Low interest rates are killing chances of a decent income in retirement

Some believe that rates are at their lowest for more than 25 years - but Reeves can help


Low interest rates are making it hard

Last month it was reported that annuity rates had plummeted to a 25-year low – however, some believe that interest rates are at their lowest for a much longer time than that. In the 1990s, £100,000 would have bought a 65-year-old an income for life of about £10,000 a year- today it will buy little more than £4,000 a year.

It’s worse than that - those are not inflation-protected annuities. If you want an income that will maintain its value over time, then that £100,000 will buy you an income of somewhat less than £3,000 a year. Essentially, you’ll spend your career scrimping and saving, worrying about the future. To get together a seemingly large pension pot of £500,000, and what you'd currently receive is a pension of less than £15,000 a year.

Lower interest rates have driven the most recent decline. It is also the reason behind the long-term decline, impacted further by the financial crisis in 2008. 

The consequences of this shift, though, are far more fundamental to our system of pension saving than either government or those of us desperately trying to save for our old age seem to appreciate.


It's going to be harder for younger people to save in the future

With traditional salary-related occupational schemes becoming scarce outside of the public sector, most of us don’t have a great chance in replicating the comfortable incomes enjoyed by many of today’s retirees.

Astonishing as it may be, the fact is most pensioners today are financially better off than they were during much of their working life. Once you take account of housing costs and the costs of bringing up children, they have a higher disposable income in their late sixties than they had when they were in their forties.  Today’s 40-year-old's should not look at their parents’ generation and expect anything remotely similar.

These low interest rates have had an even more fundamental effect on our system of private pension provision, though.  

''Despite these tough times, Reeves Independent can help you.''

Of course, at first glance, it makes for grim reading. However, it may not be as bad as it seems. Reeves Independent are experienced financial and retirement advisers. Yes, the facts above are true. But that doesn't mean you can't have a healthy retirement income.

The era of many retiring in their early sixties on a sizeable pension, possibly, will soon be over. In the future, due in part to these low-interest rates, you may have to work beyond 70.

However, no one can predict what the case will be. At Reeves Independent, we don't work on assumptions. We work on tried-and-tested research methods, industry leading communication and recommending regulated products and funds that we believe can get the best potential returns for you. We firmly believe that through proper monitoring and analysis of market movements and trend analysis we can make the right recommendations to yield a better return from your investments.

Through smart decision making and sound recommendations we believe we can set attainable, realistic goals for you - and that you can potentially retire well before 70.

Reeves Independent work hard to make sure we can get the best results for your portfolio.

To start your free initial review of your pension situation, click the button below.


This article was taken from The Times, written by Paul Johnson - Director of the Institute for Fiscal Studies. These articles are for information only and are based on specific client circumstances which may be different to yours. No advice should be conferred from the articles. No action should be taken without independent professional financial advice as any actions on your pension may be irrevocable and have a big impact on your income in retirement.

Pension funds face working in new climate

New legislation means you could be caught out - but Reeves Independent can help


Reeves can help with new pension rules

New rules introduced this month require trustees to consider climate change and other environmental & social factors when making investment decisions.

Sir Steve Webb, the former pensions minister, said that trustees ultimately could be opening themselves up to the risk of being fined or banned for non-compliance. They may also face legal challenges from pension fund members.

New rules from the Department for Work and Pensions came into force on October 1st for all defined-contribution schemes with more than 100 members. The regime will be extended to traditional defined-benefit schemes next year.

Trustees will have to set out in writing how they are taking environmental, social and governance – ESG - factors seriously when they invest members’ money.  In addition, they will have to explain whether they consider other non-financial factors, such as their members’ ethical and moral views.

Trustees who don’t take the new regulations seriously could come under the scrutiny of The Pensions Regulator, according to a joint report from Sir Steve’s employer, Royal London, and Herbert Smith Freehills, the legal firm.

“The big schemes with professional advisers will be all over this,” Sir Steve said, “but I think it is very likely that some smaller schemes won’t have even started to think about it.”

''Reeves Independent can help you with any changes to help you avoid any potential pitfalls.''

Reeves Independent are very aware of the new regulations and are already working to notify clients. Whilst it may not seem the biggest of news, it’s very important that we communicate this with our clients so that they are aware and can avoid any potential banana skins.  

Samantha Brown, head of pensions at Herbert Smith, said: “ESG is no longer an optional extra for trustees, pension providers and asset managers. It’s essential that they are able to demonstrate that they are taking it seriously and that they don’t just treat this as a tick box exercise.”

At Reeves Independent we leave absolutely nothing to chance. That means making sure we keep tracking the markets, capitalising on movements and avoiding any potential dangers. It also means making sure that we follow trends, news and the latest regulations to ensure our clients are kept in the loop and their investments & pensions are performing strongly. 

Royal London said that, on balance, the academic evidence suggested that companies with strong ESG performances generated higher investment returns with less volatility.

ESG investing has changed from a generation ago when, polluters and those who showed little care for the environment, were screened out of investment portfolios. Nowadays, fund managers are more likely to engage with managements in an attempt to pressure them into polluting less. Such investing has been criticised by some sceptics as ‘greenwashing’ — giving the impression of changing behaviour while investing in the same way as before.

Whilst this may be the case, Reeves Independent are committed to honesty, fairness and helping the community & environment. We will try to instil our methods into all our dealings. With this in mind, you will receive a service from honourable pension specialists. We can help you navigate any tricky situations that may arise for a smooth, bright and sustainable future.


Sources: information is obtained from a range of sources including seminars, webinars, industry publications and general media comments.

Disclaimer:  This document is not intended as advice and no investment decisions should be made solely on the back of this email.  Past performance is no guide to the future.  All investments carry the risk that you will not get back what you have put in.

A guide to crystallisation

Crystallisation may seem like a minefield - but it's very simple


Crystallisation will become very clear to you

Many people don’t realise what crystallisation means. It may sound incredibly complex, but it’s very simple.

The term ‘crystallised’ simply refers to the benefits you can start to take, and spend, from your pensions.

If your pension is uncrystallised you can’t touch it. The quantity crystallised is the amount of your pension used to start paying your pension income, plus any amount used to pay you a tax-free lump-sum.

To undertake phased crystallisation, Reeves Independent advise you to only crystallise enough of your pension for the income you need - your pension is not a bank account. As always, we want to make sure you make the smartest decisions possible and remain flexible in your approach to your investments and pension. We review this with you twice-a-year to ensure you maximise allowances and keep your retirement on track.

''The term ‘crystallised’ simply refers to the benefits you can start to take, and spend, from your pensions.''

Caroline Chambers is a 56-year-old Senior Line Manager for a telecommunications company. She recently became a grandmother and wants to make sure she spends as much time with her new granddaughter and help her son with childcare. As such she drops down to 3 days-a-week. She has £20,000 from income but will need another £10,000 to cover her expenditures.

The way to arrange this is to crystallise £40,000 of accrued, untouched pension. By doing this £10,000 can be paid out to Caroline – this can be done as a one-off payment or one a monthly basis. £30,000 can then be moved into a flexi-access drawdown pension. This way the money is still invested and within a pension wrapper – it’s a win-win situation.

However, if withdrawn from a pension pot, it’s subject to a marginal rate of tax. By leaving the money in an accrual pension, and not touching it for as long as possible, less tax will be paid for the longest time possible.

It’s certainly a huge benefit to consider – Reeves Independent can help you to get the most out of your investments.

For a free, no obligation review, click the button below.


Names have been changed to protect identity. These articles are for information only and are based on specific client circumstances which may be different to yours. No advice should be conferred from the articles. No action should be taken without independent professional financial advice as any actions on your pension may be irrevocable and have a big impact on your income in retirement.

Don’t Make Them: Five Inheritance Tax Mistakes

​​Face reality - make smart choices


Nobody likes thinking about death – particularly not their own.

But, facing that reality is central to the financial planning process, helping you to decide how much you need to save for retirement and how your loved ones will manage when you’re gone.

To ensure this, you must avoid any or all of these five common mistakes of inheritance tax - IHT- planning.

''You spend your working life building up your wealth and you ought to do what you can to ensure that, after you, those you choose can enjoy all of its benefits, without the taxman taking his substantial cut.''

1. Failure to plan

Not having any estate plan at all is the most common mistake. Perhaps people fall into this trap because they don’t want to think about it and keep putting it off until it’s too late. Or maybe they simply don’t think through the possible tax consequences for their estate and what these might mean for their loved ones. If you make no provision, it’s possible that when you die your spouse will be faced with a significant proportion of the assets, on which you have both relied, being taken away in tax.

2. Failure to draw up a will

Sadly 60% of people in the UK don’t have a will. This is the most basic estate planning tool and everyone should have one. You will die - it's a matter of fact. Many people have the attitude of: 'I won't be alive, so I'm going to spend it.' But what about those you leave behind?

Working on the assumption that you won’t have anything left when you die isn’t necessarily true. If you’re a husband and wife: what happens if one of you dies first and you die without having made a will? Then it can be a long drawn-out and expensive process for your surviving partner to secure control of your assets – at a time when they’re suffering more than enough stress and distress.

There can be particular problems for those with step families or who are not married to their partners. Dying intestate – without a will - is not ideal in any circumstance and we wouldn’t recommend anybody not to have a will, no matter how isolated they might feel.

Failure to make a will can have severe inheritance tax implications. If, for example, you’re single, your estate could go to your parents on your death and this adds a layer of IHT the estate will eventually have to pay.

Your will needs to be reviewed every few years to make sure it still meets your wishes. In addition, when drawing up the will, consider also appointing a power of attorney, so that somebody can handle your affairs, including your finances, if you should become incapacitated.

Retired Family Reading

Avoid mistakes to ensure a happy retirement 

3. Not using trusts

The most IHT way of leaving assets to people. But trusts are an often overlooked way of laying down how your estate should be managed after your death.

Putting money into a trust means it’s not going into anybody’s estate and, as trusts normally last for 125 years, this means you’re deferring inheritance tax on the estate for several generations. The rules around trusts are complicated and, despite the long term savings, there’s the short term expense in setting one up and they’re not for everyone. 

But, they should be considered as part of a strategy for minimising IHT liability.

4. Withdrawing funds from your pension fund and giving them away

People like to be kind. They like to give money away to their family and friends. It may be that upon reaching 55 and gaining tax free access to their pension, they want to help children buy a car or even a house.

But, the gifting rules say that only up to £3,000 can be gifted per tax year, although a year can be carried forward if not used. If you make a gift of more than this and then die within seven years, it could be considered for IHT. If you do this, you’ll have taken money out of the IHT-free wrapper of the pension and put it into an estate that is liable for IHT. If you die within seven years, your estate will have to pay tax on that money as though it were still in it.

If you’re making gifts of tens of thousands of pounds or more, this could be pretty significant and the worst-case scenario is that your children, who may well have spent the money, could be left facing a hefty tax bill. If you hadn’t done that and had died at the same age, that fund could have been passed to your children and - if you were under the age of 75 - they could have had it completely tax-free.

Reeves can make sure you avoid these mistakes

5. Not speaking to a financial adviser

An experienced financial adviser - such as Reeves - can review your estate, discuss with you how you want to dispose of it and then help you draw up a tax planning strategy.

Not having one can have serious implications if you have complicated assets or doubts about your own ability to draw up an estate plan.

These are all easy mistakes to make and that makes them easy to avoid. Don’t put off consideration of the problem, seek advice and put in place a tax efficient plan that will avoid hardship, stress and a large IHT bill for your loved ones when you are gone.

​The financial conduct authority does not regulate tax and estate plannin. These articles are for information only and are based on specific client circumstances which may be different to yours. No advice should be conferred from the articles. No action should be taken without independent professional financial advice as any actions on your pension may be irrevocable and have a big impact on your income in retirement.

What’s your retirement going to look like?

​​Retirement planning has changed over the past 20 years


With Reeves you can plan your retirement

There was a time when pensions were relatively straightforward, but retirement planning has undergone some radical changes over the past 20 years.

For one thing, final salary pensions are becoming less common and the qualifying age for a state pension has been pushed back. On the other hand, people have been given the ability to access their pension funds with greater flexibility.

''There are many benefits with the new pension environment, but it does call for some planning.''

To do this, you have to have an idea of what income you’ll need in retirement and, for the plan to be realistic, you need to recognise that that will vary during the course of your retirement. We’ll look at the four key stages of retirement for one client, Dave.

1. Growth stage

This is actually the stage running up to retirement, when Dave is still accruing wealth and at a greater rate than at any other time in his life. His children have left home, finished university and are finally largely paying their own way. He is in a senior position in his career with the highest salary of his working life. During this period, Dave is making his retirement plans and saving. 

2. Pre-state pension retirement stage

Like most people, Dave gives up work at 57 - ten years before the state pension age.

These are the golden years of his retirement. Both fit and healthy, he and his wife Jacqui can realise their ambitions of going on a cruise, visit her sister in Australia and he can buy and restore a vintage British motorbike.  Fortunately, their outgoings are much lower, the mortgage having finally been paid off just before he gave up work.

This means that he needs an annual income of £25,000. He has his pension and ISA and cash savings and he will continue working part time which will earn him £8,000 a year.

Our advice to Dave is that he makes up the difference of £17,000 between his outgoings of £25,000 and his part time income every year by using his ISA savings and by drawing £4,500 out of his pension. That way, he is making full use of his £12,500 annual income tax allowance, which would otherwise be lost. He is also safeguarding his tax free savings for the future when he will need them. If you don’t use your income tax allowance, you are effectively inviting the taxman: 'At some point in the future, tax me on this money’.

​Proffessional advice can help you achieve your pension goals & objectives.

3. State pension stage

When he’s 67, Dave qualifies for the state pension of £7,500 a year. He and Jacqui have fulfilled their greatest – and most expensive – ambitions, but they’re still active and in good health and still want to travel.

So now, Dave only needs £20,000 a year, but he has given up his part time job. After his state pension, he has to find £12,500, so he draws £5,000 from his pension (to use his income tax allowance), with the balance of £7,500 coming from his savings.

With our advice Dave and his wife can fulfil their ambitions 

4. Old age stage

At the age of 77 Dave is slowing down. He and Jacqui only travel occasionally, they go out less often and have given up driving. So, now Dave can comfortably get by with an income of £12,500. All of this can be met from his state pension and his own pension without paying any tax.

Like Dave, many people can do much more in their retirement years than they may have thought possible, as long as they plan and don’t just drift into retirement and allow for the fact that their income needs will change as they get older. For the best and most tax efficient way to structure your retirement strategy, you should always seek professional, independent advice.

This example using Dave is a fictitious example, however it demonstrates how a flexible retirement strategy can be used to meet a clients varying needs through retirement. Your needs may differ and income requirements may be affected by things such as long term care needs so careful planning is key.

​No advice should be conferred from the articles. No action should be taken without independent professional financial advice as any actions on your pension may be irrevocable and have a big impact on your income in retirement.

A Friend in Need

​​More than just financial advisers


We helped Tom make sensible decisions to help him through tough times

At Reeves, it’s fundamental to our approach that we see ourselves as more than just financial advisers but that we build deeper relationships with our clients based on a mutual trust and understanding that is closer to friendship.

Everybody likes to share good news about themselves – it’s a natural and understandable.

But, the other side of that coin is that many of us are much more reluctant to tell others when things aren’t going so well in our lives. There may be feelings of vulnerability, embarrassment or even shame. The natural instinct is to circle the wagons and keep problems within a small circle such as family or friends.

As such, we’re delighted when you contact us with good news, such as a pay rise or windfall and want to pay more money into a pension. But, it’s just as important that you get in touch during the darker times.

"Whatever stress you’re under, you don’t want the added burden of financial worries and we can help find a solution to your problems.''

We recently had a client who we’ll call Tom, who is in his late 50's. Tom rang us to tell us he was suffering from a mental health problem. He was planning to take 12 months off work to deal with this and wanted to take £10,000 out of his pension to replace lost earnings during that time.

This rang some alarm bells as we’d already identified Tom as being financially vulnerable. He didn’t have all the savings or pension to fulfil his retirement plans and this proposed, unplanned withdrawal mean his pension pot would last him an even shorter time.

We discussed this in complete confidence and came up with a bespoke solution for Tom.

First, we established the facts: exactly how long was he going to be out of work? Was it really 12 months, or possibly longer? We had to establish whether the figure of £10,000 was the result of careful and realistic calculation or an impulsive reaction to his situation. We can only act on facts, so we needed to question Tom on this, to establish just what his monthly needs and expenses were and the parameters of the period he was likely to be out of work.

No matter what, we can help you to a brighter future

Ultimately, a client’s money is their own and they're free to make their own decisions. But, we believe we have a duty as a friend to ensure first that the client understands that what they think they need may not be the best way to meet their requirements.

The solution we came up with for Tom was, rather than rush into taking a lump sum out of his pension, to make a series of sustainable, regular, smaller tax efficient withdrawals that he would be comfortable with.

Tom’s situation is by no means unusual. Somebody who is well today can be vulnerable tomorrow but we are here to help, we have the knowledge and the experience and have almost certainly dealt with similar problems in the past.

But, in order to help, we need you to get in touch and give us all the facts. Don’t keep it to yourself and make a spur of the moment decision under stress which may damage your long term goals.

Phone a friend.

Names have been changed to protect identities. These articles are for information only and are based on specific client circumstances which may be different to yours. No advice should be conferred from the articles. No action should be taken without independent professional financial advice as any actions on your pension may be irrevocable and have a big impact on your income in retirement.

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