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August 2022

Millions of married couples have no idea about their spouse’s pensions & retirement plans

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Millions of married couples have no idea about their spouse’s pensions and retirement plans, according to new research

78% of non-retired married people do not know what their spouse’s pensions are worth.

47% of non-retired married people have not spoken to their spouse about their retirement plans

85% of non-retired married people are not aware of the tax-efficiencies of planning retirement together

Involving your Family in Pension Planning

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With a flexible pension drawdown, if you’ve passed away and your partners passed away the funds can actually pass down to your children and their children, so the family always benefits from your pension planning.

Pensions & Retirement Still Remain a Taboo

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When it comes to marriage and money, it’s good to talk!

Millions of married couples have no idea about their spouse’s pensions and retirement plans, according to new research[1]. More than threequarters (78%) of non-retired married[2] people do not know what their spouse’s pensions are worth.

Nearly half (47%) of non-retired married people have not spoken to their spouse about their retirement plans and 85% of non-retired married people are not aware of the tax-efficiencies of planning retirement together.

Retirement finances

Wealthy people aren’t doing much better. Mass affluent people (those with assets of between £100,000 and £500,000 excluding property) are more likely than average to be aware of the value of their spouse’s pension, but the majority (60%) aren’t going to plan their retirement finances with their spouse and 78% aren’t aware of the benefits of planning retirement together.

The research indicates that millions of married people are not talking to their partners about their pensions and retirement plans. That’s a mistake because couples who jointly plan their retirement can be much better off when they stop working.

Lifetime of saving

Most people have a good idea of what their house is worth, and the same attitude should apply to their retirement funds. After a lifetime of saving, the value of a retirement fund can be worth as much as a property so it’s important that people know how much their retirement savings are worth and the potential death benefits they offer.

The best way for people to ensure they have the retirement they want, their pension income lasts throughout their retirement and that they avoid unnecessary tax bills is to obtain professional financial advice. This is especially true for people who plan to retire within the next five years.

Pension tips for couples

  • Pay into your partner’s pension: A higher-earning partner approaching the Lifetime Allowance or Annual Allowance could pay additional contributions into their partner’s pension. The contributions will attract tax relief.
  • Don’t forget the death benefits and Inheritance Tax benefits of pensions: Pensions won’t normally form part of the estate for Inheritance Tax purposes and, on death before age 75, they can usually be paid out tax free (on death after 75, they are taxed as the beneficiary’s income). It can make sense to discuss when and how to access a pension and if it would be better to spend any other savings first.
  • Avoid unnecessary large withdrawals from a pension fund: Couples should consider how much money they need to withdraw from their pension funds. Drawing too much too quickly can lead to large tax bills.
  • Make sure your partner knows who to contact about your pensions if you die: You may have carefully arranged all your finances so that they can be passed to your loved ones in the most tax-efficient way possible. However, if your partner hasn’t been part of the conversation they may make uninformed decisions. It’s worth remembering that any adviser/client relationship you have ends on death. Data protection rules mean your financial adviser won’t necessarily know what is happening. This can lead to irreversible and costly mistakes being made.

On retirement, many people’s first instinct is to request their full tax-free cash entitlement. However, unless a large lump sum is needed
for a specific purpose, this is not always the wisest course of action. If flexibly accessing a pension, it can often make sense for couples to retain most of the tax-free cash entitlement until a later date, looking to utilise the personal allowance (and potentially the basic rate tax band) to draw tax-efficient income instead.

Successfully managing finances in marriage

When you and your spouse married, you agreed to share a financial future. It’s an important issue for most married couples. Although successfully managing finances in marriage is essential to your happiness together, talking about money may not come naturally. To discuss how we could help you plan your finances, please contact us for more information.

Source data: [1] LV= surveyed 4,000+ nationally representative UK adults via an online omnibus conducted by Opinium in June 2021. [2] Includes couples in civil partnerships. UK population stats from ONS. Total UK adult population is 52.7m UK adults (aged 18+).

Protective Property Trust Will

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A property protection will trust is for couples who jointly own the family home. With this type of trust, you can protect at least half the value of the property to pass on to your children or chosen beneficiaries.

What is a Property Protection Trust

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A property protection will trust is a type of life interest trust incorporated into a will for couples living in England and Wales who jointly own the family home. With this type of trust, you can protect at least half the value of the property to pass on to your children or chosen beneficiaries.

Property Protection Trust

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Owning your home as tenants in common rather than joint tenants provide additional planning opportunities. This can potentially protect inheritance in terms of residential care fee assessment and marriage following bereavement.

A property protection trust is put in place so that the half share of the family home belonging to the first person to die passes into the trust (also known as a life interest trust). This allows the surviving spouse to benefit from the share of the house during their lifetime. Following the surviving spouse’s death, the property can then be passed on to either children or loved ones. By putting this trust in place, you are ensuring your assets are going exactly where you want them to go and giving you total peace of mind.

The benefits of a property protection trust are:

  • Each spouse now owns 50% of the property
  • Each spouse grants the surviving spouse a ‘right to reside’
  • Allows you to pass your property to your chosen beneficiaries
  • Each spouse can gift their 50% as they see fit (both halves of the property do not have to go to the same beneficiaries)
  • Allows you to nominate your chosen Executors/Trustees to handle the property on your behalf
  • Can be used as a tool for planning for care home fees

Please be aware that should the survivor remarry, not make a new will and then die, intestacy rules would see the new spouse taking a disproportionate amount of the estate. By severing the tenancy and creating a life interest trust in your wills (for the surviving spouse), this means your assets are going exactly where you want them to go and giving you total peace of mind. To preserve the residential nil rate band, property needs to pass to direct descendants.

Visit our page on trusts and protecting your family for more information.

Environmental Sustainability

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Environmental impact of SRI portfolios

  • Clean water and sanitation
  • Affordable and clean energy
  • Sustainable cities and communities
  • Life below water
  • Industry, innovation and infrastructure
  • Climate action
  • Responsible consumption and production
  • Life on land

Environmental Impact

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This video looks at the Sustainable Development Goals that fall within the environmental category. This is concerned with the conservation of the natural world, as well as a companies energy usage, wastage levels and pollution.

Visit our Environmental, Social and Governance page for more information.

Environmental Investment Funds

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How are the SRI portfolios helping to combat environmental issues?

Each of the funds in our SRI portfolios invest in companies that are contributing to positive environmental change, or exclude companies deemed to be causing environmental damage. Additionally, the fund managers of our SRI portfolio have strong records of actively engaging with the companies in which they invest, to push for action on climate change. Below are some examples of the funds we have in our SRI portfolios.

EdenTree

EdenTree is a pioneer in the field of SRI, with its roots dating back to 1887, and they launched some of the first socially responsible funds in the UK in the 1980s. Climate change is a key component of EdenTree’s responsible investment engagement strategy – across their entire product range, they assess companies based on their contribution to climate change; and the managers engage with businesses on a range of environmental issues such as decarbonisation and biodiversity. Under their SRI Transparency Code, EdenTree regularly publishes details of its research and engagement on its website.

In addition to their funds, EdenTree has demonstrated that they are truly committed to combating environmental issues at a much higher level. They’re a member of the Institutional Investors Group on Climate Change (or IIGCC for short), whose mission is to drive significant and real progress towards a net zero and resilient future by 2030. EdenTree is also a signatory of the COP21 Paris Pledge, the central aim of which is to strength the global response to the threat of climate change.

WHEB

WHEB was founded in the 1990s as an environmental corporate finance boutique by Rob Wylie and Kim Heyworth, hence its name: Wylie Heyworth Environmental Business. Today, WHEB is responsible for a single global equity strategy: FP WHEB Sustainability. The companies it invests in must be aligned with their sustainability investment themes, of which five are environmental: Resource Efficiency, Cleaner Energy, Environmental Services, Sustainable Transport, and Water Management.

WHEB is a Certified B corporation, where the B stands for benefit. This means that WHEB “meets the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose”.

Ninety One Global Environment Fund

In April 2022, we introduced the Ninety One Global Environment fund across our SRI portfolios. The fund focuses on investing in companies aligned with sustainable decarbonisation – for example, renewable energy (e.g. solar, wind), electrification (e.g. electric vehicles) and resource efficiency (e.g. waste management). The fund’s managers work closely with the CDP (formerly the Carbon Disclosure Project) so they have greater access to high-quality carbon emissions data. From this, the managers then engage with companies to improve their carbon footprint or, where data is not available, to improve their disclosures.

Each of the funds in our SRI portfolios must be aligned with one or more of the United Nations’ Sustainable Development Goals, such as ‘Climate Action’, ‘Clean Water & Sanitation’ and ‘Affordable and Clean Energy’; and they must demonstrate and can evidence that a socially responsible investment culture is intrinsic to their approach.

Learn more about the environmental, social and governance impacts of SRI portfolios.

Pension Drawdown

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You can usually choose to take up to 25% of your pension pot as a tax-free lump sum when you move some or all your pension pot into drawdown, from the age of 55.

You will need to carefully consider where to invest the remaining 75% (or less if you have not needed to take the full 25%), taking your likely income needs and attitude to risk into careful consideration.

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