Increase in Minimum Pension age confirmed

Increase in Minimum Pension age confirmed

“The government … proposes to increase the age at which an individual can take their private pension savings at the same rate as the increase in the State Pension age.

It is important people have the opportunity to plan properly for this change and so the government proposes to wait until 2028 (when the State Pension age will rise to 67) to fully implement this change.

From 2028, people will not be able to draw their private pension benefits without a tax penalty until age 57, whether or not this is the point at which they stop work.

From then on, the minimum pension age in the tax rules will rise in line with the State Pension age so that it is always ten years below.”

Divorce

Do you know anyone who may be involved in a divorce? 

I know its not usual to enquire about their financial settlement at an early stage.

It could be very helpful if you did, as it seems that a majority of divorcing couples are relying on their Solicitors to value the pension benefits.  

As pensions are a very complex area of finance, with a wide range of rules and taxation, Solicitors are not generally understanding but instead are relying on the pension trustees or providers to supply the answers.   

Clearly the pension trustees and, in some cases, the providers, have a vested interest. 

It is important that specific pension advice is sought, to avoid costly mistakes. 

We can help ask the right questions and get better, fairer outcomes.

Pension Death Benefits :  NEST

I have only recently been told that the death benefits under NEST should have Nominations for Death Benefits added, as the fund otherwise would go to the member’s estate, where it could be subject to taxation.

As NEST pensions are the preferred pension for many employee schemes it would be helpful if you let any members of the family or friends  know.  It’s a simple matter to obtain a Nomination form directly from NEST

For those friends or family who are in employee schemes or have retained benefits, it is advisable for them to check the Scheme Rules.

Money Marketing interview with Jan

Profile: Jan Oliff on tragedy that led her to ethical investments

By Amanda Newman Smith 5th November 2018

Jan Oliff on changing the sector’s gender profile and how personal factors led her to be an ethical specialist

Sometimes the reasons people do the jobs they do or hold certain views are intensely personal.
That is the case with Jan, director, Jan Oliff Financial Planning.

Since establishing her own business in 1992, Jan has built a reputation as an ethical investment specialist.

Like many advisers in the field, Jan has generated business through a genuine interest in helping others and aiming to create a better world. But ask her why she became interested in socially responsible investment in the first place and it becomes clear it was for personal reasons rather than business ones.

“My mother died in 1986 at a young age.
Nobody had told her smoking was dangerous and she had lung cancer. I wanted to invest some money that she had left me into something that avoided tobacco. Only the Stewardship fund offered that at the time, so I invested in it and that was my way into the SRI* marketplace,” she says.

Jan believes the SRI* market has gained many supporters as a result of the 2008 financial crisis.

How to get started with ethical investing

“Clients felt let down by financial services around the time of the crisis and people are becoming increasingly aware of issues such as damage to the environment.

“Everyone has their own story and their own values based on personal experience. Some are more interested in governance issues than the environment and vice-versa,” she says. “I have one client who is in her 80s and she wouldn’t invest in gambling because, as a young teacher in Glasgow, she was seeing children coming to school with no shoes on because daddy had spent all the money in the betting shop.”

Five questions

What is the best bit of advice you’ve received in your career?

Don’t retire. It came from my 92-year-old neighbour, a district nurse who retired at 72 and thought it was far too soon.

What keeps you awake at night?

Nothing to do with work. If it was, I’d give it up.

What has had the most significant impact on financial advice in the last year?

Increasing awareness of values and governance.

If I was in charge of the Financial Conduct Authority for a day I would …

Listen to a representative sample of workers as the go-to people for ideas to improve the system and culture.

Any advice for new advisers?

Use your brain and your emotional intellect. Together they are powerful.

Jan was drawn to the financial services world following some tragic personal events that really brought home to her the need for people to plan their finances.

Her sister was widowed at the age of 29 and she sadly lost a friend in a car crash. At the time, her friend had everything to live for; he and his wife had just had a baby and were in the middle of renovating their home. “His wife had to return home to her parents because they had no life insurance,” says Jan .

Wanting to get the message across to people that it was important to be financially resilient, just in case the worst happened, Jan joined Barclays Life in 1981 and stayed there for 11 years. However, by 1992 she had become disillusioned and it was then she decided to set up her own financial advice firm.

“It had become clear that banks were giving priority to selling contracts that made money for them. I left Barclays early in 1992, at a time when the country was in deep recession and jobs were scarce. I’d relocated to Bristol, I had just got married and everything combined to say it would be better to create something,” she says.

So what has it been like for her to do that as a woman in financial services?

“It’s been largely amusing and sometimes frustrating. At times, my physical appearance is the only thing that seems to matter,” she says.

“My frustration comes in at the lack of understanding about the insight and intellect that women can bring to the industry. As head of the International Monetary Fund, Christine Lagarde recently said if it had been Lehman Sisters rather than Lehman Brothers, we would have avoided the crash. I’m not going to argue with that.”

Jan thinks getting more women into the industry will happen naturally, once men with old-style, sexist attitudes have left.

“The industry will get rid of the wrong type of bloke and more women will come in once they’re gone. Things are a lot better now, but the bad attitudes are still there. Even women have that bad attitude at times. The whole culture in financial services has been one of bullying and disrespect. You have to stand up to it,” she says.

For some women, perhaps the misconception that financial advice is all about facts and figures rather than building relationships and finding solutions to problems puts them off it as a career choice. Jan points out the fact many advisers rely on their para-planners for the more technical side of the job.

“The para-planners are the ones doing the numbers; they do most of the technical stuff. Take a lot of IFAs away from their para-planners and they’d be lost.”

Trust and transparency are things Jan works hard at in relation to her clients. She is a member of Soroptimist International, a global volunteer organisation that has more than 75,000 members in 120 countries. With human rights and gender equality at its heart, the aim is to make women’s voices heard and help fund local causes.

However, Jan believes any sort of volunteering – whether it is charitable work or providing pro bono advice – should be for the right reasons and not to promote a professional service. Her thoughts on creating more widespread consumer trust in advisers are as simple as starting with the way you treat your colleagues and clients.

Should financial advisers be volunteers?

“I truly believe if every practice has a culture of respect for clients and colleagues, so it becomes unacceptable to say abusive or unkind things, if you do that, you gain trust,” she says.

“We are moving forward, as there are many good advisers who are great for the profession. But we need to get rid of the ugly ones as they cost the rest of us a lot in terms of our reputation and the Financial Services Compensation Scheme levies. I’m still confronted by people at conferences that make me think ‘what on earth are you still doing in this profession?’.

“Every profession has this, but I wonder why we tolerate it. We need to encourage those individuals to get out and earn their income elsewhere.”

.

* SRI – Sustainable Responsible Investing

Ever Present Danger, and more

Ever Present Danger

I once asked a friend if the widow of his next door neighbour would receive a life assurance payment.

He, my friend Ernie, was a bit shocked at the question.  It is not something you generally ask the recently bereaved.

It is however something the family care about.

Will we be able to pay the bills this month, this year, in the future?

I know it sounds a tad un-British to ask about money at such a time but here is what I know.  Death or major illnesses intervene when not expected. Having a safety net can make a difference in how you recover from the loss of a loved one or the shock of sickness or injury.

If your busy life has contributed to a heart attack then money at the right time can pay the bills, stopping much of the stress. It can give time for recovery.

In my 35-years career, I have experienced late night calls from worried clients asking “will I be able to pay the mortgage this month. Will I need to sell my home?”

Sickness and death are not just for the elderly but they are an ever-present danger. Most of us, mercifully, will never be harmed at the hands of a terrorist but never the less life rarely treats us kindly.

ISA

I return to the subject of ISAs.

Why? Because I am still hearing people complain about the low interest they are getting on cash ISAs. Apart from it being frustrating to overhear this, it occurred to me that people have stopped listening to advice.

Cash ISAs lose money, as inflation is higher than the annual interest rate, FACT

As an independent adviser, each client is different and gets treated differently.

But if you want a simple, do it yourself solution, check out some of the on-line offerings, watching out for charges and historic volatility: Both Prudential and Royal London have funds that are designed to minimise risk.

If you want an opportunity to do good as well as making a better return then find an Ethical or Socially Responsible Solution:  www.uksif.co.uk

And if you would prefer to accept and pay for valuable good professional advice . . .

Paid for Advice?

Why pay for advice when you can find insurance cover and/or ISAs on line?  Whether you pay for the advice or pay for the product, you still pay.

The advice is there, as an option.

To discover the full range of available solutions, you will need independent advice.

Is price the only thing that matters?     When it comes to your family probably not.

Climate Change

As the world fails to act water will become a weapon and a cause of war.

Regimes that control water will hold a powerful weapon.  You can ensure that the world harvests, recovers and maintains its quality, by investing in commercial businesses whose products do just that.

The Women’s Institute is having a week of action on Climate Change in July.

Please support them.

Government Announces Significant Overhaul Probate Fees

Government announces significant overhaul of probate fees from 1 May 2017

Last February, the Government began a consultation into probate fees and how much families should be charged for extracting the Grant of Probate.

Their proposals outlined a move away from the current application fee of £215 for an individual and £155 for professional, to a new tiered fee system based on the value of the estate in question:

  • Estates valued at less than £50.000 – No probate fee
  • Estates valued at £50,000-£300,000 – £300 probate fee
  • Estates valued at £300,000-£500,000 – £1,000 probate fee
  • Estates valued at £500,000-£1m – £4,000 probate fee
  • Estates valued at £1m-£1.6m – £8,000 probate fee
  • Estates valued at £1.6m-£2m – £12,000 probate fee
  • Estates valued at more than £2m £20,000 probate fee

We introduce clients to King’s Court where the clients show interest.
You can read about working with King’s Court (KC) here

Kings Court Trust was one of 853 firms or individuals to formally respond to the consultation.

They voiced strong opposition to the plans, citing the fact that the proposed fees would potentially cause significant financial difficulties for families already having to deal with the loss of a loved one.  Despite overwhelming opposition, the Government has approved the changes to the fee structure and these will come into action from 1 May 2017.

What does this mean for clients that use King’s Court
through Jan Oliff Financial Planning?

Our clients will have the fee changes clearly explained to them.
KC is committed to supporting any families who need advice and support on what the fee structure change will mean for them and are currently investigating a number of options that will allow us to help families manage the additional cost of the Grant of Probate as a result of the new structure.

How will this impact on Kings Court Trust’s fixed fee service?

KC’s comprehensive estate administration service will still be offered with a guaranteed fixed price.

They have removed the cost of the Grant of Probate as a fixed charge and will not be reintroducing this until there is a clear understanding of the new processes that the Probate Registry will be putting in place.

Instead, KC will explain clearly how the new fee structure will impact on the estate in question so that clients have as much information as possible.

Why Would I Choose Someone with Passion?

As Christmas approaches, like so many other business people, I am starting to focus on

Read moreWhy Would I Choose Someone with Passion?

The PFS Annual Conference

In any profession is important to share with other professionals, exchange ideas and learn

Read moreThe PFS Annual Conference

Increase in Will Disputes Attributed to Rising Property Prices

It has been reported that the increase in the number of children involved in inheritance disputes has been fuelled by rising property prices.

As the value of property has soared during the last decade, the estates of ‘ordinary’ families have become more likely to prompt inheritance disputes as families go to war over the division of assets. The High Court saw 116 cases of children challenging their parents’ estates in 2015, compared with 104 in 2014 – an 11% rise.

One reason for this surge is due to the rise in more complicated family structures which has led to more relatives, such as stepchildren, expecting to benefit from the estate.

There has also been an increase in cases where children challenge charity donations. This may be due to increased life expectancy which means it is becoming more common for parents to die when their children are middle-aged and assumed to be comfortable financially. If their children are perceived not to need as much financial help, parents may be more likely to make alternative arrangements for the distribution of their assets – to friends or charities, for example.

The children of the deceased can make a claim under the Inheritance Act if they feel reasonable provisions have not been made for them. There is also an option for those who were treated as the deceased’s child to claim against the estate, even if no formal or legal arrangement exists – such as when children have been adopted or fostered.

Tom Curran, Chief Executive at Kings Court Trust said: “Unfortunately, we do see family disputes over inheritance and it highlights how important it is to ensure your Will explicitly states how you want your estate to be distributed.

By ensuring that your Will is clearly and professionally written, your estate can be dealt with as smoothly as possible and reduces the likelihood of loved ones being unintentionally excluded when it comes to their inheritance. It is important that people understand the benefits of planning ahead, regardless of our age or health.”

Your Estate

Having a LPA in Place Should be Common and Natural

The Alzheimer’s Society reports that more than one million people in the UK will have dementia by 2025. Accidents, strokes, brain injuries and Parkinson’s Disease can also affect your ability to make your own decisions. Handling financial affairs can become virtually impossible and could cost a great deal of money and load the burden on relatives.

A report from ‘This is Money’ on analysis by Key Retirement Solutions found that more than 11,500 families every year are having to go to court to appoint ‘deputies’ so relatives and friends can make decision on behalf of ill or incapacitated people.

lpaWithout a lasting power of attorney** (LPA) in place, it can be difficult to access bank accounts.

For example, a 2013 British Bank Association Booklet, “Guidance for People Wanting to Manage a Bank Account for Someone Else”, said: “If one joint account holder loses mental capacity, banks and building societies can decide whether or not to temporarily restrict the use of the account to essential transactions only.”

We have all warned how the restricting of a joint account has severe implications as the joint owner cannot freely withdraw what is their own money without an order from the Court of Protection which could be devastating, especially if this is their only form of income, such as their pension, paid into this joint account.

Having a LPA in place should be as common and natural as making a will.

The UK authorities introduced LPAs in October 2007, replacing the previous system of enduring powers of attorney (EPA) – although an enduring power of attorney created before October 2007 remains valid.

The Treasury advises consumers: “If you want to give one or more people the power to completely manage your money and property if you lose mental capacity – that is, if you can’t make decisions for yourself – you have to set up a permanent power of attorney.

The people who will manage your finances are called your without the other (good for spreading the load).

You should also choose at least one replacement attorney who would take over if their attorney died or could no longer act for them. If they are older and the people they choose are all the same age as they are, they may not end up being the best people to act if and when their help is needed.

Setting up a power of attorney is a big step and you need to understand all the implications and may want to get good legal advice.

The person setting up a power of attorney must have the capacity to make their own decisions.

It is a good idea to get it set up well before you need it. It is much harder and more expensive for someone to help you with you money and property if you have already lost mental capacity. And if you get it set up now, it is there if something happens to you suddenly, like an accident or a stroke.

Setting it up does not mean you have to give up control.

It takes several weeks to register a lasting power of attorney – yet another reason to get it set up early. If you lost mental capacity during those weeks, your attorney would not be able to act for you in the meantime.

The attorney you choose should be someone you really trust and preferably younger than you. Many people choose their husband, wife, partner, another family member or a close friend.  You might choose more than one attorney.

If you do, they can decide whether they need to make decisions jointly (a good idea if they want two opinions on their finances) or whether each can decide things.

 

SEE this BBC item
Can Power of Attorney help protect your family against scams?
If an elderly relative starts to spend money irrationally, or in a way that is out of character, what powers do you have to intervene and stop them? Louise Minchin has heard from one woman who was worried about her father’s spending and when she eventually gained Power of Attorney over his affairs, discovered that more than £10,000 had disappeared from his bank account. We investigate what people can do if they feel their relative is becoming vulnerable to scams.   bbc.co.uk/programmes/p04c0yl6

 

** Lasting power of attorney in England; known by other names in other UK domains

A Fixed Price Estate Administration Service Could Save Bereaved Families up to 15%

A report on the cost of dying has highlighted that a bereaved family will spend £3,000 on average when hiring a legal professional to administer the estate of a loved one.  Administering an estate typically involves dealing with all of the assets associated with the person who has died, paying any debts and managing all of the legal and tax implications.

KingsCourtTrust200Last year, estate administration specialists Kings Court Trust [KCT] administered over 1,000 estates on behalf of families across the UK. Their average net fee for carrying out all of the legal and tax work associated with these cases was £2,549 – a saving of almost 15% compared to the industry average quoted in the research report.

Unlike the service offered by many traditional solicitors, KCT ’s comprehensive estate administration service comes with a guaranteed fixed price that is agreed up front with the customer.

This means that the family have complete peace of mind in knowing that the cost of the service will not change, regardless of the complexity of the case.

In contrast, many solicitors still use an hourly rate model which means that the final fee is dependent on the length of time that the estate takes to administer, which is often unknown until well into the estate administration process.

The report highlights the significant costs involved in someone passing away.

Professional fees often need to be met by the immediate family, so it goes without saying that they should shop around to find the service that best suits their needs.

Unfortunately, it is all too common for us to hear of families appointing the first solicitor or estate administration provider that they come across.  This often means that they end up paying over the odds for a service that they don’t fully understand.

We don’t believe this is fair for the family, which is why KCT takes the time to explain how the estate administration process works and provide a guaranteed, fixed price quote before any work is undertaken.

KCT offers a comprehensive estate administration service for a guaranteed fixed price.  For more information on their services or if you have any questions relating to the estate administration process give me a call and I will give you a personal introduction.

Jan Oliff Financial Planning is pleased to work with KCT in a business relationship that enables our firm to be alongside our clients as they make crucial financial decisions. Sometimes other financial planning can also be used to further reduce the final costs of estate settlement.

Majority Want Financial Advice to Deal with Retirement

upwardtrend200Recent research has shown that 86% of the population wants financial advice to help them prepare for their retirement, highlighting how many people do not feel confident in planning for this pivotal stage of their life.

The vast majority of people surveyed said that they want to ensure that they can financially support themselves during their retirement so that they do not become a burden to their loved ones.

However, due to a greater life expectancy, many clients are likely to experience a longer retirement than they had originally planned for.

This obviously means they will need access to more savings in order to support their lifestyle for a longer period, or reduce their expenditure during retirement.

One challenge which clients face is how to pass on their wealth without impacting on their own financial security during their retirement. Many people are actively looking for an adviser who has specialist knowledge on how to minimise the amount of Inheritance Tax (IHT) due on their estate and increase the amount they can leave for their loved ones.

Coupled with this, clients must plan for potential care costs which currently cost £29,000 per year on average, along with changes to tax or inflation which could dramatically affect how much they have to survive on during their retirement.

For many, retirement is a period of life to look forward to and enjoy after several decades of hard work.  However, these figures show how just many people feel overwhelmed with how to plan financially for this period of their life.

Tom Curran, Chief Executive of estate administration specialists Kings Court Trust, commented: “These figures highlight how the majority of the population is looking to plan for their retirement well in advance so that they do not become a financial burden to their loved ones.  Along with mitigating the impact of IHT and planning for care costs in later life, another element that clients need to consider is how their estate will be managed when they do pass away.

Estate administration can be a complex legal process, particularly for clients with a portfolio of assets and investments. Families will often turn to the financial adviser when dealing with the loss of a loved one, so a sound knowledge of the process is essential for an adviser to support their clients at this difficult time.”

We use sophisticated modelling to help our clients to see how their existing assets and financial planning can give them outcome they seek – or to show the expected shortfalls whilst there is still time to take action.

Your Residence And Inheritance Tax

BWhouseButton100The main residence nil rate band (RNRB) will be introduced on 6th April 2017 to apply to deaths on or after that date.

For those eligible to use it, it will be in addition to the standard nil rate band (NRB), currently £325,000 (and frozen at that level until April 2021).

In summary, the RNRB is intended to protect some or all of the value of the family home (or previous family home) from inheritance tax where the home (or, if the home has been disposed of, assets of equivalent value) is being passed on to children or grandchildren (or their spouses).

The RNRB will be phased in gradually from 2017/18 to 2020/2021 as follows:

  • £100,000 per person in 2017/18
  • £125,000 per person in 2018/19
  • £150,000 per person in 2019/20
  • £175,000 per person in 2020/21
  • and then increasing in line with CPI in subsequent years

The RNRB can be offset against the value of a property which has, at some time, been occupied as the family home as long as that home passes on death to the direct descendants of the deceased.

A direct descendant is defined as a child (including step-child, adopted child or foster child) or grandchild of the deceased. This includes the situation where the property is left to a direct descendant and their spouse or civil partner jointly, to a direct descendant’s spouse or civil partner solely, or to a direct descendant’s widow, widower or surviving civil partner who has not remarried or entered into another civil partnership at the time of death of the deceased.

The RNRB will be available when the individual dies on or after 6th April 2017. The transfer must be on death and can be made by will, under intestacy or as a result of the rule of survivorship.

An estate will be eligible for the proportion of the RNRB that is foregone as a result of downsizing or disposal of the property as an addition to the RNRB that can be used on death. In the Government Technical Note this is referred to as the ‘additional RNRB’. The qualifying conditions for the additional RNRB would be broadly the same as those for the RNRB.

Clearly there is a lot more to it than this so do take professional advice and not rely upon a limited knowledge of the rules. And ensure that you will including your living will, are up to date ~
oliff.info/your-financial-journey