• Yorkshire: 01423 520 052 | North East: 0191 232 8391 | Livingston: 01506 303 031 | London: 020 3011 5252

Monthly Archives :

June 2021

Funding Your Child’s Future Lifestyle!

560 315 Eleonore Bylo

Financial Planning for your child’s future lifestyle. Early preparation in life is key to becoming financially independent.

As the coronavirus (COVID-19) pandemic continues into a second year, we’re learning more and more about its financial impact. While many individuals and families are struggling up and down the country, there is a particular strain placed on the parents of adult children.

A recent survey showed that 50% of adults with children over the age of 18 have provided financial help to them due to the pandemic[1]. Children may be staying in the family home for longer, since universities are unable to operate as they usually would, and some young people have decided to postpone their studies.

Young professional lifestyle

Those who have finished their degrees, who might usually migrate to city centres for a taste of the young professional lifestyle, are instead moving back in with their parents until this becomes a viable option again.

Young workers who are inexperienced or unskilled may struggle to secure their first job or may be particularly vulnerable to redundancy. Even if they are not living at home, they may have needed to seek support from older family members.

Providing financial help

As most forms of entertainment were closed for a significant portion of the last year, many young adults have seen their spending drop. But their costs still potentially included rent, utilities, phone bills, food and petrol. Many also turned to their parents for help to buy equipment they needed to work or study at home, such as computers.

The survey highlighted that some parents who have provided financial help have spent an average of more than £400 a month.

Higher household costs

Adults over the age of 30 have been less likely to need financial help. 43% of parents with children aged over 30 reported that they were helping them financially, compared to 61% of parents with children aged 18-29.

But the cost of helping someone who is older has been higher. Those parents who have been providing support to the over-30s spent, on average, more than £500 a month. These adult children are less likely to be living with their parents and tend to have higher household costs.

Ranked by spending

Some parents have offered far more than the average of around £1,300 in support. The top 2% of parents, when ranked by their spending, have parted with over £3,300 monthly. This includes help with their children’s everyday expenses, contributions to savings accounts and pensions, and potentially help to rent or buy a home. Many parents have been prepared to offer this level of financial support to adult children if they’ve been able to.

If you have found yourself in this position you may need to examine your budget carefully and ensure that your other financial priorities, such as paying off debts or saving for retirement, are not suffering as a result. Preparing your children early in life to be financially independent is essential. If not, your retirement plans may need to include funding your child’s future lifestyle and we can provide help with your financial planning.

Time to take stock of your situation?

The coronavirus pandemic has impacted both the physical and financial health of many families. If your finances have been blown off course and you would like help with financial planning, please contact us to review where you are.

Source data: [1] https://www.lv.com/about-us/press/1-in-50-parents-spend-over-10k-supporting-grown-upchildren-in-pandemic
young couple feeling the emotional strain of not receiving financial advice

Time To Look At The ‘Big Picture’?

560 315 Eleonore Bylo

young couple feeling the emotional strain of not receiving financial adviceDiscovering the emotional benefits of financial advice!

No two individuals share the same goals or ambitions. Each person is unique, with their own needs, targets and budgets. So when it comes to managing your money, building wealth, securing your future and, above all else, drawing up an effective plan for fulfilling your investment objectives, professional financial advice should be tailored to your unique specific needs.

A recent survey has identified that around 17 million[1] UK adults have sought financial advice and, as a result, many report experiencing emotional, as well as financial, benefits.

With many people currently coping from rapid changes to their financial circumstances due to the coronavirus (COVID-19) pandemic leading to reduced income or redundancy, let’s look at how financial advice can improve your financial situation and your wellbeing.

Feeling less anxious following financial advice

Having access to financial advice is strongly linked to feeling more secure and less anxious about money. According to the survey, around 3 in 5 people who have received financial advice report that they feel financially more secure and stable, compared with under half of those who have not received any advice.

Only 1 in 3 people who have received financial advice report feeling anxious about their household finances, compared with over 40% of those who haven’t.

Feeling more confident following financial advice

One of the key practical benefits is that it gives you access to expertise on topics that are complex. This provides you with more confidence and increased peace of mind. People who have received financial advice report feeling three times more confident about their understanding of financial matters and products than those who haven’t.

For example, areas that some people find confusing concern retirement planning and understanding their life insurance and critical illness options. Among those who have not received advice, around 1 in 4 people say they would not know where to start when it comes to the different options available to them. Among those who received advice, that number is fewer than 1 in 12.

Feeling able to cope in a crisis

The COVID-19 pandemic has left many people feeling less stable in their financial situation. 35% of those who have not received financial advice report feeling anxious about their finances, while 65% see the value in being more prepared for unpredictable events in life.

Advice helps you prepare, plan and navigate any future shocks or crisis. And while you can experience the benefits of advice after just one meeting, it’s essential to receive ongoing advice over the long term as your situation and life goals change.

This means your Adviser gets to know you and your background, and can help you adjust to whatever life has in store. Those people who have an ongoing relationship and receive regular advice are twice as likely to report feeling in control of their finances as people who do not.

Time to discover more about your finances?

If you’d like to feel more confident, able to cope and less anxious when it comes to your finances, start that journey today by speaking to us. We look forward to hearing from you.

Source data: [1] https://www.royallondon.com/media/press-releases/press-releases-2020/september/financial-advice-improves-emotional-wellbeing/
man at laptop trying to carry out a pension scam

Beat the Scammers

560 315 Eleonore Bylo

man at laptop trying to carry out a pension scamBeat the pension scammers, don’t become a victim of illegal pension activities.

Your pension is one of your most valuable assets, and for many it offers financial security throughout retirement and the rest of their lives. But, like anything valuable, your pension can become the target for illegal activities, scams or inappropriate and high-risk investments.

Fraudsters promise high returns and low risk, but in reality, pension savers who are scammed can be less with nothing. When savers realise they’ve been scammed, it can be devastating – many lose their life savings. Once the money is gone, it’s almost impossible to get it back.

How pension scams work

Anyone can be the victim of a pension scam, no matter how savvy they think they are. It’s important that everyone can spot the warning signs.

Scammers try to persuade pension savers to transfer their entire pension savings, or to release funds from it, by making attractive-sounding promises they have no intention of keeping.

The pension money is often invested in unusual, high-risk investments like:

  • Overseas property and hotels
  • Renewable energy bonds
  • Forestry
  • Parking
  • Storage units

Or it can be simply stolen outright.

Warning signs of a pension scam

Scammers often cold call people via phone, email or text – this is illegal, and a likely sign of a scam. They often advertise online and can have websites that look official or government-backed.

Other common signs of pension scams:

  • Being approached out of the blue: by text, phone call, email or at your front door
  • Phrases used like ‘free pension review‘, ‘pension liberation‘, ‘loan’, ‘legal loopholes‘, ‘savings advance‘, ‘one-o# investment‘, ‘cashback‘, ‘government initiatives’
  • Recommendations of transferring your money into a single overseas investment, with returns of 8% or higher
  • Guarantees they can get better returns on pension savings
  • Help to release cash from a pension before the age of 55, with no mention of the HM Revenue & Customs (HMRC) tax bill that can arise
  • High-pressure sales tactics-time limited offers to get the best deal; using couriers to send documents, who wait until they’re signed
  • Unusual high-risk investments, which tend to be overseas, unregulated, with no consumer protections
  • Complicated investment structures
  • Long-term pension investments – which often mean people who transfer in do not realise something is wrong for a number of years
  • Claims that they are from a legitimate organisation like ours, the Pension Service, Pension Wise
  • Visits from a courier or personal representative to pressure you to sign paperwork and speed up your transfer
  • There may be an authentic-looking website, but these can be cloned from legitimate organisations
  • There will be little or nothing in the way of contact names, addresses or phone numbers

Scams can take many forms

Many scammers persuade savers to transfer their money into single member occupational schemes, or other occupational pension schemes. It’s good to remember that pension scams can take many forms and usually appear to most to be a legitimate investment opportunity. What to do if you think you’ve been or are being scammed If you think you might have already been targeted and you’ve agreed to transfer your pension, you should:

  1. Contact your pension provider immediately – they may be able to stop the transfer if it has not already gone through.
  2. Contact Action Fraud on 0300 123 2040 and report the scam.

If you need any further help or guidance on how to beat the pension scammers, please get in touch!

Older man enjoying skiing in a bright orange jacket after not exceeding his lifetime allowance

Take it to the Max

560 315 Eleonore Bylo

Older man enjoying skiing in a bright orange jacket after not exceeding his lifetime allowance

Feel confident about your retirement!

If you’ve been diligently saving into a pension throughout your working life, you should be entitled to feel confident about your retirement. But, unfortunately, the best savers sometimes find themselves inadvertently breaching their pension lifetime allowance (LTA) and being charged an additional tax that erodes their savings.

If you are a high-income earner or wealthy individual, you could be putting too much into your lifetime pension and risk exceeding the pension lifetime allowance.

The government will maintain the pensions Lifetime Allowance at its current level until April 2026, removing the usual annual incremental rises.

The following questions and answers are intended to help you avoid this tax charge.

Q: What is the lifetime allowance?

A: The LTA is a limit on the amount you can withdraw in pension benefits in your lifetime before you trigger an additional tax charge. By pension benefits, we mean money you receive from your pension in any form, whether that’s a lump sum, a flexible income, an annuity income or through any other method.

This allowance applies to your total pension savings, which may be in different pensions.

Q: How much is the allowance?

A: In the 2021/22 tax year, the LTA is £1,073,100. This allowance has now been frozen until April 2026.

Q: What happens if you exceed the allowance?

A: Once you have received your full LTA in pension benefits, you will be required to pay an additional tax charge on any further benefits you receive.

If you take your remaining benefits as a lump sum, you’ll pay a tax charge of 55%. If you take your remaining benefits as multiple withdrawals, you’ll pay a tax charge of 25% on each one.

Q: How is the usage of your lifetime allowance measured?

A: Each time you access your pension benefits (for example, by purchasing an annuity, receiving a lump sum or establishing a flexible income), this is recorded as a ‘benefit crystallisation event’. There is an additional benefit crystallisation event when you turn 75, and finally, upon your death.

Q: Is lifetime allowance protection available?

A: You can only protect your pension from the LTA if your savings were worth more than £1 million on 5 April 2016. You may be able to protect your pension savings up to £1.25 million, or up to the value of your pension on that date, depending on the type of protection you have.

Q: Is it possible to avoid the lifetime allowance?

A: If you do not have LTA protection and you are approaching the limit, there are various actions you can consider. These include stopping your contributions (and, instead, investing your money into an alternative tax-efficient environment), changing your investment strategy or starting retirement earlier.

Q: Who does the allowance affect most?

A: The LTA affects high earners and those approaching retirement age the most, including those with defined benefit pensions. As the value of high earners’ pensions rises over the next five years towards a lifetime limit that will remain fixed, more and more individuals may find they need to stop contributing to avoid breaching the limit.

Q: When should you seek professional advice?

A: The rules around the LTA are very complex and making the right decisions can feel difficult. Receiving professional financial advice will help to identify if you have a problem and offer different solutions to consider, based on a full review of your unique circumstances.

For more information on information regarding the Lifetime ISA, please get in touch!