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

Monthly Archives :

July 2022

Options at retirement

560 315 Eleonore Bylo

Options at retirement

Annuities – guaranteed income for life

Flexible retirement income – pension drawdown

Uncrystallised Funds Pension Lump Sum

Combination – mix and match

Pension options video

150 150 Eleonore Bylo

We outline the different options that are available at retirement including annuities, pension drawdown, uncrystallised funds pension lump sum and a mix and match approach.

a couple happy at their options at retirement

Pension options at retirement

560 315 Eleonore Bylo

a couple happy at their options at retirementWhat can I do with my pension?

Deciding how you want to start taking money.

Due to the changes introduced by the government in April 2015, when you reach the age of 55 (subject to change) you now have more flexibility than ever when it comes to taking money from your pension pot.

But before you do anything with your hard-earned cash, it’s important to take the time to understand your options, as the decisions you make will affect your income in retirement. Before you take money from your pension plan, it’s important to ask yourself if you really need it right away.

When and how you take your money can make a big difference to how much tax you might pay and how long your money will last.

Most pensions will set an age from which you can start taking money from your pension. They will also have rules for when you can
take your pension earlier than normal, for example, if you become seriously ill or unable to work.

When the time comes to start taking money from your pension, you’ll need to decide how you want to do this. If you’ve got a personal
pension or a defined contribution pension, you can take up to 25% of its value as a tax-free lump sum.

The remainder of your pension fund will be taxable and may either be taken as cash, used to buy an annuity (a guaranteed income for a
specific period or for the rest of your life), or you may leave the money invested and take withdrawals on a regular basis or as and when
you need.

With a defined benefits pension, you may be able to take some of its value as a tax-free lump sum, but this will depend on the rules of your scheme. The rest of the money will be paid to you as a guaranteed income for the rest of your life.

Different levels of risk and security and potentially different tax implications

The different ways of taking your money have different levels of risk and security, and potentially different tax implications too. As with all retirement decisions, it’s important to take professional financial advice on what’s best for you.

Everybody’s situation is different, so how you combine the options is up to you.

Annuities – guaranteed income for life

Annuities enable you to exchange your pension pot for a guaranteed income for life. They were once the most common pension option to fund retirement. But changes to the pension freedom rules have given savers increased flexibility.

The amount you will receive depends on a number of factors, for example, how long the insurance company expects you to live and other benefits the annuity provides, such as a guaranteed payment period or payments to a spouse or dependent.

Annuities can also be for a specific period, not just for life. This can be useful if someone wants a guaranteed income for part of their retirement, say before the State Pension is payable.

Flexible retirement income –pension drawdown

When it comes to assessing pension options, flexibility is the main attraction offered by income drawdown, which allow you to access your money while leaving it invested, meaning your funds can continue to grow.

Pension drawdown normally allows you to draw 25% of your pension fund as a tax-free lump-sum, or series of smaller sums. This ‘tax-free cash’ is known as the Pension Commencement Lump Sum, or PCLS. The rest of the fund remains invested and is used to provide you with a taxable income, via withdrawals on a regular basis or as and when you need.

You set the income you want, though this might be adjusted periodically depending on the performance of your investments. You need to manage your investments carefully because, unlike a lifetime annuity, your income isn’t guaranteed for life.

Uncrystallised Funds Pension Lump Sum (UFPLS)

You do not have to draw your pensions commencement lump sum at the outset. Instead you may use your pension fund to take cash as and when you need it and leave the rest untouched where it can continue to grow tax-free.

For each withdrawal, the first 25% (quarter) is tax-free and the rest counts as taxable income. There might be charges each time you make a cash withdrawal and/or limits on how many withdrawals you can make each year.

Combination – mix and match

It may suit you better to use a combination of the options outlined above. You might want to use some of your savings to buy an annuity to cover the essentials (rent, mortgage or household bills), with the rest placed in an income drawdown scheme that allows you to decide how much you wish, and can afford, to withdraw and when.

Alternatively, you might want more flexibility in the early years of retirement, and more security in the later years. If that is the case, this may be a good reason to delay buying an annuity until later.

Want to discuss how to decide what to do with your pension pot?

Find out more about your options for taking an income in retirement and what you need to consider. If you’re unsure about the best approach for you, please get in touch with us for further information.

Sustainable Development Goals

560 315 Eleonore Bylo

The 2030 Agenda for Sustainable Development, adopted by all United Nations Member States in 2015, provides a shared blueprint for peace and prosperity for people and the planet, now and into the future. As part of our commitment to our clients, as socially responsible investors we are committed to supporting the SDGs, so much so that every single fund we hold can easily be associated with one or more of these goals.

Sustainable Development Goals Video

150 150 Eleonore Bylo

We discuss The United Nations 17 Sustainable Development Goals and how we align our investment portfolios to one or more of these, whilst breaking these down into environmental issues, social issues and governance issues.

Want to know more about socially responsible investing?

560 315 Eleonore Bylo

Learn how each of our funds ties in with the United Nations sustainable development goals to reassure you

Socially Responsible Investing(SRI)is an investment strategy which seeks to consider both financial return and sustainable social/environmental good to bring about positive social change, without causing harm to current or future generations.

SRI allows you to align your values to your investment objectives

But what is an SRI investment fund and how do you gauge their credentials?

At Ellis Bates all our SRI funds are screened and chosen in alignment with the 17 United Nations Sustainable Development Goals (SDGs).

The 2030 Agenda for Sustainable Development, adopted by all United Nations Member States in 2015, provides a shared blueprint for peace and prosperity for people and the planet, now and into the future. At its heart are the 17 Sustainable Development Goals (SDGs), which are an urgent call for action by all countries -developed and developing -in a global partnership. They recognize that ending poverty and other deprivations must go hand-in-hand with strategies that improve health and education, reduce inequality, and spur economic growth –all while tackling climate change and working to preserve our oceans and forests.

We meet with the fund managers each year and create a matrix of how each of the 17 goals relate to each of our SRI funds.

Many of our funds are aligned with several of the 17 goals, for example:

This fund aims to achieve capital growth, by investing primarily in companies that are contributing to sustainable decarbonisation. The management team have identified three underlying drivers of sustainable decarbonisation: renewable energy (e.g. solar, wind), electrification (e.g. EVs) and resource efficiency (e.g. waste management, homes & buildings). We have therefore identified that the fund is aligned with SDG 7 (Affordable & Clean Energy), SDG 11 (Sustainable Cities & Communities) and SDG 13 (Climate Action), at the very least.

To learn more about the 17 SDGs visit https://sdgs.un.org/goals

By aligning our funds so closely with the 17 SDGs, we are able to reassure anyone considering SRI with Ellis Bates of the positive impact your choices will make for future generations.
SRI –where people, profit and planet can live together.

Volunteer day at Otley Chevin

560 315 Eleonore Bylo

On Thursday 30th June, a group of 6 employees from Ellis Bates volunteered at Leeds Parks and Countryside Service on Otley Chevin and carried out some invasive species control in the form of Himalayan Balsam Bashing. Himalayan balsam is a major weed problem, it grows rapidly, spreads quickly and smothers other vegetation.

Ellis Bates will support colleagues who wish to do volunteer work by providing one day a year where they can use their working day to volunteer within their communities or for charitable institutions. Charitable work supports our values of caring for our colleagues, customers and communities.

It allows colleagues to positively impact causes that are important to them and shows that the business is committed to its Social Responsibility principles. Volunteers can use the skills that they have developed at work to help the community, learn new skills, and help to improve morale, physical health, and work life balance.

They had a great day out volunteering and finished with a well-deserved drink.

How parents pass on wealth

560 315 Eleonore Bylo

How parents pass on wealth

Leaving it in a Will 88%
Bank transfer/cash 67%
Consulting Financial Adviser 57%
Writing wealth into trust 56%
Putting money into investment 53%
Putting money into a pension for their children 43%

Family focused financial advice

150 150 Eleonore Bylo

Often when making financial plans, it can feel like a very individual decision. What you’re actually doing is planning for yours and your family’s future. All families are different. And that’s why it’s really important to involve your financial adviser with the whole family story.

Protecting family wealth

560 315 Eleonore Bylo

What will your legacy look like?

Estate planning is about putting your affairs in order, to help make the lives of your loved ones easier. It can help to protect your estate for your beneficiaries and reduce the impact of Inheritance Tax (commonly called IHT for short).

IHT is something many of us don’t know enough about. Simply because we don’t think we need to.

Five key points to consider – Tax year 2022/23

1) IHT doesn’t just affect the wealthy

Traditionally, only the wealthiest in society were affected by IHT. But rising property prices means more and more people are now facing it. It all comes down to the value of your overall estate upon your death. If it’s worth more than your personal nil-rate band (NRB), anything above could be liable to IHT at up to 40%. (If you’re single or divorced, the NRB is £325,000 and if you’re married, in a registered civil partnership or widowed, it’s up to £650,000).

2) There’s also the residence nil-rate band (RNRB) – but not everyone can benefit

If you’re wondering what the RNRB is, this can be used alongside your usual NRB – and was introduced to help more people reduce their IHT liability. Every UK adult has a RNRB of £175,000. But the rules can be more complex than many people realise. Amongst the restrictions, you can only use this allowance if it relates to a property you have lived in, and passed to a direct descendant (such as your child or grandchild – not a friend, niece or nephew).

3) Your estate isn’t just your home

Your savings and investments, car and any rental properties form a part of your estate. Not forgetting any jewellery you have, household furniture or expensive paintings (minus any liabilities, like an unpaid mortgage). After working out the value of your belongings, you may be surprised by how much your estate comes to. It could be worth a lot more than you think. It’s also important to bear in mind that these assets could increase or decrease in value in the future.

4) Annual revenue is expected to keep climbing

The latest IHT figures should be a ‘wake-up call’ for families to think carefully about their tax planning. IHT receipts in the United Kingdom amounted to approximately £5.32 billion in the financial year 2020/21[1].

5) Your could do something about it

There are plenty of perfectly legal steps you can take to protect your family’s wealth from the taxman. The IHT solutions include annual exemptions, allowances, direct gifts and trusts.

Of course, there are many different options to choose from – so it’s important you find one that’s right for you. With this in mind, and the fact that IHT can be a complex subject, you should always obtain professional financial advice to guide you through the complexities – and help you put suitable plans in place.

Worried about Inheritance Tax eating into your estate?

How can you leave a tax-efficient legacy? We’ll help you leave more to those you love most. Although it’s not nice to think about, getting your affairs in order for when you pass away can bring real peace of mind as you get older. To find out more, please contact us to discuss your requirements or visit our Inheritance Tax page.

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.

Source data: [1] https://www.statista.com/statistics/284325/united-kingdom-hmrc-tax-receipts-inheritance-tax/

  • 1
  • 2