Budget Pension Changes
George Osborne’s recent budget reduced the lifetime pension allowance to £1m and this, coupled with the limit on annual pension contributions of £40,000 (inclusive of occupational schemes), means practitioners should be diligent when it comes to their retirement planning. It may be necessary to register for individual protection to cap your fund and prevent a tax surcharge. For those with large personal pension funds approaching £1m, we can offer various solutions which include sharing the growth with your family to avoid the 55% excess tax charge.
Let’s be honest, no-one wants to pay fees. We all think someone else’s charges are excessive. But why and how do we conclude this?
Does a patient know the cost of materials involved in making a crown? Do they know how much your practice manager is paid or the cost of your indemnity insurance? We view other businesses fees by what our perception of value is. The best thing to do is shop around but also ask yourself ‘How much would I charge for doing this job, assuming I could, or what is an hour of my time worth?’
Certain investment and pension providers and advisers still charge unnecessarily high fees but offer very little for them. Most professionals accept the concept of a fee based service but how do you quantify the value of it? If you are paying an adviser a fee for ongoing advice, do you get it? Are you offered an annual review? Do you know how your pension or investment has actually performed? Does it still meet with your attitude to risk?
One of my longstanding clients, who I knew had been investing with a well-known ‘wealth management’ provider, recently told me that the only communication he received, other than an annual statement, was a Christmas Card!
Concerned not only with the flat performance but also the lack of any kind of service, he decided to engage one of my specialist investment colleagues from Chantler Kent who, having re-assessed his risk profile, identified that his portfolio was heavily skewed towards Europe and that the plan was riddled with charges, some of which were not apparent.
We offer pension and savings programmes within a clearly defined service proposition with fair and transparent charges but also with significant cost savings when compared to other service propositions.
The late Rik Mayall was in the papers again recently because it turns out that he didn’t make a will and his family are likely to incur a significant inheritance tax liability. None of us expect to die any time soon but those of us fed up with telling our children to do as we say and not as we do should take a step back and think about the potential emotional and financial problems that we would leave them if we died intestate.
Yes, it costs. But it will cost a whole lot more if you don’t make a will and implement appropriate provision to address any potential inheritance tax liability. This is especially important for practice owners, property owners, married and unmarried couples as well as anyone with children.
The annual ISA allowance has been increased to £15,240 each so couples can shelter up to £30,480pa in what is essentially a tax free environment. As a consequence, clients are more inclined to save on a monthly basis. Apart from the ease of budgeting, you can benefit from pound cost averaging. Moreover, the funds are accessible and, under the new rules, if you make a withdrawal you may re-credit the facility later on (in the same tax year).
On our Wrap or alternative platform there are no initial charges, no switch fees or encashment penalties just an annual management charge which is invariably cheaper than that which you might pay elsewhere. Your risk profile will be assessed and your circumstances analysed to establish which service best meets your requirements.
The price of units can fall as well as rise and you may not get back the full value of your investment.