Month: January 2020

A new year often means that you are setting yourself goals to achieve in the coming year and in financial planning it is important that your family is looked after if anything should happen to you. If you are in a couple and have kids, the focus should be on whether both incomes would still be required if either party was to pass away or become seriously ill? All ‘protection planning’ should be bespoke to an individual’s circumstances. The three main covers are life and/or critical illness that tend to pay a tax-free lump sum and income protection that pays out an income if you cannot work due to accident or illness.  A general rule of thumb is to take out life and/or critical illness cover for any mortgages you may have, to make sure your house is paid for. However often this is insufficient in itself as it does not take into account how the running costs are to be met by con...

A common enquiry over the last few years is a request for us to ‘sign a form’ to cash in or transfer a pension in its entirety into a bank account. Often, we are contacted by people who simply do not understand that there are often better ways of taking pension. Whether it be using ‘guarantees’ associated with their pension that they were not aware or exploring options such as buying an annuity or flexible drawdown. Whilst it may appear like the easy option of cashing in your pension, you have to consider that a full encashment will often mean a large ‘emergency tax’ bill of at least 20% of the fund value (after tax free cash).  Often the cashed in pension will sit in a bank account earning little or no interest. Not to mention the ‘opportunity cost’ of reducing the figure that gains interest by 20% paid out in tax. If your pension is in a ‘pot’ which is invested...

It’s not worth having a workplace pensionNot true! Most people receive more back than they contributed. They also receive contributions from their employers and in most cases tax relief.My property is my pensionNot everyone wants to sell their home when they retire to live somewhere smaller. Bills still need to be paid.I’m too old to start a pensionIf it’s a workplace pension, you’ll miss out on “free money” in the form of a contribution from your employer. Secondly, saving into a pension is probably the most tax efficient way to saveI’m too young to start a pensionStarting early makes a huge difference thanks to the magic of compound interest.I can’t afford itWith auto enrolment, if you opt out you’ll be re-enrolled again every three years when hopefully your financial situation will have improved.My pension will be lost if I die before retire...