Monday 24 September 2012

Mortgages – Beware the Rate Increase

Santander (Abbey) has joined the Halifax and others in increasing their Standard Variable Rate – even though the Bank of England Base Rate remains unmoved. This will raise the level of mortgage payments for many. It provides a good excuse to review your mortgage and see if there is not something better out there for you. We would be happy to look at the options for you. Just give us a ring on 01342 313302.

Monday 17 September 2012

Pension changes

There is no doubting that the pension system has been in need of change for a while. The current retirement age was set before the dramatic increase in life expectancy we have experienced. Medical advances mean retirement, which previously lasted only a few years, can now last nearer 20. Indeed, it is widely reported that the state system is overwhelmed but few people have made an effort to obtain alternative cover. As a result, the UK pension system is undergoing various reforms aimed at addressing these issues and building a retirement system suitable for the future.

Most recently, we have seen plans to increase the retirement age . Women are already being brought in line with men through an increase in retirement age to 65, after which both will be raised from 65 to 66, then to 67 and, ultimately to 68. Personal Accounts - to which employers, employees and the Government will all contribute – are being launched from 2012 to address the alternative provision issues. Pension benefits are once again linked to average earnings and a new approach to the second state pension system (SP2) ended ‘contracting out’ from 6 April 2012 .

Personal Accounts will probably be the most wide-ranging reform, and are scheduled to start towards the end of 2012. Employees will be enrolled automatically in the scheme (unless their employer runs an exempt alternative) and minimum contributions have been set. It is at least a start in the process of bringing our pension system up to date.

Tuesday 11 September 2012

Funding a decent income

Whenever you start thinking about retirement planning, it is worth beginning by working out how much income you think you will need. Generally, few people need as much income in retirement as they did when they were working – the mortgage might be paid off, children will have left home, and day-to-day expenses should have fallen. However, anticipating increased leisure time might spur you to make ambitious plans for travel or family, and all these expectations need to be considered so you can set some realistic targets.


Once you have worked out how much money you need, you can begin to work out where it will come from. For example, the state pension is £107.45 per week (for 2012/13) , plus there may be money coming in from ISA investments, rent from property, or even some continued paid employment. Moving to a smaller main residence could also release some capital – although house prices can go down, as we have seen recently, so it is risky to rely on the value of your house to fund your retirement.

Once completed, you should have a much better idea of the income you need to generate from pension savings. You might already have started to save through a workplace or personal pension and, although this should be taken into account, it is likely you will still need to supplement it and build it further over the years you have left. To give you an idea, at the best current annuity rates (June 2012) – given interest rates are so low – £10,000 of annual income could cost a male aged 65 almost £200,000 , with no guarantees. If you are female or would like some inflation protection - or simply wish to retire earlier than that - the cost is even higher. The amount you need to save could therefore be considerable.

Thanks to changes in 2006, you can now invest up to £3,600 or 100% of your annual earnings (whichever is the higher) in your pension savings, subject to a maximum of £50,000 (for 2012/13) , and tax relief is available on the contributions. There is also a maximum limit on the overall size of the pension portfolio you can generate – although at £1.5m for the current tax year, there are only a few who are affected.

Monday 3 September 2012

SORTING OUT PENSION BENEFITS

The number of options open to people taking retirement now has never been so great. The amount of confusion as to what to do has also never been so huge! Over the past decades there have been many different types of pensions and many different types of pension rules. We have the experience and know-how to assist you to get the most out of your pension benefits. Ring us now for an initial discussion at no cost – 01342 313302.