Budget 2014! Amazing change to pensions that will change your retirement planning!

We don’t normally like to put out a post budget report but after yesterday’s announcements we felt unusually that this impacts significantly on a large number of our clients. The bottom line is that some of the restrictive rules on how you take your pension benefits are about to be relaxed. This is a game changer for clients with pension’s funds that are not being taken.

Yesterday’s budget announced plans that effectively opens up access to pension schemes by removing the need to buy an annuity. This is news that I know many clients will be absolutely delighted about.

It will be an extremely popular decision to the voter, will release millions of pounds into the economy that was otherwise tied up and will also bring in extra tax for the government.

The concern must be that this will open the doors to funds that are supposed to be for the long term security of clients and I would envisage the regulator will be looking very closely at this area of advice.

We see this news as being the most significant in the pension industry in the 23 years that Nigel Reeves has been in it.

Many client scenarios will be affected – we have listed a number of them below

  • People about to retire
  • People with Drawdown
  • People with ISA’s
  • People with funds under 30k
  • People wanting to retire at 55 years of age
  • People that have not used pensions due to lack of access

Are you one of the above?

However like most of these things the devil will be in the detail and one would not be surprised if this is amended greatly during the next few months of consultation period. Anyone seeking to buy annuities may be advised to wait till this is clearer over the next few months.

Rest assured we will make sure we consider all the facts and be up-to-date with regards the opportunities and risks that this news may bring. We will continue to provide bespoke solutions to each individual.

Below are a couple of documents the treasury have released that we thought may be of interest to you

Budget 2014: The New ISA

Budget 2014: Greater choice in pension explained

If you would like to discuss how the Budget could affect please you contact us NOW on 0191 281 9862 or e-mail info@reevesifa.com to arrange an appointment  

What do people, approaching retirement, value the most?

The following is a report by AXA Life Invest – It highlights a number of important points that I thought were relevant**

For the second year in a row now, AXA Life Invest has produced a ‘Cost of Living in Retirement’ report, to better understand pensioners’ needs.

The 2013 report examined the effect of current economic conditions on retirees’ standard of living and what the next generation of retirees can learn from the experiences of today’s pensioners.  This year, AXA Life Invest has built on this research, extending it beyond today’s pensioners to people in their 50s and 60s who are approaching retirement. The resounding response is that people value certainty: they want a stable, guaranteed income that they will not outlive.

 

People value certainty: they want a stable, guaranteed income that they will not outlive. But people approaching retirement tend to bury their heads in the sand when it comes to their retirement savings, when in fact, they need to be given the tools to take control of their finances and place themselves firmly in the driver’s seat.*

This year the report shows that certainty is king for those approaching retirement.

  • 73% of those approaching retirement said that what they would value most in a pension is a secure income in retirement
  • 61% of those approaching retirement would find it beneficial to know up to 10 years  n advance of their retirement the minimum amount of pension income they would receive
  • 39% would invest more into their pension if they knew what their retirement income would be

Although the survey focused on UK pensioners who are not reliant on state benefits, the Cost of Living in Retirement report has revealed that people neglected to take professional

Not only do people start late when it comes to preparing for retirement and neglect to take vital financial advice, but many people approaching retirement do not know how their pension is doing:financial advice before retiring. In fact 67% of today’s pensioners surveyed never received advice from a financial adviser and, worryingly, just fewer than 40% of pensioners did not start saving for retirement until they were over 40.

  • Over 7 in 10 do not know how their pension fund is invested; while around the same proportion does not know how their pension pot is performing for them.
  • 40% of 50-65 year olds in employer sponsored DC schemes have never reviewed the investment performance of their pensions.

Delving further into risk, the report showed that those approaching retirement accept the principles of lifestyle investing but don’t know what this means in reality:

  • 69% of those approaching retirement describe themselves as ‘risk averse’.
  • Almost two-thirds (62%) agree that taking on less risk means moving their pension into safer assets such as government bonds
  • But 90% of people in a DC scheme don’t realize the majority of their pension pot is invested in gilts, which are currently delivering very low returns.

Given the above, it will come as no surprise perhaps to hear that a fifth of pensioners were caught out by lower than expected annuity rates. The report showed indeed that for 20% of pensioners, their annuity rate – and therefore their retirement income – was less than they had expected. For a further 10% of pensioners, the rates were a lot less than they expected. Puzzlingly, 27% do not have an opinion about their annuity rate, vividly demonstrating the public’s lack of engagement in this important element of retirement income.

Overall, there is a worrying lack of knowledge and preparedness for retirement by many

Yet, no one should be in the position of being surprised to discover just how little their life savings have actually yielded in terms of retirement income. But this shock to the system is avoidable. It pays – both economically and psychologically – to prepare for retirement in advance and to consider all options.people in the country. Britons are oblivious to how early they need to start saving and how their fund should be performing.

In a world where risk is borne almost entirely by the individual, people are searching for a new defined benefit solution. But the 21st century version of the defined benefit pension already exists in the UK – in the form of the unit-linked guarantee. The unit-linked guarantee is the only retirement solution out there that can tell people exactly how much money they will get each year of their retirement.

Are any of the above points relevant to you? If you think we could help contact Reeves Independent on 0191 281 9862 or email info@reevesifa.com for a FREE introductory chat! 

*AXA Life Invest’s 2013 Cost of Living in Retirement report

** The report has not been edited in anyway

Retirement Options – Fact Sheet

Retirement Options – Fact Sheet

Our service
This service is designed to help you make the right decisions when you retire and can have a significant impact on your income. This includes how you retire and the timing of your retirement – whether it’s early, at the

We work primarily with clients who have accumulated multiple assets (pensions, property and investments) to look at all the options available for maximising your income.

What we offer

With our retirement options service we can help you by:

  • Analysing your needs
  • Researching ALL the options available to you
  • Providing a detailed report of the options available
  • Meeting to discuss your options
  • Implementing the agreed decisions
  • Liaising with policy providers
  • Suitability reports
  • ALL supported by a full administrative service.

How we work

  • Step 1: Introductory chat to discuss your situation, needs and goals.We follow a clear path with all of clients to ensure that we only ever provide advice that you need and that our services and fees are transparent.
  • Step 2: Approach existing providers with your permission
  • Step 3: Analyse existing assets and explore all retirement options
  • Step 4: Discuss your needs; our recommendations; the next step and fees*.

*You have the option not to proceed at any point until here.

The benefits

You don’t want to let your pensions or investments dictate when or how you retire. Reviewing your retirement options will put you in control so that you:

  •  Maximise your income in retirement
  • You are able to retire at the time YOU want
  • The options you choose are matched to the lifestyle and retirement you want.

What next?

If you think we could help contact Reeves Independent on 0191 281 9862 or email info@reevesifa.com for a FREE introductory chat! 

 

Retirement: bad for your health?

Recent research has suggested retirement may not be good for our health. Having a financial and lifestyle plan in place as soon as possible can help to ensure this doesn’t happen. This month’s guest blogger, leading HR consultant Mara Thorne, looks at the issue and offers some tips on preparing for retirement.

According to research conducted by the Institute of Economic Affairs and the Age Endeavour Fellowship, retirement may not herald the halcyon days of leisure and relaxation on which so many working people are pinning their hopes. After an initial improvement in well-being due to a reduction in stress levels, retirement actually increases the risk of clinical depression, diagnosed physical illness and the need for medication.

The solution, according to the authors of the study as well as the International Longevity Centre UK, is to facilitate a better “work-life balance” and enable older people to remain in work for longer. Not only would this help older workers both economically and socially, but it would also boost the economy as a whole. PWC, the large accounting firm, has estimated that raising the state pension age to 70 rather than 68 by 2046 would add around 0.6 per cent to the nation’s GDP.

You may be surprised to learn that, according to official statistics, 980,000 people aged 65 and over are still in paid employment. So as we are all living longer, does the prospect of working until we are 70 appeal to us, or are we reluctant to relinquish our dreams of lazy days pottering in our gardens or improving our golf swings? Why would we choose to continue working into our late 60s or even 70s?

My guess is that the most common reasons are financial constraints and fear of boredom and isolation.

“I can’t afford to retire”

Some people continue to work beyond 65 simply because they need the money. Inadequate pension provision is likely to become an ever bigger problem with the demise of the generous final salary pension schemes that fuelled the comfortable retirements of previous generations. Many people aren’t investing enough in their pensions to provide a decent income in retirement. The trend for starting a family later in life also means that the financial commitments associated with educating children may continue well into a person’s 60s. Now that the default retirement age has been abolished, if your pension income is going to be inadequate, you may have no choice but to keep working for a few more years.

“I still enjoy my job”

Other people simply enjoy their work, either for its intrinsic interest and satisfaction, or because of the social aspects of attending the workplace. After a working life of 40 plus years, with its familiar routines and camaraderie, you may feel anxious at the prospect of suddenly having nowhere to go every day, no structure to your daily life. We look forward to our holidays while we are working, but not needing to get up at a certain time and go to work – so pleasant in small doses – can be quite disorientating after a few months. And boredom and social isolation can be positively damaging to health, potentially leading to the increased risk of depression which the researchers found. People need to do something, to get out of the house and engage with other people, in order to be happy and healthy.

One of my clients was telling me recently that after deciding to “retire” in his late 40s because he was financially secure, he got so bored with playing golf that he started another company. I am sure there are many entrepreneurial people out there who would find the traditional idea of retirement equally tedious.

The right approach to retirement

The key to a successful and happy retirement, I believe, is to plan for it, both financially by ensuring that you save in a workplace pension or in some other sensible investment, and in terms of hobbies and activities. All too often retirement is a sudden life change, like jumping off a cliff. One day you are working full-time, the next day you have nothing to do. One day you have a full-time salary coming in, the next day you are reliant on a vastly reduced income. The change is too abrupt.

In an ideal world, with your employer’s agreement, a gradual reduction in your working hours would be a much better way to ease your transition into retirement, allowing you to adjust gradually to a reduction in income, and to find other activities to occupy your increasing amount of free time. It would be good for your employer, too, because you could gradually hand over to a younger person, passing on your wealth of experience, which would help with succession planning.

Baroness Greengross of the ILC criticises employers for failing to do more to support older workers. She cites some good examples of large employers such as Sainsbury’s and BMW which have schemes in place to facilitate a “phased” approach to retirement, while others make the right noises but don’t deliver in practice.

We live in an ageing society and the problems associated with poverty and ill-health in retirement are not going to go away. It’s something we all need to think about and plan for, both as employers and as individuals.

ENDS

Slow growth but some positives in budget

As always, deciphering the budget as it happens is never an easy task. Analysing the likely impact on different groups as the man with the red briefcase (he’s a politician after all) rattles off pledge-after-pledge is almost impossible. However, from the distance of 24 hours later, it becomes clearer who the winners and the losers are.

Given the nature of the economic climate (lack of growth) there was never likely to be anything startling in the 2013 budget. Indeed, the growth forecast for 2013 was cut by the Chancellor in his speech from 1.2% to 0.6%, so it’s difficult to say anyone is really a winner from that perspective.

However, in spite of the bad news (much of which was already anticipated) the budget did include several positive measures and opportunities. Most of this was naturally designed to stimulate growth by encouraging spending, borrowing and investing rather than saving – but there were still some crumbs of comfort for the latter if you looked hard enough.

WINNERS

One area of opportunity is for those investors looking to inject money into small businesses. The Chancellor called for the abolition of Stamp Duty on the purchase of shares on companies in growth markets such as the Alternative Investment Market (AIM) where duty of 0.5% is currently applied to each transaction.

Another interesting change – and one of the few concessions for savers – is the planned merger of Child Trust Funds and Junior ISAs. Until now Junior ISAs have only been available to children born before September 2002 or after January 2011.

Those born outside of these cut-offs only qualified for CTFs – which offer less choice of funds, poorer returns and high charges. The removal of this qualification should pave the way for everyone to use the junior ISA as a long-term tax free savings vehicle for children. As an example of the benefits of doing this, saving £50 per month for 18 years throughout childhood (assuming around 5% growth and normal charges) would provide £15,000 towards University or other fees.

LOSERS

Several groups would also have been disappointed – none more so than those approaching retirement. For people at this stage of life, the Chancellor’s announcement that Quantitative Easing will (unsurprisingly) continue is not great news. In simple terms, the continuation of QE keeps gilt yields, on which annuities are based, low. Even pensioners who choose ‘drawdown’ are affected as the maximum income they can take is linked to annuity rates.

Final salary pension schemes also look likely to be affected. Workers could be at risk of seeing their schemes close as a result of the introduction of flat-rate state pension measures, while experts are expecting members of final salary schemes and their employers that pay lower national insurance contributions to pay more as ‘contracting out’ of the second state pension ends.

LOOKING AHEAD

The chancellor also announced a consultation on the possibility of including residential property within personal pensions. This is a subject that was first mooted four years ago and nothing happened. While this would naturally create more opportunities, it would also raise a number of questions. However, given that this is merely a consultation at this stage, there’s little point in exploring the possible complexities here and the best course of action will be to see how and if things develop further.

WHAT TO DO?

If you’d like to discuss the financial impact of these or other measures from the budget, please give Reeves Independent a call on 0871 271 1280.

 

Case Study – Planning for Retirement!

Client Profile

Judy is in her late 50’s (it would be impolite to say how old she is!) and approaching retirement from her busy career. She wants to make sure that her pensions and investments will be adequate to fund her retirement. She also needs a detailed analysis of her options of how and where to take her income.

Our Analysis

Judy came to us 10 years ago with little retirement funding or plans despite being in a highly paid job. We advised her that what she needed was a retirement planner to help her to to focus on when she wanted to retire and how much she needed financially to lead the lifestyle she wanted in her twilight days.

The Solution

Using our financial expertise and the needs of our client, we came up with some realistic actions to ensure that Judy was on target for her retirement options.

In Judy’s case, the best solution was the funding of pensions, ISA’s and cash.

Things in life rarely go to plan all of the time so we regularly reviewed Judy’s case to ensure the plan was on target.

The Outcome

Judy is now happily retired with more than adequate funds and a healthy spread of investments held within various tax wrappers.

We are pleased that she is going to have a secure income in retirement and also the financial flexibility to cater for events such as ill health, transfer of estate or other unforeseen circumstances.

If you would like to speak to someone about the Reeves Independent Retirement Planning Review Service please contact us NOW for initial chat on 0191 281 9862 or e-mail your enquiry to info@reevesifa.com

Are you saving enough to live on when you retire?

A growing number of people are failing to save anything for their retirement, according to a survey by Scottish Widows.

The firm found that a staggering 22% of those aged between 30 and state pension age earning at least £10,000 a year were not putting anything aside for their future. The pension provider, which questioned 5,200 UK adults, said this figure had grown from 20% a year ago. (Source BBC website 21/05/12)

This begs the question – Are you saving enough to live on when you retire?

There is no doubt the closer we all get to retirement the more our minds focus on what income we will have and where it’s going to come from.

The majority of us see retirement as something to look forward to, a time for holidays, hobbies and spending more precious time with our families.If this is your ideal way to spend your retirement at the age that you want to retire, now is the time to plan ahead.Wherever you are at, it’s never too late to start doing something about your retirement savings but having a plan in order is essential to enable your to achieve your targets for when you retire.

At Reeves Independent, we will sit down with you to make sure we have the right information about you and your circumstances to give you the best possible opportunity to achieve your retirement plan.

Whatever your retirement savings situation, don’t delay taking action. The more time you have to do something about your situation the less painful it’s likely to be.

For a FREE initial chat to discuss your retirement planning call the office on 0191 281 9862 or contact us on info@reevesifa.com to book an appointment NOW!

The rules are changing – the quality of our advice isn’t!

From January 1st 2013, the way that you pay for financial services is changing. Instead of costs being hidden behind commissions, you’ll have to pay your Independent Financial Advisor direct for receiving the best advice and benefit of their experience.

At Reeves Independent Wealth Management, we do appreciate however that there is another option; shopping direct online.

Before you consider this, we’d like to gently remind you why sometimes some things are best left in the hands of experts and not call centre telesales clerks or automated systems. For example, would you really want to trust in a doctor’s online diagnosis or make decisions about your children’s future school via an online presentation?

Some things are great online; others are best left upfront and personal. Your financial future is one of them!

Why seek our advice?

As a valued client, we know you and what your financial circumstances and aspirations are. Our team has years of experience in not only dealing with the financial market but also analysing trends & statistics to make sure that the best possible advice is given to help you decide on your investments. Of course once you invest with us, we provide you with regular reviews & pro-active phone calls to ensure that your investment is protected.

The financial world can be a legislative nightmare with regular changes to rules and regulations. Our team make it their business to keep themselves up to date on factors that may affect your valuable investment. Whether it’s an opportunity or a threat, we will keep you personally informed – something that a website can’t always do.

Reeves Independent Wealth Management can:

  • Establish the degree of investment risk you’re willing to take
  • Tell you about the main asset classes such as cash, equities, bonds and property
  • Work out how to make the most of tax efficient investments
  • Tell you about specialist types of investments, such as ethical funds
  • Align you investments with a bespoke retirement plan
  • Integrate Inheritance tax issues/death & ill health planning into your investment plans

How we’ve performed for you

Over the past year, our clients have predominantly invested in cash and bonds. Through good, financial management, a significant percentage of our client’s assets have avoided being exposed to volatile equity markets, keeping their capital safe. Similarly, Corporate Bonds have been used for client’s wanting an even lower risk and have achieved similar growth to equity markets (7.7% last 6 months) compared to 6.1% from the FTSE 100 Index.

For our clients wanting equity investment, we advised those prepared to take higher risks to support Europe & financial equities through various collective funds. Over the last six months the European sector has outperformed the FTSE 100 Index, whilst the financial sector has lagged behind.

In summary, clients following our advice have seen their overall exposure kept to an absolute minimum whilst keeping away volatile markets, which have led to slightly lower returns than the FTSE 100 Index. Returns have mainly been dampened by cash holdings while clients who have just invested (no cash holdings) have generally outperformed the FTSE 100 with significantly lower risk.

Remember if you decide to take financial services advice online, you would not be receiving advice from us and you may find that there is an important issue concerning the investment or the product that you have overlooked.

You would also receive less protection in the event of a failure of your investment. For example, you would be unlikely to be successful in a complaint against us for ‘mis-selling’.

How we can help you further:

Whether you are considering investing in individual companies, a collective investment scheme such as a Unit Trust, Open Ended Investment Company (OEIC) Investment Trust or making the most of tax efficient investments using an Individual Savings Account (ISA), it always pays to seek investment advice from an IFA.

There are always questions to answer when it comes to your finances and our Priority Client Financial Health-Check will help you to make the best possible decisions on matters such as:

  • Will your current retirement provision provide you with the income you need in retirement?
  • Are your savings aligned to your current and future objectives?
  • Is your portfolio maximising the tax efficient opportunities available?
  • Has your portfolio been reviewed and aligned to your risk profile?

 Investments

Sometimes, money can arrive from unexpected sources, a lump sum inheritance or even a lottery win but mostly, your investment comes from earning it through sheer hard work.

At Reeves Independent Wealth Management we will question you extensively about your goals and ambitions so that we can give you the most appropriate solution from the whole of the market to help you achieve them. We guarantee that we will also tell you all of the risks associated with the options available and work with you to create an investment package as individual as you are.

We also want to make sure that the funds you have saved will go into an investment that will grow in value. We are able to assess the performance of individual portfolios using software analysis tools giving you peace of mind and the knowledge that our team of experts have the right experience and resources to guide you in the best way possible.

Reassurance, expertise and peace of mind are worth their weight in gold when it comes to financial decisions.

For a FREE no obligation chat about your current situation or your requirements then call 0191 281 9862 or e-mail info@reevesifa.com NOW!

Coping with Redundancy – Part 2!

After yesterdays Blog which focused more on protection yourself for the unfortunate event of redundancy we now are concentrating on the options available if it did ever happen. This is primarily focused on the pension side of things.

What can we do for people facing or going through redundancy?

There are a number of options available to people & we must ensure that they understand these. Below are 3 pension choices that can be considered;

  • Leave them were they are
  • Transfer their current pension into a new scheme
  • Bundle their current & past pension/s together – whether this is in Self-Invested Personal Pension (SIPP) or another scheme
Here at Reeves Independent we can advise people on the best option by fully understanding them & their unique situation. We do that be assessing their new life plans & their knowledge of money/investments/pensions. Below is a recent client case that happened here at Reeves Independent
Case Study
We recently met a new client who had been a successful manager for a number of years at various posts who was on a high salaries throughout his career, who unfortunately had been made redundant.  After sitting down & accessing the whole situation it was agreed that he kept his frozen pension which was worth 35k where it was. Additionally his other 4 pensions which had a combined total of over 250k were consolidated into one pot.
This restructuring of his financial position gave him much more control of pensions, lowered his management fees & gave him much more fund choice to invest in. Furthermore our Retirement Planning service has given him a much more focussed plan to give him the best opportunity for him to retire when he wants.

For a FREE no obligation chat about options after redundancy then call 0191 281 9862 or e-mail info@reevesifa.com NOW!

Case Study! Life Changing Advice – Life Changing Decisions – Life Saving Solutions!

I know the title of the Blog sounds particularly ‘cheesy’ but it is a genuine response from a new client after the service we provided her in the last few weeks.

What was the client’s position when we met?

  • 58 year old single female
  • Has had a varied career history
  • Due to economic downturn is facing no regular job for the first time in her life
  • Had been looking forward to retirement at 65 when she could start drawing her occupational pensions
  • Last 18 months has seen a decrease in job prospects & savings
  • She was desperately worried about her income & her lifestyle had become restricted

What was the result of Reeves Independent’s Advice?

  • She now faces a ‘certain’ financial future were she does not have to work unless she want to
  • Stress & worry has now been removed
  • Happy & able to pursue open ended life time opportunities through a secure financial situation
  • Accessibility to significant cash that she didn’t have before which she can use for any purpose – whether it be fresh investment or to subsidise luxury travel
  • Adequate & secure income for the rest of her life
  • Significantly reduced running costs

How has Reeves Independent achieved this?

  • Reviewed all the options on her property assets & unused pension funds
  • Produced solutions which she previously didn’t know were possible
  • Helped her step by step through all the issues to enable her to make the best decisions for her

This has resulted in one very happy secure client!

If you would like to speak to someone about the Reeves Independent Retirement Planning Service please contact us NOW for a FREE initial chat on 0191 281 9862 or e-mail your enquiry to info@reevesifa.com