Tag: Independent

Pensions and National Insurance

I offer this reminder, as I am often asked about the need to pay National Insurance and the most appropriate way to achieve full benefits.  It is easy to check your personal account on line. 

  • the State Pension changed in April 2016.
  • if you reached State Pension Age before April 2016, you needed to have National Insurance contributions or credits for 30 years to receive the full pension.
  • if you reached State Pension age prior to April 2016, the State pension is made up of the Basic Old Age Pension and the Additional State Pension; otherwise known as State Second Pension (S2P), State Earnings Related Pension (SERPS) or the Graduated Retirement Benefit.
  • Those who enter the National Insurance system on or after 6 April 2016, will need to have a minimum of 10 years National Insurance contributions or credits to qualify for a State Pension.
    To receive the full pension, they will need to have National Insurance contributions or credits of 35 years. For everyone else, transitional rules apply. 

Clearly most of us do not rely on the State Pension and the question is how much additional funding is needed to achieve a realistic income at the time you plan to stop earning or reduce your working time.

Most people are shocked once they look at the levels of funding necessary, which means that you can either choose to fund to the desired outcome or delay your plans. Most importantly start early and fund realistically but also take the opportunity to get a realistic forecast.

Pension funding is still the most tax efficient way for all but basic rate tax payers, with Stocks and Shares ISAs used for anyone who is currently a basis rate tax payer. 

One important warning, Cash ISAs give a return less than inflation and the only tax benefit is that the small amount of interest is tax free. 

They do not make financial sense for medium and long-term savings. Inflation is expected to run at about 2.5% in the foreseeable future.  Stocks and Shares ISAs are exposed to market fluctuations but rarely give a negative return in the longer term.



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.