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By Balance team, May 2 2018 09:24AM

Last year, we wrote an article on the £120 pension scam, which affected thousands of people nationwide and was under investigation by the Serious Fraud Squad. Pension scams are still hitting the headlines, with a growing number of people falling victim to a variety of dangerous schemes. In this article, we provide some advice and useful guidance to help protect you from unscrupulous fraudsters:

Protect your savings from scammers

Fraudsters are using various methods to access people’s savings including pretending to be from the government, promising an amazing deal, or persistent cold calling. Age UK has reported an increase in the number of older people being affected – read their guidance.

Typically, fraudsters will tend to offer extremely high returns, as much as 8% in some cases. They will claim to know about tax-free loopholes and will use terms such as ‘loans’, ‘saving advance’ or ‘cashback’ from your pension. They may suggest you transfer all your savings into a single investment, pressure you into making a quick decision and express urgency for your signature to approve the transaction. Fraudsters are very adept at selling techniques; they may suggest ‘new’, ‘creative’ or ‘overseas’ investment opportunities – for example, in our previous pension scams article, there was a scheme whereby people were being persuaded to invest their entire pension savings into self-storage units and never seeing their money again.

If it sounds too good to be true, then it probably is!

Never feel pressured into parting with your hard-earned savings. We recommend always seeking professional advice from a trusted financial firm before you consider transferring any part of your pension and committing to any large transactions. Always thoroughly research the company offering you pension investments: the Financial Conduct Authority (FCA) has a register of authorised firms and individuals to help you check whether a company or person has the right credentials and insurance to advise you on your pension plan. It’s also worth checking their list of unauthorised firms and individuals. Plus, the FCA has some good advice on their website to protect people from pension scams – read more

Bogus “pension liberation” schemes exploit “pension freedoms”

Since the 2015 “pension freedoms”, pension scams have been on the rise due to the ability for the over-55s to draw from their pensions before they retire. As a result, many older people are being targeted and lured into dodgy schemes. Thousands of people have lost their life savings when they realise there are no returns for their investment, and then find they cannot get their money out of the schemes. If you are approached out of the blue by a cold caller promising to ‘free’ you from your pension, be very, very wary.

Below is a list of the most common pension scams to watch out for:

• early pension release (before you’re 55)

• get-rich-quick, Ponzi and pyramid schemes

• restricted US shares, share, bond and boiler room scams

• binary options, carbon credit trading, rare earth metals, graphene

• land banking, overseas property and crop schemes

• unauthorised forex (FX) trading and brokerage firms

• unregulated investment products

The Pensions Regulator has also produced some helpful guidance to protect people from scammers – see their Pension Scams video.

Are you concerned about your pension? Do you have a final salary pension scheme? Download our pension guide for more information. We also have some general advice on retirement planning - please visit our Big Life Events – Retirement page.

If you are concerned about pension scams, or you have been affected by any aspect of this article, please get in touch to speak to one of our financial planners. We will be more than happy to advise you on suitable ways to protect your pension and help you plan safely for your retirement.

By Balance team, Apr 24 2018 04:53PM

This year’s wedding season is now just starting and it’s a good time to think about a few financial points to consider when you get married or enter a civil partnership. It doesn’t matter whether you’re embarking on your first marriage, or if you’ve been married before; whether you’re in your twenties or nineties, we have some tips for everyone.

1. Have you thought about how you will manage your finances after you are married?

It’s fairly common now for partners, whether married or not, to keep separate finances. This is certainly true of second (and later) marriages. There’s no right or wrong, and you should do what you’re comfortable with. However, bear in mind that lots of financial planning advice involves using tax allowances for married partners, so if you adopt a strict ‘separate finances’ policy, this can mean reducing the options available to you.

2. Watch your budget!

Did you know that the average wedding now reportedly costs around £27,161? When you begin planning your special day, you may have a few ideas in mind. And this is where things can start adding up and you can go way over your intended budget. So agree a budget and try to stick to it.

3. Gifts from family

If you’re marrying earlier on in life, you might find that your parents are happy to contribute; parents can gift up to £5,000 each towards their child’s wedding and this will be immediately free of inheritance tax (they don’t have to wait the usual seven years for it to leave their estates), therefore it can be a good planning opportunity for them too. Grandparents can gift up to £2,500 in the same say, and you can receive £1,000 between you from anyone else.

4. Update your passport, bank accounts and insurance policies

Okay, this isn’t going to be the first thing you think about when you’ve tied the knot and you jet off on honeymoon, but it will need sorting out eventually. It can take some time to change your name on all your accounts and policies. Usually, you will be asked to provide your original marriage certificate when you change your name on any financial accounts.

From a practical viewpoint, if you have young children with a different surname to you, you may want to make sure your passport shows the same surname to make it easier when travelling together, as border controls are now very alert to children travelling with adults who may not be their parents.

5. Marriage Allowance

Depending on your earnings, it might be worth considering the Marriage Allowance. If one of you earns less than £11,850 per year, you can transfer up to £1,190 of your Personal Allowance to your spouse, which can result in a tax reduction of up to £238 over the financial year.

6. Savings

Depending on your situation, you might want to consider transferring some – or all – of your savings into your spouse’s account, if they have a lower tax rate than yours. If you have received a large pot of cash as a wedding gift, why not consider placing this into a tax-free ISA? Although you cannot open a joint ISA, if you split your money into two ISAs, you will both benefit from being able to save up to £20,000 each tax-free over the financial year.

7. Wills and Inheritance Tax (IHT) for married couples

It’s probably the last thing you want to think about, but are you aware that any transfer of assets or investments between you and your partner is tax-free? And, when one of you passes away, the new ‘main residence allowance’, which came into effect last April, currently allows you to pass an additional £125,000 of your estate tax-free, if you pass on your property down to children. This means that your current combined allowance for IHT in 2018/19 comes to £450,000, or potentially £900,000 for a married couple. This is set to increase up to £500,000 each or £1million for a married couple by 2020/21.

And on that note, don’t forget to update your Will once you are married as it is likely to be invalid.

For more information on Wills, Trusts and Inheritance Tax, please speak to one of our team.

If you’re planning to get married and you would like advice on financial planning, please get in touch and speak to one of our financial planners. We will be happy to discuss suitable ways you can save for your big day and for the long term.

By Balance team, Mar 29 2018 01:00AM

We hope you have some exciting plans in store for Easter. As we’re also fast approaching the end of the financial year, if you happen to find yourself with some spare time, why not give your savings strategy a spring clean? With the right approach, you could create a nest egg for you and your family to enjoy in the future. So, this week, we have pulled together a helpful guide highlighting the key things you need to consider when you are reviewing your savings.

ISA Allowance – don’t forget to use this!

You have until the 5 April to use your £20,000 ISA allowance for this year, so use it or lose it!

An ISA is a tax-free savings account. You can split your money between a Cash ISA and a Stocks and Shares ISA, but there are other ISAs available too, such as the Lifetime ISA for those aged between 18 and 39, and the Junior ISA for children. For more information on ISAs, please read our previous blog, What are the different types of ISA?. From 6 April 2018, the ISA allowance will remain at this figure, so why not consider saving a percentage of your monthly income and top up your ISA throughout the year? If you need advice on choosing the right ISA for your situation, then please get in touch.

Change your bank account

Do you have a large pot of cash sitting in a current account with a low interest rate? You could consider transferring some of your money into a savings account that offers a higher rate of interest. Some accounts offer cash incentives, but the interest you receive over the long term is the most important thing to consider. Fixed rate accounts tend to offer higher interest rates, but you will be locked in for a set period of time (possibly 3 years), and there may be certain terms and conditions too. If you’re unsure on what account will work best for you, then please speak to our financial planning team.

Check your credit card statements

Are you paying interest on your credit cards? This is a fast way to lose money, so consider transferring your outstanding balance to a new card with a lower rate of interest, or repaying the balance if you can. Many credit cards offer a 0% interest period, but always look to pay your balance in full within the set period. Credit cards are one of the most common ways for people to rack up high debts. Once you add up the amount of money lost to credit card interest, you may be surprised to see how much this comes to over time. Your money would be far better spent in a savings account, which you could use as a ‘rainy day’ fund or put towards a future holiday.

Review your mortgage

When was the last time you reviewed your mortgage? Interest rates are still low, so if you’re on a fixed rate mortgage that is due for renewal, now is a good time to consider your mortgage options. Many people have benefited greatly after changing their mortgage provider. One option to consider is an off-set mortgage; which allows you to reduce the amount of interest you pay on your mortgage payments by using some of your savings. Always speak to a professional mortgage adviser before you consider changing your mortgage.

Consider investing

Investments can be a good way to get a better return on your money, but this will obviously depend on your chosen level of risk. There are many ways you can invest your money, which include stocks and shares, property, bonds, gilts, etc. We always advise diversifying your investment portfolio, rather than investing a hefty sum into one type of fund; this will help to minimise risk. If you are already an investor, when was the last time you reviewed your investment strategy? If your investments are underperforming, then it could be the right time to have a full review – speak to our team for more information.

Look at your Pensions

Many people forget about their pensions, only glancing quickly at their annual statements, but it’s a good idea to regularly check any private pensions, final salary pensions, and whether you are up to date with your state pension contributions. If you have a frozen pension, then you might be better off transferring this into a new or existing pension scheme. However, please be aware there are currently a lot of pension scams, so be very careful before you transfer any part of your pension fund - if it sounds too good to be true, then it probably is! If you would like a full pensions review, then get in touch to speak to one of our team.

To conclude, make sure you also check your bank statements for any unnecessary monthly spending. Many people forget about old subscriptions or duplicated insurance policies, so assess whether all of your outgoings are actually needed. You could save a lot of money by removing any unwanted regular spending from your bank account. Instead, you could allocate this money towards one of your savings pots, which can be used for treats or holidays, for example.

If you would like more advice on how you can create a savings nest egg, please get in touch and speak with one of our financial planners. We would be happy to carry out a review to help you make the most out of your savings. In the meantime, Happy Easter!

By Balance team, Mar 26 2018 10:54AM

Last Tuesday, 13 March, Chancellor Phillip Hammond delivered his 2018 Spring Statement.

Although he’s described as “positively Tigger-like”, many economists are not feeling quite so upbeat by Hammond’s recent announcements. Overall, the news was focused on household finances with respect to higher wages and lower unemployment rates. We have put together a summary of the key things you need to be aware of.

Updates on our economy

The Chancellor reported that the UK economy exceeded expectations in 2017 and has continued to grow consecutively for the past five years. The Office for Budget Responsibility (OBR) has forecast 1.5% GDP growth for 2018 (previously, this figure was expected to be 1.4%.) GDP growth is then forecast at 1.3% for 2019 and 2020, increasing to 1.4% in 2021 and 1.5% in 2022. However, some economists argue that these rates actually reflect the fall in inflation rather than an increase in wage growth.

It has been highlighted that the Spring Statement lacked many initiatives to increase productivity, which plays a key part in GDP growth forecasts – read our previous blog, Productivity and Investments for more information on that.

On a brighter note, borrowing is now forecast to be £45.2bn for 2018, which is £4.7bn lower than previously forecast back in November 2017 (nearly 1% lower). In simple terms, in 2018, the UK will borrow £1 for every £18, compared to £1 for every £4 back in 2009-10.

Inflation target

Currently, inflation is above the 3% target, but this is expected to fall within range over the next 12 months. Why is this important? Put simply, as inflation rises, you pay more for goods and services, although it can have positive and negative effects depending on your situation.

Employment rates

The Chancellor announced the following findings:

Employment has increased by 3 million since 2010, which is the equivalent of 1,000 people finding work every day. The unemployment rate is close to a 40-year low. There is also a joint record number of women in work – 15.1 million. The OBR predict there will be over 500,000 more people in work by 2022. - Spring Statement

However, due to the increase in zero-hour contracts, many people argue this may not be a fair representation of employment figures.

Tax, ISAs and Pensions

There are no significant changes to tax rates, ISA allowances and pensions other than what we already expected following the Autumn Budget. Here’s a quick recap:

Income Tax – the Personal Allowance will increase to £11,850 on 6 April 2018 and the Higher Rate 40% tax band will start at £46,350.

Capital Gains – the ‘Annual Exempt Amount’ will increase to £11,700.

Inheritance Tax (IHT) – remains frozen at £325,000. However, last April the new ‘residence nil-rate tax band’ (RNRB) was introduced as an extra allowance when passed to a direct descendent (this can also be used for a surviving spouse or civil partner). In 2018-19, the RNRB will be £125,000 per person. So, effectively, a married couple could pass £900,000 of their estate to their children without paying IHT (two times £125k and two times £325k) – to find out more about this, please talk to our financial planners.

ISAs – the ISA allowance remains frozen at £20,000, although Junior ISAs will now go up with Consumer Price Index inflation (CPI).

Pensions – although the annual allowance for tax relief will remain at £40,000, you could still be affected by other factors – we advise booking a full pensions review to check your individual situation.

There are also continuing plans for investment into housing, transport, and digital connectivity across the UK. For a more detailed look, please see the website - Spring Statement 2018: what you need to know.

If you are worried about how you or your business could be affected by the recent Spring Statement, then please get in touch to speak to one of our financial planning team. We will carry out a full financial review to help put your mind at ease.

By Balance team, Mar 22 2018 10:38AM

With more options than ever before, retirement is becoming an even more complex area. There are so many questions you need to ask yourself before you reach retirement age, including how much income you will need and deciding what you want to do in your later years. So, this week, we have pulled together a checklist below containing five important questions for you to consider:

“Retirement's the most wonderful thing. I get to enjoy all the things I never stopped to notice on the

way up. After an extraordinary life, it's time to enjoy my retirement.”

Patrick Macnee

1. How much money will you have?

Every person – or couple - will have different expectations when it comes to the amount of money they need to live on when they retire; some people’s idea of a comfortable retirement would barely support the lifestyle of others. When you are trying to work out how much money you will have, it is worth checking this against your desired level of comfort - and this means looking at your current lifestyle. Okay, so you may have pensions, savings and investments, you may have also paid off any debts, loans and the mortgage and by the time you come to retire you should be paying less income tax too. However, you may have plans to travel more frequently, take up new hobbies, or buy a second property/holiday home, which could all incur a considerable amount of additional spending.

Surprisingly, in retirement, many people find themselves spending roughly the same level of disposable income as when they were working and often forget to factor in the rising cost of living in the future on things like utilities and goods. If you are looking for a luxurious retirement, you need to make sure your numbers add up. Speak to our financial planning team, if you’re not sure whether you have enough money for your retirement.

2. Will you be able to retire early?

The answer to this depends on your findings above and what you want to do in your retirement (we explore this point further below). Recent “pension freedoms” allow the over-55’s to draw from their private pension income in a very flexible way (not including final salary or state pensions). You could potentially withdraw a lump sum, typically 25% of your pension is tax-free (the rest would be taxed at your marginal rate of income tax), but the obvious risk here is that you could end up spending all your pension. Interestingly, research shows that the greatest level of spending happens early on in retirement, which is called the ‘active’ phase. Spending then tends to fall during what’s called the ‘passive phase’ because people tend to travel less frequently and do less expensive activities after this point. Then finally, at a much later age, spending then tends to increase considerably as people start needing care – also known as the ‘supported’ phase.

3. What do you want to do when you retire?

This is the greatest question of all and maybe one that you won’t be able to answer fully at this stage. However, it’s important to start thinking about what you would like to do as early on in your life as possible. In simple terms, the earlier you plan, the better your retirement will be. Some possible ideas include travel, living abroad, buying a holiday home or second property, or maybe learning a new skill or taking up a new hobby. All these things will incur costs – some more than others – so we strongly advise taking some time out to think and reflect on how you would like your future to look. Read our previous blog, Setting goals for a successful future.

4. What will be your retirement income sources?

As well as pensions, savings and investments, you might consider other ways to generate income when you retire. This could involve becoming a landlord and renting out a property – perhaps even your own – while you downsize and move elsewhere. You might decide to continue working but on reduced hours, or you may even decide to start a new business; currently, there is a boom when it comes to the over-50’s starting new businesses. Many people are reshaping old or standard views on retirement. So, whether you have a personal project or a business in mind, the most important thing is to consider the amount of responsibility you would like, and any potential stress involved.

You could also consider consolidating your pensions, which may provide you with better returns. However, always seek professional advice when reviewing your pensions, savings or investments, so you can make the most of any potential tax relief.

Remember to double-check that you are up to date with your NI contributions as this will affect your State Pension income – this is especially relevant if you have taken a break from work to raise a child.

5. Have you protected your wealth and your estate?

As well as various insurance policies, there are many ways to protect your home and money, as well as your family’s future. Firstly, make your sure you have an up-to-date Will in place that covers every asset including any business interests. Many people choose a Trust-based Will as this can provide certain levels of protection for you and your family including inheritance tax relief – get in touch to speak to our team who can explain more about Trusts.

Ideally, everybody should have a Lasting Power of Attorney to allow key family members or friends the ability to act on your behalf should you lose the capacity to make important decisions. This does not necessarily mean dementia – you could lose capacity by having a stroke, heart attack, or even an accident. Without a Lasting Power of Attorney, if you lost mental capacity, your bank accounts could be frozen leaving a spouse without any access to your money. Please get in touch to speak to our team who can explain the different types of Lasting Powers of Attorney available.

On a lighter note, and most importantly of all, don’t forget to enjoy your retirement! This may sound strange, but without a successful retirement plan, money can become a real worry at a time when you should be relaxing. After all, you’ve worked hard all your life, so allow yourself a worry-free time in your golden years.

For more information, please read our guide to Retirement or visit the Which? website, which offers some insightful ways for you to calculate your retirement income.

If you would like to explore suitable strategies for a successful retirement, please get in touch and speak to one of our financial planners. We will carry out a full financial review and help you set some achievable goals, so you can meet your personal and financial targets.

Regular news and views from the Balance team. You'll find our thoughts about pensions, investments, ways to save tax, facts about finances and plenty more.


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