

started doing earlier to be nancially

ecient with their money, saving or

retirement came top o the list. Read

the ull article on page 07.

In his Budget speech delivered

in March, the Chancellor, Mr

Osborne, said this was a Budget or

an aspiration nation. He explained

that this meant helping those who

want to keep their home instead o

having to sell it to pay or the costso social care. On page 09 we look at

the conrmation o a 72,000 cap on

social care costs.

In order to protect your amily and

business, on page 12 we explain why it

is essential to have provisions in place

aer youre gone. Te easiest way to

help prevent unnecessary tax payments

such as Inheritance ax is to organise

your tax aairs by obtaining proessional

advice and having a valid will in place to

help ensure that your legacy does notinvolve just leaving a large Inheritance

ax bill or your loved ones.

A ull list o all the articles eatured

in this edition appears on the

opposite page.

We hope you enjoy reading the

magazine. o discuss your nancial

planning requirements or to obtain

urther inormation, please contact us.

Te content o the articles eatured in thispublication is or your general inormation

and use only and is not intended toaddress your particular requirements.Articles should not be relied upon in theirentirety and shall not be deemed to be, orconstitute, advice. Although endeavourshave been made to provide accurateand timely inormation, there can be noguarantee that such inormation is accurateas o the date it is received or that it willcontinue to be accurate in the uture. Noindividual or company should act uponsuch inormation without receivingappropriate proessional advice aer athorough examination o their particularsituation. We cannot accept responsibilityor any loss as a result o acts or omissionstaken in respect o any articles. Tresholds,percentage rates and tax legislation maychange in subsequent Finance Acts. Levels

and bases o, and relies rom, taxation aresubject to change and their value dependson the individual circumstances o theinvestor. Te value o your investmentscan go down as well as up and you may getback less than you invested.

P d f 2008, akg , v ez ad

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may ya.

Striving to look at

market opportunitieS

in a rational wayEven in challenging markets there are opportunities to be ound

Even in challenging markets there are opportunities to

be ound and investing in shares or bonds (xed interestassets) over the long-term presents a greater opportunity

than not investing at all, or several good reasons.

Long-term view

Markets have survived events such as the Great Depression

o the 1930s and the recession o the early 1990s. Short-

term movements in the price o stocks and shares are

smoothed out over the long term, putting dramatic losses

and sudden gains into perspective. Staying invested can

increase the likelihood that your investment will benet

rom rebounds in the market and minimise the overall

impact o volatility on your potential returns.

Cash or shares?

In a volatile environment it is tempting to transer

investments to a more secure asset class such as cash,

waiting to reinvest when the market settles. However,

you could miss the opportunity o a market rebound.

In addition, although cash retains its capital security,

over the long-term it will suer the erosional eects

o inlation, especially i interest rates remain at

current lows.

Keeping invested

Negative commentary oen results in investors takingfight in dicult markets, with investments being sold

when the price is alling and bought when the market

is rising, which can be a costly strategy. Te current

investment environment still presents many opportunities

with many good-quality companies. We can advise you

how to identiy these opportunities.

FoCus on your goaLs

A key challenge or investors is to decide which is

the greater risk: potentially losing money over the

short term or not achieving investment goals at all.

With lie expectancies increasing and retirements

sometimes lasting as long as 20 or more years,

planning ahead and investing or the uture is

becoming more and more important.

maKing the right ChoiCe

With such a wide choice o unds on the market to

choose rom, making the right choice can be daunting,

particularly as even very similar unds can deliver

signiicantly dierent returns. I you want to invest

but are unsure where, we always recommend you

seek proessional inancial advice. Past perormance

is no guide to t he uture. he value o an investment

can all as well as r ise, may be aected by exchange

rate variations and you may get back l ess than you

originally invested. n

Seeking out the opportunitieS

available to you

We understand that dicult markets can create

tough decisions or investors. o discuss yourrequirements and investigate the opportunitiesavailable to you, please contact us today.


3/1203

n Arranging a nancial wealth check

n Building an investment portolio

n Generating a bigger retirement income

n O-shore investments

n ax-ecient investments

n Family protection in the event o premature death

n Protection against the loss o regular income

n Providing a capital sum i Im diagnosed with serious illness

n Provision or long-term health care

n School ees/urther education unding

n Protecting my estate rom inheritance tax

n Capital gains tax planningn Corporation tax/income tax planning

n Director and employee benet schemes

n Other (please speciy)

Name

Address

Postcode

el. (home)

el. (work)

Mobile

Email

For more inFormation please tick theappropriate box or boxes below,

include your personal details andreturn this inFormation directly to us.

y v v . p f dp a. y g v v g .

want to make more

of your money in 2013?

striving to LooK at marKet

opportunities in a rationaL way

Even in challenging markets there are

opportunities to be ound

FooLs goLd

Demystiying some o the key undmanagement concepts

new higher

FLat-rate state pension

One o the biggest overhauls o Britains

pension system in decades

youve worKed hard For this;

nows the time to enjoy it

Start your retirement by celebrating your

newound reedom

i wish id started saving For

retirement earLier

New research shows why many older UK

adults have many money regrets

FLexibLe drawdown ruLes

untouChed by budget 2013

Greater opportunities or those with over

20,000 pension income

02

04

05

06

07

08

09

10

11

12

greater CLarity on how muCh

Care in oLd age may Cost

Cap provides long-term savers with a greater

idea o uture spending

boosting retirement saving

among uK worKersMillions o people are not saving enough to

have the income they are likely to want in

old age

whiCh investments are right

For you?

Assessing how best to achieve your goals

nothing is Certain but death

and taxes and they are

intrinsiCaLLy LinKed

Will your legacy involve just leaving a largeInheritance ax bill or your loved ones?

CONTENTS

In tHIs IssUe

TodiscussyourfinancialplanningrequiremenTsorToobTainfurTherinformaTion,pleaseconTacTus

06

08

10

maY/JUne2013

04


4/1204

Investment

w dad a fd maagm dy a a aay f jag a a f

v ad -ad v. h am dmyfy m f ky p.

FOOLSGOLDDemystiying some o the key und management concepts

With more o us living longer in the UK,maintaining our standard o living in retirementand unding holidays and outings requires somecareul planning. Have you considered how a

longer liespan and rising infation could aect youand your ability to generate income?

Fund types

Funds exist to enable many investors to pool their

money and invest together. his allows them to

achieve economies o scale when buying stocks

and diversiy their exposure to a variety o stocks,

rather than buying each one individually.

Funds are oen known as collective investment

schemes. Tese come in a number o guises, but

largely all into two key categories: open-ended or

closed-ended. In the UK, the most common types

o open-ended unds are unit trusts and investmentcompanies with variable capital (ICVCs), also known

as open-ended investment companies (OEICs). Unit

trusts and OEICs have dierent legal structures: one

operates under trust law and issues units; the other

operates under company law and issues shares.

However, they share a common characteristic:

the number o units (or shares) is not ixed, but

expands and contracts depending on the level o

investor demand - hence the name open-ended.

Another name or this kind o investment

scheme is mutual und, a term which iscommonly used in the US. Because these unds

are open-ended, the price at which they can be

bought and sold relates directly to the underlying

value per share o the entire portolio.

aim o generating returns through an increase in

the price o the underlying holdings and rom any

income generated by these holdings.

Absolute return is a style o i nvestment

which aims to produce a positive return

in all market conditions. It involves quitesophisticated strategies, including the use o

derivatives to create short positions where the

manager seeks to proit rom a all in the price

o an underlying security.

asset CLasses

Investments can usually be made in a number

o dierent asset classes, such as stocks, bonds,

currencies and cash.

Multi-asset unds may adopt long only or

absolute return strategies. ypically they invest

across a number o dierent asset classes, especially

those that do not move in correlation, and thereby

attempt to reduce the volatility o returns.

Active management involves trying to

select a range o investments with the aim ooutperorming a particular benchmark index. Te

ultimate aim o active managers is to generate

positive alpha, i.e. invest in stocks that outperorm

the market and return more than is expected given

the perceived level o risk the shares carry.

Passive management involves trying to replicate

the perormance o a particular index, such as

the FSE Al l-Share. racker unds are a orm o

passively managed und.

not putting aLL

your eggs in one basKet

Diversiication is the technical term or not

putting all your eggs in one basket. In theory,

stock-level risk can be reduced by holding about

20 to 30 dierent stocks, so that a downturn in

the ortunes o one holding may be mitigated by

the perormance o other holdings in the und.

Additional diversiication across countries,

sectors and asset classes is needed to reduce

macroeconomic and political risk.

ChanneLLing investments

Asset allocation involves channelling

investments across asset classes, geographicregions and/or market sectors. A weighting

toward bonds might be increased to boost

a portolios income, or example, or greater

investment might be made in emerging markets

Investment trusts are an example o a

closed-ended investment s cheme. he

deining characteristic o these is that the

number o shares on oer does not change

according to investor supply or demand,

but is limited to the amount in issue. hes e

investments are bought and sold on the stock

market and can trade at a premium or discount

to the underlying value per share o the

portolio depending on the level o supply and

demand or the shares.

investment ConCepts

Long only is one o the most common

investment styles in und management. It reers to

buying a basket o stocks and/or bonds with the


5/12

New higherflat-ratestate peNsioN

One o the biggest overhauls o Britains

pension system in decades

Te Government recently announced that up to

400,000 more Britons will qualiy or a new higher fat-rate

State Pension and theyll introduce the reorm a year earlier

than expected. Te simplied scheme will provide a weekly

fat-rate payment o 144.

Te date has been moved orward to April 2016, and is

one o the biggest overhauls o Britains pension system in

decades. Te current system includes a basic pension, a

State Second Pension and/or some means tested pension

credit. From 2016 this will all be merged into the universal

fat-rate payment. n

05

RetIRement

penSion fact

Non-earners, such as non-working spouses and even children, can have apension. Tey can also receive tax relie on their contributions, despite not

paying income tax.Each tax year they - or someone acting on their behal - can pay up to

2,880 into a pension. Te government automatically adds 720, makinga total contribution o 3,600. Making a contribution into someone elsespension doesnt aect your own allowances.

Want to fnd out more? Contact us to discuss your requirements. Please note, tax

rules can change and the value o benefts depends on an individuals circumstances.

or those seeking growth who are

prepared to accept a higher level o risk.

Company share priCes

A bottom up approach ocuses on the

prospects and valuations o individual shares

while a top down approach ocuses on broad

economic issues or market themes that havethe potential to infuence company share

prices. Many managers may incorporate both

into their investment processes, but usually

have an emphasis on one or the other.

investment biases

Growth and value describe certain

investment biases adopted by unds and

und managers. A growth manager will look

or stocks with good earnings momentum,

but be careul not to buy when expectations

are too optimistic (i.e. stocks are highly

priced). Small and mid-sized companies

rom fourishing industries tend to be good

growth candidates. A value manager ideally

looks or attractively priced businesses

that have allen out o avour with the

market and have been neglected, but whose

ortunes are expected to change. n

Past perormance is not necessarily a guide

to the uture. Te value o investments

and the income rom them can all as well

as rise as a result o market and currency

uctuations and you may not get back the

amount originally invested. ax assumptions

are subject to statutory change and the value

o tax relie (i any) will depend upon your

individual circumstances.

Wealth creation tip

Raising the personal income tax allowance to 10,000 rom

April 2014 is positive news or pension savers. Pensions

are one o the most tax-ecient savings vehicles available

but these eciencies are not just limited to tax relie on

pension savings.

I a married couple are able to equalise their pension

pots, signicant amounts o money could potentially be

saved in retirement by using both personal allowances,

which will be worth 10,000 each.

live better in retirement

I you are approaching your retirement, we can take you

through the process step by step to nd the best annuity

or you. Your retirement should be a special time when

you do those things you never had the opportunity to dobeore. So its essential you think and plan careully, as the

decisions you take now cannot be undone later. I you are

concerned about your retirement provision, please contact

us to review your current situation.

We can develop the beSt

portfolioS for you

No matter what your investmentgoals are, we can work with you todevelop the best portolios or you.

o discuss how we can help youmake an inormed choice to growingyour wealth, please contact us or

more inormation.


6/1206

RetIRement

YOuvE wOrkED harDFOr ThiS; NOwS ThE

TimE TO ENjOY iT

S

ome pensions allow you to switch your

money into lower risk investments as you

near retirement date, which can help to

protect you rom last-minute drops in thestock market. However, doing this may reduce the

potential or your und to grow, plus your und cannot

be guaranteed because annual charges may reduce it.

obtain an up-to-date

pension ForeCast

With only months to go beore you start accessing

your pension, its important to get a very clear

view o the level o income you can expect

to receive. Contact your pension provider or

providers or an up-to-the-minute orecast o

your tax-ree lump sum and income. You shouldalso request a State Pension orecast, which will

come complete with details o your basic State

Pension and any additional State Pension you

will receive. In addition, ind out when youll be

eligible to take your State Pension in the light o

changes to the State Pension Age.

Also think about other s ources o income

you might be likely to get when you retire.

hese could include income rom investments,

property or land, part-time employment or

consultancy, or an inheritance. Having as ull

a picture as possible will enable you to makedetailed and practical inal decisions about

exactly how you want to take your pension

income, as well as allowing you to make more

accurate plans or your new liestyle.

Choose how to taKe your pension

Although you may already have given some thought

to how you want to take your pension benets,

its worth reviewing your plans at this point.Circumstances can change or example, you might

have received a signicant inheritance or you may

have been diagnosed with a medical condition, and

ormer plans may no longer be quite appropriate.

You can either take your pens ion as an annuity,

as income drawdown or as a combination o the

two. With any o these options, normally youll

also be able to take up to 25 per cent o your und

as a tax-ree lump sum.

Additionally, now that the compulsory maximum

annuity age no longer applies, you can decide to deer

taking your pension. By keeping your pension pot

invested there is an opportunity or urther growth.

However, you should think about the risks involved

and look to de-risk as much as possible at this point.

Investments can go down as well as up and your pot will

be aected by the ups and downs o the markets. Tere

can also be tax benets but, as this is a complex decision,

you should obtain proessional nancial advice and

remember, you may get back less than you invest.

tax matters

Most people pay less tax when they ret ire, but its

worth considering your tax position at this stage.Although you can normally take up to 25 per cent

o your pension und tax-ree, any income you

receive rom it will be subject to tax under the Pay

As You Earn (PAYE) system.

Meanwhile, i youve taken the option o income

drawdown, you may be able to adjust the income you

take to minimise the tax you pay. For example, i you

plan to do some consultancy work or continue workingin a part-time capacity, you could think about reducing

your income withdrawals to stay within the basic rate o

tax. Bear in mind that tax regulations can change and tax

benets depend on your personal circumstances.

Additionally, keep your savings and investments as

tax-ecient as possible with products such as Individual

Savings Accounts (ISAs) and oshore bonds.

Youll also stop paying National Insurance

contributions when you reach State Pension age.

I you decide to continue working, whether ull-

time, part-time or on a consultancy basis, its a

good idea to contact the tax oice to make surecontributions arent still being deducted.

prepare For LiFe aFter worK

As well as sorting out your nances, dont orget

to think about how your lie will change when you

retire. Even i you intend to keep working part-time,

youre going to have much more ree time to enjoy.

Planning these rst ew months will help you set

the tone or your uture. Perhaps theres somewhere,

or someone, youve always wanted to visit. Maybe you

want to learn a new sport or leisure activity, but have

always had too many commitments. You might even

want to start the search or that perect retirement

bolthole. Te nancial planning youve been doing or

years all starts to bear ruit now. n

Tresholds, percentage rates and tax legislationmay change in subsequent Finance Acts. Levels and

bases o, and relies rom, taxation are subject to

change and their value depends on the individual

circumstances o the investor.

your neWfound freedom

Whatever you decide to do, start yourretirement by celebrating your newoundreedom. Youve worked hard or this; nows

the time to enjoy it. o discuss how we canhelp you in the run-up to your retirement,please contact us or more inormation.

Few aspects o nancial planning are as important as pension and retirement planning, especially in the run-

up to your retirement. Many people see the nal ten years beore they retire as an opportunity to build up

their pension pot. But it is also vitally important to protect your pension und as you approach retirement.

Start your retirement by celebrating your newound reedom


7/1207

i wiSh id Started Saving

for retirement earlier

todays baby boomers

And i you ask those aged 55 plus, todays baby

boomers, then an even higher number one in ve

say this is their biggest regret. Tis gure rises urther

among adults who are saving into a personal pensionrather than being part o a workplace scheme, with

a quarter (25 per cent) wishing theyd started saving

earlier, compared to just 13 per cent o those saving

into a workplace pension.

impaCt on Future FinanCes

Hindsight is a wonderul thing, but we can all learn rom

those who are older and wiser. Te earlier we start saving,

the bigger the impact on our uture nances. Someone

who starts saving 100 a month at age 25 could receive

an income o 3,570 per annum by the time they are 65.

Using the same assumptions, someone saving the sameamount rom age 40 would have a pension income o only

2,000 per annum at the same age [1].

important not to paniC

For those o you who eel youve already le it too

late, the important thing is not to panic and save what

you can now. And those o you who are not already

saving through a workplace scheme or about to be

automatically enrolled into one should nd out more

about personal pensions i you dont want to end up

with the same regrets as many other personal pension

savers. Tese days most personal pensions are really

fexible, so you can increase, decrease or stop and

start contributions to suit changes in the uture.

the ChaLLenge oF saving eFFiCientLy

Its important to take advantage o whatever

opportunities you have to increase your pension

contributions. Remember, with pension plans,

the government contributes whenever you do. Soi you are a basic rate tax payer, in most cases or

every 4 you save in a pension, the Government

adds another 1. And i youre in a workplace

scheme, your employer is likely to be topping up

your contributions too. So consider increasing your

regular pension savings as and when you can; or pay

in a lump sum aer a windall such as a bonus [2].

Dont think its ever too late to start saving or

your retirement. And i youre younger, dont think

that because you cant save very much, theres no

point bothering. Even i you can start to save a small

amount rom a young age it can make a dierence.I you dont eel you can put your money away

in a pension just now, then you might want to

consider investing in a tax-eicient Stocks &

Shares Individual Savings Account (ISA) instead.

his means you can still access your investment,

while you also have the potential to help your

money grow. here is no personal liability to

tax on anything you receive rom your Stocks &

Shares ISA, so you might want to think about

using as much o your 11,520 ISA allowance as

possible beore the end o this tax year. You can

invest up to hal o this in a tax-eicient Cash

ISA, which you can earmark or more immediate

concerns. hen you may want to consider

investing the rest in a Stocks & Shares ISA so you

have the potential o greater tax-eicient growth

over the longer term [2]. n

All fgures, unless otherwise stated, are rom YouGov

Plc. otal sample size was 2,059 adults. Fieldwork was

undertaken between 25 - 28 January 2013. Te survey

was carried out online. Te fgures have been weighted

and are representative o all UK adults (aged 18+).

[1] All pension fgures are sourced rom Standard Lie

and are based on an individual retiring at 65, making

monthly pension contributions, assuming a growth rate o

5 per cent per annum, ination o 2.5 per cent per annum,

an annual increase in contributions o 3 per cent and an

annual management charge o 1 per cent. Te income

produced is based on an annuity that does not increase,

paid monthly rom age 65, and this will continue to be

paid or the frst fve years even i the individual dies.

[2] Laws and tax rules may change in the uture. Te

inormation here is based on our understanding in April

2013. Personal circumstances also have an impact ontax treatment. All fgures relate to the 2013/14 tax year,

unless otherwise stated.

talk to uS about being

financially efficient

Always remember that the value o aninvestment can all as well as rise, and maybe worth less than you invested. o fnd out

more about being fnancially ecient andto learn more about investments such aspensions and Stocks & Shares ISAs, please

contact us or urther inormation.

RetIRement

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New research shows why many older UK adults have many money regrets

aCCording to the researCh,the top Five biggest FinanCiaLregrets are:

1 I wish I had saved or retirement earlier(15 per cent)2 I wish I had avoided running up debt oncredit cards or store cards (14 per cent)3 I wish I had set and stuck to a budget(10 per cent)4 I wish I had spent less on nights out andsaved more in general (9 per cent)5 I wish I had sold things I no longerneeded (5 per cent)


8/1208

RetIRement

Flexible income drawdown is a type

o income withdrawal where you

can take pension income direct rom

your pension und without having to

purchase an annuity. Ordinarily, there are limits on

the maximum income you can take under income

withdrawal (known as capped drawdown).

Provided you have a secured pension income

o over 20,000 Minimum Income Requirement

a year (which can include any State pension),

you could be eligible to use lexible income

drawdown in respect o your money purchase

pension savings.

amount oF inCome

Under lexible income drawdown there is no

limit on the amount o income you can take in

any year. You can tailor your drawdown pension

to suit your personal requirements, whether

taking regular amounts at a set requency orad hoc income when required. here is even

the option to draw the entire und in one go.

All income withdrawal payments are subject

to income tax under PAYE at your appropriate

marginal rate.

tax-eFFiCient

Flexible income drawdown is tax-eicient,particularly where you wish to phase in the

use o your pension savings to provide that

income. Any money let in drawdown on death is

subject to a 55 per cent tax charge, whereas any

untouched pension und money (pre age 75) can

pass on to your beneiciaries ree o tax.

Once you go into lexible income drawdown

you can no longer make tax-eicient pensioncontributions, so you should look to maximise all

allowances, including carry orward, this tax year.

Flexible income drawdown is a complex area.

I you are at all uncertain about its suitability or

your circumstances we strongly suggest you s eek

proessional inancial advice. his is a hi gh-risk

option which is not suitable or everyone. I the

market moves against you, capital and income

will all. High withdrawals will also deplete the

und, particularly leaving you short on income

later in retirement.

At a time when people are being squeezed bythe taxman, anything that helps save tax should

be considered, and the potential to avoid the

55 per cent tax charge on part o those savings on

death could result in signiicantly more o their

estate being passed on to beneiciaries. n

Flexible income drawdown is a complex area. I you

are at all uncertain about its suitability or your

circumstances you should seek proessional fnancial

advice. Your income is not secure. Flexible incomedrawdown can only be taken once you have fnished

saving into pensions. You control and must review

where your pension is invested, and how much

income you draw. Poor investment perormance and

excessive income withdrawals can deplete the und.

Te eligibility rules or fexible income drawdown rom pensions were untouched by Budget 2013, which is welcome news

i this is something you are considering or would like to nd out more about.

Greater opportunities or those with over 20,000 pension income

Flexible drawdownrules untouched by

budget 2013

Flexible drawdown in itsbasic orm is the optionto take unlimited, buttaxable withdrawals rom

a pension rom age 55. Butto qualiy you must have aguaranteed pension incomeo 20,000, the MinimumIncome Requirement.

no one-Size-fitS-all

approach

When it comes to turning your pension

savings into an income or your retirement,

you will be aced with a number o choices,so obtaining proessional inancial advice

is essential. here is no one-size-its-all

approach to retirement planning and your

individual needs will depend on your own

personal situation and priorities. o discuss

or review your cur rent requirements, please

contact us dont leave it to chance.


9/1209

Long-teRm caRe

Cost oF Care

Savers who were hoping that the Budget 2013

announcement around social care would provide

greater clarity on how much their old age may

cost them could be disappointed to ind out

that they will still have to oot the bill or

uncapped hotel costs incurred in a care home,

such as ood and board.

means testing Limit

Despite an increase in the means testing limit

covering total care costs (social care and hotel

costs) to 118,000, many whose estate is worth

more than the limit will have to pay or the bill

themselves. his means the majority o home owners

will still ind themselves in the uncertain position o

not knowing how much their old age will cost.

high Care home Fees

People may be surprised that the social care cap

does not cover their total care bill. his will result

in many pensioners and elderly people having to

prepare or high care home ees. Some may even indthemselves in the unortunate position o having to

sell their assets to und their old age. It is important

or those who ind themselves near or over the

means testing threshold to prepare or the inancial

burden that may be placed upon them to avoid

undesired consequences.

wiLL you be LeFt to

piCK up the pieCes?

Te uture o social care is one o the most important

issues acing the country. All too oen the NHS and

amilies are le to pick up the pieces when olderpeople ail in their struggle to cope alone. I you

are concerned about how this could impact on you or

a amily member, please contact us to review

your requirements. n

i bdg p

dvd Ma,

ca, M o,

ad a a bdg

f a apa a.

h xpad

ma pg

a kp

m ad f avg pay f

f a a. t

fma f a

72,000 ap a

a pvd

g-m av

a ga da f f

pdg, d

v adda

d a daa m.

Cap provides long-term savers with a greater idea of future spending

greater clarity on

how much care inold age may coSt

Te threshold up to whichpeople are entitled tomeans-tested help with carecosts is raised rom just over23,000 to 118,000. Te72,000 ceiling does notinclude hotel costs such as

ood and accommodation.


10/1210

boosting retirement

saving among uK worKers

RetIRement

Aworkplace pension is a way o saving or

retirement arranged by an individuals employer.

It is sometimes called a company pension, an

occupational pension or a works pension.

Te act is that millions o people are not saving enough

to have the income they are likely to want in retirement.

Lie expectancy in the UK is increasing and at the sametime people are saving less into pensions.

In 1901, or every pensioner in the UK there were

10 people working. In 2010, or every pensioner there

were 3 people working. By 2050, it is expected that this

will change to just 2 workers.

automatiCaLLy enroLLing worKers

Auto-enrolment is the Governments key strategy to boost

retirement saving among UK workers, at a time when

employers have been closing company schemes, particularly

the most generous nal-salary pensions.

Employers will automatically enrol workers into a

workplace pension who:

n are not already in a qualiying pension scheme

n are aged 22 or over

n are under State Pension age

n earn more than 9,440 a year (this gure is reviewed

every year), and work or usually work in the UK

required by Law

For the rst time employers are required by law to

automatically enrol all eligible workers into a workplace

pension and make a contribution to it. Te Pensions

Regulator is responsible or ensuring employers comply

with the new law and have produced guidance to help

employers to do this. Tey will write to each employer

beore the date they are required to start enrolling workers

into a workplace pension, and depending on employer size,

on at least one other occasion.

One o the employer duties relating to automatic

enrolment is that employers are required by law to provide

the right inormation in writing, to the right individual

at the right time, so that people know how automatic

enrolment will aect them.

dates For your diary

Te date on which workers are enrolled, called a staging

date, depends on the size o the company they work or and

is being rolled out over the next six years.

n Large employers (with 250 or more workers) started

automatically enrolling their workers rom October 2012

to February 2014

n Medium employers (50 - 249 workers) will have to start

automatically enrolling their workers rom April 2014 to

April 2015

n Small employers (49 workers or ewer) will have to startautomatically enrolling their workers rom June 2015 to

April 2017

n New employers (established aer April 2012) will have

to start automatically enrolling their workers rom May

2017 to February 2018

Once he Pensions Regulator has notiied employers

o their date to enrol eligible workers into a workplace

pension, employers can choose to postpone automatic

enrolment or up to three months rom that date. I they

choose to postpone, employers must inorm those workers

in writing, including notice o their right to opt-in beorethe end o the postponement period.

Employers can also use the postponement period or

any newly eligible workers.

nationaL empLoyment savings trust (nest)

NES is a trust-based, deined contribution pension

scheme. It was speciically established to support

automatic enrolment and make sure all UK employers

have access to a suitable pension scheme or their

employer duties. he scheme is not-or-proit and the

rustee has a legal duty to act in its members best

interests. It is designed to be straightorward and easy or

employers to use.

NES oers a low-cost way or people to put money

away or their retirement. NES members have one

retirement pot or lie that they can keep paying into i

they stop working or a period or become sel-employed.

tax-Free Lump sum

Most people will be automatically enrolled into a Dened

Contribution scheme or money purchase scheme. Tis

means that all the contributions paid into your pension are

invested until you retire.

he amount o money you have when you retire

depends on how much has been paid in and howwell investments have perormed. In most schemes

when you retire you can take some o your pension

as a tax-ree lump sum and use the rest to provide a

regular income.

Up to 11 million workers

will now start to be

automatically enrolled

into a workplace pension

which commenced rom

October last year. Largeremployers were the rst,

with small and medium-

sized employers ollowing

over the next six years.

Millions o people are not saving enough to have the income they are likely to want in old age

NES is a trust-

based, dened

contributionpension scheme.

It was specically

established to

support automatic

enrolment and

make sure all

UK employers

have access to a

suitable pension

scheme or theiremployer duties.

KarrenBrady


11/1211

Investmenst

Building an investment portolio can be a daunting

challenge. However, i you are seeking to save over

the long-term, perhaps or retirement or school ees,

it may be worth taking the time to assess how best to

achieve your goals.

inCome or CapitaLgrowth or a mixture oF both

You need to consider which investments are right

or you. It is easy to be tempted by the potential or

short-term prots, particularly with interest rates

so low, but you must also consider your ability to

cope with losses, as any investment comes with

risks. Knowing what you are prepared to lose

helps establish your overall risk prole. Other

considerations might include your level o nancial

understanding and whether you require an income

or capital growth or a mixture o both.

ConstruCting your

portFoLio CareFuLLy

Once you have established these objectives, it is

important to construct your portolio careully and

continue to review it on a regular basis. What one

person might consider cautious, another might

consider risky, so it is important to understand your

needs and seek proessional nancial advice.n

Past perormance is not necessarily a guide to the

uture. Te value o investments and the income rom

them can all as well as rise as a result o market andcurrency uctuations and you may not get back the

amount originally invested. ax assumptions are subject

to statutory change and the value o tax relie (i any)

will depend upon your individual circumstances.

So What do i do

With my money?

oday there is a wide choice o investments

available to investors, and with it scope to nd

greater diversication. Some asset classes and

investing techniques, once the preserve o

sophisticated institutional investors, now oer

interesting opportunities to individual private

investors. o talk to us about the dierent

investment opportunities that could be right or

you, please contact us or urther inormation.

Assessing how best toachieve your goals

whiChiNvESTmENTSarE riGhTFOr YOu?

Te Government has set a minimum amount

o money that has to be put into a Dened

Contribution scheme by employers and workers.

Contribution LeveLs

Te minimum contribution level is just that, a

minimum. Employers will be able to contribute

more than the minimum i they wish, and many

already do. Individuals can also contribute

more than the minimum i they want to. Tese

amounts can be phased in to help both the

employers and employees manage costs.

Some people may be automatically enrolled

into a Deined Beneit or Hybrid pension

scheme. his type o scheme may also be

known as a inal salary or career average

scheme. I you are enrolled into one o these

schemes, the amount you get when you retire

is based on a number o things, which mayinclude the number o years youve been a

member o the pension scheme and your

earnings. In most schemes you can take some

o your pension as a tax-ree lump sum and the

rest as a regular income.

Alternative arrangements can apply or

Dened Benet and Hybrid pension schemes

to help them manage the introduction o auto

enrolment. For example, the ull provisions

can be postponed until 30 September 2017 or

existing scheme members. New sta will have to

be enrolled rom the employer's staging date.

I employers or individuals do not know

what type o scheme they are using or

automatic enrolment, their employer will be

able to tell them.

ChaLLenges oF this new LegisLation

Not surprisingly, with new legislation comes

new jargon and employers will need to become

amiliar with terms such as eligible jobholders

and qualiying pension schemes when

considering their duties.

We can help you through the challenges

o this new legislation and provide a ull

analysis o your options, so that you can

identiy and implement an agreed plan that

best suits your requirements. n

We understand the importance o

creating bespoke solutions. Compliance

with auto-enrolment doesnt have to

be heavy duty. I you would like to nd

out more about how we can help, please

contact us or more inormation.

timing minimum total percentage

that haS to be contributed

1 Oct 2012 to 30 Sept 2017 2%

1 Oct 2017 to 30 Sept 2018 5%

1 Oct 2018 onwards 8%

Teo Paphitis, theDragons Den star,and Karren Brady,

Alan Sugars assistanton Te Apprentice,are among thecelebrities leading acampaign to publicisethe new nationalpension scheme.

Teo Paphitis


12/12

Published by gdmn Md lmd,

Basepoint Innovation Centre, 110 Butterfield, Great Marlings, Luton, Bedfordshire LU2 8DL

Articles are copyright protected by Goldmine Media Limited 2013.

estate pReseRvatIon

i d p y famy ad , a av pv pa af y g. t a ay

pv ay ax paym a ia tax ga y ax affa y ag pfa adv ad

avg a vad pa a y gay d vv j avg a ag ia tax f y vd .

nothing iS certain but death

and taxeS and they are

intrinSically linkedWill your legacy involve just leaving a large Inheritance ax bill or your loved ones?

saving your beneFiCiaries

thousands oF pounds

Eective Inheritance ax planning could save

your beneiciaries thousands o pounds, maybe

even hundreds o thousands depending on the

size o your estate. At its simplest, Inheritance ax

is the tax payable on your estate when you die ithe value o your estate exceeds a certain amount.

Its also sometimes payable on assets you may

have given away during your lietime, including

property, possessions, money and investments.

Inheritance ax is currently paid on amounts above

325,000 (650,000 or married couples and registered

civil partnerships) or the current 2013/14 tax year, at a

rate o 40 per cent. I the value o your estate, including

your home and certain gis made in the previous

seven years, exceeds the Inheritance ax threshold, tax

will be due on the balance at 40 per cent.

Leaving a substantiaL tax LiabiLity

Without proper planning, many people could

end up leaving a substantial tax liability on their

death, considerably reducing the value o the

estate passing to their chosen beneiciaries.

Your estate includes everything owned in your

name, the share o anything owned jointly, gits

rom which you keep back some beneit (such as

a home given to a son or daughter but in which

you still live) and assets held in some trusts rom

which you have the right to receive an income.

Against this total value is set everything that

you owed, such as any outstanding mortgages or

loans, unpaid bills and costs incurred during your

lietime or which bills have not been received, as

well as uneral expenses.

Any amount o money given away outright to

an individual is not counted or tax i the person

making the git survives or seven years. hese

gits are called potentially exempt transers and

are useul or tax planning.

potentiaLLy exempt transFers

Money put into a bare trust (a trust where the

beneiciary is entitled to the trust und at age18) counts as a potentia lly exempt transer, so it

is possible to put money into a trust to prevent

grandchildren, or example, rom having access to

it until they are 18.

However, gis to most other types o trust will be

treated as chargeable lietime transers. Chargeable

lietime transers up to the threshold are not subject

to tax but amounts over this are taxed at 20 percent, with up to a urther 20 per cent payable i the

person making the gi dies within seven years.

Some cash gis are exempt rom tax regardless

o the seven-year rule. Regular gis rom aer-tax

income, such as a monthly payment to a amily

member, are also exempt as long as you still have

sucient income to maintain your standard o living.

Combined tax threshoLd

Any gis between husbands and wives, or registered

civil partners, are exempt rom Inheritance ax

whether they were made while both partners were stillalive or le to the survivor on the death o the rst.

ax will be due eventually when the surviving spouse

or civil partner dies i the value o their estate is more

than the combined tax threshold, currently 650,000.

I gits are made that aect the liability to

Inheritance ax and the giver dies less than seven

years later, a special relie known as taper relie

may be available. he relie reduces the amount o

tax payable on a git.

Leaving a tax LiabiLity

Inheritance ax can be a complicated area with a variety

o solutions available and, without proper tax planning,

many people could end up leaving a tax liability on their

death, considerably reducing the value o the estate

passing to chosen beneciaries. So without Inheritance

ax planning, your amily could be aced with a largetax liability when you die. o ensure that your amily

and business benets rather than the government, it

pays to plan ahead. As with most nancial planning,

early consideration is essential. n

hresholds, percentage rates and tax legislation

may change in subsequent Finance Acts. Levels and

bases o, and relies rom, taxation are subject to

change and their value depends on the individual

circumstances o the investor. he value o your

investments can go down as well as up and you

may get back less than you invested.

can We help?

Benjamin Franklin once said that nothing

is certain but death and taxes and theyare intrinsically linked. Obtaining the rightproessional fnancial advice can have lasting

consequences or your amily and business

interests. o discuss how we could help you,please contact us or urther inormation.

MRA Money May June 2013

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Transcript of MRA Money May June 2013