Managing Director of Advance Wealth, Chris Clark will be hosting the seminar. Chris Clark, recently gaining his Chartered Insurance Institute awarded Diploma in Financial Planning, advises on personal pension planning, investment and life assurance for successful professionals and the retired. Keeping in mind the complex pension system and the fact that many people have not recognized the importance of starting a pension scheme, the webinar will focus on increasing awareness. Discussions will include types of pensions that are sold by pension providers and what facts a customer must inquire about when choosing their pension plan.

Advance Wealth believes in constant communication with their clients. They believe in not just helping choose a retirement plan, but to truly listen with understanding and aim to simplify the workings of the complicated financial world into everyday business language that their clients can understand. With this webinar, Advance Wealth aims to educate people to be on a lookout for any kind of evasion by a pension provider, and ask the right questions to get the most out of their pension schemes.

If you are interested in joining us for the webinar taking place on April 24, 2012 at 11 am, please register here.

Pension is a subject most of us do not enjoy thinking about. It’s complicated, it has risks, it is painfully given away out of your hard-earned salary and it’s too far in the future to worry about. Once you are out of college, the focus is on paying off personal debts, supporting a fairly decent independent lifestyle, and saving up for the down payment of that house you’ve been eyeing. But the important fact that many of us choose to put on the backburner is that old age is inevitable. And at a time when it’s finally time to spend the rest of your years at peace, the last thing you want to be doing is grappling for adequate finances. If you begin now, you are likely to be thanking yourself later.

Companies often do have a pension plan in place, so the first thing you need to do is find out if you might have unknowingly signed into one, and what your employer’s contribution is. Secondly, get the help of a financial advisor to wade through the vast sea of pension schemes, risks, and benefits that are available. If this seems too much work to be bothered about, remember that the state pension amounts to be about £7,000 a year, a drop compared to the kind money you are used to right now. We suggest you begin now, no matter how late it is, so that your retired life will truly be your ‘golden years’.

The Individual Savings Account, or the ISA, is a type of savings account in which the interest that you accumulate is not counted as income, making it tax efficient and completely yours. It usually offers higher rates of interest than most savings accounts. The ISA is also a place to invest money into stocks and shares. But you are only allowed a certain amount of money to place into the ISA. This year the total amount that can be held by a person aged 18 and over into an ISA is £10,680, up from last year with inflation taken into account. Out of this amount, up to £5,340 can be held as cash. The longer you bind your money in an ISA, the better the interest rate will potentially be.

The government is also keen for you to save up for your pension plan as much as possible. You could maximize your pension contributions before the tax year ends. With the recently announced pension reforms, the annual limit for pension savings for the year 2011/2012 will be the higher of 100% of earnings and £50,000. There is also the possibility to carry forward unused allowance from the previous 3 years. Individuals can obtain tax relief on contributions of at least £3,600 a year, regardless of their earnings. This means that non-earning spouses and children can also make contributions to pension schemes. Since there are many complexities involved in pension contribution and the penal tax rate it is subjected to, it is advisable that you get the help of a professional in this matter.

If you sell an investment, a share or a property, and you receive money from it, you will potentially be liable to pay a capital gains tax. But you are also permitted to make a gain of up to £10,600 this year that the tax man will not touch. Allowances cannot be carried forward if they have not been used. Also if you are married or in a civil partnership, you may be able to transfer assets to your spouse without paying capital gains tax, and further reduce the tax bill by using the capital gains tax allowance.

For gains over this amount there is a flat-rate tax of 18% if you are a basic rate taxpayer and 28% if you are a higher-rate taxpayer. There are a number of tax breaks and costs you can offset against your gain as well, and you can offset any capital gain losses from the previous years against current gains.

The tax system is complicated, especially for people who have not had a finance education background, and there is more to allowances than is stated here. We recommend you seek professional advice on these matters, as it applies uniquely to each person, taking into account the current income and retirement planning. At Advance Wealth, we aim to explain the details and nuances to you in a clear and comprehensive way. For the money that it might save you, it is likely to be worthwhile to act now with the aim of securing your future.

Though this is encouraging news, there still exists a gender gap that keeps holding women down, no matter how much they bolster themselves against uncertainty. The gender disparity sees men still earning more, and thus being able to save more. While women save an average of 12.9% of their income, men just save 12.6% of their annual income (Scottish Widows Women and Pensions report 2011)

The grim fact is even though more and more women are realizing the importance of planning for retirement, their savings may eventually have to deal with a number of hits. There are many reasons that women are more likely than men to face financial hardships later in life. Lower pay, career breaks to take care of children, cost of caring for elderly parents, relying too much on the spouse, divorce, tough economic times and a longer life span than men are all realities of modern life that could force women into poverty during old age.

But there are many ways that women might be able to overcome these obstacles. Educating themselves on the basics of investing will boost their confidence about taking control of the future. Protecting income against inflation and seeking the advice of a financial adviser are also potential ways to make a difference in getting onto the path of a comfortable retired life.

A new government plan will allow citizens over 60 years old to cash in small pension pots of £2,000, or less, to be taken as cash lump sums. The HM Revenue and Customs (HMRC), a UK Government department that writes legislations regarding tax on pensions and annuities has introduced this amendment, called the ‘trivial commutation’. The possibility to get this sum earlier existed only for occupational pensioners. But personal pensioners, who had less than £18,000 in total pension savings, were not able to take out any additional smaller pots of £2,000; rather they would be forced to convert them into annuities. This caused a cumbersome process because very few providers quote rates for less than £5,000, and if they do, the pay-out is a measly few pounds a week.

The amendment, which will come into place this April, will allow individuals to cash in up to 2 of their scattered pension pots, which have accumulated with different employers during the course of their working years. This measure is also designed to take pressure off of annuity providers, as these small pots are unprofitable. The HMRC has calculated that about 25,000 people will benefit from this, but analysts say it could advantage millions because of the boom of company pension schemes that came about in the 90’s (Blake, 2004: http://www.pensions-institute.org/workingpapers/wp9804.pdf)

Meanwhile, the rule that is on all annuities will apply, and HMRC will allow 25% of the money to be taken free of tax, while the rest will be taxed at the person’s marginal rate of income.
The proposal has been met with widespread approval, making a citizen’s small collection of pensions potentially more portable, less complicated to handle and with greater flexibility.

But a recent report by influential think tank, the Institute of Fiscal Studies (IFS), suggests this is not the case. The IFS analyzes that although the general structure of public service pension will improve with these new changes, the results will have negligible or no long-term saving for the taxpayer at all. The savings from higher pension ages will be counterbalanced by other elements of the pensions becoming more generous.

The government’s recent proposals state that the normal pension age in the public sector pension schemes should be raised to be in line with the state pension age. Because of the shift from a final salary scheme to career average scheme, a low income earner will be able to retire at 65 with a higher pension than before the reforms were implemented.

The IFS also suggests that the current pay freeze and additional two years of 1% increases will leave public pay at approximately the same level relative to private pay as it was in 2008.

The group that will benefit from both these policies are the lower earners, who will be protected against the effects of inflation and will do better in pay and pensions in the public sector. But this protection will come at the expense of higher earners, for whom a final salary pension scheme is more lucrative.

Reference:

Institute for Fiscal Studies (IFS)

BBC

Meanwhile, broad growth of money in the economy has also shown monthly falls of 0.7%, hit by a sharp fall in deposits from security dealers. This slump is also characterized by companies favouring bond issuance over bank loans.

These staggering figures have fuelled speculation that the Bank of England will pump in an additional £50 billion into the economy to prevent a deep recession, because clearly, the quantitative easing of £75 billion that was provided in November of last year is not going to be enough. Quantitative easing is an approach that involves electronically creating money to be used by the bank to buy assets, such as government bonds from investors in financial markets. This helps the economy by pushing down long term interest rates, eventually enabling banks to have more money to lend out.

References:

BBC

Reuters

Bank Of England

This expo is a unique event as it unites various sectors of business and is the only marketing medium that brings the buyer, seller and their products and services together under one roof. It is also the perfect opportunity to network with fellow professionals not only in your industry but over diverse sectors. The best part is that the event is for all to attend.

Customers will be able to meet the Advance Wealth staff face-to-face at their allocated stand who will be available to help you with initial queries and concerns relating to financial advice such as pensions, saving, investments and the like. All further meetings and consultations can be arranged and scheduled accordingly.

Advance Wealth are very excited about this expo and are looking forward to seeing their clients and others who are looking for financial advisors to aid in making the right financial decisions.

For further information, please visit the Expo website on www.b2b2012.com

In the UK, Investment Regulated Pension Schemes (IRPS) were introduced from April 2006 with one of its aims being to simplify the process of purchasing property at home or abroad using funds from a pension. Regulated by the HM Revenue & Customs (HMRC), IRPS combines previous provisions of the law to create a system that provides investors with an opportunity to claim tax relief on property investments. Not all property investments attract tax relief and not all types of property can be purchased using funds from a pension.

Residential elements of commercial property that are occupied by any person connected with the pension scheme are not, for instance, permitted by the HMRC, so funds cannot be drawn from a pension scheme to pay for, say, a flat above a shop that will be occupied by a member of the scheme. Types of commercial property investment that will incur tax include time shares, beach huts, residential property, hotel room leases, conversions and shops with upper flats (although not in all cases).

In short, funds can be drawn from a pension scheme to pay for commercial property. Not all types of property are permitted and some are subject to tax, but the process itself is becoming increasingly popular in today’s turbulent economy.

Please Note: The information contained within this article does not constitute financial advice.

The amount of income from a pension (more often called the annuity rate), is a calculation dependent upon several factors: age, sex, life expectancy, health and the state of the economy at the start of the scheme. These are the basics for most standard pensions; other factors that can affect the annuity rate are based on ‘extras’ taken out with the pension.

Average life expectancy is based on figures derived from the total UK population and basically insures the stakeholder against living longer than expected. Those who are in poor health or have unhealthy habits at the start of their pension are considered to have a reduced life expectancy.

Smokers may be eligible for an ‘enhanced annuity’, provided they can prove that they smoke at least 10 cigarettes per day. Some pension providers offer an annuity rate equivalent to 15% more income when compared to a non-smoker of the same age, sex and living in the same town, for example.

It is something of a minefield trying to find the right pension scheme and it may be best to seek independent financial advice. A pensions adviser is able to look at personal circumstances and obtain quotes from a number of providers to find the most suitable annuity scheme.