Is your pension a quiet one?

It’s always the quiet ones you have to watch, so Mum used to say: “What are they not telling you? What have they got to hide? Never trust the quiet ones.”

Your pension is probably a quiet one – and it’s keeping schtum for a reason. The last thing it wants you to do is start taking an interest. Because then you’d know its (probably dark) truth and you’d start meddling and creating a lot of work for your pension and those managing it.

It’s even more tempting though, isn’t it, when you know it doesn’t want you to… Of course, you should. Because you need to know: is yours the right pension for you?

If you are in a Company Pension you should ask the person responsible for this – how and where is my money invested? Have you asked your employer how they manage your pension?

And, if you have a personal pension does your adviser talk about how your investment meets your preferences?

You can talk to me – a free initial meeting to learn more about this
– or read this to get started: Hot off the press,
the new Good Guide to Pensions 
will intimately acquaint you with your pension, with the hope that you can see its marvellous potential to change the world – and all the places it might currently be invested in that are definitely NOT helping the planet.

NEW LAMPS FOR OLD

A bad outcome for Aladdin . . .
. . . but what if you could change your old pension for new?

What if that new pension had fairer charges and better outcomes?

Fairer charges: 
Many are still holding on to old pension funds, unaware of the amount of charge being taken every year to cover the administration of the funds or what exactly that charge is paying for. 
Often annual valuations sit gathering dust, unreadable and a mystery to most except the people who produced them.
Is the pension giving value for money or is it just a neglected asset that only has meaning when we decide to start withdrawing money. 
Often the pension fund is our second most valuable asset after our home and, like our homes, if no regular maintenance is done, it fails to achieve its highest value. 

Keeping informed about old pension funds, particularly where you have several from different providers, is not remotely interesting to most people and at best takes you away from more interesting pursuits.

However, just like house maintenance or a regular visit to the dentist it can make a big difference later. 
It can be more pleasurable than a visit to the dentist, once you understand what you are looking at and how to judge it. 
Knowledge, in this case, is to have the means of control.
You could even learn to love your annual review.

Better outcomes:
They come in two ways, better financial returns for you and understanding of what you are investing in and that those investments are technologies of the future, for example not oil and gas but alternative energy. 
Not only would that represent better social outcomes but better returns as the world abandons old lifestyles and embraces the post COVID-19 world of remote working, medical research and better care facilities.

The City woke up to the challenges of climate change when the insurance claims started to build.

Many of us started to take notice when David Attenborough spoke of the damage done from plastic waste and now we know that pandemics are the result of us invading the wild world and turning it into a place of production to satisfy humanities constant need for more and more consumption.

As a member if the Ethical Investment community since 2005, an Independent Financial Adviser since 1992 and someone committed to better outcomes for each of my clients, can I help you exchange your old pensions for new?

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.”

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

The Under The Radar Pension Tax Scandal

If you are an employer, could this apply to you?

Julia Dreblow
Founder, sriServices & Fund EcoMarket

Ros Altmann* writes in Money Marketing

 

“I want to highlight a major pensions injustice concerning employers who choose an auto-enrolment scheme administered on a net pay basis.

“Such schemes cannot add the 25 per cent bonus of tax relief to contributions of workers earning less than £11,500 a year from the employer.

“Auto-enrolling these employees – mostly women – into a net pay scheme forces them to pay extra for their pension. Every £10 that someone on more than £11,510 a year puts into a pension will cost only £8 but every £10 low earners contribute costs them the full amount. So the lowest paid are paying £2 more for the same pension.

“If their employer were to use a relief at source scheme instead, no one would have to pay more than £8 for their £10 of pension. But most would not understand the difference between choosing a net pay or relief at source scheme.

When discovering this as pensions minister, I tried desperately to address it. But nobody was interested in helping the low earners.Officials said “It’s not much money”, which I found unacceptable.

Firstly, it may not be much money, but it could and should be theirs if their employer had chosen a different scheme.

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.

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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

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.

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Avoidable tax bill, much greater than the cost of advice

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