MFF Client Newsletter - Winter 2023

news Winter 2023

+ Giving peace of mind to your loved ones Lasting powers of attorney (LPAs) have been in the news recently as the paper-based system, which has been in place since 2007 is due to be replaced with an online application scheme.

A lasting power of attorney is a legal document that appoints someone to manage your affairs in the event you are no longer able to do so. This might be the case, for example, if you are impacted by a health condition which affects your mental capacity. The LPA means a trusted representative can make decisions affecting your care and your finances on your behalf.

Without an LPA in place, your loved ones will have to apply to the courts to have someone appointed to manage your affairs and in our experience, this can be a very lengthy and costly exercise for your family which could last many months. You may also not get the outcome you may have desired.

New research from Quilter has shown that last year, 848,896 LPAs were registered, an increase of nearly 20% on the previous year. With the new online application service being introduced, it is hoped that many more people will register an LPA. There are two types of LPA, health and welfare, and property and

finance. You can take out one type or both, to ensure your total personal affairs are covered.

A health and welfare LPA will cover such issues as your daily care, your medical treatment, where you should live and your personal correspondence.

A property and finance LPA will cover paying your bills, managing bank accounts and investments, and selling property.

You can draft LPAs yourself or you can ask a professional to help.

The required form can be completed online or on paper, but both options currently require wet signatures from all parties.

In either scenario, the LPA must then be submitted to the Office of the Public Guardian (OPG) for registration. The OPG has recently increased the number of staff processing applications so that more LPAs can be registered.

We consider creating an LPA to be one of the most important decisions you can make to protect your interests and to ease the burden on your loved ones. Please speak with your adviser if you require any further information or assistance and they can point you in the right direction.

Inside this issue: What are the proposals in the latest NHS consultation?

Medical Family Finance News Winter 2023

+ Proposals to retain more staff as part of the latest NHS pension Yet another consultation has been launched by the Department of Health and Social Care which puts forward changes to the NHS pension scheme. The latest proposals include previously suggested changes to contribution rates as well as removing the abatement rules for members from April.

Abatement is the process which limits your NHS pension in payment if you return to work in the NHS after some types of retirement. The NHS Pensions Agency describes this as ‘reducing pensions pound for pound if their earnings plus the ‘unearned’ element of their NHS pension exceed their pre-retirement NHS pensionable earnings’.

The consultation suggests this move is to help retain staff in the health workforce.

Abatement was suspended during the Covid-19 pandemic in order to encourage recently retired scheme members to return to work.

This meant they could do so without incurring a penalty on their

pension, but was due to be put back in place in March 2025.

As part of the 2023-24 pay deal, the government has outlined its intention to permanently remove abatement from April.

The Department of Health and Social Care said: "For members with long careers, the abatement ceiling has previously prevented them from working more than half time in the week should they return to work before age 60.

"The removal of abatement is important in the context of the delivery of NHS services. [It] is currently suspended to March 31, 2025 and permanently removing it ensures a continued capacity boost beyond that point because members can continue to work above their abatement ceiling.”

In 2022, figures published by Quilter revealed that more than 7,000 doctors and nurses were at risk of a financial penalty on their pension as a result of the abatement rules coming back into force.

The consultation closes on 7 January 2024.

+ Mortgage Update: are rates looking competitive again?

Now inflation has finally reduced from 10.1% to 6.7% it should signal increased activity in the housing market.

The current rate reductions have brought relief for homebuyers and those looking for new mortgage deals. In fact, some rates are tipped to fall below 4% in the coming weeks, after swap rates fell to levels not seen since May. Swap rates set the prices at which banks lend money to each other.

Now is an ideal time to assess your own mortgage deal and consider the best action plan for the future. You do not need to wait until your mortgage deal is ending before finding a new option – it can pay to start discussing your options well ahead of your deadline.

Beulah Antonin writes: We have seen a more competitive market in the last few weeks with some of the UK’s biggest lenders rushing to introduce price cuts.

The average two-year fixed mortgage rate recently dropped below 6% for the first time in six months with five-year fixes also reducing from the high rates seen in summer.

Last year’s mini-Budget by Kwasi Kwarteng started a rollercoaster of mortgage rate rises on the back of volatile markets. The Bank of England has raised the base rate five times since then although it currently remains at 5.25%.

Inflation has been slow to fall, much slower than many had anticipated meaning the central bank was unable to reduce rates.

Medical Family Finance News Winter 2023

Our team at Charterhouse has supported clients across the spectrum in getting their first home, moving along the housing ladder, or buying property as investors and landlords. We work with clients no matter what industry or type of employment, having supported many self-employed sole traders and directors, as well as high-net-worth clients.

For medical professionals specifically, we have found it can really help to work with a team that understands how medical income should be treated. We recognise the nuances of your remuneration package and can explain your situation to lenders.

If you are considering a new or existing home loan, please do get in touch with us at Charterhouse, part of the MFF family, via Beulah.antonin@chmap.co.uk or phone 03304 704 585.

+ MFF Introduction: Mira Scull, Financial Planner When I take on a new client and they ask about the ongoing services MFF offers, I like to explain the potential of our relationship going beyond “what is on paper”. It is about the big things in life and the small things and the uncertain things, but no matter what, there is someone that understands you and will ensure the steps you take are always in your best interest.

How is MFF different?

We are truly trusted by our clients – and this is not always the case in the larger firms. I can honestly say that every one of my colleagues has a genuine desire to understand and care for our clients which makes me very proud to be part of the team.

Mira joined our team almost seven years ago. Here she tells us about her pride in working for the company as well as her charitable dreams for the future.

What did you do before you joined MFF? I came to the UK from Hungary just before I turned 18. I was only supposed to stay for the summer to practise my English but never ended up going back as the summer was misleadingly warm and dry. This led me to believe that the rumours about the weather were not true! As much as I love remembering all the fond childhood memories in Hungary, a very long time has passed since then and England is where I call home.

Did you always want to work in finance?

From a very young age I was “in charge” of the family finances where I had to know exactly how much money we had coming in and how much certain things would cost so that we had a clear strategy agreed for example, for a day out. Needless to say, my two younger siblings no longer want my financial advice!

In my teenage years, I attended a grammar school where I was torn between pursuing acting or a career in medicine. When I started working in London, I decided on the latter but soon realised that this was not going to be the most suitable path for me.

What is the most rewarding part of your role?

I genuinely enjoy complex financial planning, the more challenging a case is, the more rewarding I find it when the desired outcome is achieved. From the initial stages to concluding the plan, it is amazing to see the weight being lifted off someone’s shoulders.

Going beyond that, the part that I love the most above everything else is the relationship I have with my long-term clients. When we meet, we just continue our conversation where we left off. I hear about all their most joyous moments, hopes and dreams but also about their challenges.

It is such a privilege to be entrusted with this role and helping people achieve their goals that go far beyond money.

Medical Family Finance News Winter 2023

I firmly believe that this is not only the result of MFF having recruited the right people with the right attitude but also that the senior management team also do their utmost for their employees.

Is there anything you would like to change about the finance industry?

My hope is that one day, financial planning will be more widely available to people. There is so much value that financial advice and coaching could add to everyone’s life, after all we all earn and we all need to spend.

This education should start at an early age and I would love to see financial planning being a major part of the national curriculum in schools. Learning about savings, mortgages, pensions and investments could be crucial to people’s wellbeing and could help minimise debt.

If you could do anything, what would it be?

I have always been about big dreams and not giving up until I get there. When I am in a position to do so, I will set up a charity and establish an orphanage in India to personally help children that are growing up under conditions unimaginable to most living in a first world country.

I am realistic about not being able to save everyone, but if we are just able to help a few it will change the whole world for those individuals as well as ourselves. The famous American Author, Booker T. Washington once said: “Those who are the happiest are those who do the most for others.”

What do you like to do in your spare time?

I love spending quality time with my family doing the simplest things like playing boardgames while sharing delicious food and great wine. Another passion of mine is planning surprise holidays for my family or anyone who dares!

Do you have a mentor?

I do not have a mentor per se, but I try and actively learn from people that inspire me whether that is a colleague, a friend or a client!

+ Comment: Paul Hart, director allowance limit of £60,000.

As advisers, we will also be working through issues with the lifetime allowance. It may have been reduced to zero for the current tax year and due to be abolished completely in April, but could still cause headaches for those unprepared to deal with the change.

At the time of writing, the BMA has agreed to recommend a pay offer by the government to its members. Whether doctors vote to accept the new deal may not be decided until the new year.

According to the BMA, the offer includes total investment of 4.95% that will be used to reform the pay scale structure of consultants. The number of pay points will be reduced from eight to four and the number of years it takes for a consultant to reach the top of the pay scale will be reduced by five years.

This increase is in addition to the 6% uplift awarded earlier in 2023. If accepted, these changes will come into force in April 2024 but pay increases will be backdated to January 2024.

An important point to note is that the revised pay proposal could cause a return of the annual allowance issues that we saw in the last few years until the threshold was increased in the 2023 Budget.

For example, a senior consultant with an old CEA who receives an increase to their pensionable pay could breach the new annual

This new pension legislation will mean a cap on the tax-free lump sum cash of £268,275 as confirmed by the Finance Bill published in November. This represents 25 per cent of the former lifetime allowance of £1,073,000. Any cash taken above this amount will be subject to a tax charge unless individuals already have lifetime allowance ‘protection’ in place and can therefore retain their right to take a higher tax-free lump sum.

Less well known is the death benefit allowance which is now set at the same amount,£1.073m.

While the removal of the lifetime allowance at the Budget this year was very welcome for most high achieving doctors, there are complications to consider. There are still significant tax concerns to plan whether this is the amount of cash they can take as part of their pension or the sums they can pass to loves ones when they die.

Anyone hoping for tax affairs to be simplified will be disappointed.

The new legislative documents to remove the lifetime allowance have over 100 pages for us to deliberate and apply to our clients’ particular situations.

While we may not relish reading through tax-rule textbooks, we do enjoy being your first port of call and a steadfast support when facing constant change to pay and pensions. Please do chat to your adviser if you ever have any concerns.

+ New team members As a company we are always striving to provide even greater levels of customer service. We are therefore delighted to be welcoming additional client services team members Kapona Georges-Campbell, Evgenia Galinskaya, and Henry Martin.

Season’s greetings from the team at Medical Family Finance

Medical Family Finance 020 7252 5765 Medical Family Finance News Winter 2023

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