Premier independant jul aug 2014

MoneyMatters July/August 2014

INVESTOR The inheritance tax JARGON TIME BOMB The new state pension

‘top-up’

Everyone should save

FOR RETIREMENT

Lifestyle Protection

ISA selection

Creating Wealth

Tax Rules

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inside inside ISA selection ISA selection

PagePage 2 2

Pension reforms in the Pension reforms in the Queen’s Speech PagePage 3 3 Queen’s Speech

ISA ISA selection selection

Is there nowhere to hide Is there nowhere to hide fromfrom the the taxman?

4 4 taxman? PagePage WillWill youryour pension pot pot last?last? pension PagePage 5 5 The The newnew statestate pension pension ‘top-up’ explained 6 6 ‘top-up’ explained PagePage The The inheritance tax tax inheritance timetime bomb PagePage 7 7 bomb Pensions planning – – Pensions planning whatever youryour age age PagePage 8 8 whatever Do IDo have to pay tax under I have to pay tax under newnew freedom rules?

9 9 freedom rules?PagePage Investor jargon you you Investor jargon need to understand PagePage 10 10 need to understand HowHow to save for your to save for your grandchildren PagePage 11 11 grandchildren Could youryour family copecope Could family if you die?die?

PagePage 12 12 if you Reader Reply…

Reader Reply…

Personalised reply section Personalised reply section PagePage 12 12

Need Need more more information? information?

Simply Simply complete complete and and return return the the information information request request on on page page 12 12

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If you’re If you’re looking looking for a savings for a savings account account to to INVESTMENT INVESTMENT ISA ISA squirrel squirrel away away your hard-earned your hard-earned cash, cash, then athen a An investment An investment ISA, otherwise ISA, otherwise knownknown as a as a good good place place to start to isstart withis an with ISA. anThese ISA. These tax- tax- stocksstocks and shares and shares ISA, isISA, different, is different, you’reyou’re not not efficient efficient accounts accounts let youletrack youup rack interest up interest savingsaving in cash in but cashare butinstead are instead actively actively without without givinggiving the taxman the taxman a share. a share.

With the With the investing investing your money your money in theinstock the stock market, market, but but tax-free tax-free allowance allowance set atset £15,000 at £15,000 from July from July you still youretain still retain the tax-efficient the tax-efficient element element of a of a 2014 2014 they’llthey’ll be even be more even more popular. popular. traditional traditional ISA. ISA. It is believed It is believed that many that many peoplepeople don’t don’t actually actuallyAgainAgain there there are different are different types types you can you can knowknow the difference the difference between between a casha and cash and choose, choose, depending depending on whether on whether you want you want to to investment investment ISA, despite ISA, despite the fact thethat factmany that many investinvest in individual in individual sharesshares yourself yourself or leave or leave it it peoplepeople view saving view saving into an into ISAana ISA necessity a necessity and and to thetohands the hands of a fund of a manager, fund manager, but the but the save on save average on average over £100 over £100 per month. per month. majority majority of these of these accounts accounts will use willcollective use collective This lack Thisoflack ISAofknowledge ISA knowledge could could potentially potentially investment investment fundsfunds to spread to spread risk and riskallow and allow you you cost savers cost savers hundreds hundreds of pounds of pounds and there and there are areto invest to invest acrossacross a range a range of different of different areas.areas. concerns concerns that when that when the new therules new come rules come into into The most The most important important thing thing to bear to in bear mind in mind is is force force the majority the majority of savers of savers will put willtheir put their that your that money your money isn’t necessarily isn’t necessarily safe. There’s safe. There’s a a allowance allowance into lower into lower rate cash rate ISAs cash rather ISAs rather than than greater greater amount amount of riskofquite risk quite simplysimply because because exploring exploring investment investment ISAs for ISAs theforpotential the potential of ofyou’reyou’re actively actively investing investing in theinstock the stock market, market, betterbetter returns. returns. you’reyou’re not getting not getting a set interest a set interest rate, so rate, your so your returns returns will depend will depend entirely entirely on theon the CASH CASH ISA ISA performance of theoffunds the funds and there’s and there’s a chance a chance Cash Cash ISAs are ISAsaccounts are accounts that let that youletsave you in save in performance be leftbewith left less withthan less you thanput youin.put in. cash, cash, keeping keeping thingsthings simplesimple and giving and giving you ayou a you’ll you’ll Investment Investment ISAs are ISAsmore are more suitedsuited for those for those great great homehome for your for money. your money. with a with longer-term a longer-term view, view, as although as although you’ll you’ll ThereThere are various are various versions versions you can youchoose can choose usually usually be able be to able access to access your money your money should should from depending from depending on your on circumstances. your circumstances.

InstantInstant you need you need to, it’s to, not it’s as not easy as as easy with as a with cash a ISA. cash ISA. accessaccess accounts, accounts, wherewhere you can youput canmoney put money in in Another Another key point key point to remember to remember is that is that and take andittake out itasout often as often as youaslike youand likefixed and fixed although the FSCS the FSCS still applies, still applies, the rules the for rules for rate versions, rate versions, wherewhere you’ll you’ll deposit deposit a lumpa lump sum sumalthough investors are slightly are slightly different different and you’ll and you’ll only only and keep and itkeep in for it in a fixed for a length fixed length of time, of with time, with investors be covered for upfor to up £50,000. to £50,000. the trade-off the trade-off usuallyusually beingbeing a better a better rate than rate than be covered Generally Generally the potential the potential for better for better returns returns with instant with instant accessaccess accounts accounts and alland interest all interest when when compared compared to traditional to traditional cash ISAs cash is ISAs is will bewill free befrom free tax. from tax. higher. higher.

Cash Cash savingsaving meansmeans there’sthere’s no riskno risk Whichever ISA you ISAchoose you choose from July from2014 July 2014 whatsoever; whatsoever; as long as as long youasdon’t you don’t deposit deposit more more Whichever you’ll you’ll be able be to able save to up save to up £15,000 to £15,000 however however than £85,000 than £85,000 with any withone anyinstitution one institution you’ll you’ll you please, you please, so it could so it could pay topay consider to consider both both be covered be covered by thebyFinancial the Financial Services Services options options carefully. carefully.

Compensation Compensation Scheme Scheme (FSCS).

(FSCS).

The value of your investment andincome the income candown go down as well The value of your investment and the fromfrom it canitgo as well as upas up and may you may notback get back the original amount invested.

Past performance and you not get the original amount invested.

Past performance is notisanot a reliable indicator for future results.

Please contact for further information reliable indicator for future results.

Please contact us forusfurther information or if or if youinare indoubt any doubt tosuitability the suitability an investment. you are any as toas the of anofinvestment.

Not all Not financial all financial advisersadvisers will have will regulatory have regulatory permission permission to advise to on advise every onproduct every product mentioned mentioned in theseinarticles. these articles.

CertainCertain products products mentioned mentioned in this magazine in this magazine may require may require advice from advice other from other professional professional advisersadvisers as well as as well youras financial your financial adviser adviser and thisand might thisinvolve might involve you in extra you incosts. extraThe costs. articles The articles featured featured in this publication in this publication are for are yourfor general your general information information and useand onlyuse and only areand notare not intended intended to address to address your particular your particular requirements. requirements.

They should They should not be relied not beupon reliedinupon theirin entirety. their entirety.

Although Although endeavours endeavours have been havemade beento made provide to provide accurate accurate and timely and information, timely information, there can there can be no guarantee be no guarantee that such that information such information is accurate is accurate as of the as date of the it date is received it is received or that or it will thatcontinue it will continue to be accurate to be accurate in the future. in the future.

No individual No individual or company or company should should act upon actsuch upon information such information withoutwithout receiving receiving appropriate appropriate professional professional advice after advicea after thorough a thorough examination examination of theirof particular their particular situation. situation.

Will writing, Will writing, buy-to-let buy-to-let mortgages, mortgages, some forms someof forms tax and of tax estate and planning estate planning are notare not regulated regulated by the Financial by the Financial Conduct Conduct Authority. Levels, Authority. Levels, bases ofbases and reliefs of and from reliefs taxation from taxation are subject are subject to change to change and their and value theirdepends value depends on the individual on the individual circumstances circumstances of the investor. of the investor.

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PENSION PENSIONREFORMS REFORMS If these If these Collective Collective Defined Defined Contribution Contribution pensions for savers. for savers.

Ultimately Ultimately thesethese Pensions Pensions were were high high on the onagenda the agenda in thein the pensions schemes schemes are ever are introduced, ever introduced, they would they would schemes schemes wouldwould be invested be invested in thein the Queen’s Queen’s Speech, Speech, whichwhich outlined outlined the the be made available available through through employers. employers. stockmarket, muchmuch like other like other pension pension be made legislation legislation Parliament Parliament will focus will focus on foronthe for thestockmarket, However, However, therethere are still aremany still many hurdles hurdles they they schemes.. schemes.. next year. next year.

Two pension Two pension itemsitems were were have have to overcome to overcome first. Parliament first. Parliament will will In addition, In addition, pension pension saverssavers will not willbe not in be in included included in theinparliamentary the parliamentary agenda. agenda. to debate to debate and pass and pass laws,laws, then then control control of where of where their their pension pension is invested, is invested,need need ThereThere will be will legislation be legislation to make to make way for way for pension providers providers will need will need to develop to develop the the a notion that may that not maybe not appealing be appealing to to pension the pension the pension freedom freedom announced announced in thisin this a notion framework for these for these schemes schemes and finally and finally Indeed, Indeed, the growth the growth in popularity in popularity of offramework year’syear’s Budget, Budget, whereby whereby saverssavers will be will able be ablemany.many. employers will have will have to adopt to adopt them.them.

It is It is (Self (Self Invested Invested Personal Personal Pensions) Pensions) employers to access to access their their pension pension pot aspot and aswhen and when SIPPsSIPPs therefore therefore likelylikely to beto many be many yearsyears before before wouldwould suggest suggest people people wantwant to have to have they want they want from from age 55. age 55. schemes schemes see the seelight the light of day, of day, control control over their over their pension pension savings savings and and thesethese ThereThere will also will be also legislation be legislation to to assuming assuming they make they make it through it through Parliament.

Parliament. choose choose their their own investments. own investments. introduce introduce ‘Collective ‘Collective Defined Defined Contribution’ Contribution’ In theInmeantime the meantime saverssavers can obviously can obviously schemes, schemes, whichwhich are established are established in thein the Will they Will they be lower be lower cost cost thanthan existing existing continue continue to save to save for retirement, for retirement, eithereither Netherlands.

Netherlands. pensions? pensions? through through their their company company pension, pension, or through or through ThereThere are some are some suggestions suggestions thesethese Collective Collective Defined Defined Contribution Contribution an individual an individual pension pension like alike SIPP. a SIPP. collective collective schemes schemes couldcould have have lowerlower schemes schemes charges than than existing existing pensions. pensions.

Certainly Certainly The introduction The introduction of Collective of Collective Defined Defined charges therethere are economies are economies of scale, of scale, this this Contribution Contribution schemes schemes is a controversial is a controversial wherewhere can mean lowerlower charges charges for investors. for investors. step, step, because because Parliament Parliament will need will need to pass to passcan mean However existing existing pension pension providers providers laws laws to allow to allow pension pension schemes schemes to cutto cut However already already enjoyenjoy thesethese economies economies of scale of scale as as people’s people’s income income in retirement, in retirement, if theif the they currently manage manage pensions pensions for for scheme scheme doesn’t doesn’t have have enough enough money money to to they currently hundreds hundreds of thousands of thousands of people. of people.

Any new Any new keep keep payments payments up. The up.idea The of idea these of these schemes schemes may eventually may eventually get toget thistoscale, this scale, schemes schemes is to pool is to pool people’s people’s money money The Queen’s The Queen’s Speech Speech also confirmed also confirmed but would but would have have to start to start from from scratch. scratch. together together in oneinbig onefund big fund and make and make we will we be will seeing be seeing legislation legislation payments payments out ofout thisoffund this fund whenwhen they retire, they retire, Collective Collective Defined Defined Contribution Contribution introducing introducing the pension the pension freedom freedom thus applying thus applying an element an element of levelling of levelling to to schemes schemes announced announced in theinBudget. the Budget.

This will This will the ups theand upsdowns and downs of theofstock the stock market. market.

Collective Collective Defined Defined Contribution Contribution schemes schemes allowallow savers savers over over the age the of age 55 of to55 to Unfortunately Unfortunately this means this means that ifthat theiffund’s the fund’s mightmight in theory in theory suit savers suit savers who don’t who don’t wantwant take take their their pension pension as and as when and when they they returns returns aren’taren’t as high as high as expected, as expected, control control of their of their pension pension and who and don’t who don’t want,want, ratherrather than than locking locking into an into an pensions pensions may need may need to beto cut. be cut. wantwant to choose to choose wherewhere to invest. to invest.

Savers Savers in in annuity annuity assuming assuming it makes it makes its way its way such such schemes schemes wouldwould also have also have to beto be Is a 30% Is a 30% increase increase in pensions in pensions onto onto the statute the statute book.book. willing willing to accept to accept that their that their pension pension income income attainable? attainable?

This measure This measure has ahas great a great deal deal of of mayonce fall once they are theyinare retirement. in retirement.

It is It is ThereThere have have been been somesome claimsclaims in theinpress the pressmay fall popular popular support, support, because because it gives it gives worthy worthy of note of note that these that these collective collective that Collective that Collective Defined Defined Contribution Contribution people muchmuch greater greater control control over over pensions may not mayallow not allow saverssavers to enjoy to enjoy the thepeople schemes schemes will provide will provide 30 per 30cent per higher cent higher pensions their their pension pension savings. savings.

As a As result, a result, pension pension freedom freedom announced announced in theinBudget, the Budget, pensions pensions for savers, for savers, though though savers savers are now are now likely likely to put to more put more or if they or if do, theymay do, impose may impose penalties penalties therethere has been has been little little evidence evidence for their for their retirement, retirement, because because for those for those who wish who wish to usetothis use this asideaside to support to support this notion. this notion.

Even Even once once they they hit 55 hit they 55 they will have will have total total flexibility. flexibility.

SteveSteve Webb,Webb, the Pensions the Pensions flexibility flexibility over over how how to draw to draw it, rather it, rather Minister Minister who is who proposing is proposing than than handing handing their their money money over over to anto an thesethese changes, changes, has been has been insurance insurance company. company. careful careful not tonot saytothese say these collective collective schemes schemes will will resultresult in higher in higher

Pension Pension freedom freedom

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IsIsthere therenowhere nowheretotohide hide from fromthe thetaxman? taxman?

WhatWhat to dotoifdo HMRC if HMRC challenges challenges your your tax return. tax return.

If youIfdisagree you disagree with with the amount the amount of taxof tax HMRC’s HMRC HMRC has beefed has beefed itself itself up byup doubling by doubling its its HMRC’s determination determination is toisget to its get its the Revenue the Revenue says is says owed, is owed, writewrite to to bailiffs of bailiffs and debt and debt collection collection agencies agencies pound pound of flesh of flesh fromfrom the middle the middle use ofuse HMRC HMRC immediately. immediately.

The taxman The taxman will will class. overlast thetwo last years. two years.

Its focus Its focus on on class.

HowHow can you can you staystay on the on the over the ask toask seetocertain see certain documents. documents.

Don’tDon’t rightright evasion and non-payment and non-payment lookslooks set toset to sideside of the of law the law but still but still keepkeepevasion pass pass over everything, over everything, only supply only supply themthem youryour gather gather force.force. tax bills tax bills to a to minimum? a minimum? with with the information the information they request. they request.

One of One theofmost the most controversial controversial snooping snooping The taxman The taxman is now is going now going after after the the HMRC HMRC will write will write back back to youtoand youifand it if it middle powers powers the taxman the taxman uses uses to spytoon spy on middle classes, classes, no longer no longer targeting targeting just the just the still believes still believes its taxitsposition tax position is correct is correct super-rich, individuals is obtaining is obtaining information information from from super-rich, but everyday but everyday professionals professionals are areindividuals the next the step next is step to make is to make a tribunal a tribunal parties, parties, including including banks, banks, creditcredit card card now feeling now feeling the pressure the pressure of thisofgreater this greater third third date.date.

Independently Independently appointed appointed tax tax providers, employers employers and other and other scrutiny scrutiny with with an increased an increased likelihood likelihood that thatproviders, judges judges will hear will hear your your case case and come and come their their government government agencies agencies such such as theasLand the Land tax returns tax returns will be will challenged. be challenged. to antoinformed an informed decision. decision.

But those But those Registry.

HM Revenue HM Revenue & Customs & Customs (HMRC) (HMRC) has has Registry. takingtaking their their disputes disputes to a tribunal to a tribunal face face doubled The Revenue The Revenue will also will snoop also snoop on the on the doubled the number the number of inquiries of inquiries into into a longa long wait.wait.

Another Another option option is theis the websites that taxpayers that taxpayers use and usecheck and check up up taxpayers taxpayers it feels it feels are not arepaying not paying enough enough websites independent independent Adjudicator’s Adjudicator’s Office, Office, an individual’s mobile mobile phonephone usage. usage. tax over tax the overpast the two past years. two years.

WhenWhen such such on anonindividual’s whichwhich arbitrates arbitrates complaints complaints aboutabout can use canbugging use bugging or telephone or telephone inquiries inquiries become become in depth in depth investigations investigations They They HMRC. HMRC. Telephone Telephone 03000300 057 1111.

057 1111. tapping, tapping, but inbut practice in practice they are theyrarely are rarely they can theytake can years take years to conclude. to conclude.

New New powers powers have have been been proposed proposed to to used.used.

WhatWhat action action will HMRC will HMRC follow follow to to This policy is seen is seen as hitting as hitting the ‘easy’ the ‘easy’ allowallow HMRC HMRC to take to money take money directly directly from from This policy collect collect unpaid unpaid tax? tax? target, target, using using all its all powers its powers to crack to crack downdown taxpayers’ taxpayers’ bank bank accounts, accounts, including including joint joint If theIfRevenue the Revenue is confident is confident that tax thatistax is on individuals, on individuals, rather rather than than companies companies or or accounts, accounts, without without first obtaining first obtaining a court a court owedowed it willitdemand will demand the sum the in sum in betterbetter resourced resourced institutions. institutions.

The The If theIfproposals, the proposals, whichwhich are subject are subject to other to other writing. writing.

A time A time limit limit for a for response a response will will order.order. involved involved may not maybe not huge be huge whenwhen a consultation, are approved, are approved, therethere are are sumssums be setbeand setifand thisifisthis notismet not then met then the the a consultation, compared compared to going to going after after a major a major concerns concerns that HMRC that HMRC will withdraw will withdraw taxman taxman will issue will issue a fineaand finealso and also corporate, corporate, but individuals but individuals are aare much a much incorrect sumssums from from accounts accounts before before charge charge additional additional interest. interest.

If thisIfisthis stillis still incorrect targettarget to squeeze to squeeze and collectively and collectively taxpayers taxpayers a chance a chance to argue to argue their their easiereasier ignored ignored the debt the debt will be will referred be referred to a to a givinggiving they are theynow are paying now paying out aout huge a huge amount amount of of case. case. private private debt debt collection collection agency. agency. tax. They tax. They are more are more likelylikely to have to have HMRC HMRC says that says they that do theynot doplan not to plan to extraextra WhatWhat can Ican do to I doprotect to protect my my tax return tax return mistakes mistakes but they but are theyalso are also emptyempty bank bank accounts accounts completely completely as rules as rulesmademade money? money? likelylikely to capitulate to capitulate without without arguing, arguing, are inare place in place to ensure to ensure that, that, after after the tax the tax moremore The best The advice best advice is to maximise is to maximise the use the use making making HMRC HMRC confident confident of success. of success. owedowed is taken, is taken, a suma of sum £5,000 of £5,000 must must of mainstream, of mainstream, clear-cut clear-cut tax-efficient tax-efficient Another aggressive aggressive tool used tool used

by HMRC

by HMRC remain remain in theinindividual’s the individual’s bank bank accounts. accounts. Another investments investments such such as pensions, as pensions, a a threatening by threatening taxpayers taxpayers with with higher higher The money The money can only can be only taken be taken after after four four is by is maximum maximum of £40,000 of £40,000 of your of your income income penalties penalties as part as of part itsof tougher its tougher stance, stance, requests requests for the fortax theowed tax owed have have been been can go caninto go ainto pension a pension each each year and year and whichwhich has helped has helped increase increase tax returns tax returns for for ignored. ignored. your your full ISA fullallowance ISA allowance of £15,000. of £15,000. the Revenue because because individuals individuals are are OtherOther existing existing measures, measures, such such as theas the the Revenue AvoidAvoid complex complex schemes schemes such such as film as film paying automatically automatically to avoid to avoid receiving receiving creation creation of special of special “task“task forces” forces” to target to targetpaying investment investment vehicles, vehicles, whichwhich the the higher fines fines ratherrather than than looking looking at theat the certain certain job sectors job sectors such such as freelancers as freelancers and andhigher Revenue Revenue has successfully has successfully challenged. challenged. amount owedowed and challenging and challenging the taxman the taxman buy-to-let buy-to-let landlords, landlords, have have also helped also helped amount Individuals Individuals can also can set alsothemselves set themselves up up if theyif think they think it is incorrect. it is incorrect. boostboost the Revenue’s the Revenue’s total total tax take. tax take. as a company as a company if theyif have they have multiple multiple sources sources of income of income on a on contract a contract basis.basis.

They They createcreate a “personal a “personal services services company” company” or PSC. or Clients PSC. Clients pay the payPSC the PSC instead instead of theofindividual the individual and the and the individual individual pays pays only corporation only corporation tax attax at 20 per 20cent per under cent under £300,000 £300,000 and 21 and 21 per cent per above. cent above.

The individual The individual then then takestakes dividends dividends as income as income or winds or winds the company the company up after up after a fewayears few years to to access access the money. the money.

This approach This approach can can help individuals help individuals avoidavoid the highest the highest rates rates of income of income tax. tax.

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Will Willyour yourpension pensionpot potlast? last?

The The Government Government is going is going to to include include your your lifelife expectancy expectancy in pensions in pensions ‘guidance’. ‘guidance’.

WeWe pre-empt pre-empt that that and and explain explain how how to to make make your your money money ‘see ‘see you you through’ through’ but what happens happens if youiflive youtolive 100, to you 100, you disposal disposal at different at different stagesstages of retirement. of retirement.

So how So long how will longyour will pension your pension pot last? pot last? but what to consider to consider this. this.

You can Youreduce can reduce risk byrisk spreading by spreading your your Or, toOr, puttothe putsame the same question question another another way, way, have have Do not Doforget not forget to factor to factor in theinrising the rising cost of cost of investments, investments, but you butwill youneed will need to relytoon rely on whenwhen do you doexpect you expect to die? to die?

For instance, For instance, if youifspend you spend £10,000 £10,000 a a estimates estimates of expected of expected growth growth rates rates for for Individual Individual life expectancy life expectancy is oneisofone theof the living.living. year today, you might you might need need £15,200 £15,200 a yeara to year different to different asset asset classes classes such as such cash, as cash, bondsbonds piecespieces of information of information which,which, according according to to year today, makemake the same the same purchases purchases by thebytime the you time you and shares. and shares.

SteveSteve Webb,Webb, the pension’s the pension’s minister, minister, all savers all savers die. die.

You could You could keep keep all theallmoney the money in cash, in cash, should should be given be given at theatpoint the point of retirement of retirement as as wherewhere returns returns are clearer are clearer but low. butThis low.isThis is part of part theofnew the “guidance” new “guidance” planned planned by theby the Plot Plot the years the years likely likely to mean to mean dipping dipping into capital into capital on a on a Government.

Government.

Once Once you retire you retire your expenditure your expenditure typically typically regular regular basis,basis, depleting depleting your funds. your funds.

The guidance The guidance is promised is promised alongside alongside radical radical startsstarts off high, off high, possibly possibly more more than in than working in working OtherOther assetsassets will provide will provide greater greater scopescope for for pension pension changes changes announced announced in lastinmonth’s last month’s life, aslife, youasdo you alldo theallthings the things you wanted, you wanted, but but potential. potential.

For instance, For instance, corporate corporate bondsbonds budget, budget, whichwhich will enable will enable saverssavers to access to access lackedlacked the time the or time money. or money. mightmight pay apay yielda yield of 5 orof65per or 6cent. per A cent. fund A fund their pension their pension fund whenever fund whenever they want, they want, once once Then Then your needs your needs start to start falltoasfall youasget you get that invests that invests in dividend-paying in dividend-paying sharesshares mightmight they’ve they’ve reached reached 55. 55. slightly slightly older.older.

Then Then they increase they increase againagain oftenoften yield yield 4 per 4cent. per You cent.could You could take this takemoney this money Mortality Mortality statistics statistics are crunched are crunched more more than than due todue deteriorating to deteriorating health. health.

Just as Just people as people as income as income without without touching touching the capital. the capital. ever before, ever before, givinggiving increasingly increasingly detailed detailed data data are poor are at poor predicting at predicting life expectancy, life expectancy, they they Remember, Remember, the underlying the underlying valuevalue of these of these of peoples of peoples likely likely lifespans. lifespans. are also arepoor also at poor predicting at predicting health. health.

The cost Theof cost of assetsassets couldcould rise and risefall. andIffall. youIfneed you need more more HowHow muchmuch will you will need? you need? care iscare theissting the sting in theintail, thethe tail,great the great than the than“natural” the “natural” income income from from bondsbonds and and The most The most important important step of step anyoffinancial any financial plan plan unknown unknown and could and could be asbe high as as high £85,000 as £85,000 a a shares, shares, you could you could be forced be forced to withdraw to withdraw is figuring is figuring out how out much how much income income you will you will year. year. whenwhen stockstock markets markets are down. are down. need.need.

UsingUsing life expectancy life expectancy to plan to retirement plan retirement Buying Buying an annuity, an annuity, an insurance an insurance product product The starting The starting point point should should be to be identify to identify isn’t aisn’t newa idea. new idea.

ManyMany professional professional financial financial that converts that converts a pension a pension fund into fundainto lifetime a lifetime your fixed your fixed costs,costs, whichwhich will reveal will reveal how much how much planners planners have have been been givinggiving clientsclients this this income, income, will provide will provide a fixed a fixed payout payout at around at around money money there there is to maintain is to maintain your lifestyle your lifestyle information information for several for several yearsyears now, now, takingtaking 6 per 6cent per acent year,a but year,you butlose youcontrol lose control of theof the aboveabove and beyond and beyond the essentials. the essentials. into account into account their entire their entire wealth wealth and needs and needs money. money.

This means This means that ifthat youifdie youbefore die before your your including including care or care nursing or nursing fees. This fees.helps This helps projected projected life expectancy life expectancy your estate your estate may may HaveHave a margin a margin of error of error them them determine determine whether whether they have they have enough enough lose out. loseIfout. youIflive youlonger, live longer, you will youbegin will begin to to Once Once you have you have worked worked out your out income your income money money to last. to last. profit.profit. requirement, requirement, think think aboutabout how to how spread to spread your your The advisers The advisers believe believe a combination a combination of of savings savings in order in order to manage. to manage.

Growth, Growth, losses losses and returns and returns different products products and investments, and investments, with with Retirees Retirees have have to testtoout testsuch out plans such plans If youIfkeep you keep your money your money invested invested and make and make different each each used used to meet to meet different different income income needsneeds against against their health their health position. position.

You might You might steadysteady withdrawals withdrawals in retirement, in retirement, you should you should and desires, is likely is likely to make to make the best the saving best saving receive receive a number a number from from the government the government factorfactor in theineffect the effect of growth of growth and losses, and losses, on onand desires, options. sayingsaying you are youlikely are likely to livetotolive 86to on86 average, on average, the amount the amount of money of money that will thatbe will at be your at your options.

The value The value of your of your investment investment and the andincome the income fromfrom it canitgo candown go down as well as well as upasand up you and may you may not get notback get back the original the original amount amount invested. invested.

Past performance Past performance is notisanot reliable a reliable indicator indicator for future for future results. results.

Please Please contact contact us forusfurther for further information information or if or youif are you are in any indoubt any doubt as toas the tosuitability the suitability of anofinvestment. an investment.

5

5

The Thenew newstate statepension pension

‘top-up’ ‘top-up’

The The government government has has introduced introduced a state a state pension pension top-up top-up designed designed to allow to allow pensioners pensioners and and those those closeclose to to retirement retirement age age to boost to boost theirtheir pension pension incomes. incomes.

A new A new classclass of voluntary of voluntary national national insurance insurance contribution contribution called called ClassClass 3A, 3A, was was announced announced in the in the 20132013 autumn autumn statement. statement.

OnlyOnly nownow are details are details emerging emerging as toas to what what the the extra extra pension pension would would cost.cost.

The The good good news news is, itis, looks it looks good good value, value, offering offering a better a better dealdeal thanthan ordinary ordinary inflation-linked inflation-linked annuities. annuities. better,better, more more flexible flexible optionoption for their for money, their money, WhatWhat doesdoes it do? it do?

WhenWhen will the willtop the up topstart? up start? if they if are they willing are willing to take to more take more risk. risk.

This new, This Class new, Class 3A scheme, 3A scheme, adds adds to theto the The new The top newuptop scheme up scheme will only will be only available be available Investors Investors can currently can currently fund a fund tax-free a tax-free existing existing ‘top up’ ‘topscheme up’ scheme calledcalled Class Class 3 3 between between October October 2015 2015 and April and April 2017.2017.

3.5 per 3.5 cent per yield cent yield from from an equity an equity income income fund fund national national insurance insurance contributions. contributions.

Buying Buying it it Who Who will benefit? will benefit? within within an ISA. an With ISA. With the new the £15,000 new £15,000 ISA ISA will give will you giverights you rights to additional to additional state state The scheme The scheme offersoffers pensioners pensioners the chance the chance to to allowance allowance available available from from July, between July, between them them pension. pension.

Your benefits Your benefits will be will increased be increased by by securesecure an inflation-linked an inflation-linked income income for life. forItlife. is It is couples couples could could invest invest up to up £30,000 to £30,000 tax free. tax free. the consumer the consumer pricesprices indexindex (CPI) (CPI) measure measure of of designed designed for people for people in good in good healthhealth who have who have inflation inflation each each year. year.

What’s in it in foritthe forGovernment? the Government? a partner, a partner, because because half the halfpension the pension can pass can passWhat’s It is difficult to know to know what what impact impact this will this will Is it costly?

Is it costly? to a partner to a partner on death. on death.

It willItbe will especially be especially It is difficult on Government on Government spending, spending, because because we we It depends It depends on your on age. your For age.a For 65 year a 65 old, year old, beneficial beneficial for those for those who do who notdoqualify not qualify for for have have not know how many how many pensioners pensioners will take will take each each extra extra £1 per£1week per week paid out paidatout ageat65 age 65 the full thestate full state pension pension and who and have who have not not do notdoknow up theupoffer, the offer, how much how much extra extra state state pension pension will cost will£890 cost £890 and the andmaximum the maximum extra extra previously previously been been able to able toptouptop their up their theybuy willand buyhow and long how they long will theylive willand live and pension pension you can youbuy canisbuy £25isper £25week, per week, whichwhichentitlement. entitlement.

This includes This includes the self-employed the self-employedthey will how much inflation inflation will be. willWhat be. What is clear is clear is is will cost willyou cost£22,250. you £22,250. and women and women who lost whoNIlost contributions NI contributions whilewhilehow much that this thatwill thishave will have a positive a positive cash flow cash flow This isThis equivalent is equivalent to an to annuity an annuity rate ofrate of bringing bringing up their up children. their children. impact, impact, as theasnew the money new money from from pensioners pensioners 5.8 per 5.8cent, per cent, whenwhen the actual the actual market market rate israte is Who Who should should sit tight? sit tight? will come will come into the intoDWP the DWP immediately, immediately, around around 2.9 per 2.9cent. per cent.

So paying So paying just £22,250 just £22,250 The scheme The scheme is notissonot good so good for people for people in poor in poor whilstwhilst any obligations any obligations to paytoout paymore out more state state in thisinscheme this scheme wouldwould normally normally cost you cost you health. health.

Someone Someone with awith short a short life-expectancy, life-expectancy, pension pension will spread will spread over many over many yearsyears to come. to come. approximately approximately £45,000 £45,000 in theinopen the open annuity annuity who might who might already already be ill,be would ill, would not benefit not benefit market. market.

Summary because because they will theynot willreceive not receive the additional the additionalSummary For a For 70 year a 70 old yearthe oldrate thereduces rate reduces to £779 to £779 The new The top-up new top-up scheme scheme is a very is a good very good deal deal income income long term. long term. and for anda 75 for year a 75 old yearthe oldrate theisrate £674. is £674.

You You for many for many people. people.

If you’re If you’re 65 now 65 and nowinand in A point A point to remember to remember can check can check the Government the Government website website to seetothe see the good good health, health, you will youprobably will probably benefit, benefit, will find willthe findsecure the secure inflation-linked inflation-linked different different rates rates you pay youdepending pay depending on your on your ManyMany especially especially if inflation if inflation is high. is high.

The other The other optionoption income income attractive. attractive.

However However the income the income is is age. age. if you’re if you’re willing willing to take to on take a bit on of a bit risk, of risk, taxable, taxable, whichwhich meansmeans somesome saverssavers should should consider consider investing investing in theinmarkets the markets instead; instead; the the Who Who is eligible is eligible for the fortop-up? the top-up? pausepause to consider to consider whether whether an ISAanmay ISA be may a be a risks are riskshigher are higher but sobut aresothe arepotential the potential Men aged Men aged 63 and 63over and in over April in April 2014 2014 and and returns. returns. women women aged aged 61 and 61over and in over April in April 2014 2014 qualify, qualify, because because this top thisuptop is up onlyis available only available to anyone to anyone entitled entitled to a UK to astate UK state pension pension who reaches who reaches state state pension pension age before age before April April 6, 2016.

6, 2016.

6

6

The The inheritance inheritance tax taxtime time

BOMB BOMB

Rising Rising house house prices prices and and thethe recovering recovering economy economy areare setset to to force force tens tens of of costs,costs, but not costscosts such such as as butassociated not associated thousands thousands more more people people above above accommodation.

As such, someone couldcould accommodation.

As such, someone thethe death death taxtax threshold threshold end up out £150,000 beforebefore they they endforking up forking out £150,000

actually reachreach the cap. actually the cap.

A Treasury spokeswoman said: said: ‘While‘While we we A Treasury spokeswoman The system is seen as unfair because it it are having The system is seen as unfair because The number of families hit with inheritance The number of families hit with inheritance to paytooff deficitdeficit are having payLabour’s off Labour’s taxestaxes assetsassets such such as family homes bought as family homes boughtcouples tax bills as theas the tax will billsrise willsignificantly, rise significantly, can still £650,000 tax free couples canleave still leave £650,000 tax free income that was whenwhen it wasit was and importantly, income that taxed was taxed Treasury forecasts suggest that rising Treasury forecasts suggest that rising with with freezing the IHT and importantly, freezing thethreshold IHT threshold earned. househouse pricesprices and the economy andrecovering the recovering economyearned. means we can end of of means wepay cantopay tothe endscandal the scandal forecasts estimate that the Government forecasts estimate that thepeople will push tens of thousands moremore people will push tens of thousands people Government having to selltotheir homes to payto pay people having sell their homes of households liableliable for for number of households over the threshold for paying over£325,000 the £325,000 threshold for paying number for social care -care meaning they often had had for social - meaning they often inheritance tax will more than than a a no home inheritance taxrise willby rise by more the duty. the duty. to leave to their children and and no home to leave to their children this year with with 35,600 expected this alone, year alone, 35,600 expected The Government said the The Government saidcontinued the continued third third grandchildren in theinfirst grandchildren the place.’ first place.’ bills, bills, risingrising to 43,800 next next Inheritance hit with to 43,800 freezefreeze of theofIHT at £325,000, thethreshold IHT threshold at £325,000, to betohitbewith tax remains a deeply Inheritance tax remains a deeply a level at which it hasitremained for more a level at which has remained for moreyear. year. unpopular tax among the British publicpublic unpopular tax among the British It’s estimated that some 236,000 It’s estimated that some 236,000 than than five years - will-be to fund five years willused be used to fund and one theissubject of regular calls calls andthat one isthat the subject of regular will have to paytothe families will have pay40 theper 40cent per cent for reform. upcoming reforms to long-term care laws upcoming reforms to long-term care lawsfamilies for reform. left byleft their families over over Married on estates by their families that will costscosts of care thatcap willthe captotal the total of borne care bornetax ontaxestates couples can reduce their their tax tax Married couples can reduce the next with with booming property the five nextyears, five years, booming propertyliabilities by thebyindividual at £72,000. the individual at £72,000. by combining their their allowance to to liabilities by combining allowance in certain partsparts of theofUK in certain thesending UK sending £650,000 Inheritance tax istax levied at a rate Inheritance is levied at a of rate of pricesprices for when their their assetsassets pass pass to to £650,000 for when with with modest estates over the modest estates over the 40 per of anofestate 40cent per on centthe onvalue the value an estate thosethose their their children uponupon their their deaths. children deaths. threshold. threshold. aboveabove the threshold.

Economists, tax tax the threshold.

Economists, But inBut some casescases middle class class families, in some middle families, The Treasury says this to to particularly The Treasury sayswill thisbe willused be used experts and Tory calledcalled for for experts and MPs Tory have MPs have thosethose livingliving in andin around particularly and around fund fund its care that along with with the the London, its reforms care reforms that along radical reform, warning that growing radical reform, warning that growing are exceeding even even the doubled London, are exceeding the doubled care cost care cap costwill capsee willthe seeGovernment the Government allowance, numbers of middle-class families are being numbers of middle-class families are being such such is theispremium on on allowance, the premium towards care costs whenwhen a a property contribute towards care costs trapped as house pricesprices rise. Arise. typical trapped as house A typical contribute in theincapital. property the capital. total total assetsassets are valued at below person’s are valued at below property in London is worth moremore than than person’s property in London is worth £118,000. £118,000. £450,000. £450,000. said this prevent The Government saidshould this should prevent Britain has some of theofhighest deathdeath The Government Britain has some the highest having to selltotheir homes to fund people having sell their homes to fund dutiesduties of anyofcountry and itand hasitbeen any country has been people care costs. care costs. estimated that more than than a third of home estimated that more a third of hometheir their this has challenged as it as it However thisbeen has been challenged owners face the of inheritance tax tax However owners facethreat the threat of inheritance emerged that the care care emerged thatcap theonly cap covers only covers bills because of rising househouse prices.prices. bills because of rising

7

7

Pension planning Everyone should save for With major changes being made to Britain’s pension system, we all should be encouraged to save in a tax efficient pension.

20s

Once you begin work, retirement is a distant thought. Other priorities tend to take precedence, like saving a deposit for a first home, paying down debts from student days or simply enjoying life.

The biggest influence on a comfortable retirement is the capacity to generate earnings. By starting a regular savings plan early, even if you can only spare small amounts, the returns will be much bigger.

Your earnings are generally low during this period but diverting the small amount left at the end of each month into a pension is likely to yield less than saving into an ISA, where the £15,000 tax-free annual allowance (from July 1 2014) will be more than sufficient.

The exception is your company’s pension scheme. Employers will pay on your behalf, for example, you might pay 5 per cent and the company 5 per cent.

30s

During this period your earnings should start to increase, but you could have higher costs to possibly meet like getting married, starting a family or buying a first home.

You may need to create an ‘emergency fund’ to cover unexpected issues such as redundancy; a fund worth six months’ expenditure is generally the rule of thumb.

8

New parents may want to consider life assurance, which will protect family finances if anything happens to the main income.

Repaying mortgage debt will also take a large chunk of income.

If you can afford to, invest as close to the £15,000 ISA limit as possible. You should also consider joining your company pension and consider increasing contributions if possible.

Pensions can help tax planning. Families where one parent earns more than £50,000 will start to lose their entitlement to child benefit. Contributing to a pension can reduce your taxable earnings below £50,000 and preserve this benefit for your family.

40s

If you haven’t started a pension type savings plan yet, it’s not too late. With up to 27 years before you collect your state pension and potentially more afterwards. Don’t be fooled into thinking your investment time-horizon is short; investments can still continue into retirement, for good returns.

During this period you may have school fees or other commitments to consider. Try to maximise the £15,000 ISA allowance, but don’t ignore the tax relief on pensions, though, which applies at your highest marginal rate. It costs a higher-rate taxpayer only £60 to put £100 into their pension.

Consolidate pensions sitting idle with former employers into a Self-Invested Personal Pension, or “SIPP”. These plans, which give access to thousands of investments in one place, are offered at low cost by different financial companies.

Do I have to pay tax under new freedom rules?

retirement

50s

Saving for retirement should now become serious. From age 55 you will be able to access your pension. In theory you could retire then.

In reality, most people will continue working and plan carefully, saving as much as possible for the future as other expenses cease. Plan by working out how much income you’ll need when you eventually stop work.

Pensions do work as tax-planning tools after your ISA allowance is used. Consider for every £2 you earn above £100,000, you lose £1 of your tax-free personal allowance (currently £10,000).

Contributing to a pension can reduce your taxable income so you retain this tax break.

Focus though on the £1.25m lifetime cap on saving. Someone aged 50 with £525,000 in a pension would push past the lifetime allowance by age 65 if the fund grew at 7 per cent a year even without additional contributions, according to pension provider Standard Life.

There is a currently a £40,000 limit on annual contributions to pensions.

60s

Many people will continue working, into their sixties. With the new rules from next April, you have instant access to your entire pension fund, how and when you withdraw becomes a major decision.

An annuity will guarantee a stream of income payments for life, but the cost of purchase is high. For example, current rates pay just £6,000 a year for each £100,000 of savings. Shop around for the best rates, as they do vary between insurers and declare all health conditions to obtain the highest income.

The main alternative to an annuity is to keep your pension invested in the stock market and take income as you need it.

This runs the risk of the ups and downs of the stock market. The capital should be protected, a well-diversified set of dividend-paying funds and shares can provide a decent income, so long as you can put up with the fluctuating value of the underlying capital.

With the introduction of the new flat-rate state pension, probably in 2016, you will need 35 qualifying years of National Insurance contributions to benefit from the full £155 a week (it is possible to “buy” extra qualifying years). Check with the Pension Service on 0800 731 7898 to ensure you have the full amount.

Hundreds of thousands of savers could be heading for a tax shock at retirement because they fail to understand the new pension freedom rules being introduced by the Government.

Many people with defined contribution pensions are labouring under the illusion that they will be able to access their retirement pots tax-free from next April.

People will be given unrestricted access to their pension pots provided they’re above the age of 55, but they will still have to pay marginal income tax on withdrawals.

Full details of the new pension rules are still being formulated, with the Government currently in consultation with the industry as it seeks feedback on its proposals.

But the basic premise is that people with money purchase pensions will be able to make withdrawals from pots as and when they like once they turn 55.

They will still be able to take 25 per cent of their pot as a tax-free lump sum.

Previously, withdrawing cash above the 25 per cent lump sum from a pension pot outside of an annuity or income drawdown product would have incurred a 55 per cent tax charge on the amount taken - but this has been scrapped.

Instead, savers will only have to pay income tax on their withdrawal and how much tax they pay will depend on their whole income during the financial year.

So based on 2014/15 tax rates, incomes of up to £10,000 will be tax-free because of the personal allowance, while earnings between £10,000 and £41,865 will be taxed at 20 per cent.

Earnings between £41,865 and £150,000 will be taxed at 40 per cent and income above £150,000 will be taxed at 45 per cent.

Those who plan on withdrawing their full pension pots from next year should bear in mind that they risk paying higher levels of tax on it than they would if they spread their withdrawals out over several years, particularly if they have other sources of taxable income such as a work salary or rental income.

The value of your investment and the income from it can go down as well as up and you may not get back the original amount invested. Past performance is not a reliable indicator for future results. Please contact us for further information or if you are in any doubt as to the suitability of an investment.

9

INVESTOR JARGON you need to understand in £10,000 and the initial charge is 5 per cent, £500 is taken to cover the fee and £9500 balance is invested in the fund.

A recent report from the Financial Conduct Authority (FCA), the City regulator, says that investment houses and fund managers are failing to provide investors with clear figures on total fund charges, instead offering a number of different charging structures that can lead to confusion.

Asset managers were also criticised for using jargon in information that makes it difficult to understand.

The FCA has declined at this time to take action, but has set out a number of suggestions which it would like companies to adopt, including stopping the annual management charge in favour of spreading charges as an ongoing charges figure.

Confusion can cost you money, because it enables some companies to continue to charge higher fees, therefore understanding the jargon and terms used is very important.

Here are some common terms you need to know.

AMC - Annual Management Charge This is what you pay to a fund manager each year. The AMC is taken directly from the fund to cover management costs but it excludes many fees including administration, accounting, custodian and legal fees.

TER - Total Expense Ratio TER is a better indicator of the annual costs as it includes the AMC and some other costs that are taken directly out of the fund, like legal and custody fees, audit charges and any performance fee. TERS are levied at between 1 and 2 per cent.

TERs do not, however, include the dealing costs for buying and selling shares or bonds.

10

OCF - Ongoing Charges Figure The FCA would like to see OCF as a true measure of fund costs, but does not include any performance fees. The performance fee and transaction costs are disclosed separately.

OCFs are presented in percentage terms and can be misunderstood, so the IMA is keen to introduce another measure of fund charges.

This will include transaction costs and be shown in real values of how much profit or loss you have made and how much the fund costs you.

Set up charge This fee is taken out of your money before it is invested to cover the set up costs. If you pay

Clean share class A clean share class within a fund is where the commission for financial advisers or fund supermarkets have been taken away. A consequence of the regulatory shake-up that started in January 2013, called the Retail Distribution Review, which aimed to make fund charges more transparent.

With clean share classes, the fee you pay to the fund manager or broker who completed the deal are separate. Instead of a typical 1.5 per cent for an actively managed fund you will now usually pay just 0.75 per cent in “clean” fund charges.

You then pay the adviser or platform fee on top.

Unfortunately, there is no set way of identifying share classes so it can be difficult to identify which is the clean one.

INC - Income Share Class This is any income generated by the fund’s investments, like dividends or bond interest, paid out to you.

ACC - Accumulation Share Class With accumulation shares the income gained from the fund is reinvested back into the fund.

Generally, reinvested dividends provide a large part of total returns over the longer term.

Bid-offer spread If you are buying shares or unit trusts you pay a bid price and when you are selling an offer price. The selling price is often higher than the buying price.

With unit trusts the bid-offer spread is often similar to the initial charge, though it may incorporate costs incurred by the fund such as stock broking commission, making the spread bigger.

NAV – Net Asset Value Discount/premium Investment trusts are similar to unit trusts because both pool savers’ money to invest in a wide spread of companies, but there are key differences.

Investment trusts are public companies traded on the stock market. You buy shares in the trust and crucially only a limited number of shares are available.

Meaning the share price depends not just on the value of the investments held, but also on demand for the shares. If more people want to buy than sell, the share price increases and vice versa. The price of unit trusts, on the other hand, always reflects the value of the underlying investments less all the charges.

Investment-trust shares can often be bought for less than the value of the shares under ownership. The trust is then trading at a discount to its net asset value (NAV).

When the opposite happens and the shares are worth more than the NAV they are trading at a premium.

How to save for your

grandchildren

Save for them One of the easiest ways to help your grandchildren is to pay money into ‘wrapped’ schemes like Junior ISAs; these are an extension of the adult ISA system and enable children to receive tax-free interest on savings, as well as tax-efficient returns on stock market investments. They have to be set up by parents, but anyone else, can pay in. The big advantage of Junior ISAs is that they roll into adult ISAs at age 18, so offer a way to give young adults a head start.

You can put up to £4,000 a year as from July 2014 into Junior ISAs, split however you like between one cash account and one stocks-and-shares account at any time.

If your grandchild has a Child Trust Fund (CTF), the predecessor of the Junior ISA with poorer rates and choice, they are not eligible for a Junior ISA, but that will change from April 2015, when it will become possible to transfer their funds from their CTF. Investing As many people use Junior ISAs to invest for a period of ten-years plus, they can afford to put a good proportion of their contributions into stocks and shares, which means higher risk but the likelihood of considerably better longer-term returns than with cash.

However, there is a major caveat attached to Junior ISAs. The biggest danger is that at age 18 the child can access the money and spend it however they want.

Set up trusts Trusts can enable you and other trustees to control how money that you ring-fence is used and in some cases, provide significant tax advantages. They’re often used for providing for specific costs, such as school fees.

There are two main types of trust: “bare” trusts are the simplest trusts and when they are created by grandparents for a grandchild they are taxed on the latter’s tax band, meaning they are normally tax-free. That’s not the case where parents create a bare trust for their children, when it’s taxed at the parents’ rate. The disadvantage, as with Junior ISAs, is that the beneficiary has the right to access the trust cash at 18.

“Discretionary” trusts are more complicated but flexible and you can use one trust to benefit all your grandchildren, or a wider group of relatives. These trusts are typically created for 125 years, so they can benefit multiple generations of your family and the trustees keep control regardless of the ages of beneficiaries. Bare trusts are

typically more suitable for sums that will stay in the tens of thousands of pounds, and discretionary trusts for larger amounts. Trusts aren’t cheap to set up, so they won’t be costeffective for smaller sums.

Think long term More people now go to university than to private schools and most leave with huge debts. Smart planning now could help you to cover your grandchildren’s education costs.

Another ‘life’ goal could be to provide a deposit to help them on to the property ladder. You could help with university fees and a deposit, or maybe aim to save the equivalent of about £30,000 and keep both options open.

Start pensions The government will top up the maximum pension contribution of £2,880 net a year, taking the actual sum invested to £3,600 gross.

Stakeholder pensions are the cheaper option in terms of fees and allow you to invest in a limited range of funds. SelfInvested Personal Pensions give greater flexibility but also have higher charges.

Grandparents are well placed to help their grandchildren because small contributions now can be life-changing for them later as both grow.

The value of your investment and the income from it can go down as well as up and you may not get back the original amount invested. Past performance is not a reliable indicator for future results. Please contact us for further information or if you are in any doubt as to the suitability of an investment.

11

Could your family cope When it comes to the financial security of your family, it is a must to consider their future and this means facing up to the darkest of subjects. What would happen to your family if you were no longer there to provide for them? Would your loved ones be able to pay the bills? Would they be able to stay in the family house? These are some of the questions that need to be addressed and the solution could be an easy one… life insurance.

According to recent research it seems that many people are not prepared and only a few have life insurance in place, with some admitting they don’t know how much they are covered for. Have they enough to meet the needs of their family?

This needs to be carefully considered when taking out insurance.

We insure our vehicles, our property and even our mobile phone, so why are so many people overlooking the most important asset, their life?

if you die?

Life insurance is generally taken out to cover an outstanding mortgage to allow your family to remain in their home. There could be nothing worse than losing a loved one, but to see them face financial difficulties and potentially lose their home at such a vulnerable time is unthinkable.

Life insurance cover can also be used to help the family pay future bills or paying an inheritance tax bill (40 per cent on anything in excess of £325,000) are further uses for the payout.

Whatever your age, life insurance can be a vital lifeline to your family if you’re no longer around. Equally important is making sure your life insurance plan is reviewed regularly and the type of cover to

ensure it reflects your needs and the requirements of your family. Your situation changes during your life, you may have more children and your income and outgoings could alter over time. It is these life advancements that make it all the more imperative to review the cover you have. It’s easy to top up or take out an additional policy to keep up with your family’s requirements.

When taking out life insurance, be sure to compare the premiums and policies on offer. It generally costs more the older you get, but as life insurers compete for business and reduce rates, there are good deals out there. Don’t settle for the cheapest deal either as this may not offer the type of cover you need. Take time to research what is on offer, speak to your professional financial adviser and above all make sure your family are secure should the very worst happen.

Death is never a good subject to discuss, but there are times when we need to bring the inevitable to the forefront and discuss such difficult issues.

For more information on any subject that we have covered in this issue, or on any other subjects, please tick the appropriate box or boxes, include your personal details and return this section to us.

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