Premier Independant Jan-Feb 2015

MoneyMatters January/February 2015

New Year changes

FOR YOUR PENSION

Why do I need a

WILL?

Stamp Duty reforms

Lifestyle Protection

Pensioner

BONDS

2015 Protection Review

Creating Wealth

Tax Rules

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

inside inside Pensioner PensionerBonds Bonds Pensioner Bonds Pensioner Bonds

Page 2 2 Page

2014 Autumn Statement 2014 Autumn Statement Page Page 3 3 What’s new forfor you?

4 4 What’s new you? Page Page New Year changes forfor New Year changes your pension Page your pension Page 5 5 Stamp Duty reforms Page Page Stamp Duty reforms 6 6 2015 Protection Review 2015 Protection Review Page Page 7 7 2015 pension pitfalls Page Page 2015 pension pitfalls 8 8 Retirement giveaway Retirement giveaway continues Page continues Page 9 9 Final salary pensions Final salary pensions ……

What now?

Page What now?

Page 1010 Why I need a Will?

Why dodo I need a Will?

Page Page 1111 Trusts Trusts

Page Page 1111

Adventurous investing Adventurous investing Page Page 1212

The TheGovernment Governmenthas hasfinally finallyrevealed revealeddetails details about aboutthe thelong-awaited long-awaited‘pensioner ‘pensionerbonds’, bonds’, first firstannounced announcedininthe theChancellor’s Chancellor’sBudget Budget ininMarch March2014.

2014.

These Theseaccounts accountsare are designed designedtotohelp helpretirees retireeswhose whosecash cash savings savingshave havebeen beenravaged ravagedbybyinterest interestrate rate cuts cutsover overseveral severalyears. years.

HOW HOW CAN CAN I INVEST? I INVEST? WHAT WHAT IS THE IS THE DEAL? DEAL? VisitVisit thethe website website at nsandi.com, at nsandi.com, callcall 0500 0500 Savers Savers cancan invest invest a lump a lump sumsum in ain a 500500 000000 or write or write to National to National Savings Savings andand Government-backed Government-backed bond bond withwith National National Investments, Glasgow Glasgow G58G58 1SB.1SB. Savings Savings & Investments & Investments overover a term a term of one of one or or Investments, THE PROS PROS AND AND CONS CONS three three years, years, withwith fixed fixed interest interest rates rates of 2.8 of 2.8 THE Interest Interest is accrued is accrued annually annually andand in the in the threethreeandand 4 per 4 per centcent respectively. respectively. bond, bond, interest interest willwill be compounded, be compounded, so so TheThe minimum minimum investment investment perper person person andand yearyear youyou earnearn interest interest on your on your interest. interest. perper bond bond is £500 is £500 up to up atomaximum a maximum of of Other advantages advantages are are thatthat investments investments £10,000. £10,000.

So aSocouple a couple could could squirrel squirrel away away a a Other be 100 be 100 perper centcent backed backed by the by the Treasury Treasury combined combined £40,000 £40,000 spread spread across across bothboth bond bond willwill andand early early access access is possible, is possible, although although savers savers types. types. loselose thethe equivalent equivalent of 90 of 90 days’ days’ interest. interest.

WHO WHO ARE ARE THEY THEY FOR? FOR? If the If the bondholder bondholder dies,dies, a beneficiary a beneficiary overover thethe For For people people overover thethe ageage of 65 of 65 whowho want want of 65 of 65 cancan inherit inherit andand retain retain thethe bond. bond. inflation-beating inflation-beating risk-free risk-free returns returns on cash on cash ageage On On thethe flip flip side,side, interest interest is not is not payable payable savings savings overover thethe short short to medium to medium term. term. maturity, maturity, excluding excluding those those on the on the hunthunt TheyThey cancan be opened be opened individually individually or inorjoint in joint untiluntil for for regular regular income. income.

AndAnd basic basic 20 20 perper centcent tax tax names. names. is deducted, is deducted, so non-taxpayers so non-taxpayers must must reclaim reclaim WHEN WHEN ARE ARE THEY THEY AVAILABLE? AVAILABLE? overpaid tax tax fromfrom HMHM Revenue Revenue & Customs, & Customs, TheyThey go on go sale on sale in January in January 2015 2015 untiluntil theythey overpaid while while higher higher raterate taxpayers taxpayers must must declare declare runrun out.out.

There There is an is overall an overall limitlimit on how on how interest interest annually annually on their on their much much savers savers cancan putput intointo thethe bonds, bonds, up to up to thethe self-assessment self-assessment tax tax £10£10 billion, billion, enough enough for for oneone million million return. pensioners pensioners to invest to invest £10,000 £10,000 each each in one in one return. bond. bond.

TheyThey are are expected expected to be to popular be popular andand willwill be awarded be awarded on aonfirst a first come, come, firstfirst served served basis. basis.

Need Need more more information? information?

Simply Simply complete complete and and return return thethe information information request request onon page page 1212

Not all Notfinancial all financial advisers advisers will have will have regulatory regulatory permission permission to advise to advise on every on every product product mentioned mentioned in these in these articles. articles.

Certain Certain products products mentioned mentioned in this in magazine this magazine may may require require advice advice fromfrom otherother professional professional advisers advisers as well as well as your as your financial financial adviser adviser and this and might this might involve involve you in you extra in extra costs.costs.

The articles The articles featured featured in this in publication this publication are for areyour for your general general information information and use andonly use only and are andnot are not intended intended to address to address youryour particular particular requirements. requirements.

TheyThey should should not be notrelied be relied uponupon in their in their entirety. entirety.

Although Although endeavours endeavours havehave beenbeen made made to provide to provide accurate accurate and timely and timely information, information, therethere can can be no beguarantee no guarantee that that such such information information is accurate is accurate as ofas the ofdate the date it is received it is received or that or that it will it continue will continue to betoaccurate be accurate in the infuture. the future.

No individual No individual or company or company should should act upon act upon such such information information without without receiving receiving appropriate appropriate professional professional advice advice afterafter a thorough a thorough examination examination of their of their particular particular situation. situation.

Will Will writing, writing, buy-to-let buy-to-let mortgages, mortgages, somesome forms forms of tax ofand tax estate and estate planning planning are not are not regulated regulated by the byFinancial the Financial Conduct Conduct Authority. Levels, Authority. Levels, basesbases of and of reliefs and reliefs fromfrom taxation taxation are subject are subject to change to change and their and their valuevalue depends depends on the onindividual the individual circumstances circumstances of the ofinvestor. the investor.

2 2

2014 2014

Autumn AutumnStatement Statement

What Whatdid didthe theannouncements announcements

bring bringyou? you?

I have I have a lot a lot of money of money in NISAs? in NISAs? CanCan I I Should Should mymy spouse spouse diedie next next year year andand herher pass pass all all of them of them to my to my spouse spouse if I ifdie I die NISAs NISAs pass pass to me, to me, cancan I still I still useuse mymy first? first? annual annual allowance? allowance?

Under Under thethe newnew rules rules announced announced in George in George YouYou willwill be able be able to inherit to inherit herher NISA NISA pot,pot, Osborne’s Osborne’s autumn autumn statement, statement, youryour NISA NISA potpot andand retain retain its tax its tax advantages advantages andand stillstill putput up up cancan be passed be passed on to onyour to your husband husband or wife or wife to £15,240 to £15,240 intointo youryour NISA NISA in the in the same same tax tax when when youyou die.die. year.year.

Before Before thethe autumn autumn statement, statement, youryour NISA NISA What What about about civilcivil partnerships? partnerships? savings savings lostlost theirtheir tax-free tax-free status status when when youyou TheThe newnew rules rules apply apply to people to people whowho are are in in died. died.

TheThe newnew rules rules mean mean youryour widow widow or or civilcivil partnerships partnerships as well as well as those as those whowho are are widower widower cancan inherit inherit youryour NISA NISA savings, savings, married. married. keeping keeping theirtheir tax-free tax-free status. status.

Who Who benefits benefits most most from from changes? changes?

TheThe Treasury Treasury believes believes around around 150,000 150,000 Women Women willwill be among be among thethe biggest biggest people people whowho are are married married andand have have NISAs, NISAs, beneficiaries beneficiaries because, because, on average, on average, theythey die die every every yearyear andand theirtheir “NISA “NISA tax tax outlive outlive theirtheir husbands. husbands. advantages advantages die die withwith them. them.

Allowing Allowing thethe transfer transfer of NISA of NISA assets assets to to HMHM Revenue Revenue & Customs & Customs figures figures show show thethe spouses spouses andand civilcivil partners partners on death on death provides provides average average person person aged aged 65 and 65 and overover whowho hashas a much a much fairer fairer outcome, outcome, especially especially for for retired retired a NISA a NISA hashas about about £29,880 £29,880 invested invested in it.in it. women women andand it will it will nownow provide provide a bigger a bigger For For highhigh earners earners of all of ages, all ages, withwith incomes incomes incentive incentive to save to save in NISAs. in NISAs. overover £150,000, £150,000, average average NISA NISA savings savings How How much much is itisreally it really worth? worth? approach approach £50,000. £50,000.

Imagine Imagine youyou have have a NISA a NISA worth worth £29,880. £29,880.

MyMy husband husband died died recently. recently.

WillWill I benefit I benefit YouYou would would get get around around £448 £448 in interest in interest from from thethe new new rules? rules? (assuming (assuming a rate a rate of 1.5% of 1.5% in aincash a cash NISA) NISA) Yes,Yes, although although theythey come come intointo effect effect on April on April andand paypay no tax no tax on the on the income. income.

Before Before these these 6, 2015, 6, 2015, thethe Chancellor Chancellor saidsaid anybody anybody whowho changes, changes, a basic a basic raterate taxpayer taxpayer would would have have lostlost dieddied on or onafter or after thethe dayday of the of the autumn autumn about about £90,£90, a higher a higher raterate taxpayer taxpayer about about £179, £179, statement, statement, willwill benefit. benefit. andand a top a top raterate taxpayer taxpayer would would have have lostlost £202. £202.

What What is the is the NISA NISA allowance allowance each each year? year? WasWas about about Junior Junior NISAs? NISAs? YouYou cancan savesave £15,000 £15,000 a year a year intointo a cash a cash NotNot much much news news herehere butbut parents parents willwill be able be able NISA, NISA, a stocks a stocks andand shares shares NISA, NISA, or aor a to save to save £4080 £4080 nextnext yearyear intointo a Junior a Junior NISA NISA or or combination combination of the of the two.two.

From From April April nextnext yearyear intointo a child a child trusttrust fund, fund, which which is ais2% a 2% riserise it will it will increase increase again again to £15,240. to £15,240. from from £4,000 £4,000 currently. currently.

Growth Growth TheThe economy economy hashas grown grown faster faster thanthan previously previously reported, reported, up 8% up 8% overover thisthis Parliament.

Parliament.

Business Business investment investment hashas risen risen by 27%. by 27%.

GDPGDP growth growth forecast forecast for for 2014 2014 is is upgraded upgraded from from 2.4% 2.4% a year a year ago,ago, andand 2.7% 2.7% in March in March to 3%. to 3%.

It isItpredicted is predicted thatthat thethe economy economy willwill thenthen grow grow by 2.4% by 2.4% next next year, year, 2.2% 2.2% in 2016, in 2016, 2.4% 2.4% in 2017 in 2017 andand 2.3% 2.3% in 2018 in 2018 andand 2019.

2019.

Inflation Inflation is forecast is forecast to be to 1.5% be 1.5% thisthis year, year, 1.2% 1.2% next, next, andand 1.7% 1.7% thethe yearyear after. after.

Jobs Jobs and and education education Unemployment Unemployment willwill fall fall to 5.4% to 5.4% nextnext year, year, thethe Office Office of Budget of Budget Responsibility Responsibility says. says.

Meanwhile, Meanwhile, wages wages willwill grow grow faster faster than than inflation inflation for for thethe nextnext fivefive years. years.

Loans Loans of up of to up£10,000 to £10,000 for for post-graduate post-graduate degrees degrees National National Insurance Insurance on young on young apprentices apprentices willwill be abolished be abolished Borrowing Borrowing TheThe deficit deficit willwill fall fall fromfrom £97.5bn £97.5bn in 2013-14 in 2013-14 to £91.3bn to £91.3bn thisthis year. year.

It will It will thenthen be £75.9bn, be £75.9bn, £40.9bn, £40.9bn, andand £14.5bn £14.5bn in the in the three three years years after after that. that.

Personal Personal taxes taxes TaxTax freefree allowance allowance raised raised to £10,600 to £10,600 nextnext year. year.

Higher Higher raterate tax tax band band raised raised to £42,385. to £42,385.

When When someone someone dies,dies, theirtheir husband husband or or wifewife willwill be able be able to inherit to inherit theirtheir NISA NISA tax tax free.free.

Corporate Corporate taxes taxes A 25% A 25% taxtax on on profits profits from from activity activity in in thethe UK UK for for companies companies thatthat shiftshift profits profits offshore offshore willwill raise raise £1bn £1bn overover thethe nextnext fivefive years. years.

Property Property Stamp Stamp Duty Duty reformed reformed to become to become more more progressive, progressive, introduces introduces marginal marginal tax tax rates. rates.

Changes Changes came came intointo force force 4th4th December December 2014.

2014.

Up Up to £125,000 to £125,000 - no- tax no tax Up Up to £250,000 to £250,000 – 2% – 2% Up Up to £925,000 to £925,000 – 5% – 5% Up Up to £1.5m to £1.5m – 10% – 10% Above Above thatthat – 12% – 12% Stamp Stamp dutyduty cut cut for for 98% 98% of homebuyers of homebuyers whowho paypay it, you it, you paypay more more if you if you buybuy anything anything above above £937,000. £937,000.

Health Health Confirmed Confirmed £2bn £2bn a year a year extra extra spending spending on on NHSNHS Extending Extending £2,000 £2,000 employment employment allowance allowance to carers to carers Travel Travel FuelFuel dutyduty frozen frozen again again Air Air passenger passenger dutyduty for for children children under under 12 12 abolished abolished from from nextnext year, year, andand for for children children under under 16 the 16 the yearyear after. after.

TheThe value value of your of your investment investment andand the the income income from from it can it can go down go down as well as well as up as and up and youyou maymay not not get get backback the the original original amount amount invested. invested.

PastPast performance performance is not is not a reliable a reliable indicator indicator for future for future results. results.

Please Please contact contact us for us further for further information information or iforyou if you are are in any in any doubt doubt as to asthe to the suitability suitability of an of investment. an investment.

3 3

Investors Investors who who rely rely onon interest interest rates rates onon their their savings savings to to boost boost their their income income have have suffered suffered during during thethe financial financial crisis. crisis.

What’s What’s new new for for you? you?

Government’s Government’s savings savings arm. arm.

Pensioners Pensioners willwill be allowed be allowed to save to save Investors Investors whowho relyrely on on interest interest rates rates on on their their savings savings to boost to boost their their thethe a maximum of £10,000 of £10,000 in each in each version version of the of the bond, bond, offering offering a a income income have have suffered suffered during during thethe financial financial crisis. crisis.

Official Official interest interest a maximum total total of £20,000. of £20,000. rates rates languish languish at 0.5% at 0.5% andand various various Government Government schemes schemes Experts Experts predict predict huge huge demand demand for for thethe bonds, bonds, so they so they could could sellsell designed designed to encourage to encourage borrowing borrowing have have given given thethe banks banks little little outout veryvery quickly quickly once once theythey go go on on salesale in January in January 2015.

2015. reason reason to tempt to tempt savers savers withwith decent decent interest interest rates. rates.

Interest Interest on on these these bonds bonds willwill be taxed be taxed in line in line withwith all other all other Savers Savers were were hoping hoping for for some some good good news news from from George George savings savings income income at the at the individual’s individual’s personal personal taxtax rate. rate.

ButBut youyou willwill Osbornes’ Osbornes’ 2014 2014 Autumn Autumn statement. statement. notnot be able be able to register to register to receive to receive interest interest gross, gross, as isasnormally is normally NISAs NISAs possible withwith saving saving accounts. accounts.

Instead, Instead, non-taxpayers non-taxpayers or those or those Mr Mr Osborne Osborne announced announced thatthat widows widows andand widowers widowers would would nownow be bepossible have have hadhad tootoo much much taxtax deducted deducted willwill have have to reclaim to reclaim via via a a ableable to inherit to inherit NISAs NISAs tax-free. tax-free.

Previously Previously NISAs NISAs lostlost their their tax-free tax-free whowho self-assessment taxtax return. return. status status on on death death butbut nownow under under thethe newnew rules rules when when someone someone dies, dies,self-assessment their their husband husband or wife or wife willwill be able be able to inherit to inherit their their NISA NISA andand keep keep Interest Interest rates rates its tax-free its tax-free status. status.

TheThe official official interest interest rates rates areare set set independently independently by the by the Bank Bank of of TheThe change change came came intointo effect effect on on 3 December 3 December 2014, 2014, if aifNISA a NISA England.

England.

However, However, Government Government policies policies cancan affect affect thethe interest interest saver saver in ainmarriage a marriage or civil or civil partnership partnership dies, dies, their their spouse spouse or civil or civil rates rates thatthat areare actually actually offered offered to savers to savers by banks. by banks. partner partner willwill inherit inherit their their NISA NISA taxtax advantages. advantages.

OneOne example example is the is the “Funding “Funding for for Lending Lending Scheme”, Scheme”, a source a source of of From From 6 April 6 April 2015, 2015, surviving surviving spouses spouses willwill be able be able to invest to invest as as cheap cheap funds funds made made available available to banks to banks on on condition condition thatthat it was it was lentlent much much intointo their their ownown NISA NISA as their as their spouse spouse used used to have, to have, on on toptop of of on on to mortgage to mortgage borrowers borrowers andand small small businesses. businesses.

While While thethe their their usual usual allowance, allowance, andand so will so will be better be better ableable to secure to secure their their mortgage mortgage sideside hashas ended, ended, thethe Chancellor Chancellor announced announced an extension an extension financial financial future future andand enjoy enjoy thethe taxtax advantages advantages theythey previously previously of the of the small small business business partpart of the of the scheme. scheme. shared. shared.

Official Official sources sources of cheap of cheap funding funding for for banks banks reduces reduces their their need need OneOne keykey point point of interest of interest waswas thatthat there there waswas no no mention mention of of for for deposits deposits from from savers savers andand withwith it their it their incentive incentive to offer to offer excluding excluding assets assets in NISAs in NISAs from from inheritance inheritance tax.tax. attractive attractive interest interest rates, rates, therefore therefore further further badbad news news for for ordinary ordinary savers. savers.

Pensioner Pensioner Bonds Bonds These These bonds, bonds, designed designed to pay to pay much much better better rates rates than than conventional conventional‘Peer-to-peer ‘Peer-to-peer NISAs’ NISAs’ savings savings products products from from banks banks andand building building societies, societies, were were In the In the Autumn Autumn Statement Statement thethe Chancellor Chancellor saidsaid he would he would act act to to announced announced in the in the Budget Budget in March in March andand more more details details hadhad been been boost boost peer-to-peer peer-to-peer lending lending to allow to allow small small businesses businesses better better access access expected expected in the in the Autumn Autumn Statement.

Statement. to credit. to credit.

In March In March he said he said a one-year a one-year Pensioner Pensioner Bond Bond would would paypay around around TheThe Government Government willwill consult consult on on whether whether to allow to allow “crowd “crowd 2.8% 2.8% andand a three-year a three-year bond bond around around 4%.4%.

At the At the timetime thethe bestbest funded funded debt-based debt-based securities” securities” intointo NISAs NISAs andand on on howhow it could it could be be rates rates available available on on thethe market market were were 1.9% 1.9% andand 2.6% 2.6% respectively. respectively. implemented, implemented, which which is different is different from from ordinary ordinary peer-to-peer peer-to-peer TheThe newnew bonds bonds willwill be available be available to anyone to anyone aged aged 65 65 or over. or over. lending lending as lenders as lenders ownown a bond a bond thatthat theythey cancan sellsell on.on.

Supply Supply willwill be limited, be limited, withwith up up to £10bn to £10bn of the of the bonds bonds being being made made available available from from National National Savings Savings & Investments, & Investments, TheThe value value of your of your investment investment andand thethe income income from from it can it can go go down down as well as well as up as up andand youyou maymay notnot getget back back thethe original original amount amount invested. invested.

PastPast performance performance is not is not a reliable a reliable indicator indicator forfor future future results. results.

Please Please contact contact us for us for further further information information or iforyou if you areare in any in any doubt doubt as to as the to the suitability suitability of an of an investment. investment.

4 4

New NewYear Yearchanges changesfor foryour yourpension pension 7. Transparency 7. Transparency & Knowledge & Knowledge A big A big partpart of the of the reforms reforms is better is better freefree pensions pensions guidance guidance for retirees, for retirees, including including face-to-face face-to-face sessions sessions fromfrom Citizens Citizens Advice Advice andand phone phone helphelp fromfrom the the Pensions Pensions Advisory Advisory Service.

Service.

YouYou won’t won’t be told be told what what is best is best for you for you andand must must decide decide yourself yourself andand accept accept full full 1. Taking 1. Taking thethe maximum maximum tax-free tax-free lump lump make make withdrawals. withdrawals.

YouYou maymay havehave to move to move responsibility. responsibility. sumsum pension pension schemes schemes to access to access the the newnew freedoms freedoms Alternatively, Alternatively, youyou cancan seekseek the the advice advice fromfrom 25 per 25 per centcent of your of your pension pension fundfund cancan be taken be taken arrangements. arrangements. youryour professional professional financial financial adviser, adviser, whowho would would tax tax freefree in one in one lump lump sumsum at retirement at retirement if you if you Savers Savers withwith large large pension pension potspots above above £1.5£1.5 be responsible be responsible for recommending for recommending the the rightright buybuy an annuity an annuity withwith the the rest,rest, or put or put it into it into million million whowho registered registered for primary for primary or enhanced or enhanced solution, solution, withwith comeback comeback if they if they make make a a drawdown. drawdown.

In other In other words, words, taking taking the the full full lump lumpprotection protection to safeguard to safeguard theirtheir rights rights when when the the mistake. mistake. sumsum “crystallises” “crystallises” youryour whole whole pension pension so you so you lifetime lifetime allowance allowance waswas introduced introduced willwill not not be be 8. Keep 8. Keep a lookout a lookout loselose the the option option to keep to keep it invested it invested andand make make ableable to make to make these these withdrawals withdrawals either. either.

TheThe details details understood understood so far so are far are fromfrom a draft a draft the the newnew “bank-account-style” “bank-account-style” withdrawals withdrawals 4. Move 4. Move your your pension pension bill bill andand subject subject to change, to change, although although most most thatthat havehave been been highly highly publicised. publicised.

There There maymay be high be high exitexit penalties penalties if you if you decide decide experts experts in the in the business business don’t don’t foresee foresee anyany People People willwill stillstill be able be able to take to take smaller smaller tax-tax- to switch to switch provider. provider.

YourYour current current scheme scheme maymay reason reason as to aswhy to why theythey willwill not not go through go through in in freefree lump lump sums sums alongside alongside the the newnew flexibility flexibility by by alsoalso provide provide valuable valuable benefits benefits youyou would would loselose theirtheir current current form. form. mixing mixing andand matching. matching.

For For instance, instance, if you if you hadhad should should youyou transfer. transfer.

If your If your scheme scheme waswas set set up up 9. Will 9. Will mymy pension pension be be subject subject to death to death a £100,000 a £100,000 pot pot youyou could could in theory in theory keepkeep before before 2006, 2006, youyou could could havehave a tax-free a tax-free lump lump taxes taxes £50,000 £50,000 in their in their existing existing scheme scheme andand make make the thesumsum above above the the standard standard 25 per 25 per cent. cent.

Schemes Schemes If you If you fail fail to nominate to nominate beneficiaries beneficiaries for your for your newnew withdrawals, withdrawals, andand put put the the restrest intointo set set up in upthe in the Nineties Nineties maymay paypay guaranteed guaranteed pension pension fundfund andand the the trustees trustees can’t can’t decide decide drawdown drawdown or buy or buy an annuity, an annuity, taking taking a £12,500 a £12,500annuity annuity rates rates much much higher higher thanthan those those offered offered whowho to pay to pay the the money money to, your to, your fundfund willwill be be tax-free tax-free payment. payment. today. today. liable liable for afor45a per 45 per centcent tax tax charge, charge, as well as well as as 2. ‘Bank-account-style’ 2. ‘Bank-account-style’ withdrawals withdrawals areare 5. What’s 5. What’s thethe future future forfor annuities? annuities? inheritance inheritance tax tax as part as part of your of your estate. estate.

NOTNOT tax-free tax-free Annuities Annuities are are stillstill a good a good option option for some for some If you If you die die before before ageage 75 then 75 then youryour If you If you want want to use to use youryour existing existing pension pension likelike a a retirees. retirees.

Many Many people people willwill useuse annuities annuities beneficiaries beneficiaries cancan taketake the the money money tax-free. tax-free. bank bank account, account, youyou willwill get get tax tax relief relief on future on future alongside alongside drawdown drawdown so that so that theythey cancan buybuy If you If you die die later, later, theythey willwill paypay tax tax on any on any contributions contributions of up of to up£10,000 to £10,000 a year a year andand willwill some some secure secure income income andand keepkeep some some capital capital withdrawals withdrawals at their at their normal normal income income tax tax rates. rates. be able be able to make to make withdrawals withdrawals when when youyou want. want. flexibly flexibly invested. invested.

10.10.

YouYou could could fallfall intointo a higher a higher taxtax Although Although these these payments payments fromfrom uncrystallised uncrystallised 6. Check 6. Check your your pension pension investments investments bracket bracket funds funds (UFPLSs) (UFPLSs) maymay include include a 25a per 25 per centcent YouYou should should check check youryour existing existing scheme scheme andand Be clear Be clear thatthat whilst whilst youyou cancan access access 25 per 25 per centcent tax-free tax-free portion, portion, the the restrest is taxable is taxable as income. as income. review review howhow it’s it’s invested. invested.

Check Check what what typetype of of of your of your fundfund tax-free, tax-free, other other withdrawals withdrawals are are 3. Will 3. Will your your pension pension provider provider give give youyou fundfund youryour pension pension money money is in.is Itin.may It may be in beain a subject subject to tax to tax along along withwith anyany other other income. income. thethe new new freedoms? freedoms? default default option, option, suchsuch as aas‘lifestyle’ a ‘lifestyle’ fund, fund, thatthat For For example: example: If you If you withdraw withdraw £40,000, £40,000, YourYour company company or private or private pension pension scheme scheme maymay might might no longer no longer be appropriate. be appropriate.

ThisThis fundfund thenthen up to up£10,000 to £10,000 could could be tax-free be tax-free but but the the not not givegive youyou the the option option to stay to stay invested invested andand would would havehave assumed assumed youyou are are going going to to restrest would would be added be added to your to your other other earnings earnings for for buybuy an annuity an annuity andand not not remain remain thatthat year.year.

Someone Someone withwith £20,000 £20,000 of further of further invested invested afterafter a pre-set a pre-set date. date. income income would would havehave £50,000 £50,000 of taxable of taxable income income andand would would paypay higher-rate higher-rate tax.tax.

The The pension pension reforms reforms that that come come in in next next April April have have been been seen seen asas revolutionary revolutionary and and still still little little is understood is understood byby many. many.

Experts Experts are are suggesting suggesting crucial crucial points points have have been been missed, missed, soso what what dodo you you need need toto know? know?

value of your investment income from it can down as well as up back original amount TheThe value of your investment andand thethe income from it can go go down as well as up andand youyou maymay notnot getget back thethe original amount invested. performance is not a reliable indicator future results.

Please contact us for further information if you invested.

PastPast performance is not a reliable indicator forfor future results.

Please contact us for further information or iforyou areare in any doubt as the to the suitability of an investment. in any doubt as to suitability of an investment.

5 5

STAMP STAMPDUTY DUTYREFORMS REFORMS

George George Osborne Osborne announced announced sweeping sweeping changes changes toto stamp stamp duty duty inin hishis 2014 2014 Autumn Autumn Statement.

Statement.

HeHe claimed claimed 98% 98% ofof buyers, buyers, particularly particularly first-time first-time buyers buyers and and low low and and middle-income middle-income families families would would benefit benefit financially. financially. £2m£2m attracted attracted 5%5% tax,tax, rising rising to 7% to 7% for for affect affect buyers buyers in London in London andand thethe South South EastEast ButBut nownow professionals professionals in the in the property property houses houses worth worth more more thanthan £2m. £2m.

Under Under thisthis most, most, where where prices prices are are much much higher. higher. business business believe believe thethe reforms reforms would would notnot system system a family a family buying buying a house a house for for £400,000 £400,000First-time benefit benefit first-time first-time buyers buyers in the in the longlong run.run.

First-time buyers buyers would would have have to pay to pay 3%3% on the on the whole whole sum, sum, Many TheThe widely widely heldheld viewview is, like is, like all property all property Many typical typical aspiring aspiring home home owners owners have have or £12,000. taxes, taxes, these these changes changes to stamp to stamp dutyduty willwill veryvery or £12,000. been been hit hard hit hard by the by the combination combination of stamp of stamp likely likely be quickly be quickly reflected reflected in house in house prices. prices. dutyduty andand rising rising house house prices. prices.

ThisThis tax tax saving saving willwill allow allow first-time first-time buyers buyers People People in London in London know know thisthis all too all too well, well, more more money money to put to put towards towards theirtheir property property many many have have triedtried to buy to buy in earlier in earlier years years butbut andand withwith all buyers all buyers in the in the same same situation, situation, were were unable unable to make to make theirtheir budget budget stretch stretch to to prices prices would would riserise accordingly. accordingly. cover cover thethe stamp stamp duty. duty.

TheThe industry industry thinking thinking is the is the stamp stamp dutyduty Such Such examples examples are are common common place. place.

Many Many changes changes willwill addadd around around 1%1% to house to house prices. prices. firstfirst timetime buyers buyers findfind theirtheir dream dream property property at at As stamp As stamp dutyduty is normally is normally paidpaid in cash in cash andand thethe toptop endend of their of their budget, budget, butbut are are all too all too higher higher property property prices prices would would addadd to the to the often often unaware unaware of stamp of stamp dutyduty andand findfind TheThe newnew stamp stamp dutyduty willwill consist consist of of buyer’s buyer’s mortgage, mortgage, thatthat theythey would would paypay more more themselves themselves unable unable to afford to afford thisthis additional additional “marginal” “marginal” tax tax rates, rates, as with as with income income tax.tax. in interest. in interest. cost, cost, leaving leaving them them no option no option butbut to pull to pull outout There There willwill be no be tax no tax on the on the firstfirst £125,000, £125,000, Some Some allegedly allegedly taketake thethe viewview thatthat thethe andand loselose theirtheir dream dream home. home. thenthen 2%2% on the on the costcost between between £125,000 £125,000 andand Chancellor Chancellor waswas trying trying to engineer to engineer a minia miniMany Many people people whowho are are looking looking at properties at properties £250,000, £250,000, andand 5%5% up to up £925,000. to £925,000.

A rate A rate of of house house price price boom boom justjust before before a general a general in more in more affordable affordable areas areas of London of London are are 10% 10% willwill apply apply to the to the costcost between between thatthat sumsum election election without without considering considering peoples’ peoples’ grateful grateful for for thethe reduction reduction in stamp in stamp duty, duty, butbut andand £1.5m, £1.5m, andand 12% 12% on the on the value value above above indebtedness. indebtedness. fearfear thatthat if house if house prices prices riserise further further theythey willwill £1.5m. £1.5m. be priced be priced outout of the of the market. market.

How How hashas stamp stamp duty duty changed? changed?

Now Now buying buying a £400,000 a £400,000 home home theythey would would ButBut it’s it’s notnot all bad all bad news news for for first-time first-time Under Under thethe old old “slab” “slab” system, system, house house paypay 2%2% on the on the portion portion between between £125,000 £125,000 buyers. buyers.

Those Those already already in the in the process process of buying of buying purchasers purchasers hadhad to pay to pay theirtheir relevant relevant raterate on on andand £250,000 £250,000 andand 5%5% on the on the remaining remaining willwill savesave money. money.

Typically Typically someone someone buying buying a a thethe whole whole purchase purchase price. price.

Previously Previously stamp stamp £150,000. £150,000.

ThisThis reduces reduces theirtheir totaltotal tax tax bill bill to to £175,000 £175,000 house house willwill seesee theirtheir stamp stamp dutyduty cut cut dutyduty started started at 1% at 1% on sales on sales fromfrom £125,000 £125,000 £10,000. £10,000. fromfrom £1,750 £1,750 to £1,000. to £1,000. to £250,000, to £250,000, rising rising to 3% to 3% on sales on sales of up of to up to Stamp Stamp dutyduty billsbills willwill riserise for for purchases purchases £500,000 £500,000 andand 4%4% on homes on homes costing costing up to up to worth worth more more thanthan £937,500. £937,500.

ThisThis is likely is likely to to £1m. £1m.

Houses Houses thatthat soldsold for for between between £1m£1m andand

House Houseprices pricesare are expected expectedtotorise riseasas sellers sellerscash cashininononthe the stamp stampduty dutysavings savings

6 6

2015 2015

Protection Protection Review Review

AsAs wewe enter enter into into a New a New Year; Year; a primary a primary time time forfor reflection, reflection, it could it could • Increasing term: term: thisthis increases increases thethe • Increasing potential potential payout payout by abycertain a certain amount amount each each bebe considered considered anan ideal ideal opportunity opportunity to to re-examine re-examine your your personal personal year year for for the the duration duration of the of the term. term. finances finances – especially – especially thethe protection protection of of your your own own future, future, should should thethe term: term: thisthis provides provides youyou withwith • Convertible unforeseen unforeseen occur. occur.

With With many many variants variants of of insurances insurances available, available, it can it can • Convertible thethe ability ability to switch to switch to another to another typetype of life of life bebe difficult difficult to to determine determine thethe most most appropriate appropriate forfor you. you.

Here Here wewe insurance insurance in the in the future future should should youyou wish wish to. to. consider consider your your options: options:

income income benefit: benefit: this,this, instead instead of of • Family • Family 1. Critical 1. Critical Illness Illness Insurance: Insurance: however however willwill onlyonly be for be for a limited a limited period. period. paying paying oneone lump lump sum, sum, payspays dependaents dependaents If you If you are are diagnosed diagnosed as having as having oneone of the of the A number A number of chosen of chosen policies policies willwill alsoalso agree agree by instalments by instalments from from thethe datedate of death of death untiluntil specific specific life-threatening life-threatening conditions conditions denoted denoted to make to make a “proportionate” a “proportionate” payment payment which which thethe endend of the of the agreed agreed policy. policy. in the in the policy, policy, critical critical illness illness insurance insurance willwill paypaytops-up tops-up earnings earnings should should youyou return return to to b. Whole-of-Life b. Whole-of-Life Insurance: Insurance: outout a tax-free a tax-free lump lump sum. sum.

There There are are a number a number full-time full-time employment employment within within a lower a lower paidpaid ThisThis is aispolicy a policy which which remains remains in force in force youryour of illnesses of illnesses andand definitions, definitions, set set outout by by role.role. whole whole life,life, meaning meaning thatthat whenever whenever youyou industry industry guidelines, guidelines, which which thisthis typetype of of 3. Life 3. Life Insurance: Insurance: should should die,die, there there is aisguaranteed a guaranteed payout payout to to insurance insurance must must cover; cover; these these include include a severe a severe In the In the unfortunate unfortunate event event of your of your premature premature youryour dependants. dependants.

There There are are different different forms forms of of heart heart attack attack or stroke or stroke andand an aggressive an aggressive death, death, life life insurance insurance boosts boosts youryour dependants dependants thisthis insurance; insurance; some some offer offer a set a set payout payout from from form form of cancer. of cancer.

Most Most policies policies do however do however ability ability to cope to cope financially financially in your in your absence. absence. thethe start, start, whilst whilst others others linklink to investments to investments cover cover many many other other conditions conditions on top on top of these. of these. LifeLife insurance insurance fallsfalls intointo oneone of two of two types; types; andand thethe payout payout is dependent is dependent on on YouYou cancan alsoalso combine combine critical critical illness illness “term “term assurance” assurance” andand “whole-of-life” “whole-of-life” – – performance. performance.

TheThe terms terms andand conditions conditions of of insurance insurance withwith life life insurance, insurance, depending depending on on however however there there are are many many variations variations within within whole-of-life whole-of-life insurance insurance policies policies vary,vary, so make so make youryour ownown requirements; requirements; these these policies policies willwill these these twotwo categories; categories; suresure youyou understand understand thethe scope scope of the of the cover cover paypay outout if you if you are are diagnosed diagnosed withwith a critical a critical a. Term a. Term Assurance: Assurance: being being offered offered before before making making a commitment. a commitment. illness illness or inorthe in the eventuality eventuality of your of your death, death, ThisThis is the is the most most simple simple form form of life of life insurance insurance When When it comes it comes to insurance to insurance it isitalways is always whichever whichever thethe firstfirst to occur. to occur. which which payspays outout a lump a lump sumsum in the in the event event of of worth worth seeking seeking professional professional financial financial advice. advice.

2. Income-Protection 2. Income-Protection Insurance: Insurance: youryour death death in ainspecified a specified period period of time. of time.

Term Term An An advisor advisor should should helphelp youyou decipher decipher thethe If you If you become become ill orillsuffer or suffer a disability a disability leaving leaving assurance assurance is usually is usually purchased purchased along along withwith a a level level of cover of cover youyou individually individually require, require, thethe youyou unable unable to work, to work, income income protection protection mortgage, mortgage, andand frequently frequently taken taken outout for for thethe duration duration of the of the appropriate appropriate policy policy andand insurance insurance is designed is designed to replace to replace partpart of your of your same same duration. duration.

There There are are different different sub-subwhether whether or not or not to consider to consider a combination a combination of of lostlost earnings earnings in order in order to fill to the fill the void. void. categories categories of term of term assurance: assurance: insurances. insurances.

Term: Term: in the in the event event of premature of premature Depending Depending on the on the policy policy youyou choose, choose, income income • Level • Level It isItalso is also vitalvital thatthat whenever whenever youyou apply apply for for death, thisthis payspays outout thethe same same sumsum protection protection insurance insurance willwill provide provide youyou withwith a a death, anyany typetype of insurance, of insurance, youyou provide provide full full andand regardless regardless of when of when thethe policy policy commenced. commenced. accurate monthly monthly payment payment of 50-60 of 50-60 per per centcent of your of your accurate information information – a –failure a failure to disclose to disclose term: term: thisthis decreases decreases thethe • Decreasing usual usual earnings, earnings, tax-free. tax-free.

ThisThis willwill customarily customarily • Decreasing “material “material facts” facts” cancan result result in future in future claims claims potential potential payout payout by abyfixed a fixed amount amount each each continue continue untiluntil youyou either either return return to work to work or or being being declined. declined. yearyear untiluntil reaching reaching zerozero at the at the endend of the of the reach reach retirement. retirement. term.

Some Some policies policies maymay alsoalso offer offer a “partial” a “partial” or or term. “rehabilitation” “rehabilitation” payment payment if you if you are are ableable to to return return to your to your previous previous job job although although in ain a reduced reduced capacity capacity – i.e.

– i.e. partpart time, time, thisthis

7 7

The The2015 2015pension pensionpitfalls pitfalls AsAs from from April April 2015, 2015, pension pension investors investors will will bebe free free to to dodo what what they they like like with with their their pension pension savings savings at at retirement. retirement.

Almost Almost half half a million a million people people will will bebe eligible eligible to to take take advantage advantage of of these these new new rules rules this this year, year, the the question question to to bebe answered answered is, is, areare the the pension pension freedoms freedoms a good a good thing thing or or bad bad thing? thing?

The The Government Government has has voiced voiced itsits opinion opinion that that it expects it expects some some people people to to make make wrong wrong choices, choices, given given the the new new freedom freedom onon offer. offer.

Recently, Recently, Steve Steve Webb, Webb, the the Government’s Government’s Pension Pension Minister Minister said said “this “this coming coming April April some some people people will will get get it wrong”. it wrong”.

SoSo what what should should people people bebe aware aware of,of, here here wewe explain explain some some possible possible pitfalls pitfalls and and how how you you could could trytry to to avoid avoid them? them?

All All thethe withdrawals withdrawals youyou make make during during thethe taxtax yearyear willwill be added be added to to Don’t Don’t turn turn yourself yourself into into a 45% a 45% income income tax-payer tax-payer restrest of your of your income income in that in that taxtax year, year, andand then then willwill be subject be subject Once Once youyou turnturn 55 55 youyou cancan normally normally taketake up up to atoquarter a quarter of your of your thethe to income taxtax at your at your highest highest rate. rate.

ThisThis could could move move youyou intointo a a pension pension as aastax-free a tax-free lump lump sum. sum.

ThisThis hashas notnot changed changed andand thisthis to income higher taxtax bracket bracket andand youyou could could possibly possibly endend up up being being a top a top raterate tax-free tax-free cash cash is yours is yours to spend to spend or invest or invest as you as you wish. wish.

YouYou cancan then thenhigher payer payer (45%) (45%) if you if you make make a withdrawal a withdrawal which, which, combined combined withwith taketake as much as much or as or little as little as you as you likelike from from thethe pension, pension, however, however, taxtax youryour other other income, income, takes takes youyou overover £150,000. £150,000. these these withdrawals withdrawals areare taxable. taxable.

Some Some argue argue thethe hope hope of the of the TheThe other other problem problem herehere is your is your personal personal annual annual taxtax allowance allowance Government Government is that is that these these newnew pension pension rules rules could could netnet thethe (for(for most most people people thisthis is £10,000) is £10,000) starts starts to be to scaled be scaled down down once once Treasury Treasury an extra an extra £3 £3 billion billion in tax in tax receipts receipts overover thethe nextnext fourfour youryour income income exceeds exceeds £100,000. £100,000.

It reduces It reduces by £1 by £1 for for every every £2 £2 of of years. years. income income youyou have have overover £100,000. £100,000.

So ifSoyour if your taxable taxable income income is is between between £100,000 £100,000 andand £120,000 £120,000 (2014/15 (2014/15 taxtax year), year), youyou might might effectively effectively be subject be subject to atotax a tax raterate of up of up to 60%. to 60%.

Avoiding Avoiding thethe problem problem cancan be be achieved achieved by:by: 1. Not 1. Not taking taking large large withdrawals withdrawals all at all once. at once.

Staggering Staggering youryour withdrawals withdrawals overover different different taxtax years, years, could could reduce reduce thethe taxtax youyou pay.pay.

2. Use 2. Use more more of your of your tax-free tax-free cash cash to supplement to supplement youryour otherwise otherwise taxable taxable income income in the in the early early years. years.

3. Pensions 3. Pensions shelter shelter youryour savings savings from from taxtax until until youyou taketake thethe money money out,out, youyou don’t don’t paypay income income taxtax or or capital capital gains gains taxtax on on thethe income income or growth or growth from from youryour investments, investments, andand in most in most cases cases youryour pension pension is exempt is exempt from from inheritance inheritance tax.tax.

It can It can be sensible be sensible to keep to keep thisthis taxtax efficient efficient status status going going for for as long as long as possible. as possible.

TheThe newnew rules rules alsoalso offer offer more more options options for for passing passing on on youryour pension, pension, in some in some cases cases taxtax free,free, when when youyou die.die.

“this “thiscoming comingApril April some somepeople peoplewill will get getititwrong”. wrong”.

8 8

Retirement Retirement giveaway giveaway continues continues pension pension providers providers once once theythey start start to draw to draw Make Make sure sure youyou don’t don’t runrun outout of of from from oneone of these of these pensions. pensions. money money Most Most people people have have thethe standard standard annual annual A pension A pension is there is there to provide to provide income income in in allowance allowance of £40,000 of £40,000 which which they they can can retirement; retirement; thisthis period period could could be 30 be 30 years years or or contribute to pensions, to pensions, andand receive receive taxtax more. more.

If you If you spend spend all your all your pension pension savings savingscontribute relief on on these these contributions. contributions.

ButBut investors investors in the in the early early years, years, or draw or draw more more income income relief whowho start start drawing drawing from from their their pension pension than than is sustainable is sustainable overover thethe longlong term, term, flexibly for for thethe firstfirst timetime after after April April 2015, 2015, youryour pension pension might might notnot lastlast as long as long as you as you flexibly willwill have have thethe amount amount theythey cancan contribute contribute do.do. to pensions reduced reduced to only to only £10,000. £10,000.

Many Many people people in the in the UK UK underestimate underestimate to pensions TheThe rules rules require require thethe investor investor to notify to notify all all their their lifelife expectancy; expectancy; fewfew willwill want want to be to be pension providers providers to whom to whom theythey areare stillstill reliant reliant on on thethe state state in their in their oldold age.age.

It isIt is pension paying paying pension pension contributions, contributions, so that so that therefore therefore veryvery important important to know to know howhow provider cancan apply apply thethe newnew lower lower £10,000 £10,000 much much money money youyou areare likely likely to need to need to last to last provider contribution contribution limit. limit.

They They need need to do to do this this youryour retirement. retirement. within 91 91 days days of receiving of receiving a certificate a certificate Avoiding Avoiding thethe problem problem cancan be achieved be achieved within confirming confirming theythey have have commenced commenced flexiflexi by: by: access drawdown drawdown or starting or starting to make to make 1. Setting 1. Setting in place in place some some funds funds which which cancan access contributions to the to the planplan if later. if later. be used be used to buy to buy a secure a secure income income for for life?life? contributions If people If people ignore ignore thisthis deadline deadline then then theythey Whilst Whilst lowlow on on riskrisk andand return, return, thisthis willwill could be hit be hit withwith a fine a fine of up of up to £300, to £300, never never runrun outout andand cancan be used be used to pay to pay could withwith further further penalties penalties if this if this is not is not met. met. essential essential living living costs, costs, which which have have a a In the In the UK,UK, people people have have on average on average 11 jobs 11 jobs tendency tendency to keep to keep increasing increasing through through overover a lifetime, a lifetime, so this so this rulerule could could involve involve retirement. retirement. liaising withwith multiple multiple pension pension providers providers if if 2. When 2. When youyou taketake regular regular income income directly directly liaising youyou areare stillstill paying paying intointo them. them. from from youryour pension pension fund, fund, keep keep thethe Avoiding thethe problem problem cancan be achieved be achieved by: by: amounts amounts under under regular regular review review to ensure to ensureAvoiding Consider Consider consolidating consolidating all your all your pensions pensions youyou staystay on on track track andand consider consider justjust intointo oneone place, place, which which willwill avoid avoid youyou having having taking taking thethe income income generated generated by the by the to notify to notify multiple multiple providers. providers. investments investments themselves. themselves.

Take Take your your time time WillWill your your provider provider paypay thethe bill? bill? notnot rushrush intointo anyany oneone product product or or OneOne bigbig unanswered unanswered questions questions of the of the newnew Do Do decision, either either now, now, or once or once thethe newnew rules rules freedoms freedoms is will is will pension pension firms firms allow allow their their decision, effect. effect.

TakeTake youryour time, time, research research all all clients clients to take to take advantage advantage of them of them in full. in full. taketake youryour options options andand if inifdoubt in doubt askask for for an an TheThe National National Association Association of Pension of Pension explanation in full in full of how of how things things work. work.

Funds, Funds, represents represents around around 1,300 1,300 funds, funds, withwithexplanation Always readread thethe small small print print andand shop shop 17 17 million million savers, savers, hashas warned warned there there could could Always around. around.

Many Many options options areare nownow extremely extremely be severe be severe delays. delays.

Major Major insurance insurance flexible, butbut theythey could could result result in you in you losing losing companies companies have have alsoalso predicted predicted capacity capacity flexible, entire entire pension pension in the in the stock stock market. market. concerns. concerns.

There There is no is no legal legal obligation obligation for for youryour At the other other endend of the of the scale, scale, some some options options providers providers to be to ready be ready for for thethe April April 2015 2015 At the don’t don’t always always allow allow changes changes once once you’ve you’ve kick-off. kick-off. entered intointo them. them.

Avoiding Avoiding thethe problem problem cancan be be achieved achieved entered by:by: Consider Consider transferring transferring youryour pension pension to ato a provider provider whowho willwill be ready be ready by the by the kick-off kick-off date? date?

Don’t Don’t getget a fine a fine from from HMHM Revenue Revenue & & Customs Customs Savers Savers whowho have have more more than than oneone pension pension maymay be required be required to notify to notify their their other other

Husbands Husbands andand wives wives whose whose partners partners die die before before reaching reaching 75 will 75 will get get annuity annuity income income from from theirtheir spouse’s spouse’s pension pension tax-free, tax-free, thethe Chancellor Chancellor announced announced in the in the Autumn Autumn Statement.

Statement.

TheThe move move brings brings annuities annuities used used to provide to provide a retirement a retirement income income intointo lineline withwith thethe options options to keep to keep youryour pension pension invested invested andand draw draw on it. on it.

ThisThis change change willwill arrive arrive nextnext April, April, as part as part of of thethe pensions pensions freedom freedom shake-up. shake-up.

Beneficiaries Beneficiaries of ‘joint of ‘joint life’life’ annuities annuities or other or other types types thatthat come come withwith death death benefits benefits currently currently paypay income income tax tax on what on what theythey receive. receive.

TheThe Chancellor Chancellor hashas axed axed death death taxes taxes for for under under 75s75s alongside alongside a major a major shake-up shake-up of of pensions, pensions, which which willwill seesee people people given given greater greater power power overover howhow theythey spend, spend, savesave andand invest invest theirtheir retirement retirement potspots from from nextnext April.

April.

TheThe changes changes make make it easier it easier for for people people to to shun shun annuities, annuities, which which offer offer guaranteed guaranteed income income for for life life butbut are are heavily heavily criticised criticised for for being being poorpoor value. value.

Instead Instead theythey willwill be able be able to keep to keep theirtheir pension pension invested invested andand draw draw on itonasit needed, as needed, or even or even cashcash in their in their entire entire pot.pot.

ThisThis willwill be done be done either either through through a process a process called called income income drawdown, drawdown, or by or simply by simply keeping keeping theirtheir pension pension where where it isitand is and drawing drawing on it. on it.

People People withwith jointjoint life life annuities annuities cancan name name someone someone other other thanthan a spouse a spouse as aas a beneficiary, beneficiary, butbut theythey have have to be to approved be approved by by the the insurer. insurer.

If it’s If it’s notnot a family a family member, member, it would it would usually usually be someone be someone likely likely to be to financially be financially affected affected by your by your death death - for- for instance, instance, a joint a joint owner owner of your of your home. home.

TheThe change change today today brings brings annuities into annuities into lineline withwith income income drawdown drawdown plans, plans, which which willwill seesee thethe so-called so-called 55 per 55 per centcent ‘death ‘death tax’tax’ on any on any remaining remaining potpot passed passed on removed on removed from from nextnext April.

April.

Instead, Instead, beneficiaries beneficiaries willwill paypay no tax no tax if the if the person person whowho dieddied waswas under under 75, 75, while while if the if the person person whowho diesdies is 75 is or 75over, or over, beneficiaries beneficiaries willwill have have to pay to pay theirtheir marginal marginal raterate of income of income tax tax in both in both cases. cases.

However, However, thethe changes changes do not do not affect affect people people in final in final salary salary pensions, pensions, normally normally considered considered thethe bestbest andand most most generous generous schemes, schemes, meaning meaning some some people people could could be tempted be tempted to to transfer transfer outout of them of them in order in order to leave to leave money money to their to their families. families.

9 9

Final Finalsalary salarypensions pensions

Widely Widely seen seen asas the the most most radical radical reforms reforms toto pensions pensions since since the the State State Pension Pension was was first first introduced, introduced, pension pension savers savers are are setset toto take take advantage advantage ofof new new pension pension freedoms freedoms asas ofof April April 2015, 2015, but but does does it apply it apply toto allall pensions? pensions?

Those people people whowho are are in illinhealth ill health andand do do Everyone Everyone needs needs some some levellevel of guaranteed of guaranteed Those How How willwill thethe changes changes affect affect final final notnot expect expect to live to live for for a long a long timetime in in income income during during retirement, retirement, to cover to cover theirtheir salary salary schemes? schemes? retirement. retirement. basic basic living living costs. costs.

A final A final salary salary scheme scheme Company Company pensions pensions which which provide provide a a • Those withwith family family or friends or friends whom whom theythey should be considered be considered as the as the foundation foundation for for • Those guaranteed guaranteed retirement retirement income income are are known known as as should wishwish to benefit to benefit fromfrom theirtheir death, death, butbut are are retirement retirement income income providing providing some some or all or of all of finalfinal salary salary or defined or defined benefit benefit schemes. schemes. not not covered covered by the by the rules rules of the of the final final salary salary the the guaranteed guaranteed income income to cover to cover basic basic living living People People withwith a pension a pension of this of this typetype cannot cannot scheme. scheme. costs. costs. taketake advantage advantage of the of the newnew rules. rules.

• Those whowho have have veryvery large large pension pension Who could could benefit benefit from from a transfer? a transfer? • Those ThisThis includes includes anyany public public sector sector finalfinal salary salary Who benefits builtbuilt up and up and do not do not want want thethe Generally, onlyonly those those approaching approaching retirement retirement benefits pension pension schemes, schemes, including including teachers, teachers, civilcivil Generally, majority majority of their of their retirement retirement income income before before theirtheir scheme’s scheme’s normal normal pension pension age.age. servants servants andand those those in the in the NHS. NHS. provided by just by just oneone employer. employer. is important to understand to understand thatthat finalfinal salary salary provided Final Final salary salary schemes schemes have have longlong been been thethe It isItimportant • Those withwith a final a final salary salary scheme scheme offered offered schemes provide provide something something other other pensions pensions • Those most most coveted coveted of pensions, of pensions, because because theythey offerofferschemes by abycompany a company whowho theythey think think maymay notnot be be do not do not andand thatthat is they is they guarantee guarantee youryour a guarantee a guarantee of the of the income income payable payable in in in business in business when when theythey retire. retire. pension is growing is growing all the all the time. time. retirement, retirement, where where thethe scheme scheme andand notnot thethe pension • Those withwith no dependants no dependants andand are are single single Once Once youyou are are a deferred a deferred member member of aoffinal a final • Those individual individual taketake on all on the all the risks. risks. whowho wishwish to maximise to maximise thethe benefits benefits salary salary pension, pension, youyou are are given given a promise a promise of of DueDue to the to the sheer sheer generosity generosity of aoffinal a final payable payable throughout throughout theirtheir lifetime. lifetime.

TheThe thethe income income youyou willwill be paid be paid in retirement. in retirement. salary salary pension pension scheme, scheme, anyone anyone fortunate fortunate transfer transfer value value fromfrom a final a final salary salary scheme scheme In the vastvast majority majority of schemes, of schemes, thisthis enough enough to have to have oneone could could count count themselves themselves In the includes thethe value value of any of any death death benefits, benefits, promised income income increases increases yearyear on year on year untiluntil includes lucky. lucky.

There There are are nownow veryvery fewfew in existence in existence for forpromised even even if they if they are are notnot required. required.

HereHere a a deciding to take to take benefits. benefits.

TheThe increase increase is is newnew members members outside outside of the of the public public sector. sector. deciding transfer transfer can can sometimes sometimes allow allow a higher a higher generally generally in line in line with with inflation. inflation.

This This means means Does Does a transfer a transfer now now make make anyany income income to be to paid. be paid. youyou willwill notnot be affected be affected by stock by stock market market sense? sense?

• Those whowho would would prefer prefer to take to take benefits benefits fluctuations in the in the same same wayway as you as you might might • Those Whilst Whilst thethe newnew changes changes maymay looklook interesting interestingfluctuations early, butbut thisthis is not is not permitted permitted within within finalfinal a personal a personal pension pension for for example. example.

For For thisthis early, to many, to many, in reality in reality thethe vastvast majority majority are are likely likely withwith salary salary schemes. schemes. reason reason finalfinal salary salary schemes schemes provide provide to be to better be better off off keeping keeping theirtheir finalfinal salary salary something something other other pensions pensions do not, do not, thethe scheme scheme in place. in place.

Please note note thethe decision decision to transfer to transfer a a guarantee thatthat youryour pension pension is growing is growing all all Please Remember Remember thatthat thethe primary primary purpose purpose of of guarantee final final salary salary pension pension scheme scheme is very is very thethe time. time. anyany pension pension is tois provide to provide an income an income complex, andand should should only only be be considered considered A transfer A transfer maymay be worth be worth considering considering onlyonly complex, throughout throughout youryour retirement. retirement. after after taking taking financial financial advice advice from from a a in certain in certain circumstances circumstances which which could could be; be; professional professional financial financial advisor. advisor.

1010

TRUSTS Why Whydo doIIneed needaaWill?

Will? TRUSTS Lifetime Lifetime Trusts Trusts

Lifetime Lifetime trusts trusts are are often often known known as as property property protection protection trusts trusts or asset or asset protection protection trusts. trusts.

Siblings Siblings andand parents parents of someone of someone married married TheThe Courts Courts areare familiar familiar withwith families families Unlike Unlike willwill trusts, trusts, which which come come intointo being being withwith no no children, children, willwill no no longer longer inherit inherit arguing arguing overover thethe division division of the of the assets assets of aof a andand on death, on death, lifetime lifetime trusts trusts are are established established a share a share of the of the estate estate if itifisitworth is worth more more parent parent whowho dieddied without without a Will. a Will.

If you If you straight straight away. away.

YourYour home home is gifted is gifted to the to the than £450,000, £450,000, thethe entire entire sumsum willwill go go to to trust, don’t don’t want want to run to run thethe riskrisk of putting of putting youryour than trust, which which allows allows youyou to carry to carry on living on living in in thethe surviving surviving spouse. spouse.

However, However, thisthis is ais a family family at war at war andand want want to ensure to ensure youryour it. The it. The rationale rationale is that is that if you if you need need danger danger for for unmarried unmarried couples couples whowho do do notnot residential family family is taken is taken carecare of, here’s of, here’s what what youyou residential carecare at some at some point point in the in the have have anyany rights rights overover their their deceased deceased need need to consider. to consider. future, future, youyou no longer no longer ownown a house a house andand cancan only only be assessed be assessed on minimal on minimal assets. assets. partner’s partner’s estate, estate, so you so you need need to ensure to ensure a a 1. 1.Make Make suresure youyou useuse a regulated a regulated Anyone Anyone considering considering setting setting up auplifetime a lifetime is inisplace in place to guarantee to guarantee youryour wishes wishes individual individual as your as your Will-maker Will-maker when when making makingWillWill trusttrust for for thisthis reason reason should should be aware be aware thatthat are are carried carried out. out. youryour decision decision as anyone as anyone cancan set set a local a local authority authority maymay regard regard thisthis themselves themselves up up as aaswriter a writer of Wills. of Wills.

TheThe LawLaw 3. 3.

Many Many people people have have seen seen their their property property arrangement arrangement as ‘deliberate as ‘deliberate deprivation deprivation of of Society Society says: says: “It “It is important is important thatthat riserise in value in value andand some some have have more more than than assets’. assets’.

If this If this is the is the case, case, theythey cancan assess assess consumers consumers areare ableable to distinguish to distinguish between between doubled doubled in value in value overover recent recent years, years, butbut youyou as ifasyou if you stillstill owned owned thethe property property (and(and those those thatthat areare unregulated, unregulated, uninsured uninsured andand there there is aisprice a price to pay to pay in the in the form form of of refuse refuse to fund to fund youryour care). care). untrained, untrained, andand solicitors solicitors whowho specialise specialise in in inheritance inheritance tax.tax.

OneOne wayway to mitigate to mitigate thisthis By placing By placing property property outside outside youryour estate, estate, lifetime lifetime trusts trusts cancan reduce reduce probate probate costs costs thisthis areaarea andand offer offer a quality a quality service”. service”. charge charge is tois set to set up up a trust; a trust; youyou cancan then then significantly. protect some some of your of your estate estate from from thethe 40 40 significantly.

2. 2.WithWith effect effect from from thethe 1st 1st October October 2014 2014 protect Lifetime Lifetime trusts trusts andand tax tax centcent inheritance inheritance tax.tax. newnew rules rules were were introduced introduced relating relating to who to who perper The The tax tax treatment treatment of lifetime of lifetime trusts trusts is is Trusts Trusts cancan alsoalso be abegood a good wayway to protect to protect inherits inherits what what if aifperson a person diesdies without without a a worth worth considering considering carefully. carefully.

Because Because youyou estate estate for for future future generations generations in case in case Will.

Will.

Under Under these these newnew rules, rules, where where there there youryour giftgift thethe house house to the to the trust, trust, it can it can attract attract of your divorce divorce or bankruptcy. or bankruptcy.

It isItalso is also areare no no children, children, if aifspouse a spouse diesdies intestate intestate of your IHTIHT if itifisitworth is worth more more thanthan thethe nil-rate nil-rate useful useful to get to get advice advice from from a solicitor a solicitor if you if you then then thethe surviving surviving spouse spouse or civil or civil partner partner band band (currently (currently £325,000). £325,000). have assets assets overseas overseas because because some some inherits inherits thethe whole whole estate, estate, rather rather than than onlyonly have Those Those whowho transfer transfer theirtheir property property to ato a countries countries will will not not recognise recognise a Will a Will written written lifetime lifetime trusttrust maymay faceface an immediate an immediate 20% 20% £450,000 £450,000 as was as was thethe previous previous case. case. in the in the UK. UK. charge charge on the on the balance balance over over £325,000 £325,000 Where Where children children areare involved, involved, under under these these (including (including giftsgifts made made in the in the previous previous seven seven newnew rules rules thethe surviving surviving spouse spouse or civil or civil 4. 4.ForFor children children youyou need need to name to name a a years), years), while while the the trustees trustees must must submit submit tax tax partner partner would would inherit inherit thethe firstfirst £250,000 £250,000 guardian guardian andand check check withwith them them firstfirst to to accounts accounts to HMRC. to HMRC. They They may may have have a a andand then then halfhalf of the of the remainder remainder of the of the make make suresure theythey would would be happy be happy to take to take on on further further tax tax bill bill every every 10 years 10 years plusplus income income estate, estate, withwith thethe remaining remaining balance balance of the of the thethe responsibility. responsibility.

In some In some cases, cases, tax tax on any on any payments payments from from thethe trust. trust.

assets assets being being heldheld in trust in trust for for thethe children children particularly particularly for for unmarried unmarried parents, parents, having having Lifetime Lifetime trusts trusts are are far far more more expensive expensive until until theythey become become an adult. an adult. a Will a Will is the is the bestbest wayway to be to sure be sure thatthat thanthan basic basic willswills or will or will trusts. trusts.

TheyThey are are children children under under 18 18 willwill staystay in the in the custody custody normally normally soldsold as part as part of aofpackage. a package. of your of your loved loved ones. ones.

Discretionary Discretionary trusts trusts Will Will trusts trusts and and lifetime lifetime Trusts Trusts cancan be either be either 5. 5.Making Making a Will a Will is not is not relatively relatively fixed fixed interest interest (where (where the the beneficiary beneficiary has has expensive; expensive; notnot having having oneone could could be more be more an absolute an absolute right right to occupy to occupy thethe house house andand costly. costly.

If your If your needs needs areare simple simple andand basic, basic, receive receive thethe income income from from anyany trusttrust youyou cancan even even useuse an online an online company, company, butbut investments) investments) or discretionary or discretionary (where (where thethe using using a solicitor a solicitor or professional or professional financial financial trustees trustees have have a pool a pool of potential of potential adviser adviser whowho specialises specialises in this in this area, area, offers offers beneficiaries beneficiaries andand have have a discretion a discretion howhow to to peace peace of mind. of mind. benefit benefit anyany of the of the potential potential beneficiaries). beneficiaries).

Usually Usually a discretionary a discretionary trusttrust alsoalso hashas a a letter letter of wishes of wishes for for thethe trustees trustees to to Taxation Taxation advice, advice, Trusts Trusts and and Will Will consider, consider, which which maymay givegive oneone beneficiary beneficiary trustees’ trustees’ permission permission to live to live in the in the writing writing areare notnot regulated regulated byby thethe thethe house house or receive or receive thethe income income from from Financial Financial Conduct Conduct Authority Authority investments. investments.

The The tax tax treatment treatment of fixed of fixed interest interest trusts trusts is different is different from from discretionary discretionary trusts. trusts.

Taxation Taxation advice, advice, Trusts Trusts and and Will Will writing writing areare notnot regulated regulated by by thethe Financial Financial Conduct Conduct Authority Authority

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Adventurous investing All investors want to see long-term growth, but many are cautious in their approach, they don’t want to take too many chances with their hard earned money.

There is however a significant minority, which are prepared to move up the risk/reward ladder.

They recognise that share investment is the most likely route to generating good long-term returns and are ready to accept the risks involved.

The key is of course mixing investments, so that the risk is spread across different asset classes. We take a look at some of the areas that adventurous investors might include in their portfolio.

Value funds

The attraction of value funds is that they deliver high returns over the long term, but they can also experience long periods of depressed growth.

The best managers of value funds look for stocks with unrecognised quality which is

not reflected in the price. This strategy offers a valuable safety margin to adventurous investors who may hold what is otherwise a pretty high-risk portfolio.

Smaller company funds

The attraction of smaller company funds is they tend to grow faster than larger companies, because they can adapt to events more rapidly. Smaller company funds have historically produced better returns than their larger rivals of the developed world markets but smaller companies are riskier and tend to have higher borrowing costs and can be more dependent on one or two key people.

Specialist funds

Funds with a clear geographic or sector focus can help investors gain exposure to specific areas of solid performance. Facebook and Twitter are recent examples of success and biotechnology is another potentially

profitable area. The downside is these areas can be volatile.

Emerging, frontier markets

The fastest-growing economies in the world are still the BRICs, Brazil, Russia, India, China and other emerging markets. Although the growth doesn’t always translate into good stock market performance, it provides the hunger in which companies can thrive.

The growing middle class in developing countries provides a huge consumer market, as well as scope for vast increases in healthcare and telecoms.

The danger is that these funds are the most exposed of all, since they carry business risk, political risk, currency risk and corporate governance risk.

You should always seek professional financial advice before making decisions which carry great risk.

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.

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.

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)