Archive for July, 2009
Written by richard on 31 July 2009
Brittanic Pension | Barclays Life |Abbey Life Pension| Midland Life Pension | NATWEST Pension | Self Invested Personal Pensions etc
If you have a Brittanic Pension you must take action today!
It’s now 2009 and the decade seems to be slipping away, however the old problems of poor performing and high charging Pension Plans do not seem to go away.
Despite the regulator asking more and more of the industry there seems to be no notice taken at all. Should that surprise us. All is not lost though, there is some action you can take.
We have a dedicated page for PENSION reviews and we have a Free Report for you.
For those of you that are taking Financial Planning Advice from many of the major Banks or Building Societies, you should note that what has been provided is not actually Financial Advice, but Product Advice normally from a narrow band of products. It might feel that you have received Financial Advice, however I can assure you it is not. Can I prove it, of course, make contact with me and I will outline the differences.
On a further note:-
If you have Pensions with Scottish Provident, Equitable and along with the likes of Guardian and any of the Major Banks and Building Society’s you should act now to have these reviewed before it is too late and you retire. There is a lot to be achieved by moving/reviewing these plans.
Finally – Self Invested Personal Pensions are one of the most oversold and possibly inappropriate kinds of Pension for many. Let me review yours and I will provide guidance. It seems that some (at least one of the major Banks ) are heavily targeting the sale of these and for many they are just not appropriate.
We do not charge for our initial advice and guidance.
As always – 0845 226 9106 to contact me .
Posted in Pensions - News | Comments Off
Written by richard on 30 July 2009
If you have a PEARL ASSURANCE Pension you must take action today!
It’s now 2009 and the decade seems to be slipping away, however the old problems of poor performing and high charging Pension Plans do not seem to go away.
Despite the regulator asking more and more of the industry there seems to be no notice taken at all. Should that surprise us. All is not lost though, there is some action you can take.
We have a dedicated page for PENSION reviews and we have a Free Report for you.
For those of you that are taking Financial Planning Advice from many of the major Banks or Building Societies, you should note that what has been provided is not actually Financial Advice, but Product Advice normally from a narrow band of products. It might feel that you have received Financial Advice, however I can assure you it is not. Can I prove it, of course, make contact with me and I will outline the differences.
On a further note:-
If you have Pensions with Scottish Provident, Equitable and along with the likes of Guardian and any of the Major Banks and Building Society’s you should act now to have these reviewed before it is too late and you retire. There is a lot to be achieved by moving/reviewing these plans.
Finally – Self Invested Personal Pensions are one of the most oversold and possibly inappropriate kinds of Pension for many. Let me review yours and I will provide guidance. It seems that some (at least one of the major Banks ) are heavily targeting the sale of these and for many they are just not appropriate.
We do not charge for our initial advice and guidance.
As always – 0845 226 9106 to contact me .
Richard Smith
Tags: Pearl Assurance
Posted in News - Updates | Comments Off
Written by richard on 30 July 2009
Barclays Life Pension | Abbey Life Pension| Midland Life Pension | NATWEST Pension | Self Invested Personal Pensions etc
If you have a Barclays Life Pension you must take action today!
It’s now 2009 and the decade seems to be slipping away, however the old problems of poor performing and high charging Pension Plans do not seem to go away.
Despite the regulator asking more and more of the industry there seems to be no notice taken at all. Should that surprise us. All is not lost though, there is some action you can take.
We have a dedicated page for PENSION reviews and we have a Free Report for you.
For those of you that are taking Financial Planning Advice from many of the major Banks or Building Societies, you should note that what has been provided is not actually Financial Advice, but Product Advice normally from a narrow band of products. It might feel that you have received Financial Advice, however I can assure you it is not. Can I prove it, of course, make contact with me and I will outline the differences.
On a further note:-
If you have Pensions with Scottish Provident, Equitable and along with the likes of Guardian and any of the Major Banks and Building Society’s you should act now to have these reviewed before it is too late and you retire. There is a lot to be achieved by moving/reviewing these plans.
Finally – Self Invested Personal Pensions are one of the most oversold and possibly inappropriate kinds of Pension for many. Let me review yours and I will provide guidance. It seems that some (at least one of the major Banks ) are heavily targeting the sale of these and for many they are just not appropriate.
We do not charge for our initial advice and guidance.
As always – 0845 226 9106 to contact me .
Tags: Barclays Life
Posted in Pensions - News | Comments Off
Written by richard on 23 July 2009
Inheritance Tax and Planning around the subject has always been a minefield. Understood by a few and talked about by many!
In the last few years the subject seems to have dropped of the ‘radar’ of many Financial Pundits as they all seem to think that the issue of Inheritance Tax Planning and Inheritance Tax Advice is no longer needed by most of Middle England. How wrong could they be.
There are several aspects that need careful consideration before your estate can effectively use the Dual Nil Rate Band which is why no one is still talking about this area of planning, and this is the catch. New Labour have a habit of giving in one hand and of course taking away with the other.
These are the areas where you need to be concerned.
You are a Widow/Widower and have since remarried.
You are living together and are Not Married.
You have a Business or Own Joint Assets
You have Children and overall assets of over £300,000 at the moment (we are not talking about the threshold for IHT which is £325k for 09/10)
There is a chance you might need Nursing Home Care at some stage in the future.
If any of these apply to you, there is action you can take and there are things you need to do before you can safely say you are safe.
We of course are happy to provide advice and guidance in this area, and have the services you need to make this problem go away.
You can contact me on the form below or you can call on 0800 781 2031 for a further discussion.
Richard Smith
Posted in News - Updates | Comments Off
Written by richard on 22 July 2009
It does not seem so long ago that Pension Transfers from your previous Employers Pension Scheme were all of the rage, and every adviser and client was scrambling to move money from one scheme to another.
We then had a major review of Pensions Business and the then Securities and Investment Board (SIB) decided enough was enough, reviewed all of the transfers that had been made, compensated those that had poor advice and reinstated others.
Jump forward 15 years and we have history repeating itself with large numbers of Pension Transfers now being put through the systems, are all of these justified? Seemingly no.
The Pension Ombudsmen in the UK are looking into a record number of complaints in relation to Pension Transfers from Final Salary Schemes in all of their guises and it is so vitally important that you obtain and understand the correct advice before moving forward with any transfer of benefits from your employers scheme. It is too late after the event. You must seek advice before the event and not rely on the action of any Ombudsmen once the transfer has been made.
Very few Independent Financial Advisers in the UK have access to the tools and skills required to make recommendations in the area of Pension Transfers and even less actually carry out this type of business (since the last review of Pensions carried out by SIB).
One simple solution you do have is to obtain the information from your Scheme Trustees yourself and then consult with some of the leading firms of Advisers in the market place (a simple search on any of the major search engines will point you in the right direction). Once you are happy with the firms initial review of your options you can then decided to take it forward from there.
If you do feel under pressure to make any changes to your ceding benefits you should not make a move until you are completely sure. Whilst this should make sense to you, often we are speaking to clients who are not sure what they have done, or why they have done it. Pensions are by their very nature boring, but they are vitally important to your overall financial wellbeing for you and your dependents and you should not be making any decisions before you fully understand and are aware of your options.
On a final note the Administration Standards from most Pension Providers is appallingly slow and you should take on the following points when communicating with them.
Always do it in writing.
Send all correspondence via recorded or secure post where possible.
Always quote your correct reference numbers or National Insurance Numbers in all correspondence.
Always follow up via telephone/fax or even email after 10 days or so.
If you take a little control over the process it is likely to have a beneficial effect in the short term, even it is like having teeth extracted.
Tags: Pension Transfers
Posted in Pensions - News | Comments Off
Written by richard on 21 July 2009
You will have seen lots of references recently to a radical and important initiative from the Bank of England known by the rather intimidating name of ‘Quantitative Easing’ (QE). We thought it would be helpful to explain what this jargon refers to, why it matters, why it is probably the right policy for the Bank of England at the moment, and what the risks of it are.
QE is sometimes described as ‘printing money’. This is slightly misleading as money is not literally printed in the form of notes, but it does involve the Bank of England simply creating money electronically on the keystroke of a computer. It is new money which is not backed by tax revenues or assets that the Bank of England holds. It is effectively created ‘out of thin air’, and to that extent it is indeed the electronic equivalent of printing money. The money is then used for a specific purpose: the Bank of England purchases bonds from commercial banks, in the hope that this will ease their liquidity problems and encourage them to lend.
QE is a response to the situation where interest rates have fallen almost to zero but the economy is suffering from increasingly entrenched deflation. With interest rates at 0.5%, it is doubtful that any further cut in rates would improve the availability of credit, and might actually do more harm than good to the banking system. Yet the economy is suffering from the deepest recession for more than a generation and the most widely used measure of inflation, the annual Retail Price Index, fell by 1.1% in May. It is forecast to fall significantly more sharply in the coming months.
Deflation is damaging for the economy; it encourages companies and consumers to defer purchases in the expectation of buying more cheaply in the future, and thus severely curtails economic activity. It also has many more subtle but undesirable impacts on companies’ balance sheets and profitability. When we are already in a severe recession it creates the risk of a spiral which ends in outright depression.
QE seeks to prevent deflation by providing the banks with the wherewithal to boost lending in a way that promotes economic growth and demand. In theory
technical rules about bank lending should allow them to lend a multiple of 5-10 times the cash they receive, although in the current climate they will be more than usually choosy about to whom they lend. Nevertheless some extra credit should become available to encourage companies to invest and consumers to spend, and thus help to break the ‘domino effect’ of deflation, deferral and depression. As a very simplistic rule of thumb, £6 of credit tends to generate about £ 1 of extra GDP.
So far the Bank of England has created £125bn of new money under this programme. It has bought a few corporate bonds, but most of the assets that it has bought so far have been government bonds, or ‘Gilts’. However it should be stressed that these have all been existing bonds held by banks, not bonds newly issued by the government to fund its ballooning budget deficit. It is specifically not purchasing debt directly from the government, as for instance happened with such disastrous inflationary consequences in Germany in the 1920s. Indeed, it is explicitly prohibited from doing so under EU rules. Nor is it the debt being cancelled; the Bank will hold it on its books and intends to sell it back when conditions normalise. The Bank insists that its motivation is not conveniently to reduce the National Debt, but purely to grease the wheels of the credit market.
The policy gives rise to two obvious and pressing questions: will it work, and will it stoke inflation?
QE only started in the UK in March. It is too early for its impact to be quantified, and nor does history give us a firm answer about its efficacy. Until this year it had been tried only in Japan in the 1990s. While it did seem to alleviate the worst of deflation, Japan’s economy has remained one of the most subdued in the developed world. It is also now being tried on a much greater scale in the USA but, as in the UK, it is too early to draw firm conclusions.
However some important metrics have improved: most significantly, the interest rate that banks require when lending to each other has fallen. There are also increasing signs that at least the speed with which the economy is contracting is beginning to slow. Of course this may have more to do with measures that have already been taken internationally than with QE, but it does seem that the grip of the recession is starting to loosen in the UK.
The other question concerns inflation. Common sense tells one that expanding the monetary base without increasing output will eventually lead to inflation. If a larger amount of money is chasing the same amount of goods, the price of the goods will surely rise. There have indeed been many examples, from Germany to Zimbabwe, in the last hundred years of countries suffering rampant inflation, even in times of depression, when they used fresh money to pay off budget deficits. That encourages fiscal irresponsibility, and does tend to lead to rampant credit growth, which quickly stokes inflation.
However QE explicitly seeks to avoid these traps and Japan’s experience does strongly suggest that, if we are to suffer inflation at all, ‘eventually’ is the crucial word.
While the Monetary Policy Committee may well need at some stage to be rather more fleet of foot than usual in turning off the tap if it wishes to keep inflation within its targeted range, the risk of it happening quickly should really not be overstated.
In an economy as complex as ours it is dangerous to oversimplify the inflation mechanism. The policy is only being tried because deflation and credit contraction threaten us, and deflation will certainly not loosen its grip if the banks merely hoard the cash on their balance sheets. Only if and when the banks start to lend that multiple of QE cash mentioned above would the risk of inflation grow.
Over the rest of 2009, and probably into 2010, we think that deflation remains a greater risk than inflation, and only in 2011 do we think that QE might cause inflation to become the greater threat. But we would stress even that would be dependent on the world economy recovering more quickly than expected.
That does not mean that the long-term risks can be blithely ignored. Particularly where one has monetary policy set by committee, as we now do, there is an obvious risk that the majority will not agree to reverse the policy until it is too late. In a healthy economy in which the lending mechanism is starting to function as normal, an extra £50bn of cash inappropriately provided to the banking system might well encourage an extra £500bn of credit to be quickly issued. Even ignoring the impact on Sterling of all this new money, that would undoubtedly run the risk of inflation which could only be stopped by the most ungainly and disruptive hike in interest rates. However we would emphasise that this is not a risk that should exercise us now, and in the short term we do think that the benefits of QE outweigh the risks.
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Written by richard on 20 July 2009
The Chancellor announced an unexpected bonus for investors in his April Budget, when he increased the annual individual Savings Account (ISA) allowance from £7,200 to £10,200. The allowance had remained frozen at £7,000 for many years until it was increased to £7,200 last year, and no-one expected such a large further uplift now.
For people under the age of 50 this extension will not become available until April 2010; but those over 50 will be able to subscribe the higher amount half way through this tax year on 6 October 2009. Unusually, those that will turn 50 on or before 5 April 2010 will be able to take advantage of the higher subscription on 6 October.
For clients who are over 50 we will be making arrangements to take advantage of the higher limit in October. This enhanced concession increases an already valuable tax break for investors, especially for those who are punctilious about taking advantage of it every year.
Over time it is possible to build up a very substantial portfolio which enjoys complete freedom from Capital Gains Tax and also, for higher rate tax payers, a substantial Income Tax reduction. Indeed for those that will have to pay the new 50% rate of Income Tax, the benefit of an ISA will be significantly greater. We would encourage all tax-payers that have not already done so to think of starting an ISA.
Given that we have seen a good deal of volatility in investment markets over the last 18 months or so there is now an ideal opportunity to review your investment choices and of course factor in the new investment limits.
Please do not forget that whilst ISA’s allowances can play a major part in your longer term investment planning there is the issue of using very favourable Capital Gains Tax Planning to ensure your longer term security from investments with an eye on Tax Efficiency. Noting of course that there is a favourable Capital Gains Tax Treatment on Death.
Therefore utilising both ISA allowances and building a separate Unit Trust or Share portfolio can make a lot of sense in any market.
With many modern ‘wrap’ type investments you can hold Unit/Investment Trusts within the wrap and simple make switches on an annual basis in order to utilise your annual allowances.
As always you should seek Independent and Impartial Advice before you make any investment decisions and of course you should never invest for Tax Reason alone.
Tags: Investing, ISA Investments
Posted in News - Updates | Comments Off
Written by richard on 17 July 2009
Whilst this important subject has had much press comment over recent years we are probably no closer to solving the problem.
There is now another discussion being started which will resolve what? Probably nothing, to put some simple spin on the matter ‘there is not going to be solution because it is not palatable for any of the politicians to give us a solution’ .
We are very close to an election, none of the opposition has really made it’s mind up about this important area of care, and realistically the Health Service is at breaking point.
My recommendation to you all in relation to the area of Long Term Care is the following:-
Protection all of your assets where you can.
Make some provision for the potential need for longer term nursing/elderly care.
Fact is you should not rely on a state promise in this or any other area.
Richard Smith
0845 226 9106
PS: For those of you interested in the subject there are limited books available. One that I have found interesting is here
As always you can use the form below to contact me.
Posted in General Financial News | Comments Off
Written by richard on 15 July 2009
Whilst it might seem to some of you that I am on constantly about Abbey Life and what a poor provider of Personal Pensions they really are (mind you there are others that even worse) this is a story that should worry all of you that are employed, and it looks like it will be getting worse.
Today is has been announced that AMEX are reducing the level of contributions to their Stakeholder Personal Pensions (held under their Staff Scheme). Now this surely is a sign of the times.
A link to the full story is here
Richard Smith
0845 226 9106
Posted in News - Updates | Comments Off
Written by richard on 11 July 2009
With Profit Investments
If you live in the South East we are running some seminars covering these areas in the coming few weeks (Book Here, they are free)
Update 14th July 2009 it gets worse With Profit Bonuses Slashed
One day when we live in a world of honesty and truthfulness we will see some investment products disappear from the market place completely.
With Profits Bonds | With Profits Pensions | With Profits Endowments | With Profits. (Full Stop) should all have been removed from the sale many years ago and despite some involvement from the Financial Regulator (the FSA) in the UK they are still on sale.
Designed in the early part of this century to be used by the Insurance Companies to increase profits and hide investment returns these funds are so decrepit, words really do escape me.
In very simple terms these plans work by pooling your money with like minded investors in one managed fund, when these funds grow some of the returns are added back as bonuses (guaranteed) and a further variable amount is held back to add bonuses in poor investment years. This creates a smoothing effect.
The reality is that since 1980 onwards and probably before then it has been possible to get the same result with a far lower level of charges, greater control of your investment overall and of course flexibility.
It is just a shame that most Financial Advisers have seen fit not to use any of the alternatives and of course the Insurance Companies (like Porn or Drug Dealers) that peddle this stuff have seen fit not to provide alternatives because is suits them.
The reality is that With Profits contracts/funds in any guise only benefit the Insurer/Salesman with hidden levels of charges and inflexible terms and very poor investment performance.
We are now in a position where these Funds (or Investment Links) are still being sold as some panacea for customers who are risk averse and are looking for a safe home with high overall returns. Humbug (I nearly swore then). You should avoid these With Profits Investment like the plague (or Swine Flu).
Let me give you some proof, some of you will have noticed that the Investment Markets have started to look better in recent months, and in fact the stock market has risen 18%, to close at 4127 on 10 July, since hitting a 2009 low of 3512 in early March, and what has happened to With Profit returns nothing!
Nearly all of the providers in the market place are still levying penalties for customers wanting to get out of them.
They should change the name of these investments to “without profits” or “ one sided high charging investments that only benefit the insurance company” .
The sale of these products must surely be banned in the short term, and if you own one a review must be carried out immediately. Really you are better out than in with these plans.
It is not possible to explain how poor this type of plan is in this modern world and you are really are better of out of them.
Richard Smith
Independent Financial Adviser
0845 226 9106
Tags: With Profit Bonds, With Profit Investments
Posted in Investments | Comments Off
