Advance Wealth

Work more, Pay more? The Government’s new pension scheme

admin — Fri, 17 Feb 2012 13:05:03 +0000

Significant changes were proposed at the end of last year regarding the UK’s public sector pension scheme. Adjustments were made in the pension schemes for staff in the NHS, local government, civil service and education. The changes were made to the rate at which a pension builds up, and to bolster the employee against the wrecking effects of inflation, the existing pension pot was revalued. The government had estimated that these reforms would save the taxpayer tens of billions of dollars.

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

Consumer Credit Plummets to Record Lows

admin — Thu, 09 Feb 2012 12:44:24 +0000

Is saving up becoming fashionable? Did the current economic crisis force the ordinary UK citizen to rethink his/her personal debt that is becoming more and more of a burden? Other loans and advances have faced similar decline. This drop in net lending is attributed to several factors. Mainly, it is the rising cost of living that has caused British consumers to cut back on purchases and pay off their existing debt, all the while having the threat of unemployment hanging over their heads. This reaction to economic hardship has come across to some experts as reassuring, because a reasonable repayment of debt at a controllable rate gives time to the economy to pick itself up, and not fall into a deep consumer recession. It also shows that the UK consumer is looking towards other forms of finance, such as debit cards and payday loans. Bank lending, however, is a fundamental measure to an economy’s health, and such sharp declines lead to a faltering confidence of firms, and especially small business owners.

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

Advance Wealth Business Exhibition in Maidstone

admin — Mon, 23 Jan 2012 16:00:57 +0000

This January, Advance Wealth is exhibiting their business at the Business to Business Expo 2012 in Maidstoneon the 27^th of the month. The event is due to take place at Mercure Maidstone Hotel, formally known as the Ramada Maidstone hotel.

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

How to buy Commercial Property using your Pension Fund

admin — Mon, 23 Jan 2012 15:53:11 +0000

Investing in business has become a necessity for some people as the world once again nudges towards recession, but funding commercial enterprises when credit options have been exhausted and savings depleted can prove extremely difficult. Challenging economic conditions have prompted some business-minded individuals to seek alternative sources of funding. In some cases, pension funds have been used to buy commercial property.

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.

Why do people get a bigger pension if they smoke?

admin — Thu, 29 Dec 2011 12:04:44 +0000

It is sometimes a matter of concern to those seeking a private pension fund when they find out that living in a rural area will mean less final pension income than for those living in an inner city or deprived area. Having an existing illness or an unhealthy lifestyle is also likely to mean getting a bigger payout on retirement as well.

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.

How you can protect the key people in your business?

admin — Thu, 15 Dec 2011 14:15:55 +0000

In law, a company is regarded as an individual. In practice, a company cannot survive all by itself; real life human beings are needed to control key aspects of a business, from the very top to the very bottom. Unlike the artificial entity that is a company, however, human beings are subject to human problems. People often fall ill and everybody expires at some point or another, which is why provisions must be made to safeguard the interests of a company by protecting the people who form its whole.
Some might argue that all workers are important, while others might contend that only those members of staff who occupy the most integral or critical positions are indispensable. Numbers play a vital role in this respect. A company consisting of just one or two employees obviously cannot afford to lose any, while a multi-national corporation comprising thousands of workers can quite probably afford to shed its entire board of members every once in a while.

Of course, stability is important to any firm, no matter its size or financial might. Employers, directors, members and human resources staff ought to realise that stability is most easily obtained by maintaining a happy, healthy workforce that is properly motivated and eager to succeed. In order to achieve this, companies must mitigate the risk of workers dying or falling seriously ill by taking out suitable insurance cover.

Life insurance policies and critical illness protection are sometimes the only measures available that are capable of maintaining a healthy company when key people fall ill. No business ought to suffer when human problems affect the workforce.