Premier independent sep oct 2013

MoneyMatters   

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 

 

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   Premier Independent Services Head Office, 4a Gildredge Road, Eastbourne, East Sussex, BN21 4RL Web: www.premierindependent.com Email: info@premierindependent.com

Reg statement: Premier Independent Services is a trading name of Premier Independent Ltd is an appointed representative of IN Partnership the trading name of The On-Line Partnership Limited which is authorised and regulated by the Financial Conduct Authority Registered in England and Wales no 4441022 Registered Office 4a Gildredge Road Eastbourne East Sussex BN21 4RL

    Self Self Assessment…

Assessment…

Deadlines Deadlines charges and and charges PagePage 2 2 a new opportunity…

AIMAIM for afor new opportunity…

ISA investment vehicle NewNew ISA investment vehicle PagePage 3 3 ISA guidelines…

A brief ISA guidelines…

A brief overview of limits the limits overview of the PagePage 3 3 Is auto-enrolment working?

Is auto-enrolment working? … …

Reviewing the Government’s Reviewing the Government’s plans plans PagePage 4 4 Avoiding Inheritance Avoiding Inheritance tax tax mistakes … Passing on your mistakes … Passing on your estate’s wealth estate’s wealth PagePage 5 5 Workplace pensions….

Workplace pensions….

Changes within existing Changes within existing schemes schemes PagePage 6 6 Income boost for savers Income boost for savers in in ‘drawdown’…

Limits ‘drawdown’…

Limits havehave raised beenbeen raised PagePage 7 7 financial The The financial painpain of of divorce…Pensions, property divorce…Pensions, property assets division PagePage and and assets division 8 8 Investment Funds Jargon…

Investment Funds Jargon…

Avoiding confusion Avoiding any any confusion PagePage 9 9 UK pension buyouts…

UK pension buyouts…

What happens What happens and and howhow it it affects affects you you PagePage 10 10 Lifetime allowance changes Lifetime allowance changes …. …. forms of protection NewNew forms of protection available available PagePage 11 11 assurance…

What are the Life Life assurance…

What are the options available? PagePage options available?

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Financial Penalties Penalties Self Assessment Self Assessment taxpayers taxpayers have have to meet to meet Financial Youlegally are legally obliged obliged to meet to meet the Self the Self several several important important deadlines deadlines throughout throughout the theYou are Assessment Assessment deadlines. deadlines.

If you If fail you to fail do toso,do so, year or year elseorincur else incur penalty penalty charges. charges.

Here Here is is you will youreceive will receive the following the following financial financial our handy our handy guideguide to thetoyear’s the year’s penalties: penalties: Self Assessment Self Assessment deadlines. deadlines.

1 day1late day–late You–will Youbewill charged be charged a £100 a £100 Filing Filing YourYour Tax Return Tax Return penalty. penalty.

ThereThere are different are different deadlines deadlines for filing for filing your your 3 months late –late You–will Youbewill charged be charged £10 for £10 for Self Assessment Self Assessment Tax return.

Tax return.

The deadline The deadline 3 months following following day, up day, toup a 90 to day a 90 day whichwhich you must you must meet meet depends depends on theonfiling the filingeach each maximum maximum of £900. of £900. method method you choose. you choose.

6 months 6 months late – late You–will Youbewill charged be charged £300£300 or or You must You must makemake sure that sure HM thatRevenue HM Revenue & & per of cent theoftax thedue, tax whichever due, whichever is theis the Customs Customs (HMRC) (HMRC) receives receives your completed your completed 5 per5cent higher. returnreturn by midnight by midnight on 31onOctober 31 October 2013,2013, higher.

12 months late –late You–will Youbewill charged be charged £300£300 if youifchoose you choose to filetoyour file return your return on paper on paper 12 months or 5 per or 5 cent per of cent the of tax the due, tax whichever due, whichever is theis the However, However, if youifdecide you decide to filetoyour file tax your tax higher. higher.

In serious In serious cases,cases, you may you have may have to payto pay returnreturn online, online, it must it must reachreach HMRCHMRC by by 100 toper 100cent per of cent theoftax thedue taxinstead. due instead. midnight midnight on 31onJanuary 31 January 2014.2014.

Remember Remember up toup that you thatwill youneed will need a Government a Government Gateway Gateway username username and password and password in order in order to fileto file online, online, and this andcan thistake can up taketoup a week to a week to to arrivearrive by post. by post.

So ensure So ensure you leave you leave enough enough time before time before the deadline the deadline beforebefore applying. applying.

If youIfowe you less owethan less £2,000, than £2,000, and you and you want want HMRCHMRC to collect to collect your tax yourthrough tax through your your Tax Code, Tax Code, you will youneed will need to submit to submit your tax your tax returnreturn onlineonline by 30byDecember 30 December 2013.2013.

If however, If however, HMRCHMRC is unable is unable to alter to your alter tax your tax code,code, you may you still maybestill required be required to filetoagain file again You may You not mayhave not have to paytoapay penalty a penalty if youif you by 31byJanuary 31 January 2014.2014. have have a reasonable a reasonable excuse excuse for missing for missing the the Making Making a Payment a Payment deadline.

TheseThese include: include: Like filing Like filing there there are also are several also several payment payment deadline.

• documents Your documents have have been been lost inlost a fire, in a fire, deadlines deadlines throughout throughout the year. the The year.best The best • Your flood flood or theft. or theft. known known of these of these is 31 isJanuary 31 January 2014,2014, on on • You• have You have a life-threatening a life-threatening illnessillness that that whichwhich you may you need may need to make to make several several has prevented has prevented you from you from completing completing your your different different payments. payments.

Self Assessment.

Self Assessment.

The first Theoffirst these of these is theisbalancing the balancing • partner Your partner has died has shortly died shortly beforebefore the the payment, payment, whichwhich is theistax theyou taxowe you for owethe for the • Your deadline. previous previous tax year. tax Ifyear. youIfmade you made payments payments on on deadline.

• You• have You have experienced experienced technical technical problems problems account account in theinprevious the previous year, you year,will youalready will already with the withonline the online service. service. have have paid some paid some of thisoftax. thisYou tax.may You also may also Should HMRCHMRC feel favourable feel favourable to your to your have have to make to make the first thepayment first payment on account. on account. Should reasoning for missing for missing the deadline, the deadline, they may they may This will Thisnormally will normally be equal be equal to 50toper50cent per of cent ofreasoning reduce or notorpursue not pursue the fine theatfine all.at all. your previous your previous tax bill; taxitbill; excludes it excludes student student reduce loan repayments loan repayments and Capital and Capital GainsGains Tax. Tax. The second The second payment payment deadline deadline is 31 isJuly 31 July 2014.2014.

On this Ondate this you datewill youbewill required be required to to makemake your second your second payment payment on account, on account, whichwhich is normally is normally equalequal to your to first. your first.

         

The articles The articles featured featured in thisin publication this publication are forare your forgeneral your general information information and use and only useand only are and not are intended not intended to address to address your particular your particular requirements. requirements.

They should They should not not be relied be relied upon in upon their inentirety. their entirety.

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

No individual No individual or company or company shouldshould act upon act such uponinformation such information without without receiving receiving appropriate appropriate professional professional adviceadvice after aafter thorough a thorough examination examination of their ofparticular their particular situation. situation.

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

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An ISA AnisISA basically is basically a form a form of taxof tax efficient efficient wrapper wrapper in which in which you can you can From From August August the rules the rules allowing allowing Alternative Alternative it stillittakes still takes skill, knowledge skill, knowledge and research and research to to investments investments to give to them give them tax tax Investment Investment Market Market (AIM)(AIM) sharesshares to be to held be in held inidentify identify thosethose sharesshares whichwhich qualify qualify for BPR for BPR placeplace efficient efficient status. status. an ISAancame ISA came into effect. into effect.

ManyMany want want to know to knowand this andmay this be may a very be a good very good reason reason to to For the Fortax theyear tax 2013/14 year 2013/14 an an if these if these new rules new rules will give will this givemarket this market the the consider consider instructing instructing a team a team with expertise with expertise in in individual’s individual’s total total annual annual subscription subscription focusfocus it deserves. it deserves. the sector. the sector. to antoISA anisISA £11,520 is £11,520 per tax per tax It is true It isto true saytothe sayFTSE the AIM FTSEAll-Share AIM All-Share So, just So,what just what does does this BPR thisadvantage BPR advantage in in limit limit year, year, of which of which a maximum a maximum of £5,760 of £5,760 IndexIndex as a whole as a whole has not hasperformed not performed AIM shares AIM shares meanmean for ISAs? for ISAs? Despite Despite tax tax particularly particularly well in well recent in recent years,years, this isthis mostly is mostlyadvantages advantages whichwhich ISAs offer ISAs offer to an to investor an investor can be can held be in held cash. in cash. due todue thetofact thethat factAIMs that AIMs are exposed are exposed to theto theduringduring their lifetime, their lifetime, ISAs are ISAsnormally are normally subject subject Subject Subject to thetooverall the overall limits,limits, you you latestlatest investment investment fads and fadsthey and have they have a a to inheritance to inheritance tax. Many tax. Many older older investors investors have have can split can your split your ISA between ISA between the the significant significant proportion proportion of natural of natural resource resource built up built large up large ISA portfolios ISA portfolios over many over many yearsyears following following components: components: companies companies that have that have dominated dominated the listed the listed and have and have facedfaced a difficult a difficult decision decision to either to either STOCKS STOCKS ANDAND SHARES SHARES companies. companies. enjoyenjoy the tax thebenefits tax benefits now, now, by remaining by remaining You are Youable are to able hold to hold stocksstocks and and Investors Investors need need to recognise to recognise and understand and understand invested invested in their in ISA, theirorISA, giving or giving their families their families shares shares and managed and managed investment investment that the thatAIM themarket AIM market is notisannot index. an index.

AIM isAIM a is atax benefits tax benefits later on, laterbyon, selling by selling out ofout theof the fundsfunds withinwithin an ISA. an ISA. wide wide and diverse and diverse rangerange of companies, of companies, with with ISAs, ISAs, in order in order to gifttothe giftmoney the money or putoritput intoit into It is possible It is possible to invest to invest up toup £11,520 to £11,520 manymany displaying displaying successes successes including including trust.trust.

Now Now with AIM withyou AIMcan youdo can both. do both. into stocks into stocks and shares and shares insideinside an ISA an ISA businesses businesses that have that have been been growing growing their their Transferring Transferring ISA savings ISA savings into an into an in theintax theyear tax 2013/14. year 2013/14. earnings earnings year-on-year year-on-year over many over many years.years.

AIM-focused AIM-focused ISA that’s ISA that’s built around built around BPR BPR CASHCASH Earnings Earnings growth growth is essential is essential for the forlong-term the long-term genuinely genuinely appears appears to offer to offer the best the of best both of both You have You have the option the option of holding of holding a a performance performance of a company of a company of anyofsize anyand size and worlds worlds with tax-efficient with tax-efficient growth growth for asfor long as as long as proportion proportion of your of your ISA allowance ISA allowance in in smaller smaller businesses businesses have have muchmuch more more potential potentialpossible, possible, followed followed by significant by significant tax savings tax savings cash,cash, whichwhich will earn will earn tax-free tax-free to achieve to achieve it thanit their than larger their larger companies. companies.

AIM AIM whenwhen the investor the investor passespasses away.away.

Additionally, Additionally, interest. interest.

You are You able are to able invest to invest is a market is a market that will thatreward will reward expertise; expertise; this isthis isthey have they have the ability the ability to pass to the passportfolio the portfolio on on £5,760 £5,760 of that of annual that annual allowance allowance in in because because fewerfewer analysts analysts combined combined with awith wide a wide to beneficiaries, to beneficiaries, making making it a real it along-term real long-term to a cash to a cash ISA in ISA the in tax the year tax year rangerange of options of options meansmeans a specialist a specialist team team with with investment investment plan. plan.

2013/14. experience experience in thisinarea this has areathe haspotential the potential to to This means This means a reasonably a reasonably sized sized portfolio portfolio of of 2013/14.

Due to Due new to rules new rules that came that came in to in to overperform overperform significantly. significantly.

AIM shares AIM shares (around (around 30) should 30) should have have the the effect effect in April in April 2010, 2010, as long as long as you as you ManyMany sharesshares invested invested in AIMs in AIMs are eligible are eligible diversification diversification to protect to protect against against stock-specific stock-specific don’t don’t exceed exceed the maximum the maximum ISA ISA for a form for a form of taxofrelief tax relief calledcalled Business Business risks, risks, with the withpotential the potential to grow to grow significantly significantly allowances allowances in anyinone anytax oneyear, tax year, you you Property Property ReliefRelief (BPR).(BPR).

This provides This provides a verya very over the overcoming the coming years,years, whilstwhilst at theatsame the same can split now your split your ISA investments ISA investments good good secondary secondary reason reason to invest to invest in AIMs, in AIMs, time, time, offering offering a smart a smart way to way combat to combat somesome can now muchmuch moremore flexibly. flexibly.

BPR-eligible BPR-eligible sharesshares become become exempt exempt from from inheritance inheritance tax. tax. inheritance inheritance tax after tax after two years. two years.

However, However, You have You have just one justISA oneallowance ISA allowance available available each each tax year tax (6th year April (6th April to to 5th April).

5th April).

Subject Subject to thetorules the rules above, above, you can, you however, can, however, split your split your ISA ISA allowance allowance between between two different two different providers, providers, i.e. a i.e.

Cash a Cash ISA with ISA with one one provider provider and an andInvestment an Investment ISA with ISA with another. another.

With With effecteffect from from April April 2011,2011, the the Government Government have have confirmed confirmed that that each each tax year, tax year, it is their it is their intention intention to to raise raise the amount the amount that individuals that individuals can put caninput to in their to their annual annual ISA ISA allowance allowance by inflation by inflation each each April.April.

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

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

Please Please contact contact us for usfurther for further information information or if or if you are youinare any in doubt any doubt as toasthe tosuitability the suitability of anofinvestment. an investment.

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Millions Millions of UKofworkers UK workers are now are being now being Important Important Dates Dates Tax-free Tax-free lumplump sum sum automatically automatically enrolled enrolled into ainto workplace a workplace The date The on date which on which workers workers are enrolled, are enrolled, Most Most people people will be will automatically be automatically enrolled enrolled pension, pension, a process a process whichwhich commenced commenced from from calledcalled a staging a staging date, date, depends depends on theonsize theofsize ofinto ainto Defined a Defined Contribution Contribution scheme scheme or or October October last year. last Larger year. Larger employers employers were were the the their company their company and isand being is being rolledrolled out over out over money money purchase purchase scheme. scheme.

This means This means that all that all first, with first, small with small and medium-sized and medium-sized employers employers the next the six next years. six years. the contributions the contributions paid into paidyour into pension your pension are are due todue follow to follow over the overnext the six next years. six years.

LargeLarge employers employers with 250 withor250 more or more invested invested until you untilretire. you retire.

A workplace A workplace pension pension is a means is a means of saving of savingemployees employees started started automatically automatically enrolling enrolling The amount The amount of money of money you have you have whenwhen you you for retirement for retirement arranged arranged by anby individual’s an individual’s their workers their workers from from October October 2012 2012 to February to February retireretire depends depends on how on much how much has been has been paid paid employer. employer.

It is sometimes It is sometimes calledcalled a ‘company a ‘company2014.2014. in andinhow and well how investments well investments have have pension’, pension’, an ‘occupational an ‘occupational pension’ pension’ or a or a Medium Medium employers employers with 50 with - 249 50 - 249 performed. performed.

In most In most schemes schemes whenwhen you you ‘works ‘works pension’. pension’. employees employees will have will have to start to automatically start automatically retireretire you can youtake can some take some of your of pension your pension as as Automatically Automatically enrolling enrolling workers workers enrolling enrolling their workers their workers from April from April 2014 2014 to to a tax-free a tax-free lump lump sum and sumuse andthe userest thetorest to Auto Auto enrolment enrolment is theisGovernment’s the Government’s key key April April 2015.2015. provide provide a regular a regular income. income. strategy strategy to boost to boost retirement retirement savingsaving among among SmallSmall employers employers with 49 with employees 49 employees or or The Government The Government has set hasa set minimum a minimum UK workers.

UK workers. fewerfewer will have will have to start to automatically start automatically amount amount of money of money that has thattohas be to putbeinto putainto a Employers Employers will automatically will automatically enrol enrol workers workers enrolling enrolling their workers their workers from from June 2015 June 2015 to to Defined Defined Contribution Contribution scheme scheme by employers by employers into ainto workplace a workplace pension pension if theyif are theynot are not April April 2017.2017. and workers. and workers. already already in a qualifying in a qualifying pension pension scheme, scheme, New employers New employers (established (established after April after April Contribution Contribution levels levels are aged are aged 22 or22 over, or are over,under are under State State Pension Pension2012)2012) will have will have to start to automatically start automatically Employers Employers will be will able be to able contribute to contribute more more age, earn age, more earn more than £9,440 than £9,440 a yeara (this year (this enrolling enrolling their workers their workers from from May 2017 May 2017 to to than the thanminimum the minimum if theyif wish, they wish, and many and many figurefigure is reviewed is reviewed annually) annually) and work and work or or February February 2018.2018. already already do. Individuals do. Individuals can also cancontribute also contribute usually usually work work in theinUK the UK National National Employment Employment Savings Savings TrustTrust more more than the thanminimum the minimum if theyif want they want to. to.

LegalLegal requirement requirement

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(NEST) (NEST)

Legislation Legislation

For the Forfirst thetime first employers time employers are required are required by byNEST NEST is a trust-based, is a trust-based, defined defined contribution contribution With With new legislation new legislation comescomes new terms new terms and and law tolaw automatically to automatically enrol enrol all eligible all eligible pension pension scheme. scheme.

It wasItspecifically was specifically phrases phrases whichwhich employers employers will need will need to to workers workers into ainto workplace a workplace pension pension and make and makeestablished established to support to support automatic automatic enrolment enrolmentbecome become familiar familiar with such with as such ‘eligible as ‘eligible a contribution a contribution to it. The to it.Pensions The Pensions Regulator Regulator is and is make and make sure all sure UKallemployers UK employers have have accessaccess jobholders’ jobholders’ and ‘qualifying and ‘qualifying pension pension schemes’ schemes’ responsible responsible for ensuring for ensuring employers employers comply comply to a suitable to a suitable pension pension scheme scheme for their for their whenwhen considering considering their duties. their duties. with the withnew the law. new law. employer employer duties.duties.

We can Wehelp can you helpthrough you through the challenges the challenges of of One of One theofemployer the employer dutiesduties relating relating to to NEST NEST members members have have one retirement one retirement pot pot this new this legislation new legislation and provide and provide a full a full automatic automatic enrolment enrolment is thatisemployers that employers are are for lifeforthat lifethey that can theykeep can keep paying paying into ifinto if analysis analysis of your of options, your options, so that soyou thatcan you can required required by lawbytolaw provide to provide correct correct they stop they working stop working for a period for a period or become or become identify identify and implement and implement an agreed an agreed plan that plan that information information in writing, in writing, to thetoright the right individual individual self-employed. self-employed. best suits best your suits requirements. your requirements. at theatright the right time, time, so that sopeople that people knowknow how how automatic automatic enrolment enrolment will affect will affect them.them.

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reservation reservation of benefit of benefit attached. attached.

It is also It is also As anAs example, an example, imagine imagine you give you away give away CashCash loansloans usefuluseful to make to make a formal a formal recordrecord of theof the £425,000 £425,000 wherewhere the nilthe rate nilband rate band A cash A loan cash isloan a loan is a and loannot andanot gift.a As gift.such, As such, transfer, including including the date the on datewhich on which the gift the gift (the amount (the amount exempt exempt from from IHT) isIHT) £325,000, is £325,000, the value the value of theofloan, the loan, whether whether £500£500 or or transfer, was made, and give and agive copya copy to your to your but die butsixdieyears six years later. later.

The £425,000 The £425,000 is is £50,000, £50,000, remains remains withinwithin the donor’s the donor’s estateestatewas made, executors. executors. addedadded back back to your to estate your estate because because you died you died for IHT forpurposes.

IHT purposes.

Parents Parents oftenoften makemake a casha cash An option An option wherewhere parents parents may wish may wish to give to give withinwithin sevenseven years years of making of making the gift. the gift. loan, loan, ratherrather than athan gift,awhen gift, when concerned concerned their home their home to their to children their children but but You will Youpay willtax payontaxyour on assets your assets at death, at death, aboutabout the money the money if a child’s if a child’s marriage marriage fails. fails. awayaway continue continue livingliving in it isintoit agree is to agree on a licensing on a licensing plus this plus£425,000. this £425,000.

You first Youdeduct first deduct the the However, However, they may they be may able be to able argue to argue that the that the arrangement.

The children The children grantgrant a licence a licence to tonil-rate nil-rate band band of £325,000 of £325,000 from from the the loan was loanawas partial a partial gift and giftthey and did theynot did not arrangement. their parents their parents to livetoinlive theinfamily the family homehome for a for a£425,000, £425,000, leaving leaving £100,000 £100,000 on which on which you you expectexpect the whole the whole sum to sum be to repaid, be repaid, therefore therefore fixed fixed number number of years, of years, paying paying a commercial a commercialcan claim can claim tapertaper relief.relief.

The normal The normal tax oftax 40of 40 obtaining obtaining a reduction a reduction of anyofIHT anydue.

IHT due. rent their to children. their children. per cent per on cent£100,000 on £100,000 wouldwould amount amount to to To make To make a giftaeffective gift effective it should it should be anbe an rent to £40,000 £40,000 but the but80theper80cent per taper cent taper relief relief cuts cuts outright outright gift, with gift, no withconditions. no conditions.

As such As itsuch it JointJoint investing investing that by that £32,000 by £32,000 to justto£8,000. just £8,000. becomes becomes a potentially a potentially exempt exempt transfer transfer (PET) (PET)ManyMany parents parents are now are helping now helping their children their children rulesrules and when and when the provider the provider has survived has survived for for by offering by offering somesome money money to buytoabuy property. a property.

If Gifting If Gifting Transfers between between spouses spouses and civil andpartners civil partners sevenseven years years from from the date the of date theofgift, thethere gift, there the parents’ the parents’ stakestake is seen is seen as anas investment an investmentTransfers are exempt are exempt from from inheritance inheritance tax and tax the and the will bewill nobeIHTnotoIHT paytoon payit.on it. ratherrather than athan giftathen gift the thenmoney the money givengiven will will surviving surviving partner partner can claim can claim any unused any unused nil- nilIn addition In addition to PETs, to PETs, there there are other are other ways ways be treated be treated as a remaining as a remaining part of part their of estate their estate rate band exemption, exemption, whichwhich meansmeans the the to cuttoyour cut potential your potential IHT liability.

IHT liability.

You can You can and no andtransfer no transfer of wealth of wealth will have will have takentaken rate band maximum maximum total total exemption exemption available available is is give away give away up toup £3,000 to £3,000 a yeara and yearmake and make as asplace.place. (tax year (tax 2013/14). year 2013/14). manymany smallsmall gifts as gifts youaslike youeach like each year year The way Theto way ensure to ensure a transfer a transfer takestakes placeplace is £650,000 is £650,000 Youmake can make wedding wedding or civilorpartnership civil partnership providing providing the amount the amount is no ismore no more than £250 than £250to make to make clear clear that the thatmoney the money is a gift, is anot gift,annot anYou can gifts upoftoup £5,000 to £5,000 to a child, to a child, £2,500 £2,500 to a to a per recipient. per recipient. investment, investment, by transferring by transferring beforebefore the house the housegifts of and £1,000 and £1,000 to other to other people. people.

This This purchase purchase takestakes place.place.

Then Then it is clear it is clear that itthat is itgrandchild is grandchild Gifting Gifting assets assets is in addition to thetobasic the basic annual annual exemption exemption the children alonealone who invest who invest money money in thein theis in addition In theIneyes the of eyes HMRC, of HMRC, you cannot you cannot be said be to said tothe children limit of limit £3,000 of £3,000 for gifts, for gifts, plus unlimited plus unlimited have have givengiven awayaway a property a property if youifare youstill are still home.home. numbers numbers of small of small gifts of gifts upoftoup £250 to £250 per per livingliving in it. in it.

Yearly Yearly allowances allowances recipient. recipient.

TheseThese sorts sorts of ‘gifts’ of ‘gifts’ are known are known as gifts as gifts You can Youmake can make regular regular gifts out giftsofout income of income on on Take advantage of investments of investments that carry that carry with reservation with reservation of benefit of benefit and do andnotdocount not counttop oftop theof£3,000-a-year the £3,000-a-year allowance allowance as long as long Take advantage IHT exemptions, such as such shares as shares on theon the as gifts as for giftsIHT forpurposes.

IHT purposes. as theasgifts the are giftsregular are regular and come and come from from any any IHT exemptions, Alternative Investment Investment Market Market (AIM),(AIM), most most To make To make a giftathat gift will thatbewill regarded be regarded as as surplus surplus income income and do andnotdoreduce not reduce your your Alternative of which of which qualify qualify for business for business property property relief.relief. having having comecome out ofout your of estate, your estate, you need you need to tostandard standard of living. of living.

This means This means that, that, after after two years, two years, holders holders of of ensure ensure that itthat is irrevocable it is irrevocable and has andno has no TaperTaper reliefrelief the shares obtainobtain 100 per 100cent per IHT centrelief IHT relief on on Is a discount Is a discount on theonamount the amount of taxofdue, tax not due, notthe shares their investments. their investments. the size theofsize theofgift. theTaper gift. Taper relief relief applies applies wherewhere Similarly, Similarly, more more wealthy wealthy people people couldcould put put someone someone gives gives awayaway an asset an asset but then but then money into Enterprise into Enterprise Investment Investment Schemes, Schemes, dies within dies within the seven the seven year qualifying year qualifying money investinvest in budding in budding businesses businesses and most and most periodperiod for IHT forexemption.

IHT exemption.

ThereThere is a is which a which of which qualify qualify for the forsame the same IHT exemption IHT exemption variable variable discount discount running running from fromof which two years. two years.

20 per20cent per after cent after three three years yearsafter after to 80toper80cent per after cent after six. six.

          5

5

    With With auto-enrolment auto-enrolment now now in force, in force, employers employers areare looking looking to improve to improve andand revamp revamp their their workplace workplace pension pension whilst whilst at the at the same same time, time, looking looking to renew to renew focus focus on on scheme scheme design, design, which which hashas been been encouraged encouraged by the by the Pensions Pensions Regulator.

Regulator.

whenwhen certain certain assetasset classes classes rise, others rise, others fall, fall, The member The member selects selects the fund the fund that best that best Life Life styling styling so diversifying so diversifying reduces reduces risk. risk. matches matches the year the he yearwants he wants to retire to retire in. in.

At theAtcentre the centre of many of many of theofnew the new A solution is to move is to move to so-called to so-called The system The system worksworks well because well because the the arrangements arrangements is a range is a range of ‘lifestyle’ of ‘lifestyle’ fundsfunds A solution diversified diversified growth growth funds.funds.

TheseThese fundsfunds are aremanager manager of each of each fund fund can use canthe usebest the best and aand system a system involving involving a switching a switching process process actively managed managed funds,funds, oftenoften targeted targeted at atinvestment investment thinking thinking in theingrowth the growth period, period, that moves that moves members members from from a higher a higher risk risk actively achieving equity-like equity-like returns returns at bond-like at bond-likethen then later later on the onswitch the switch to less torisky less risky fund fund to a lower to a lower risk fund risk fund in theinlead the up leadtoup toachieving risk. risk. investments investments is at the is atfund the fund level,level, allowing allowing retirement, retirement, in theory in theory reducing reducing the chances the chances Diversified growth growth fundsfunds are beginning are beginningthe manager the manager to harness to harness a whole a whole arrayarray of of of a fall of ainfall theinvalue the value of a member’s of a member’s pension pensionDiversified to acquire a longa long tracktrack record, record, but are but are strategies strategies to bring to bring downdown risk inrisk theinfund. the fund. pot just potbefore just before retirement. retirement.

Employee Employee to acquire considered to beto thebestate-of-the-art the state-of-the-art fundsfunds Keep Keep your your employer employer informed informed aboutabout benefit benefit advisers advisers say that say all that new all scheme new scheme considered the pension the pension industry industry likes to likes talk to talk whenwhen you would you would like tolike retire. to retire.

You will Yoube will be arrangements arrangements should should have have default default fundsfunds whichwhich about. about. disadvantaged disadvantaged if youifare youswitched are switched into into basedbased on the onlifestyle the lifestyle principle. principle.

To reduce ‘manager ‘manager risk’, risk’, advisers advisers bondsbonds prematurely. prematurely.

SinceSince the abolition the abolition of of Lifestyle Lifestyle fundsfunds do, however, do, however, buy into buy ainto a To reduce generally buildbuild a multi-asset a multi-asset fund fund for a for a the long-standing the long-standing retirement retirement ages ages for men for men wide wide rangerange of underlying of underlying investments investments generally workplace pension pension scheme scheme by blending by blending the the and women, and women, employers employers face legal face legal during during a fund’s a fund’s growth growth stagestage , which , which is is workplace passive fundsfunds of various of various assetasset classes. classes. difficulties difficulties in asking in asking their their staff staff whenwhen they they generally generally the longest the longest stagestage in theinpension the pensionpassive Target-date Target-date funds funds plan’splan’s life, when life, when the member the member is aged is aged 25 to25 to Another Another strategy strategy is a target-date is a target-date fund.fund.

55-60.

55-60.

This isThis a structure is a structure wherewhere a scheme a scheme offersoffers a a Multi-asset Multi-asset funds funds of funds of funds named named by year by or year years. or years.

A bigAchange big change of direction of direction over recent over recent years years is series is series that passive that passive equityequity fundsfunds and managed and managed fundsfunds in theingrowth the growth phasephase have have been been replaced replaced by by multi-asset multi-asset fundsfunds to benefit to benefit from from diversification. diversification.

The thinking The thinking beingbeing is thatis that

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6

Pension Pension generally. generally.

If youIfwant you want to gotoforgo for wantwant to retire. to retire.

ManyMany people people who have who have assetsassets flexible flexible drawdown, drawdown, to avoid to avoid the the nominated nominated a datea date whenwhen they first they joined first joined restrictions applying applying to capped to capped the pension the pension scheme scheme yearsyears ago may ago find may findrestrictions drawdown, drawdown, you may you need may need to work to work out out this isthis now is unsuitable. now unsuitable. thesize potyou sizeare youlikely are likely to need to need to to Employees Employees who are wholow areearners low earners may maythe pot accumulate accumulate to ensure to ensure it meets it meets the the have have less need less need to buytoan buyinflation-linked an inflation-linked £20,000 £20,000 annual annual minimum minimum income income annuity annuity at retirement, at retirement, because because an earner an earner requirement. on, say, on,£20,000 say, £20,000 paying paying the minimum the minimum requirement. underunder auto-enrolment auto-enrolment couldcould easilyeasily find findWhat What should should young young investors investors that half thatof half their of their income income in retirement in retirement do? do? comes comes from from the state the state pension, pension, and that and thatSomeSome workplace workplace schemes schemes are adopting are adopting a a is automatically is automatically index-linked. index-linked.

It needs It needs to to low-risk, low-risk, low-return low-return strategy strategy for the for the be borne be borne in mind in mind though though that the thatcurrent the current lifestyle lifestyle fund fund in theinvery the early very early yearsyears of a of a ‘triple‘triple lock’ lock’ guarantee guarantee of state of state pension pensionmember’s member’s career. career.

The government The government has has increases increases (that (that is, theis,annual the annual increase increase to to foundfound in theinNEST the NEST pension pension scheme scheme roll roll the state the state pension pension will be will thebehigher the higher of of out that out young that young people people with with little little inflation, inflation, average average earnings earnings increase increase or or experience experience of investment of investment are highly are highly 2.5 per 2.5cent) per cent) may be may removed be removed in future. in future.risk-averse risk-averse and likely and likely to stop to contributing stop contributing As lifeAsexpectancies life expectancies rise, however, rise, however, the the to a pension to a pension if theyif lose they money. lose money. betterbetter off should off should pay more pay more attention attention to to NESTNEST has therefore has therefore adopted adopted a a buying buying inflation-proofing inflation-proofing assets, assets, foundation foundation phasephase for the forfirst the five firsttofive to particularly particularly thosethose who choose who choose the the eighteight yearsyears of a member’s of a member’s career, career, during during drawdown drawdown routeroute at retirement. at retirement. whichwhich the default the default fund’sfund’s primeprime remitremit is is ThoseThose who plan who to plan take to income take income capital capital preservation preservation and matching and matching drawdown drawdown at retirement at retirement instead instead of anof an consumer consumer pricesprices indexindex inflation. inflation. annuity annuity will want will want to stay to in stay growth in growth

Drawdown Drawdown

BOOST BOOST

Pensioners Pensioners who keep who keep their their pensions pensions invested invested have have been been givengiven a wella needed well needed boost.boost.

Pensioners Pensioners who take who an take income an income from from pensions pensions still invested still invested in theinstock the stock market market have have recently recently received received somesome goodgood news:news: the the cap on cap withdrawals on withdrawals has been has been increased. increased.

The Government’s The Government’s limit on limit income on income drawdown drawdown policies policies has been has been raisedraised with with effecteffect from from August August 2013 2013 and this andcould this could resultresult in an in income an income increase increase of upof toup 3.5toper 3.5cent per cent for a for typical a typical 65 year 65 old. year old.

ManyMany pensioners pensioners have have chosen chosen drawdown drawdown at retirement at retirement ratherrather than than buy an buy annuity, an annuity, whichwhich provides provides a fixed a fixed pension pension income income for for life. life.

Pension Pension drawdown drawdown is available is available from from age 55 age 55 and keeps and keeps you invested you invested in assets in assets such such as as shares, shares, bonds, bonds, and property and property whilewhile you take you atake a steady steady income. income.

BeingBeing “still “still invested” invested” allowsallows your money your money a chance a chance to continue to continue growing, growing, but equally, but equally, it could it could reduce reduce in value in value if theif the market market falls. falls.

To prevent To prevent pensioners pensioners from from exhausting exhausting their their savings savings rapidly, rapidly, the Government the Government imposed imposed a limita on limit theonamount the amount of money of money that that can be can withdrawn be withdrawn everyevery year. This year.cap Thisapplies cap applies to anyone to anyone with less withthan less than £20,000 £20,000 secured secured pension pension income income from from elsewhere, elsewhere, such such as a as a separate separate annuity annuity or a workplace or a workplace final salary final salary scheme. scheme.

The cap Theiscap setisagainst set against the rates the rates on on government government bonds, bonds, knowknow as gilts. as gilts.

Drawdown Drawdown customers customers are now are forced now forced to to review review their their income income level level everyevery threethree yearsyears ratherrather than than the previous the previous five years. five years.

As a consequence As a consequence of theoffinancial the financial crisis,crisis, the the Bank Bank of England of England beganbegan printing printing £375bn £375bn in in their their quantitative quantitative easing easing programme, programme, this this actionaction led toled thetofall theoffall gilts of yields. gilts yields.

This was This was compounded compounded by a Government by a Government measure measure whichwhich reduced reduced the amount the amount of income of income takentaken from from 120 per 120cent per of cent theofrate theon rate government on government bondsbonds to 100 toper 100cent. per cent.

This effectively This effectively forcedforced customers customers to take to atake a compulsory compulsory review, review, with some with some suffering suffering 60 60 per cent per cuts cent in cuts their in their income. income.

Tthe Tthe Government Government has since has since reinstated reinstated the higher the higher 120 per 120cent per rate. cent rate.

Any customer Any customer who has whosuffered has suffered an income an income cut can cutcall canan call emergency an emergency withdrawal withdrawal review review on theonanniversary the anniversary of their of their last assessment. last assessment.

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7

divorce, In divorce, it is not it isanot simple a simple case case of of   Inownership ownership beingbeing transferred transferred from from joint joint names names into one. into The one.mortgage The mortgage lenderlender will will   needneed to beto satisfied be satisfied that the thatremaining the remaining borrower will be will able be to able afford to afford the the  borrower mortgage. mortgage.

Tax issues issues   Tax Capital Capital gainsgains tax (CGT) tax (CGT) is payable is payable on gains on gains of £10,900 or more or more at a rate at a of rate 18ofper 18cent per cent  of £10,900 if youifare youaare basic-rate a basic-rate payer,payer, and 28 andper 28 per cent ifcent youifare youaare higher a higher or top-rate or top-rate payer,payer,  

whenwhen you sell youassets sell assets such such as shares as shares or unit or unit trusts.trusts.

Pension-sharing Pension-sharing orders: orders: are more are more Pension Pension division division A spouse A spouse may decide may decide to clear to clear out bank out bank commonly used used by thebycourts the courts to sign to asign a The two The most two most common common waysways in which in which commonly accounts accounts and sell and off sell stocks, off stocks, bonds bonds and and proportion of one ofspouse’s one spouse’s pension pension fund fund pensions pensions can be can shared be shared on divorce on divorce are are proportion other other investments, investments, but people but people forget forget that that over to over thetoother. the other.

They They are widely are widely through through an attachment an attachment orderorder or a pensionor a pensionare tax areconsequences tax consequences to such to such considered considered to beto thebefairest the fairest way to way deal to deal therethere sharing sharing order.order. actions. actions. pension pension benefits benefits on divorce. on divorce.

Attachment Attachment Order:Order: a proportion a proportion of your of yourwith with Couples Couples couldcould dividedivide assetsassets that are that are The usual outcome outcome is thatis the thatagreed the agreed spouse’s spouse’s pension pension rightsrights is earmarked is earmarked for for The usual liable liable to CGT to before CGT before the end the of end the of the proportion proportion of your of your ex’s pension ex’s pension fund fund will will you, so you, that so you thatare youentitled are entitled to a to a financial year in year which in which separation separation takestakes be transferred out and outyou andwill youneed will need a a financial proportion proportion of both of both the lump the lump sum and sumthe and thebe transferred place, place, to help to minimise help minimise tax bills. tax bills. pension pension contract contract of your of your own to own transfer to transfer income. income.

SomeSome experts experts claimclaim this method this method of of Before Before rushing rushing to thetodivorce the divorce courtscourts this This into.means This means you now you have now have pension pension splitting splitting should should be avoided, be avoided, as it as it this into. consider consider that when that when you are you married, are married, all all complete control control of thisoffund. this fund. givesgives the spouse the spouse who is who currently is currently without withoutcomplete assetsassets can be can passed be passed to a spouse to a spouse on the on the It is important It is important for those for those getting getting divorced divorced a pension a pension no control no control over when over when they they first death first death IHT-free.

IHT-free.

The nil-rate The nil-rate band band of theof the to speak to speak to a professional to a professional financial financial adviser adviser receive receive their their share.share. deceased deceased spouse spouse also passes also passes to the to the get their pensions pensions valued valued independently. independently.

You will Younot willget notyour get your shareshare until until your your ex exto gettotheir survivor, survivor, thus maximising thus maximising IHT exemptions.

IHT exemptions. division division decides decides to retire. to retire.

Equally Equally they could they could makemake a Property a Property divorced, divorced, this exemption this exemption is lost. is lost. a couple a couple divorces, divorces, one person one person may may OnceOnce pointpoint of investing of investing the funds the funds in dreadful in dreadful WhenWhen New New rules rules still reside in theinfamily the family home,home, especially especially investments, investments, wiping wiping out the outvalue the value of theof the still reside April April 1 this1year, this year, legal legal aid has aidbeen has been wherewhere children children are involved. are involved.

This brings This brings its itsSinceSince fund.fund. removed removed from from many many sections sections of the of law, the law, own complications.

Additionally, Additionally, the income the income that isthat received is receivedown complications. including including divorce divorce and custody and custody cases.cases.

It is It is is taxed is taxed as if itaswas if it your was your spouse’s, spouse’s, meaning meaning now restricted now restricted to only to the only most the most serious serious that ifthat theyif are theystill areastill higher-rate a higher-rate taxpayer taxpayer cases. cases. in retirement, in retirement, you will youlose will 40 loseper 40cent per of cent of MoreMore people people are now are moving now moving into the into the your your income. income. arrangement arrangement of their of their own divorce own divorce wherewhere they can theyagree can agree on the onreasons the reasons for the forsplit, the split, how they how will theylook will after look after the children the children and and how they how will theydivide will divide all theallassets the assets including including the family the family home.home.

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Investment Investment concepts concepts Types Types of Funds of Funds Diversification Diversification The ‘long term ‘long only’ only’ is theismost the most common common Diversification FundsFunds exist to exist enable to enable investors investors to pool to their pool theirThe term Diversification is a key is asafety key safety strategy. strategy. investment stylesstyles in fund in management. fund management. In theory, money money and invest and invest as a group. as a group.

This allows This allows investment In theory, stock-level stock-level risk can riskbe can reduced be reduced by by It refers to buying to buying a basket a basket of stocks of stocks and/orand/orholding them them to achieve to achieve economies economies of scale of scale whenwhen It refers holding aboutabout 20 to20 30todifferent 30 different stocks, stocks, so so bondsbonds with the withgoal the of goal generating of generating returns returns that athat buying buying stocksstocks and diversify and diversify their exposure their exposure to to downturn a downturn in theinfortunes the fortunes of oneof one through through an increase an increase in theinprice the price of theofbasket the basket a variety a variety of investments. of investments. holding holding may be may reduced be reduced by thebyperformance the performance and from any income any income generated generated by these by these of theofothers.

FundsFunds are often are often known known as ‘collective as ‘collective and from the others. holdings. investment investment schemes’. schemes’.

TheseThese comecome in many in many holdings.

Additional Additional diversification diversification acrossacross countries, countries, ‘Absolute ‘Absolute return’ return’ is a style is a of style investment of investment sectors formsforms and mostly and mostly fall into falltwo intomain two main sectors and asset and asset classes classes is needed is needed to reduce to reduce aims aims to produce to produce a positive a positive returnreturn in in macroeconomic categories: categories: ‘open-ended’ ‘open-ended’ or ‘closed-ended’. or ‘closed-ended’.whichwhich macroeconomic and political and political risk. risk. all market all market conditions. conditions.

It involves It involves quite quite In theInUK, thethe UK,most the most common common typestypes of of Channelling Channelling investments investments sophisticated sophisticated strategies, strategies, like shorting. like shorting. open-ended open-ended fundsfunds are unit aretrusts unit trusts and and AssetAsset allocation allocation involves involves channelling channelling Asset Asset classes classes Investment Investment Companies Companies with Variable with Variable Capital Capital investments investments acrossacross asset asset classes, classes, geographic geographic The asset The asset classes classes are different are different typestypes of of (ICVCs), (ICVCs), also known also known as Open-Ended as Open-Ended regions regions and market and market sectors. sectors. investments, such as such stocks, as stocks, bonds, bonds, currencies currencies Investment Investment Companies Companies (OEICs).

(OEICs).

Unit trusts Unit trusts investments, Company Company shares shares and cash. and OEICs and OEICs have have different different legislation: legislation: one one and cash.

One approach One approach is to focus is to focus on theonprospects the prospects Multi-asset Multi-asset fundsfunds may adopt may adopt ‘long ‘long only’ only’ and valuations operating operating underunder trust laws trust and lawsissuing and issuing and valuations of individual of individual shares, shares, a a or ‘absolute return’ return’ strategies. strategies.

They invest They invest secondary ‘units’; ‘units’; the other the other operates operates underunder company company or ‘absolute secondary approach approach focuses focuses on broad on broad acrossacross a number a number of different of different asset asset classes, classes, economic law and lawissuing and issuing ‘shares’. ‘shares’. economic issuesissues or market or market themes themes that have that have thosethose that do thatnotdomove not move in in TheseThese two groups two groups have have common common ground ground in especially in especially the potential the potential to influence to influence company company shareshare correlation, and thereby and thereby attempt attempt to reduce to reduce prices.prices. that the thatnumber the number of units of units (or shares) (or shares) is notis not correlation, the volatility of returns. of returns. fixed,fixed, but expands but expands and contracts and contracts depending dependingthe volatility Investment Investment biases biases management management is seeking is seeking a range a range of ofA growth on theonlevel the of level investor of investor demand, demand, hencehence the the ActiveActive A growth manager manager will look will for lookstocks for stocks with with investments investments whichwhich outperform outperform a particular a particular good good namename ‘open-ended’. ‘open-ended’. earnings earnings momentum, momentum, beingbeing careful careful not not benchmark benchmark index,index, wherewhere the investment the investment is in is to in buytowhen Investment Investment truststrusts are anare example an example of of buy when stocksstocks are highly are highly priced. priced.

SmallSmall stocksstocks that outperform that outperform the market the market and return and return a ‘closed-ended’ a ‘closed-ended’ investment investment scheme. scheme. and mid-sized and mid-sized companies companies from from flourishing flourishing than is than expected is expected givengiven the perceived the perceived industries Their Their defining defining feature feature is thatis the thatnumber the number of ofmore more industries tend to tend be to good be good growth growth candidates. candidates. level riskofthe riskshares the shares carry.carry. sharesshares on offer on offer does does not change not change according according to level to of A value A value manager manager tendstends to look to at look more at more Passive management management involves involves tryingtrying to to attractively investor investor supplysupply or demand, or demand, but isbut limited is limited to to Passive attractively pricedpriced businesses businesses that have that have fallenfallen replicate the performance the performance of a particular of a particular out ofout the amount the amount in issue. in issue.

TheseThese investments investments are arereplicate favour of favour with the withmarket the market and have and have been been index,index, such as such theasFTSE the All-Share.

FTSE All-Share.

Tracker Tracker neglected, tradedtraded on theonstock the stock market market and can andtrade can trade at at neglected, but whose but whose fortunes fortunes couldcould change. change. are a are forma form of passively of passively managed managed fund.fund. a premium a premium or discount or discount to thetounderlying the underlying fundsfunds valuevalue per share per share of theofportfolio the portfolio depending depending on on the level the of level supply of supply and demand and demand for the for the shares. shares.

Past performance Past performance is notisnecessarily not necessarily a guide a guide to thetofuture. the future.

The value The value of investments of investments and the andincome the income from from themthem can fall canasfall well as as well rise asas rise as a result a result of market of market and currency and currency fluctuations fluctuations and you andmay you not mayget notback get back the amount the amount originally originally invested. invested.

Tax assumptions Tax assumptions are subject are subject to to statutory statutory change change and the andvalue the value of taxofrelief tax relief (if any) (if will any)depend will depend uponupon your your individual individual circumstances. circumstances.

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before, but the butterms the terms are often are often betterbetter than than accounts and removes and removes risk, which risk, which somesome before, Recently, Recently, 20,000 20,000 members members of theofworld the world accounts before before for most for most members. members.

Insurance Insurance analysts analysts may be may concerned be concerned about. about. famous famous musicmusic empire empire EMI Group’s EMI Group’s final final companies do want do want to make to make a profit a profit on theon the Do individual members members benefit? benefit? companies salarysalary scheme scheme were were moved moved out ofout EMI’s of EMI’s Do individual buyout buyout overall, overall, but are but subject are subject to the to the Scheme Scheme members members should should consider consider the the company company pension pension fund and fundtransferred and transferred into into requirements requirements of Treating of Treating Customers Customers Fairly Fairly on on advantage advantage of the of change the change in the in knowledge the knowledge an insurance an insurance company company whichwhich will become will become setting setting such terms. such terms. that their that pension their pension will still will be still paid be by paid an by an responsible responsible for paying for paying their pensions. their pensions.

WhatWhat if things if things go wrong? go wrong? insurance insurance company, company, ratherrather than their than their Such Such arrangements arrangements are known are known as as Members Members of defined of defined benefit benefit schemes schemes are are employer. employer.

Over Over the past the 20 past years 20 years there there have have “buyouts” “buyouts” and have and have become become more more common common protected protected by the by Pension the Pension Protection Protection Fund Fund been been many many hundreds hundreds of pension of pension scheme scheme in theinUK theduring UK during recentrecent yearsyears as companies as companies (PFF) (PFF) which which will pay will most pay most of the of benefits the benefits to to members members who have who have experienced experienced losses losses in in look for looknew for ways new ways to shed to shed their large their large members if the ifemployer the employer goes goes bust. bust. their pension their pension scheme scheme benefits benefits because because their theirmembers pension pension liabilities. liabilities.

On buyout, the protection the protection regime regime switches switches employer has gone has gone bust with bust awith pension a pension On buyout, Buyouts Buyouts have have big benefits big benefits for employers for employersemployer from from PPF to PPF the to Financial the Financial Services Services scheme scheme in deficit. in deficit.

Capital Capital requirements requirements for for looking looking to reduce to reduce risk from risk from pension pension Compensation Scheme Scheme (FSCS).

(FSCS). insurance insurance companies companies are much are much higherhigher than than Compensation liabilities, liabilities, but what but what does does this mean this mean for for Under Under the PPF, the final PPF, salary final salary members members who who for many for many employers, employers, so there so there is more is more of a of a pension pension members? members? are retired are retired whenwhen their employer their employer goes goes bust bust safetysafety net. net.

Do members Do members havehave a say? a say? can generally can generally expectexpect to continue to continue receiving receiving WhatWhat happens happens in a buyout? in a buyout?

ThereThere is no is legal no legal requirement requirement for employers for employers100 per 100cent per of cent their of pension. their pension.

Members Members who who WhenWhen a company a company decides decides to instigate to instigate a a to consult to consult members members on a proposed on a proposed buyout. buyout. had not hadretired not retired will have will have 90 per90cent per of cent their of their buyout, buyout, the company the company windswinds up itsup pension its pension WhatWhat changes changes will affect will affect the the benefits benefits protected, protected, up toup a cap to aofcap about of about scheme scheme and hands and hands responsibility responsibility for paying for payingmember? member? £31,000 £31,000 per annum. per annum. the pension the pension promises promises to an to insurance an insurance WhenWhen a buyout a buyout proceeds, proceeds, members’ members’ The FSCS The FSCS will pay will90 pay per90cent per of cent all of all company. company. entitlements, entitlements, such as such theasincome the income and the and the benefits benefits to all to members, all members, retiredretired and not andyet not yet WhenWhen the buyout the buyout is finalised, is finalised, all links all with links with spouses’ spouses’ benefits, benefits, should should remain remain intactintact as as retired, retired, with no with cap. noBuyouts cap. Buyouts are more are more the former the former sponsor sponsor and trustees and trustees are severed are severedthey are theywritten are written into the intoscheme the scheme rules.rules. common common for schemes for schemes with retired, with retired, ratherrather and the andscheme the scheme member member is issued is issued with awith a The scheme The scheme trustees trustees are required are required to secure to secure than active, than active, members. members. contract contract from from the insurance the insurance company. company. benefits benefits in full,inand full,obtain and obtain funding funding if needed if needed WhileWhile the PPF thesafety PPF safety net appears net appears more more WhyWhy are employers are employers changing? changing? for the forbuyout the buyout cost from cost from the employer. the employer. generous generous for pensioners, for pensioners, annual annual increases increases Employers Employers are moving are moving this way thisbecause way because final final WhatWhat may change may change are the areterms the terms that were that were are restricted, are restricted, with no with increases no increases on pre-1997 on pre-1997 salarysalary pension pension schemes schemes have have become become more morepreviously previously decided decided by thebyscheme the scheme actuary actuary service. service. expensive expensive for companies for companies to fund to as fund people as people and trustees. dealsdeals withwith a problem? a problem? and trustees.

TheseThese include include termsterms such as such as WhoWho are living are living longerlonger and returns and returns from from low-risk low-risk how pension Once Once a buyout a buyout is completed, is completed, all all how pension income income is converted is converted into ainto casha cash assetsassets have have reduced. reduced.

Changes Changes to accounting to accountinglump lump communication communication aboutabout your pension your pension will will sum or sum transfer or transfer valuations valuations and and rules rules meanmean pension pension deficits deficits must must be shown be shownpayments from from your employer your employer to thetoinsurance the insurance payments for those for those retiring retiring beforebefore or after or after movemove on companies’ on companies’ balance balance sheets. sheets. company. company.

Members Members do have do have a course a course of of the scheme’s the scheme’s normal normal retirement retirement age. age.

The buyout The buyout ultimately ultimately enables enables the the redress redress if theyif have they have a complaint a complaint with the with the With With buyout, buyout, responsibility responsibility for terms for terms employer employer to wind to wind up theupscheme the scheme and and company; they have they have the right the right to take to their take their passespasses to thetoinsurance the insurance company. company.

Therefore, Therefore,company; therefore therefore it willitno will longer no longer feature feature in their in their thesethese dispute dispute to thetoFinancial the Financial Ombudsman Ombudsman Service.

Service. termsterms will usually will usually be different be different to those to those

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 

Fixed Fixed Protection Protection 2014 2014 HowHow doesdoes it work? it work?

Pension Pension saverssavers can apply can apply to have to have a lifetime a lifetime allowance allowance of £1.5 of million, £1.5 million, applicable applicable whilewhile this isthis higher is higher than the thanstandard the standard lifetime lifetime allowance. allowance.

WhoWho can can apply? apply?

Anyone Anyone who already who already has ahas pension a pension of more of more than £1.25 than £1.25 million million or think or think they are theylikely are likely to to whenwhen they take they their take pension their pension can apply. can apply.

They must They must not hold not enhanced hold enhanced or primary or primary protection protection or Fixed or Fixed Protection Protection 2012.2012.

HMHM Revenue Revenue & Customs & Customs (HMRC) (HMRC) hashas recently recently When When can can you you apply? apply? announced announced twotwo new new forms forms of protection of protection to help to help those those Applications Applications are available are available via the viaHMRC the HMRC website. caught caught outout by the by the fallfall in the in the pension pension lifetime lifetime allowance allowance website.

When When is the is the proposed proposed deadline deadline from from £1.5£1.5 million million to £1.25 to £1.25 million million on on 6 April 6 April 2014.

2014. for application? for application?

The The lifetime lifetime allowance allowance is a limit is a limit on oncontributions contributions withwith Individual Individual the value the value of benefits of benefits that that can be can be Protection Protection 20142014 but you but can’t you can’t withwith saved saved in a in pension a pension and and any any FixedFixed Protection Protection 2014.

2014. additional additional value value could could be subject be subject to to Individual Individual Protection Protection 20142014 a taxacharge tax charge of upoftoup55toper 55 cent. per cent. could could benefit benefit anyone anyone expecting expecting NowNow that that HMRC HMRC has introduced has introduced further further contributions, contributions, fromfrom an an ‘lifetime ‘lifetime allowance allowance protection’ protection’ for for employer, employer, for example, for example, or wanting or wanting those those investors investors whowho havehave builtbuilt the flexibility the flexibility to boost to boost theirtheir pension pension pension pension potspots in line in line withwith previous previous should should it fallit in fall value. in value.

Alternatively, Alternatively, rules, rules, theythey do not do have not have to pay to the pay the FixedFixed Protection Protection 20142014 might might benefit benefit tax charge. tax charge.

This This will allow will allow themthem to to someone someone nearing nearing retirement, retirement, whowho is is benefit benefit fromfrom a lifetime a lifetime allowance allowance not looking not looking to add to add moremore to their to their higher higher thanthan £1.25 £1.25 million million when when pension pension pot but pot wants but wants to protect to protect drawing drawing theirtheir pensions. pensions. theirtheir pension pension up toup£1.5 to £1.5 million. million.

The The application application process process is expected is expected What What protection protection willwill be be to open to open laterlater this year this year for Fixed for Fixed available? available?

Protection Protection 20142014 and and in summer in summer 20142014 There There will be willtwo be two newnew forms forms of of for Individual for Individual Protection Protection 2014.

2014. protection, protection, Individual Individual Protection Protection 20142014 and and FixedFixed Protection Protection 2014.

2014.

A major A major difference difference is you is can you can continue continue to make to make pension pension

The deadline The deadline for application for application is 5 April is 5 April 2014 2014

Can Can I continue I continue to contribute to contribute and and keepkeep the the protection? protection?

No, ifNo, youifcontinue you continue to make to make pension pension contributions contributions or build or build up further up further final salary final salary pension pension benefits, benefits, on oron after or after 6 April6 April 2014,2014, your Fixed your Fixed Protection Protection 2014 2014 will normally will normally be be lost. lost.

What What planning planning should should you you consider? consider?

HMRCHMRC has opened has opened the application the application process process for for Fixed Fixed Protection Protection 2014,2014, however, however, applications applications for Individual for Individual Protection Protection 2014 2014 will likely will likely open open on 06on April 06 April 2014.2014.

You are Youable are to able download, to download, complete complete and and returnreturn a forma form to HMRC to HMRC to apply to apply for Fixed for Fixed Protection.

Protection.

ThereThere is no is charge no charge for this for this protection. protection.

Individual Individual Protection Protection 2014 2014 HowHow doesdoes it work? it work?

Pension Pension saverssavers can apply can apply for a personal for a personal lifetime lifetime allowance, allowance, up toup £1.5 to million, £1.5 million, basedbased on theonvalue the value of their of pensions their pensions at 5 April at 5 April 2014.2014.

WhoWho can can apply? apply?

Anyone Anyone with pension with pension savings savings worthworth more more than £1.25 than £1.25 million million at 5 April at 5 April 2014 2014 who does who does not hold not enhanced hold enhanced or primary or primary protection protection

When When can can you you apply? apply?

The application The application date is date yetistoyet be to confirmed, be confirmed, but isbut likely is likely to be to 06be April 06 April 2014.2014.

When When is the is the proposed proposed deadline deadline for application? for application?

The deadline The deadline for application for application is yetistoyet be to be confirmed. confirmed.

Can Can I continue I continue to contribute to contribute and and keepkeep the the protection? protection?

Yes you Yescan youcontinue can continue to make to make pension pension contributions contributions and not andlose notyour lose Individual your Individual Protection.

Protection.

This information This information is based is based on our onunderstanding our understanding of proposed of proposed legislation legislation whichwhich is stillis subject still subject to consultation to consultation and so and particularly so particularly liableliable to change. to change.

It is aItbrief is a brief summary summary that cannot that cannot covercover everyevery case.case.

Any tax Anybenefits tax benefits or charges or charges will depend will depend on your on your circumstances. circumstances.

If youIf are youatare allatunsure all unsure you should you should seek seek advice. advice.

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The options available The simplest and cheapest form of life assurance is term assurance. There is no investment element and it pays out a lump sum if you die within a specified period.

Level term assurance: this offers the same lump sum payout throughout the life of the policy, your dependants receive the same amount whether you died on the first day or the final day before the policy expired.

These policies are normally used to run parallel with an interest-only mortgage, where the debt has to be paid off only on the last day of the mortgage term.

Decreasing term assurance: with this policy the payout reduces each year and it finally ends up at zero by the end of the term. Because the level of cover decreases during the term, premiums on this type of insurance are lower than on level policies.

This cover is often bought with repayment mortgages, where the debt falls during the mortgage term.

Increasing term assurance: allows the potential payout to increase by a small amount each year. This can be a beneficial way of protecting the initial loaned amount against future inflation.

Convertible term assurance: offers the most flexibility as the policy allows the option for switching to another type of life assurance in the future, such as a ‘whole-of-life’ or endowment policy, without having to submit any further medical evidence.

Family income benefit: this policy type offers the holder’s dependants a regular income from the date of death until the end of the policy term, instead of any lump sum payment.

Lifetime protection A “whole-of-life” assurance policy provides cover throughout a person’s lifetime. The policy only pays out once the policyholder dies, providing the policyholder’s dependants with a tax free lump sum.

Some policies require the policyholders to continue contributing right up until they die or they may be able to stop paying in once they reach a stated age, with the cover continuing until they die.

Other policies are available which offer cover for additional benefits, such as a lump sum that is payable if the policyholder becomes disabled or develops a specified illness. Whole-of-life assurance policies are often reviewable, usually after ten years, at which point the insurance company may decide to increase the premiums or reduce the cover it provides.

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Thank you for your honest and trustworthy approach!

As a company your advice and knowledge has been invaluable. We were looking for a company that could not only look after our company’s pensions plan, but also advise us on which type of insurance policies were applicable to us. Your advice on, key man, death in service, and life insurance has made all of our directors, not only feel comfortable about the future of the company but also for their families.

Sarah Kneller (Pensions and Insurance)

Thank you so much for sorting out my Mortgage and Life insurance. I felt completely informed and well looked after throughout my house buying process.

I will be recommending your services to all my friends and family.

Chris Riley (Mortgage and Insurance)

After years of careful financial planning. I put my trust into Premier Independents Advisor’s, they proved to be highly knowledgeable, and were easily able to explain my options to me in a concise manner, that left me feeling better informed to make future financial decisions. I continue to ask for their expertise before investing my savings.

Mr John Haynes (Investments)