Category: Pensions

IRA Savings

How to Use IRA Savings

IRA Savings

You may withdraw money out of your IRA whenever you choose, but be aware that if you’re under the age of 59 ½, doing so could result in a tax penalty. This is because the government wishes to discourage you from withdrawing funds from your IRA until you reach the age of retirement. Since an IRA is a retirement account, it’s understandable.

If you are under the age of 59 ½ and you withdraw any money from a conventional IRA you will be subject to a 10% penalty on the amount of money you take out of the account. Additionally, you’ll be liable for standard income tax on the amount of money you take out of the account. This is a bad concept.


Traditional Individual Retirement Accounts (IRAs) vs Roth Individual Retirement Accounts (Roth IRAs)

Traditional IRAs, at their most basic level, are available to people who make an income for as long as they continue to do so. This sort of IRA may allow you to deduct your contribution from your taxable income in the tax year in which it was made, as well as possibly allowing your profits to grow tax-deferred. In most cases, withdrawals from an IRA account begin when the account owner reaches the age of 72, at which point they will be subject to taxation.

Roth IRA contributions, in contrast to traditional IRA contributions, are made after tax. This means that there is no tax deduction available. Roth contributions are not taxed when withdrawn as long as you are at least 59 ½ years old. This is because you have previously paid taxes on the money you contributed.

Traditional IRAs and Roth IRAs are controlled by income levels, which determine who is allowed to make contributions to the accounts and how much they may contribute. The total annual contribution maximum for Roth and regular IRAs in both 2019 and 2020 is $6,000 if you are under the age of 50 and $7,000 if you are 50 or over, regardless of your age.

To put it another way, with a Traditional IRA you pay taxes on your income and profits when you withdraw the funds, but with a Roth IRA you pay the taxes up front. You may be eligible for a tax deduction for the year in which you make your contribution, and your contributions may grow tax-free. Roth IRAs are exempt from required minimum distributions (RMDs) since they are taxed at the time of contribution.

In most cases, you may make penalty-free withdrawals (also known as “qualified distributions”) from any IRA if you are 59 ½ years old or older. However, if it is a typical IRA you will still be liable for income tax. To be eligible to take qualifying withdrawals from a Roth IRA, you must be at least 59 ½ years old and have been contributing to the account for at least five years. Furthermore, if you converted a traditional IRA to a Roth IRA you will not be able to withdraw the money from the Roth IRA until at least five years following the conversion.


What Happens to My IRA When I Reach the Age of Retirement?

Knowing what will happen to your IRA when you reach a specific age is just as essential as understanding what an IRA is and how to use one effectively. Here are a few things you should be aware of in order to avoid penalties:

  • Your money can’t just sit in your IRA for an indefinite period of time. Because of congressionally mandated minimum distributions, if you do not remove any money from your IRA throughout your lifetime (RMDs) you will not be able to refuse to take any money from your IRA and just pass the entire account on to your spouse or children. Regardless of whether or not you are employed, once you reach the age of 72, you must begin taking funds from your account to cover living expenses. This need is necessary in order for the IRS to be able to tax money that had previously been exempt from taxation.
  • RMDs are calculated differently for each individual. It is not necessary for everyone to have the same retirement plan, nor have they all invested the same amount of money throughout their working years. As a result, the amount of money that individuals must remove from their accounts each year will vary and rely on a variety of circumstances.
  • The failure to take an RMD leads to a severe penalty. It is true that if you do not remove the requisite minimum amount from your IRA you will be subject to a tax penalty. The penalty is calculated as a 50% levy on the amount of money that was not withdrawn in a timely manner.


Another great method of investing the money again would be to put it in self-directed IRA real estate. That way your money could continue to work for itself just as it has for all of these years.

Pension Scams

Pension Fraud Is On the Rise – Here’s 5 Simple Tricks to Stay Savvy Against the Latest Scams

Pension Scams

Pension and investment scams can have a serious impact on your financial health, losing you a lot of money. Falling victim to fraud may affect your wellbeing and leave you feeling anxious, stressed, and worried.

New research from Lottie has found a recent rise in scams targeting the over 55’s. Over the last three months, online searches for those looking for support after falling victim to pension and investment scams has significantly increased:

  • 75% increase in online searches on Google for ‘scam help’ and 50% increase for ‘fraud support’
  • 24% increase in online searches for ‘pension fraud’
  • 22% increase in searches for ‘pension scam’ and ‘investment scam’


Here’s why pension frauds are on the rise, according to Lottie’s Will Donnelly:

“More people than ever before are seeking online support after falling victim to fraud. With more flexibility in managing your pension at retirement, it is no surprise there has been a recent rise in pension and investment scams.

Fraudsters have exploited the uncertainty around the pandemic and the recent rise of living costs to trick people into transferring over their life savings. Many people choose to retire at the end of March because of a lower rate of Income Tax, so there is now more opportunity to fall victim to pension and investment scams.

Anyone can fall victim to a fraud – especially as they are becoming more sophisticated – but the over 55s are most likely to be targeted, according to previous research by Citizens Advice.

Scammers will often try to persuade you to remove some or all money from your pension fund. They may ask you to invest in unusual, high-risk investments, including overseas property. Or they may contact you out-of-the-blue for a free pension review, promising advances on your pension pot.

Thankfully, there are ways to reduce your risk of falling victim to fraud and we must raise awareness about staying savvy to scams.”


Five simple tricks to lower your risk of pension fraud:

Frauds are becoming even more sophisticated, so it is important to stay clued up on the warning signs of pension and investment scams. They can lead you to losing a lifetime’s worth of savings in one moment, so you must stay cautious.

  1. Watch out for warning signs

Scammers will often contact you unexpectedly, whether that is via a phone call, text message or email. Remember – since January 2019, there has been a ban on cold-calling about pensions. So, if you do get contacted and offered a free pension review or investment opportunity, it is likely that it is a scam.

Simply hang up or ignore any unsolicited text messages promising you more money.

  1. Seek financial guidance first

If you are keen to review your pension, there are ways to receive free, impartial advice, including Money Helper’s Pension Wise service. Before changing any of your pension arrangements, seek out impartial financial advice from a reputable source, first.

Take the time to check any investment opportunities before transferring over any money. Make sure that whoever you are dealing with is regulated by the Financial Conduct Authority (FCA) and they are authorised to provide you with financial advice.

  1. Keep up to date with the latest scams

It is no surprise that fraudsters are becoming even more sophisticated. An important part of reducing your risk of falling victim to fraud is staying clued up on the latest scams. Age UK provide information on the latest scams – including fake Ukraine fundraisers and fake energy refund emails.

  1. Speak to your loved ones

If you have fallen victim to fraud, do not suffer in silence. Anyone can be susceptible to scams, especially as they are becoming more sophisticated. Even the most careful people can be caught out.

Make sure you speak to your friends and family, as it can feel a huge relief to open up about how you’ve feeling. They can support you in reporting the fraud and help you cope with any stress, anxiety or worry you are experiencing.

  1. Report a scam

Most importantly, do not feel embarrassed about reporting fraud. There are organisations that can support you and you will help them track down the fraudsters. Contact the police via 101 immediately if you feel threatened or if you have transferred money to the scammer in the last 24 hours.

You can also report fraud to the Citizens Advice service – make sure you note down all details about the scam, including whether you have transferred any money, who you have been in contact with and the type of information you have shared.

Financial advisors looking over spreadsheets and graphs
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How Can Pension Schemes Align With ESG Goals?

Financial advisors looking over spreadsheets and graphs


By Tracy Walsh, partner in the pensions team at law firm Womble Bond Dickinson

Pension schemes and the industry as a whole are responding to the zeitgeist of ESG investing. Last year, the Universities Superannuation Scheme, the UK’s largest pension scheme, announced that by 2023 it will have divested from companies involved in tobacco manufacturing, coal mining and weapons manufacturers, where this makes up more than 25% of their revenues.

The government has chosen not to impose targets onto pension schemes and is instead hoping that all schemes can learn from the actions of some larger schemes like this that have set ambitious ESG (Environmental, Social and Governance) investment strategies, and in particular those that have voluntarily adopted net zero targets for their investments. Pension schemes will need to engage much more with their asset managers, understand what net zero really means, and be prepared to better interrogate their managers over their fund selection and how this is being monitored.

That will require Trustees to be more clued up, and to have a much different investment strategy, than perhaps they have been in the past. But the effort is likely to be worth it, for their scheme members. ESG investing is proving to be very attractive to millennials (Trustees may be surprised by just how many of their members fall into that bracket), and is bucking the assumption that ESG investing means lower returns.

Research from Bloomberg has shown that the average ESG fund fell in value by just half the decrease registered of other funds in the S&P 500 index over the same period during the Covid-19 crisis. All of which is good news for DC fund values, and also for DB schemes that are seeking to rely less and less on the employer going forward.

Trustees should not focus solely on the “E” in ESG though. The social credentials of companies seeking investment are just as important and it seems that those companies with solid scores in their area have also performed better during the pandemic, and members will likely expect further and better particulars from their schemes about how those scores are arrived at, and how it has shaped the investment strategy for the scheme.

So how can trustees ensure that managers engage positively with investee companies on their behalf? There are some key actions Trustees should take, in order to exercise the right degree of influence and accountability among their fund managers:



Trustees should educate themselves about the S and the G in ESG, not just the E. Ask the managers and other advisers to provide training on how to interpret information, and what sources are being used to asset the ESG credentials of funds (especially social factors, such as labour standards and diversity). This will enable the Trustees to better monitor their managers and understand and interrogate the information provided by them, and in turn, managers will be forced to engage positively with investee companies



Trustees should make clear in their SIP and their risk register what their position is in relation to ESG, and how they will review the performance of their managers and investments against that position. Don’t just use boiler-plate assurances that the asset manager’s policies are consistent with the Trustees’ ESG beliefs. The voting policy is an excellent tool, even where voting is delegated, and would set out how schemes check their manager’s approach (some asset managers’ policies currently offer limited coverage of social topics) and the steps that will be taken where the managers’ voting choices diverge from the scheme’s voting policy.



Require your managers to be signatories of the UK Stewardship Code. If you are a qualifying scheme, you should also sign up, to show that you are walking the walk as well.


Follow through:

Select managers whose approach to ESG and sustainability issues is in line with that of the scheme, and choose those that can demonstrate that they fully integrate ESG considerations into their investment process.

Tracey Walsh
Tracy Walsh

Pension Awareness Day: Expert Advice for Tradespeople On How to Prepare for Retirement

  • One in eight (13%) older tradespeople (55-64s) have no financial plan for retirement 


Preparing for retirement can be challenging, and it can be difficult to know where to start. In fact, recent research by IronmongeryDirect found that one in eight (13%) tradespeople approaching retirement age (55-64s) don’t have any financial preparations for retirement. 

So, what do you need to know about saving for retirement? 

IronmongeryDirect has partnered with Fabian Taylor, senior associate and chartered financial planner in Nelsons’ wealth management team, and George Stainton, senior wealth manager at Hoxton Capital Management, to reveal helpful tips for tradespeople on how to prepare for retirement.


1. It’s never too late to start

While it’s recommended to begin planning for retirement as soon as possible, IronmongeryDirect’s research found that more than one in ten (13%) tradespeople approaching retirement age don’t have a financial plan in place. Thankfully, it’s never too late to make a start.

Fabian said: “Contributions to a pension attract tax relief from the Government. So, for every £80 you contribute, tax relief of £20 is added, making the total contribution £100. 

“As a general rule of thumb, you should try to save half the age at which you started as a percentage of your salary. For example, if you start saving at age 20, then you should contribute ten percent, but if you start at age 30, you should aim to save 15%.”


2. Saving early makes things easier 

While it’s true that you can start saving at any point during your career, it’s sensible to begin putting aside money for retirement as early as possible.

Many young people have the advantage of being able to use workplace pension schemes, but for those who opt out, are ineligible, or are planning on saving additional funds, starting early has major benefits.

George said: “If younger people are not contributing to a pension scheme, then they should make sure they have some sort of structured savings in place. Getting into the habit of saving for retirement earlier in your career will make life much more comfortable as you get closer to retirement. Let us look at a simple calculation to prove this.

“If someone needs to have a retirement pot of £500,000 at the age of 55, they will need to save £441 per month if they start at the age of 25 and see a 7% return on their investment each year. If they start saving at 35, this figure increases to £1,016 per month and dramatically increases to £2,783 per month if they start at 45 years old.”


3. Take advantage of workplace schemes

For tradespeople who work on an employed basis, they should look to enrol in their workplace pension scheme, if they have not already.

This means that they will be saving throughout their career, with additional top-ups from their employer, and while tradies should still aim to set up a private pension, a workplace scheme provides a safety net in the meantime. 

Fabian said: “If you are 22-years-old or older, earning over £10,000 and employed by a company, you will be automatically enrolled into your company’s workplace scheme. Through this, a minimum of 8% of your earnings, split between yourself and your employer, between £6,240 and £50,000, will be invested into your pension. If it is affordable, you should consider increasing contributions. If you opt out of this workplace pension, you are missing out on money from your employer.”

George said: “Thankfully, with the help of auto-enrolment, younger people are better equipped than ever to start saving for their retirement early. As the majority of the young working population will be contributing to some kind of workplace pension, they are able to benefit from the effect of long-term saving and compounded growth.”


4. Remember to plan ahead and save if you’re self-employed

Those working on a self-employed basis, unfortunately, do not have the same auto-enrolment to a workplace pension scheme that employed people do, so therefore it’s important that you make your own preparations and plan ahead for your retirement.

Fabian said: “Draw up a budget to see what you can afford to contribute each month, and do some research into the best place for you to put it that allows for investment growth and tax relief. Even if it is a small amount, every little helps.”

“Assuming a growth rate of five percent, if you were to contribute £50 per month to a pension at age 25, the pension could be worth £76,301 by age 65. However, if you don’t start saving until age 35, the pension could be worth £41,612 by age 65. The longer you wait to save in a pension, the more you may have to pay in later in life to save enough to meet your needs in retirement.”

Regardless of your age, it’s always best to prepare for retirement in advance. By ensuring that you’re making the most of workplace pensions where available, as well as saving privately, you can place yourself in the best position to enjoy retirement in comfort.

For more information and advice, visit: 

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Forward Planning: 7 Easy Tips for Managing Your Retirement Savings


Forward Planning: 7 Easy Tips for Managing Your Retirement Savings

We’ve all dreamed about a blissful retirement, spending more time with the people we love, in places we love and doing things we love. But is it just a pipe dream, or are you financially prepared for the life you wish to lead?

The good news is, it’s never too early to start preparing for retirement. Whilst most of us spend our twenties paying off student debt, as we approach our thirties, our financial priorities change somewhat as we’ve technically been there, done that, got the house, mortgage and family. It’s a time when we experience career progression, leading to promotions, bigger salaries and more funds that can be stashed away for later years.

To help you begin forward planning for the future, Alex MacEwen, expert at The Wealth Consultant has come up with 7 easy tips to get you on your way to achieving the retirement you imagine.


Before we begin, you might be thinking just how much stashing away should we do? According to research commissioned by

– 55% of UK adults estimate that they will need £100,000 to live comfortably in retirement.

– Only 28% of people believe they are on target to meet this.

– The recommended amount for a comfortable retirement is between £260,000 – £445,000.


Shocked? Maybe it’s time to start planning the life you deserve.


1. Get independent financial advice

The future is an unknown – How should I save for retirement? Am I saving enough? How much will I need to live on? By enlisting the help of a professional, independent advisor, you will find the answers to all these vital questions. Your independent financial advisor will help you plan and make decisions based on your lifetime goals. They will advise on the various products that most suit your needs instead of pushing a product to boost their sales.


2. Create a realistic spending plan

Determine a budget by assessing your income, salary, interest, dividends, any rental income or child support. Define your outgoings, housing bills, utilities, transport, food, perhaps you are still paying off student loans. Decide on the things you really could sacrifice in the name of saving – do you need so many European city breaks? Are you still paying membership fees for facilities you never use because you keep forgetting to cancel the membership? Scrutinise your balance sheet and commit to saving as much as you can. Your future self will thank you, trust me.


3. Monitor old and new workplace pensions

It’s easy to get caught up in the excitement of landing a new job and just as easy to lose track of your old workplace pension! But it is important to keep track to know the value of your pension pot as this will help you decide whether it’s worth merging the old pension with the new one, and will give you an idea of how much you have saved for the future. It’s important to check the pension management fees as your previous employer will stop making contributions to old funds once you change jobs, the fees keep rolling, depleting your pension pot in the process. If you have a defined contribution pension, it is always worth checking where your pension funds have been invested, both from a risk level perspective and to ensure it aligns with your values.


4. Review investment performance

Keep track of your investments to ensure your portfolio is flourishing. If something isn’t working, figure out why. Perhaps it’s just a case of sitting tight and keeping your cool, or maybe time to diversify into a different sector or explore international opportunities to minimise losses. Remember, even if you have a few disappointing investments in your portfolio, a portfolio that is steadily increasing in value is always a sign that conditions are good.


5. Minimise retirement tax

After spending a lifetime working and sensibly putting money away for retirement, it’s important to ensure you keep as much as that money as possible. How? By ensuring your savings are as tax efficient as possible. This will mean working with an experienced financial advisor to ensure you are making use of all the tax allowances and pension tax relief.


6. Estate planning

Your inheritance and estate plan should set out your values and your intentions for how you wish your estate to be divided up and managed when the time comes. By focusing on your estate planning now, you can manage your tax obligations and safeguard the financial stability of those you hold dear. Inheritance matters can be challenging emotionally and financially, so it’s important to get professional advice and protect your wealth for future generations.


7. Save as much as you can

Save as much as you can, while you can. Achieving your dream retirement means making small short-term sacrifices in favour of saving for the future life you want. Remember, topping up your pension now means you will benefit from tax relief up to the annual limit of £40,000.

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UK Gender Income Gap for Single Pensioners Widens by Almost 20% in Four Years


UK Gender Income Gap for Single Pensioners Widens by Almost 20% in Four Years

Men over the age of 75 receive £114 a week more from their pension income than women of the same age, according to a new report.

Single male pensioners receive up to 26 per cent more income than female pensioners, according to official data compiled by digital wealth advisory firm, Fintuity. The findings, analysed using data compiled by the Office for National Statistics, reveals that the gender pension gap between single men and women was only eight per cent in financial year (FY) 14/15, noting a rise of 18 per cent in four years.

In 2018/19, the average incomes for males, who were under 75 and 75 or over, were £441 and £429 per week, respectively during this period. At the same time, these figures were significantly lower for the same age groups of women: their average income per week reached £333 for those under 75, and £315 for 75 or over.

Furthermore, according to analysis from Fintuity, a woman in her 20s would need to save approximately £1,300 extra per year in order to close the gender pensions gap. However, this average amount increases depending on age. For example, the average 30 year old woman would require an additional £2,000, a 40 year old woman would require an additional £2,900 and a 50 year old woman would need to acquire a further £5,300 in order to close the gender pensions gap.

Gross income of single pensioners consists of different sources, including; benefit income, occupational pension income, personal pension income, investment income and earning income. According to the most recent pensions data, in FY 18/19 occupational pensions income for men was on average 35 per cent higher than women, compared to 23 per cent four years prior.

The personal pension income gap was 63 per cent in FY 18/19, compared to 46 per cent in FY 14/15, and, the investment and earnings income gap between male and female pensioners increased from five and eight per cent in FY 2014/15, to a massive 61 and 74 per cent respectively. Suggesting that women are not as capable of making savings and investments due to low income which results in lower level of pensions.

Ed Downpatrick, Strategy Director, Fintuity comments:

“Despite government initiatives to improve the pensions income for women, it’s clear that no amount of support programmes can make up for the occupational gender disparity in the UK. This problem needs to be tackled head-on, with correct support initiatives put in place to enable women to get a much fairer deal.

“With Fintuity, women and men of all ages can receive professional, yet affordable, financial advice in order to see what options are available to them so that they can manage their pension income. All of this can be conducted online, via our digital platform, making professional financial help more accessible than ever.”

For more information on how to effectively save, spend wisely, understand alternative income routes, or improve monthly pension payments, please visit: 


43 Or Younger? Here’s How To Recoup Your Years Of Lost Pension Income By Investing Today


43 Or Younger? Here’s How To Recoup Your Years Of Lost Pension Income By Investing Today

In October this year, the pension age is due to increase from 65 to 66 years old, with a further increase to 67 by 2028 and plans to increase this even further by 2046 to 68 years old.

Leading Peer to Peer investment platform, Sourced Capital, has looked at the lost pension income for those facing the additional three years at work, the current median age of those in line to work until they’re 68, how long they still have left in the workplace, and just what they would need to invest today via private pension funds vs peer to peer platforms, in order to recoup their lost pension income between now and the time they retire.

Not only are we set to work for longer, but we’re also in line for a pension pay cut to the tune of £8,767.20 for the first year for those working to 66, climbing to £20,588.71 for two additional years for those working until the age of 67, and an eye-watering £47,582.06 over three years for those working until the age of 68 when also accounting for the minimum pension increase of 2.5% per year*.

That means anyone born after 6th April 1978, at a current median age of 42.5 years old, faces being nearly £50k out of pocket from lost state pension income as a result of the Government moving the pension age goal posts.  

However, there are moves you can make now to bridge this gap and increase your lost pension pot through investing wisely.

A Private Pension Fund

Over the last decade, private pension funds have averaged a return of 5.9% per annum. 

Therefore investing £1,000 today based on this average while considering compound interest and a yearly compound interval, would return just £4,314 over a 25.5 year term. Nowhere near enough to bridge the pension gap.  

Investing into the same scheme with £10,000 would return a more favourable return of £43,137, but it would take an investment of £14,370 today in order to make both your money back and the additional pension loss of £47,582 by the time you hit 68 (£61,987). 

For those with deeper pockets, investing £50k would return a total of £215,684 over the same period, while £100k would bring a return of £431,367.  

Peer 2 Peer Platforms 

But, a more interesting investment option is a Peer to Peer platform such as Sourced Capital. While your capital is at risk, with annual returns of as much as 10%, you could bridge the pension pay gap with a much smaller initial investment today.

In fact, with a return of 10% per a year, it would take an investment of just £4,595 today to see a return of £52,215 over a 25.5 year period, enough to recoup your initial investment along with an additional £47,620 to cover your three years of lost pension income.

Founder and Managing Director of Sourced Capital, Stephen Moss, commented:

“The requirement to work for longer is one that won’t sit well for those that have paid into pension schemes for many of their working years, only to see as many as three years worth of pension payments vanish to the tune of almost fifty thousand pounds.

But there’s a silver lining and for those that stand to lose the most, there are other investment options available that could see them recoup this lost pension pot by investing less than five thousand pounds now with an eye on the future.

In fact, the right investment now could not only recover these lost in pension payments but could do so by the age of 65, allowing you to retire ‘early’ without any financial penalty.

As with all investments, there is an element of risk. However, opting for the right platform can help reduce this dramatically. For example, all of our investors get a first charge against the property invested in, which gives a greater level of protection and lowers risk but is something that not all platforms do.  

We always recommend that investors only opt for FCA approved companies which again reduces risk, while we also only loan at a maximum loan to value of 70%. We also offer all investors the chance to view a project and to learn directly from us which again, is something that other platforms don’t offer, but for us, it provides greater transparency and trust while helping improve knowledge on a particular investment.” 

Wealth and Finance
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The Mosaic of Modern Wealth: Wealth Advisers Must Keep Pace with Globally Mobile Clients

Wealth and Finance

The Mosaic of Modern Wealth: Wealth Advisers Must Keep Pace with Globally Mobile Clients


By Axel Hörger, CEO Europe at Lombard International Assurance

The world’s wealthiest people are on the move. According to this year’s Knight Frank Wealth Report, 26% of ultra-high-net-worth individuals (UHNWIs) are planning on emigrating in the next year. An astounding 36% already hold a second passport. For many, the ability to move their lives, families and assets freely around the world is the new norm.

This trend has been growing for well over a decade, fuelled by increased competition between countries seeking to attract the world’s wealthiest and drive investment. From France to Thailand, countries are seeing the benefit of adopting competitive tax regimes, investment-based visa schemes, and fast-tracked citizenship programmes. Since 2000, 20 EU member states have implemented these types of policies, resulting in approximately $28 billion in foreign direct investment.

For countries like Malta and Cyprus, this has led to a much-needed economic boost as thousands of wealthy individuals have invested in their local economies in return for residency or citizenship. In Portugal, attractive tax rates have in part led to a remarkable economic rebound, with GDP growth set to be one of the highest in Europe, while Lisbon and Porto consistently top the list of most attractive places to live in the world. As countries look to replicate this type of success story, global mobility is only set to increase.

But as global mobility increases so too does the complexity of managing wealth. Globally mobile clients will look to their advisers to be able to seamlessly manage their cross-border wealth, regardless of where they look to base themselves. And as many of the residency by investment programmes have a time limit, moving to a third or fourth country over a ten-year period is becoming increasingly normal. Wealth solutions for truly globally mobile clients need to be able to facilitate this unprecedented level of cross-border movement.

Advisers will also have to be aware that the globally mobile HNW and UHNW client base they are serving is expanding. In 2018, $8.7 trillion of personal financial wealth was held cross-borders – roughly 4.2% of the global total. The fabric of modern-day wealth is evolving as the sources and destinations of this wealth are set to change significantly over the coming years. For example, Boston Consulting Group predicts that by 2023, the value of Asia’s cross-border wealth will have grown by 150%.

Wealth advisers will need to keep pace with this dramatic shift and cater for the changing needs of this growing client base. Driven by continuing economic and political uncertainty in the region, HNWIs and UHNWIs from emerging markets will increasingly seek asset safety, protecting against currency depreciation, and the desire to gain stable returns through international diversification. What these clients need are wealth structuring solutions that can manage cross border wealth spread across multiple developed markets. They will also need advisers who are able to navigate effectively around any regulatory or cultural differences between markets.

The mosaic that makes up the lives of modern wealthy people is constantly shifting and being redesigned as wealth is distributed across a more diverse range of ages, genders and nationalities than ever before. What drives wealthy people around the world has never been so complex. For wealth advisers, this means greater difficulties and greater opportunities. The wealth management industry needs to understand the changing landscape that faces HNWIs and UHNWIs and offer solutions that can help them to navigate the uncertainty and complexity.

When I speak to clients, what they are looking for is comfort that their adviser has expertise across multiple markets and jurisdictions. What they want is a feeling of control over their wealth and life’s legacy wherever they are, wherever they want to be, and regardless of what lies ahead.

For more information about Lombard International Assurance, visit our website.

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Retirement fund is top saving priority for Brits

Retirement fund

Retirement fund is top saving priority for Brits


Over half (58%) of Brits wish they had invested in their future and retirement at an earlier age, according to new research by savings and mortgage provider Nottingham Building Society, known as The Nottingham.

The survey of 2,000 UK adults looked at the biggest saving priorities for the nation, and what age we wish we had started investing in different aspects of our lives, from health and careers to money management. A retirement fund was ranked as the biggest saving priority, despite only 29% of respondents admitting to actively saving towards their future.

The top ten most important saving priorities for Brits are:

  1. Retirement fund

  2. ‘Rainy day’ fund

  3. House deposit or increasing equity

  4. Holiday fund

  5. Funds to partake in my hobbies / outside of work activities

  6. Debt repayments

  7. New car

  8. Children’s saving account

  9. Children’s education

  10. Wedding fund

Debt repayments didn’t make the top five saving priorities for the nation, however, of the respondents who are currently saving, paying off or planning to pay off their debt, this saving was ranked second in importance, indicating that those who are currently in debt are prioritising this over saving for other factors such as a house deposit (ranked fourth in importance), or a new car (ranked seventh).

However, when it comes to what Brits are actually saving for, the most common goal was a ‘rainy day’ fund, with over a third (34%) of Brits currently saving towards this. Interestingly, more than double are saving towards a holiday (29%) than a house deposit (13%), despite a house deposit being ranked as a higher priority overall.

When it comes to the ages the nation wish they had started investing in different aspects of our lives, Brits found that they wished they had invested towards their retirement at age 31, when on average they actually began investing at 39 – almost a decade later. On average, UK adults begin saving towards a ‘rainy day’ fund at 34, despite wishing they had started at 28.

Retirement data


Jenna McKenzie-Day, Senior Savings Manager at The Nottingham, said: “Our research found that on average, homeowners wish they had begun planning to buy their first home three years earlier than they started, with a similar picture being painted for those saving for their future. Interestingly, it found that Brits wish they had started their retirement fund a staggering eight years before they actually began saving.

“Whether you are saving for your first home or starting your retirement plans, products such as the LISA, which is available for those looking to plan for their future, offer a 25% government backed bonus on annual savings  up to £4,000, those extra eight years of savings could have increased their future savings by a potential £8,000 – making it the perfect product to start your saving journey.”

To find out more about the Nottingham’s LISA, visit:

PensionsWealth Management

What are the top ways to save on everyday spending?

We’re always on the lookout for ways to save money, especially after our bank balances have taken a hit over the festive period. Of course, there are the traditional ways of saving such as budgeting and setting aside a certain amount of funds each month. But, without overly restricting your leisure activities, what everyday changes can you make to spend less?

1.      Spend less on your energy bill

Make small everyday changes to lower the cost of your energy bill.

Did you know that 4% of your energy bill is attributed to cooking? Work on lowering this if you can. Your oven stays warm for a long time after you’ve switched it off. Try turning it off 10 minutes before you’re finished cooking to save on energy.

Instead of turning your thermostat up during the colder months, layer up instead to save on pennies! Switching down by just one degree Celsius can save you £85 per year — it all adds up. When it comes to showering, cutting your shower time down to 5 minutes instead of 15 minutes can save you £98 per year — less singing and faster washing!

2.      Storing food properly

When we’re packing food away in the fridge or freezer, we usually don’t think about how it’s stored. But, the way that you put away your goods can have an impact on your energy bill.

If you pack your freezer more tightly, this keeps more of the cold air in when you open the door. This means that the appliance doesn’t have to work as hard to lower the temperature again. The same applies for the refrigerator too — a full fridge requires less energy to stay cool than one that’s empty. If you’re struggling to pack your fridge or freezer full, filling it with newspaper can do the job.

3.      Save money booking holidays

Even when we’re trying to save money, we all deserve a holiday now and then! The good news is that you can save money by following a few top tips the next time you book a vacation.

Try and fly out on a Friday if you can, this can save you 18% on your airfare compared to if you flew out on a Sunday. Taking into consideration the average cost of a flight and the fact that the average Brit goes on holiday three times a year, you could save £85 annually by following this top tip.

Be calculative about when you book your holiday too. You can save £36 per year by booking your trip on a Monday as flights are 5% cheaper.

Consider packing more economically too. You can save £144 per year by only taking hand luggage on your flights. Squeeze more into your suitcase by rolling clothes and packing garments in your shoes.

4.      Meal prepping

Being prepared when it comes to grocery shopping and planning lunches for the week can help save on cash.

Even making a shopping list before you head to the supermarket can help. In fact, 60% of people who take a shopping list to the supermarket said it saves them money. It stops you buying things that you don’t necessarily need and helps you stick to your budget.

Create a meal plan for the week too. This means that you’re only buying what you need and don’t need to spend money on unexpected lunches out. Statistics have shown that you can save an impressive £1,300 per year by preparing lunch at home rather than eating out during the week.

5.      Eco-conscious coffee drinking

There are a few ways that you can be eco-conscious about your coffee drinking while saving money.

First of all, you can start by making your coffee at home when you can. You can save £507 per year by making your coffee at home instead of buying one each day from a retailer. If you prefer coffee from the store, why not take your own cup? This is helping the environment and you can save £150 per year as many high street retailers now offer 50p off coffee when you present your own cup.


Make the small changes above and watch your pennies turn into pounds this year! For more saving tips, check out True Potential Investor’s Life Hacks interactive.

What are The Main Benefits of a SIPP Investment?

What are The Main Benefits of a SIPP Investment?

A self-invested personal pension (SIPP) is one of the most popular long term investment options when preparing for retirement. They are very similar to standard personal pension plans, except they offer a lot more hands-on experience for those taking one out.

Unlike a standard personal pension, where you will invest the money to be looked after by a financial professional, with a SIPP you have more of a say over where it is invested. This makes it a much more appealing option for those who enjoy and have experience with investing, and there are many other benefits to it as a long term investment option.

Flexible Investment Choice

If you want to manage your own retirement fund, then a SIPP is the way forward. They offer the opportunity to pick and switch investments when you decide, providing full control over your financial future.

There is a broad range of assets available from most SIPP providers to invest in. These include stocks and shares on a recognised stock exchange, government securities, investment trusts, insurance company funds, commercial property and many other options. Such a flexible investment choice means experienced investors should have the opportunity to tailor their retirement fund to be exactly as they want it.


A SIPP is an incredibly efficient long term investment option. Up to 25% of the accumulated fund can be withdrawn as a tax-free cash lump, while the rest will be taxed as income. Plus, all the other tax benefits that come with standard pension plans are still included.

Savers can benefit from tax relief when it comes to making contributions into a SIPP. Compared to making some other financial investments in an attempt to increase retirement funds before you finish working, these tax-efficient benefits are a worthy perk.

Early Access

New rules introduced in April 2015 mean that pensions can be accessed and used in any way deemed necessary by holders from the age of 55. This includes a SIPP, and you can keep paying into it until the age of 75. However, from 2028 you will need to be 57 or over to make withdrawals.
Accessing the fund is also highly flexible, with options to take it all in one go as cash, in smaller lumps or as regular income. As a long term investment option, there aren’t many more tax-efficient and flexible options available to savers at the moment than a SIPP.

Business Elite MD of the Year 2016

Business Elite MD of the Year 2016

As the UK’s largest friendly society, LV= have more than five million members and customers and exist to grow the value of their business for the benefit of their members. When asked about why their company has grown from strength to strength, Rowney simply says: “We do this by putting our customers at the centre of everything we do and by living our mutual and ethical values. We offer our products and services direct to customers, as well as through advisers and brokers, and through strategic partnerships.”

Formerly known as Liverpool Victoria, the company rebranded as LV= in 2007. Since then, the LV= brand is now recognised for being modern and vibrant and well placed for an even more successful future. A testament to their success is that they have over 5.7 million customers, of which 1.1 million are members. Furthermore, within life and pensions, they are the top provider of individual income protection in the advised market and a leading provider of enhanced annuities.

Although the company is very forward-thinking, to say that the company has been around for quite a while is an understatement. LV= was founded in Liverpool in March 1843, with the aim to help people on low incomes maintain a standard of living for their families and save for their funerals so they didn’t burden their families with this expense after they had passed away.

173 years on, the LV= Group employs over 6000 people. The Life and Pensions area that Rowney controls has over 1,000 employees based across main centres in Bournemouth, Exeter and Hitchin plus a network of regional offices.

As you can imagine, managing such an enormous team can be quite a daunting task. However, Rowney believes that the degree of specialisation is what allows them to perform so well. “We help our customers protect their health, wealth, family and wellbeing,” says Rowney. “To do this we specialise in a number of areas. Firstly, our Retirement Solutions business covers our retirement and investment businesses, from pensions and annuities to equity release and bonds.

Secondly, our Protection business includes a range of award winning products and services including a market leading position in income protection. Lastly, our Protection and Retirement Financial Advice Services include our automated online advice offering via our Retirement Wizard. All of these services combine to create the success behind our Life and Pensions team.”

Prior to LV=, Rowney accumulated a wealth of experience and expertise that has added to his current role. “In the early 1990s, I joined Barclays, which gave me my first insight into the financial services industry,” explains Rowney. “During this time I held a number of different positions, including business risk director, chief operating officer of premier banking and integration director for Woolwich and Barclay’s retail bank.”

It was in 2007 when Rowney joined what was then known as Liverpool Victoria, where he was instrumental in their rebranding as LV=.

“I started as a group chief operating officer in February and was appointed to the board in August 2007,” says Rowney. “As group COO, I was responsible for the transformation programme that saw LV= successfully re-brand and develop functions to support the trading businesses that have delivered significant growth over recent years. In 2010, I was appointed managing director of LV= Life and Pensions – leading a strategy to become the UK’s leading retirement and protection specialist.”

LV= ‘s position as leaders in their industry is something Rowney takes great pride in, and as such he is constantly ensuring that the company is always embracing any new technology or trends that come along the way.

“Our continual challenge is to utilise digital technology,” says Rowney. “We’ve made great strides into embracing digital, but technology progresses quickly, so it’s important for us to continue to move at pace to be at the digital forefront – replacing our legacy systems enabling us to become more efficient and easy to do business with.” Alongside the continuing developments in technology, there are also challenges facing Rowney in the retirement industry too.

“At the moment, we are nearing the end of a period of transition in the retirement industry,” says Rowney. “Driven by the pension freedoms changes in 2015 and now the FAMR review impacting people heading into retirement. With retirement being viewed as a series of smaller stages, which require multiple decisions, it’s important for customers to understand the decisions they are making. We’ve been proactively looking at ways to help people reaching retirement, making advice affordable to everyone through utilising automated online advice, but there is more to be done to get people thinking about their retirement sooner.”

“Looking towards the long term, these challenges include how we engage with our current generation to talk about saving for retirement, and we really need to challenge the ‘buy for today over saving for tomorrow’ culture. Auto-enrolment has attempted to improve one part of this but I still believe we need to do more as an industry to engage people to think about their retirement, at both ends of peoples working lives, to save enough for retirement and to make the right decision at retirement.”

“Furthermore, there appears to be no let-up in the pace of regulatory change, with the launch of the secondary annuity market and forecast tax changes are areas that will keep the life industry busy over the coming years.”

Despite these challenges, Rowney remains optimistic that they are more than capable of meeting the demands of their industry. A motivating factor for him is receiving recognition from Wealth & Finance magazine, which he believes is further evidence of their success.

“I was very surprised to be receiving this award,” says Rowney. “Nonetheless, our Life and Pensions business has gone from strength to strength in recent years, so this is testament to our hard work paying off to be officially recognised.”

Name: Richard Rowney

Company: LV=


Pension Savers Could Lose up to £58

Pension Savers Could Lose up to £58,500 in tax Relief due to Annual Allowance Minefield

Savers currently benefit from tax relieved pension accrual up to the annual allowance of £40,000 for the 2016/17 tax year. However, from 6 April 2016, individuals with “adjusted income” greater than £150,000 will have their annual allowance reduced by £1 for every £2 of excess income. An individual with adjusted income of £210,000 or more will have their annual allowance tapered down to the minimum of £10,000 for that year.

However, individuals, including additional rate taxpayers affected by the taper, can carry forward any unused allowance from the previous three tax years to increase the tax relief they receive. An individual earning £210,000 or more making a personal net contribution of £8,000 in 2016/17 will benefit from £2,000 basic rate tax relief giving a gross payment into their pension of £10,000, plus further £2,500 tax relief via self-assessment as their top rate of income tax is 45%.

By way of an example, let’s consider a self-employed individual who has total earnings in 2016/17 of £400,000, he has made no pension contributions since March 2013 so has unused annual allowances of £130,000 to carry forward. If he decides to make the maximum pension contribution of £140,000, the position would be as follows:

• Contribution (made net of 20% relief at source of £28,000) £ 112,000;
• Balance of additional rate income tax reclaimed from HMRC £ 35,000;
• Net cost of £140,000 pension contribution £ 77,000;
• Total overall tax relief (£28,000 plus £35,000) £ 63,000.

By maximising the use of carry forward of unused annual allowance in this example the individual has benefit from additional tax relief of £58,500 (the difference between the £4,500 and the £63,000).

Brian Davidson, Senior Pensions Proposition Manager, Alliance Trust Savings, commented:

“The tax rules around pensions can be complex and with so much radical change to pensions over the last few years, some savers could easily miss out on tax relief in the new tax year. When the unclaimed tax relief could be as high as £58,500, it can make a substantial difference to retirement savings. When people realise that they are affected by the tapered annual allowance they could be forgiven for assuming that the carry forward rules will not apply which could be a costly error.”

“In addition to the tapering that can reduce an individual’s annual allowance below the full £40,000, there is also the Money Purchase Annual Allowance, which, when it applies, also caps an individual’s ability to make tax efficient contributions to a money purchase pension, such as a SIPP. The Money Purchase Annual Allowance may be triggered depending on how you have taken an income from your pension. However, unlike the tapering, once the Money Purchase Annual Allowance applies, it is no longer possible to utilise carry forward.

There is also the Lifetime Allowance – the total amount you can hold in pensions without being subject to tax – which reduced this month from £1.25million to £1 million. With all these different rules, pension saving is one area where seeking professional advice to maximise your tax relief can really add value.”

Defaqto Launches 'The case for hybrid'

Defaqto Launches ‘The case for hybrid’

The case study explores the differences between blended solutions, in which two or more individual products are implemented side by side, and hybrid solutions which offer flexibility and security in one simple arrangement.

Gillian Cardy, Insight Consultant (Wealth) at Defaqto who wrote the study commented:

“Numerous studies are continuing to demonstrate that clients value secure income in retirement, but that they are also interested in benefiting from many of the flexibilities introduced by last year’s pension reforms.

“The practical issue that advisers have to confront is how to offer such advice in a cost effective way, especially for those with more modest pension funds who would typically have been advised to purchase annuities and for whom the cost of more bespoke advice strategies may have been prohibitive.”

The publication is free to download here.

UK Government one step Closer to Introducing new State Pension

UK Government one step Closer to Introducing new State Pension

This means that those who reach State Pension Age on or after the 6th April 2016 and before the 6th December 2018 – when the State Pension Age equalises – will receive a fully indexed public service pension for their whole life.

This will ensure public service pension payments to these individuals continue to be equal between men and women.

The government is committed to ensuring older people can live with dignity and security in retirement. The introduction of the new State Pension in April this year will radically simplify state pension provision, making it easier for ‎people to understand what the State will provide in retirement.

As well as simplifying the system, the new State Pension will remove the inequalities in the current system whereby some groups, such as women and the self-employed, tended to build up low amounts of Additional State Pension.

As part of these changes, this complicated, earnings related element of the current system, is being abolished. To manage the transition to the new state pension, the government will continue its current practice of directly price protecting the Guaranteed Minimum Pension of public sector workers where the Additional State Pension uprating rules do not apply.

The government, as a large employer, has considered how best to address the implications of changes resulting from the introduction of the new State Pension, for public service pension schemes and their members, taking into account historical commitments made by previous governments.

The government is expected to launch a consultation this year on how to address this issue in the longer term, recognising the increased value of the new State Pension, and seeking to balance simplicity, fairness and cost for members, public service pension schemes and the taxpayer.

PMI and OPDU Collaborate to Promote Good Governance in Pension Schemes

PMI and OPDU Collaborate to Promote Good Governance in Pension Schemes

For all new OPDU members, the organisation will enrol the Chair of Trustees, free of charge, in the PMI’s Trustee Group for the first year of membership thus promoting even better governance of that company’s pension scheme.

Martin Kellaway, Executive Director at OPDU said:

“We welcome the opportunity to join with the PMI on this initiative. It comes at an exciting time for OPDU and represents a key part of our strategy to provide strong customer focus, and ensure our members derive maximum benefit from joining. The PMI is the industry leading provider of professional qualifications and training so a perfect partnership to support our aim of improved governance.”

Vince Linnane, PMI Chief Executive, commented:

“We are continually looking for ways to support trustees to provide good governance and working in partnership with OPDU is key to ensuring we expand our membership and raise the standards of our Trustee Group. We believe the knowledge sharing enabled by the educational material and information we provide, will help to raise the bar for what pension scheme members can expect from their trustees.”

The PMI Trustee Group has a strong track record going back to 1994 of supporting pension scheme trustees. More than 3,000 trustees have passed the PMI Award in Pension Trusteeship qualification since it was introduced. Many more have also attended dedicated PMI Trustee Seminars.

FCA Encourages Firms to do more to Support Ageing Population

FCA Encourages Firms to do more to Support Ageing Population

Changing demographics and trends in health and society mean that developing more inclusive financial products and services is increasingly important the FCA argues. Their Ageing Population Discussion Paper is an important first step in their conversation with firms, consumer groups, and other stakeholders to determine how the regulator and industry can collaborate to address the range of issues facing older consumers, when they engage with financial services.

Tracey McDermott, acting chief executive of the FCA, commented:

“The number of people aged over 65 in the UK is expected to increase by 1.1 million in the next five years. There is a real and urgent challenge for the financial services sector to develop new and innovative products to meet the needs of our changing population.

“The publication of this discussion paper is intended to stimulate debate and discussion about these needs and how to meet them. Ultimately, the industry must take the lead but we recognise that the FCA has a key part to play in ensuring we encourage appropriate innovation that also provides proper levels of protection for consumers. This work will help us and the industry to develop our approach with the benefit of insights from others, in particular those representing the end consumers of these services.”

Next steps

The FCA is working with stakeholders, including industry, trade bodies, consumer groups, and the public sector to discuss experiences, best practice and potential approaches to the issues raised in this discussion paper. Further research will be undertaken by the FCA to develop a regulatory strategy that promotes better outcomes for older consumers. The strategy will be launched in 2017.

New CEO of PMI Announced

New CEO of PMI Announced

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Mr Tancred has enjoyed a long and successful career to date in a number of financial and senior managerial positions. He was most recently employed by the British Institute of Facilities Management, latterly as its Chief Executive Officer, where he oversaw a significant growth in its qualifications, membership and profitability.

Mr Tancred said:

”I am very excited to be joining PMI at this time. I look forward to building on the successes that Vince, the Board, Advisory Council and the PMI House team have achieved and to delivering the PMI vision. Clearly there are significant challenges ahead, but I eagerly anticipate serving an industry and profession that is vital to the economy and society at large.”

He commences work at the PMI on 1 March, where he will work for a period alongside Mr Linnane to ensure a smooth transition.

PMI President Kevin LeGrand commented:

“I am delighted to welcome Gareth to the PMI team. His experience, enthusiasm and impressive track record make him an ideal candidate to lead the PMI through the next phase of its development. I have no doubt he will provide strong leadership for the Institute though the challenges that undoubtedly lie ahead, positioning it to help its members in addressing the new pensions and savings world that is developing now.

I would also like to pay tribute to Vince Linnane, who has led the PMI to this point, handing on a strong organisation to Gareth. I wish Vince every success in his future endeavours.”

UK Government Takes aim at Pension Freedom Barriers

UK Government Takes aim at Pension Freedom Barriers

People looking to access their pension pot under the new pension freedoms will benefit from easier transfers and more information as the government outlines further action to remove unjustifiable barriers, the Economic Secretary to the Treasury Harriett Baldwin announced today (10 February 2016).

Building on the Chancellor’s announcement last month that the government would limit early exit charges for people seeking to access the freedoms, the government has today published its response to the Pension Transfer and Early Exit Charges consultation.

The response outlines that:

• government will introduce a new requirement for trust-based pension schemes to regularly report on their performance in processing transfers;
• The Pensions Regulator (TPR) will issue new guidance for scheme trustees to ensure transfers are processed quickly and accurately;
• Pension Wise will develop new content on the transfer process, which will include information on likely timescales, what customers need to do and greater clarity on whether financial advice is required.

The consultation found that whilst the majority of eligible individuals are able to access their pension under the new freedoms, there are a small but significant number who have been effectively prevented from accessing the pension freedoms because of high exit charges or long transfer times.

The consultation found that for Financial Conduct Authority(FCA)-regulated contract-based pension schemes, transfers took 16 days on average, however, TPR data showed that the mean transfer time for trust-based pensions was 39 days, with many consumer survey respondents saying that they had to wait significantly longer for individual transfers.
Harriett Baldwin, Economic Secretary to the Treasury, commented:

“It is only fair that people who have worked hard and saved their entire lives are able to access their pensions flexibly, without facing any unjustifiable barriers. That’s why we’re taking action to curb excessive exit charges, make transfers easier and ensure people have the information they need to make informed decisions.

“We will continue to work to ensure that our landmark reforms deliver real freedom and choice for people.”

Baroness Ros Altmann, Minister for Pensions at the Department for Work and Pensions, said:

“Encouraging people to save and helping them on their way to a financially secure retirement is a priority for this government and we need to ensure that the right protections are in place for consumers.

“No consumers should have to pay excessive early exit fees, regardless of the type of scheme that they are in. And we will be working to ensure that action is taken to protect members of trust based schemes.”

Lesley Titcomb, Chief Executive of The Pensions Regulator added:

“We welcome the government’s commitment that all pension savers will be protected from unnecessary barriers to accessing their pensions, such as excessive early exit charges and delayed transfers. We will be working closely with government and the industry to deliver the recommendations of the response.”

The Chancellor announced on 19 January 2016 that the government would introduce legislation to place a new duty on the FCA to cap early exit charges. The consultation sets out that the government will introduce this legislation through the Bank of England and Financial Services Bill. The government will mirror these requirements in relation to trust-based schemes.

As part of the consultation the government conducted an online consumer survey – with over 70% of respondents supporting a legislative cap.

The pension freedoms, which came into effect on 6 April 2015, represent the most significant pension reforms for a generation. They allow people who have worked hard and saved their entire lives to access their savings how and when they want. Still in its first year, the government’s pension reforms have already seen over £3.5 billion flexibly accessed through nearly 400,000 payments.

Excessive Charges for Accessing a Pension pot Early will End

Excessive Charges for Accessing a Pension pot Early will End

Speaking at Treasury Oral questions in the House of Commons, the Chancellor George Osborne said:

“The pension freedoms we’ve introduced have been widely welcomed, but we know that nearly 700,000 people who are eligible face some sort of early exit charge.The government isn’t prepared to stand by and see people either ripped off or blocked from accessing their own money by excessive charges.

“We’ve listened to the concerns and the newspaper campaigns that have been run and today we’re announcing that we will change the law to place a duty on the Financial Conduct Authority to cap excessive early exit charges for pension savers.

“We’re determined that people who’ve done the right thing and saved responsibly are able to access their pensions fairly.”

The new duty, introduced through legislation, will form part of the response to the government’s Pension Transfers and Exit Charges consultation, and will help people take full advantage of the new flexibilities.

FCA data collected through the consultation showed that nearly 700,000 (16%) customers in contract-based schemes who are able to flexibly access their pension could face some sort of early exit charge, including a significant minority who faced charges that were high enough that the government consider that they effectively put them off accessing their pension flexibly.

The independent FCA will be responsible for setting the level of the cap and will consult fully on this in due course

The new pension freedoms, which came into effect on 6 April 2015, represent the most significant pension reforms for a generation. They allow people who have worked hard and saved all their lives to access their savings how and when they want.

So far almost 400,000 pension pots have been accessed flexibly under the new freedoms with many providers offering their customers a range of options.

The government will shortly publish its formal response to the Pension Transfers and Exit Charges consultation, which also looks at ways of making the process for transferring pensions from one scheme to another quicker and smoother.
FCA investigations have shown that 670,000 consumer aged 55 or over faced an early exit charge. Of these, 358,000 faced charges between 0-2%; 165,000 faced charges between 2-5%; 81,000 faced charges between 5-10%; and 66,000 faced charges above 10%.

Banks Offer Improved Deal on Mortgages for Armed Forces Personnel

Banks Offer Improved Deal on Mortgages for Armed Forces Personnel

The commitment from the UK’s biggest high street banks will benefit almost 265,000 people in the UK and abroad, including Forces families. The move comes ahead of an Armed Forces Covenant roundtable meeting of banking chiefs and Ministers at No.10 Downing Street yesterday (Thursday 14 January) where a range of further measures to help service personnel and their families will be discussed.

Currently, members of Armed Forces who rent out their homes during deployment have to change their residential mortgage to a buy-to-let mortgage, often incurring new product charges and an increased rate of interest. Under the new agreement they will no longer have to change their mortgage product, saving them time and money.

Barclays, HSBC, Lloyds Banking Group, Santander UK, Royal Bank of Scotland and Nationwide – the UK’s biggest building society – will all offer the support.

Defence Secretary Michael Fallon said:

“Looking after your home and your money can be more of a challenge when deployed on operations or serving abroad. This is a welcome first step from the major banks and financial institutions to help our servicemen and women get a better mortgage deal.

“I look forward to further pledges from across the financial services sector to support the Armed Forces Covenant after today’s roundtable.

Anthony Browne BBA CEO said:

“Members of our Armed Forces work all over the world to look after us, so it’s only right that we look after them. The extra support proposed by the banks and the Ministry of Defence will make sure service personnel and their families are not disadvantaged for working aboard and make their mortgages and credit history fairer.”

Of the nearly 800 business signatories of the Armed Forces Covenant, 29 are from the financial services sector.
Other measures being discussed at the roundtable are aimed at meeting the unique pressures of service personnel and their families, whose jobs require them to relocate and move more often than in civilian life Problems can arise because the financial services sector has difficulty recognising the postcodes of UK military bases abroad – the British Forces Postal Order index provided for free by the Royal Mail – as UK addresses. Time spent serving their country from UK military bases abroad can affect the Forces community’s credit history, and cause difficulties when applying for products that civilians take for granted, for example mortgages and bank accounts. The Forces can also lose out on benefits and cost savings, like no claims bonuses and discounts, which is being discussed with the insurance industry.

Sara Baade, Chief Executive of the Army Families Federation, said:

“What this recognises is that military families often have limited choice in where they are sent to live. They go overseas because the country needs them to. It will mean a lot to those that have bought their own homes to know that the challenges of service life are beginning to be understood by our banks.

“This is an issue Army Families Federation has campaigned on and we look forward to informing future financial measures that will counter the very real disadvantage families experience as a result of their service.”

FCA Reveals New Retirement Income Market Data

FCA Reveals New Retirement Income Market Data

The FCA collected data from retirement income providers covering an estimated 95% of assets in contract based pensions to enable it to monitor and track changes in the market. The information is helping to inform the FCA’s approach to regulation of the market.

The Government’s pension reforms brought about significant changes in the way consumers can access their pensions and the data provides insight into how people are using the new freedoms.

The report covers:

• Choices made by consumers accessing their pensions;
• Guaranteed annuity rates – levels taken up and not taken up;
• Levels of pension withdrawals for customers making a partial withdrawal;
• Use of regulated advisers;
• Consumers’ stated use of Pension Wise;
• Whether consumers change providers when accessing their pensions.

Retirement income market data will be published quarterly. The data published today concerns the second quarter following the pension reforms and may not reflect longer term trends.

Women and Pensions 2016 Survey Launched in UK

Women and Pensions 2016 Survey Launched in UK

The survey recently launched looks at confidence and empowerment of female pension savers, exploring attitudes and beliefs about planning for retirement.

While the survey is aimed at “Women and Pensions”, we are aware that many factors highlighted in the survey, which influence saving amongst women, also affect other genders. The service therefore welcome views from all genders within the world of pension planning.

Michelle Cracknell, Chief Executive of the Pension Advisory Service said:

“We know that women face significant barriers to achieving a good retirement income; on average lower levels of income throughout their working life, impact of career breaks and carer responsibilities and lower levels of confidence around financial products.

“Women and Pensions survey’s conducted by TPAS have previously focused on knowledge, whereas this latest survey looks more specifically at women’s attitudes, beliefs and rationale for financial decision making. The results of this survey will help us to really appreciate what women need from the pensions world, so that they can plan their pension provision confidently.”

If you are interested in taking part please click here.

Slocum Implementing New Risk Analytics Platform

Slocum Implementing New Risk Analytics Platform

Slocum has adopted RiskFirst’s real-time analytics and reporting platform, PFaroe. The investment advisory firm – which serves more than 125 institutional clients with total invested client assets of approximately $120bn – will use PFaroe to help inform strategic asset allocation decisions and implement dynamic de-risking strategies.

Nicole Delahanty, Principal at Slocum, comments: “We will always strive to be a firm that takes a big picture or qualitative view of the market when setting long-term asset allocation strategy for our retirement plan clients. But a dynamic pension landscape also calls for the ability to view pension risk on a frequent basis – we need to stress-test our views and ensure that they meet the needs of our clients from a funded status, cash and expense perspective. PFaroe is an important addition to our toolkit – allowing us to evaluate clients’ risk from multiple perspectives and to perform real-time scenario stress-testing.”

Delahanty adds: “More and more of our clients are also implementing LDI or de-risking programs – particularly those with frozen plans who want to reduce funded status volatility as their funded status improves. To do this efficiently and effectively, we need a robust and real-time system – cue PFaroe.”

Matthew Seymour, Managing Director, RiskFirst, comments: “It is clear that de-risking is swiftly moving up the agenda for US pension plans, large and small, and we are delighted that the industry is turning to real-time analytics to improve efficiency and effectiveness of such solutions. Slocum is a firm that takes a highly customised approach to developing asset allocation and risk management for clients, which marries perfectly with PFaroe’s holistic and flexible approach.”

New Global Report Finds Advantage with Funded Pension Schemes

New Global Report Finds Advantage with Funded Pension Schemes

Emerging markets with funded government pension systems will enjoy important advantages over those with pay-as-you-go systems, according to a report from the nonprofitGlobal Aging Institute and sponsored by the Principal Financial Group®.

In order to realize their potential, funded pension systems must be well-designed because inadequate contribution rates, restrictive portfolio allocation rules, early retirement ages or the failure to provide for annuitization of account balances can all undermine the model’s adequacy, the report found.

Global Aging and Retirement Security in Emerging Markets: Reassessing the Role of Funded Pensions explores how today’s emerging markets will encounter many of the challenges that now confront developed economies, such as rising fiscal burdens, aging workforces and declining rates of savings and investment.

“If the challenge for most developed countries is how to reduce the rising burden that government retirement systems threaten to place on the young without undermining the security they now provide to the old, the challenge for many emerging markets is precisely the opposite,” said Richard Jackson, president of the Global Aging Institute and author of the report. “How do they guarantee a measure of security to the old that does not now exist, without at the same time placing a large new burden on the young?”

The design challenges can be addressed though relatively straightforward policy measures, according to the report. While emerging markets have much greater flexibility to design retirement systems that adapt to new demographic realities, failure to rise to the challenge could result in a humanitarian aging crisis of immense proportions.

“It’s clear that policymakers need to address the aging challenge and make it a priority,” said Luis Valdes, president and CEO of Principal International. “Unfortunately, regulations can get in the way of creating the right environment for retirement plan providers to be able to offer the right solutions. We continue to be proactive and advocate for further reforms around the globe.”

Funded pension systems alone do not add up to a complete solution, the report cautions. Emerging markets also need to support citizens by having a noncontributory old-age poverty protection program. This comes into play for workers who retire with inadequate benefits from their contributory pension system or with no benefits at all, which in some countries is the majority of workers.

Corporate Pension Funded Status Improves by $25bn in October

Corporate Pension Funded Status Improves by $25bn in October

Milliman, Inc., a premier global consulting and actuarial firm, today released the results of its latest Pension Funding Index, which analyzes the 100 largest U.S. corporate pension plans. In October, these pension plans experienced a $25bn increase in funded status based on a $33bn increase in asset values and an $8bn increase in pension liabilities. The funded status for these pensions increased from 81.7% to 83.3%.

“October was a great month for these pensions, but it may be too little too late as far as 2015 is concerned,” said John Ehrhardt, co-author of the Milliman 100 Pension Funding Index. “Overall funded status has improved by only 1.8% this year, and this would be worse if it weren’t for interest rates inching in the right direction to reduce pension liabilities.”

Looking forward, under an optimistic forecast with rising interest rates (reaching 4.26% by the end of 2015 and 4.86% by the end of 2016) and asset gains (11.3% annual returns), the funded ratio would climb to 85% by the end of 2015 and 98% by the end of 2016. Under a pessimistic forecast (4.06% discount rate at the end of 2015 and 3.46% by the end of 2016 and 3.3% annual returns), the funded ratio would decline to 82% by the end of 2015 and 75% by the end of 2016.

Milliman is among the world’s largest providers of actuarial and related products and services. The firm has consulting practices in healthcare, property & casualty insurance, life insurance and financial services, and employee benefits. Founded in 1947, Milliman is an independent firm with offices in major cities around the globe.

Canada Pensions Consortium To Acquire Chicago Skyway Toll Road

Canada Pensions Consortium To Acquire Chicago Skyway Toll Road

A consortium comprising Canada Pension Plan Investment Board (“CPPIB”), OMERS and Ontario Teachers’ Pension Plan (“Ontario Teachers'”), together “the Consortium”, has announced that they have signed an agreement to acquire Skyway Concession Company LLC (“SCC”) for a total consideration of US$2.8 billion. SCC manages, operates and maintains the Chicago Skyway toll road (“Skyway”) under a concession agreement, which runs until 2104.
CPPIB, OMERS and Ontario Teachers’ will each own a 33.33% interest in SCC and contribute an equity investment of approximately US$512 million each. The transaction is subject to regulatory approvals and customary closing conditions.

Skyway is a 7.8 mile (12.5 kilometre) toll road that forms a critical link between downtown Chicago and its south-eastern suburbs. As an essential part of the Chicago road network, it delivers reliability and time savings for its users in one of the busiest corridors in the U.S.

“Skyway represents a rare opportunity for us to invest in a mature and significant toll road of this size in the U.S.,” said Cressida Hogg, Managing Director and Head of Infrastructure, CPPIB. “This investment fits well with CPPIB’s strategy to invest in core infrastructure assets with long-term, stable cash flows in key global markets. We are pleased to partner with OMERS and Ontario Teachers’ in this investment as like-minded, long-term investors.”

“We’re pleased to announce OMERS investment in Skyway, which aligns with our strategy to acquire assets that will generate stable, consistent returns, matching our long-term obligations to the pension plan’s members,” said Ralph Berg, Executive Vice President & Global Head of Infrastructure, OMERS Private Markets. “Our investment in Skyway also fits with our goal of growing our assets under management in the North American infrastructure space. We welcome the opportunity to partner with CPPIB and Ontario Teachers’ as co-investors in this acquisition.”

“Skyway is a critical asset for the Chicago region that will provide inflation-protected returns to match our liabilities and further diversify our infrastructure portfolio,” said Andrew Claerhout, Senior Vice-President, Infrastructure at Ontario Teachers’. “The long-dated nature of the concession closely reflects the investment horizon of Ontario Teachers’ and our partners at CPPIB and OMERS.”

UK Chancellor Abolishes 55% Tax on Pension Funds at Death

UK Chancellor Abolishes 55% Tax on Pension Funds at Death

George Osborne, the UK Chancellor of the Exchequer, today announced that from April 2015 individuals will have the freedom to pass on their unused defined contribution pension to any nominated beneficiary when they die, rather than paying the 55% tax charge which currently applies to pensions passed on at death.

Around 320,000 people retire each year with defined contribution pension savings; these people will no longer have to worry about their pension savings being taxed at 55% on death.

From next year, individuals with a drawdown arrangement or with uncrystallised pension funds will be able to nominate a beneficiary to pass their pension to if they die.

If the individual dies before they reach the age of 75, they will be able to give their remaining defined contribution pension to anyone as a lump sum completely tax free, if it is in a drawdown account or uncrystallised.

The person receiving the pension will pay no tax on the money they withdraw from that pension, whether it is taken as a single lump sum, or accessed through drawdown.

Anyone who dies with a drawdown arrangement or with uncrystallised pension funds at or over the age of 75 will also be able to nominate a beneficiary to pass their pension to.

The nominated beneficiary will be able to access the pension funds flexibly, at any age, and pay tax at their marginal rate of income tax.

There are no restrictions on how much of the pension fund the beneficiary can withdraw at any one time. There will also be an option to receive the pension as a lump sum payment, subject to a tax charge of 45%.

This system replaces the current 55% tax charge which the government committed to reviewing as part of the Freedom and Choice in Pensions consultation and has the potential to benefit all those with some form of defined contribution pension savings – that is 12 million people in the UK.

At Budget 2014, the government announced a fundamental change to how people can access their pension.
From April 2015, around 320,000 individuals retiring each year with defined contribution pension savings will be able to access them as they wish, subject to their marginal rate of tax.

The tax free pension commencement lump sum (usually 25% of an individual’s pot) will continue to be available.
This policy will be scored at the Autumn Statement and is expected to cost around £150m per annum.

One in Five Brits Will

One in Five Brits Will “Work until They Drop”

One in five Brits admit they are planning to “work until they drop” in order to have a comfortable retirement, a new study by insurance company Aviva reveals.

Researchers found worries about being able to afford their “ideal retirement” means millions of over 40s are expecting to carry on working until they physically can’t continue.

Others are concerned about simply paying their day-to-day bills without the regular income from employment coming in. A further three in ten expect to continue working until at least a few years past the state retirement age.

Clive Bolton, managing director of retirement solutions at Aviva, said: ”For many, their retirement is a time they are looking forward to, whether it’s to get away from the pressures of work or simply having more time on their hands.

”But worryingly, it seems there are a large number of people who are so concerned about what their financial situation is going to be like, they are beginning to consider the possibility that they will always be working.

”I’m sure there are a small number of people who simply don’t want to give up work, but most would rather spend their retirement doing what they want to do, rather than continue to work.

”And while some will be working to ensure they have enough money to have the kind of retirement they are hoping for, it seems there are some who will still be getting up every day to go to work simply to pay the bills.

”Your state pension is unlikely to cover everything you want to do during your retirement and cover unexpected expenditure, so it’s important to have some kind of financial plan in place to provide additional funds to give you some breathing space.

”The change to pensions and annuities announced in this year’s budget now mean you can spend your pension pot how you want, but given we’re all living longer too, it’s still important to make sure you have enough put by to cover your annual costs for the long term.”

The study of 2,000 over 40s found that while the average adult would like to retire around the age of 60, one in five believe they will be working right until the bitter end.

More than three quarters said they are worried about being able to afford all they have planned during their retirement. Another 64% are concerned about simply paying for day-to-day living costs.

But despite these fears, around three in ten over 40s have no plans in place to fund their retirement. Even of those that have a financial plan, 64% admit it’s probably not going to be enough to do everything they want to do. And almost two thirds of those surveyed wish they had started to plan for their retirement much earlier.

Thousands Make Contact with Long Lost Funds

Thousands Make Contact with Long Lost Funds

Latest figures show that in the past year alone almost 145,000 people have used the service to locate those long forgotten pensions. This is more than double the number who used the service in 2010, with numbers rising year on year.

By 2018 all employers will have to provide a workplace pension and with the average person having 11 jobs in their lifetime this could lead to 50 million dormant and lost pension pots by 2050.

The government announced last year that it was introducing a system whereby if you move job your pension pot moves too. The ‘pot follows member’ system will mean that any pots of less than £10,000 will automatically move with them.

Minister for Pensions Steve Webb said: “With the new flexibilities announced at the Budget it is now even more important that people can access all of their pension saving. People who have already lost touch with a pension can use our free tracing service to track down their fund and many more are.

“Soon it will be the norm that when you move job your small pension pot moves with you. This will reduce the costs of providing pensions and help people to plan for their future.”

The Pension Tracing Service helps individuals to find occupational and personal pensions that they have lost track of. It uses a database containing information on more than 200,000 pension schemes. The free service provides contact details of the potential scheme administrator to enable customers to make subsequent enquiries.

Pension Deficits Reach 12-Month High

Pension Deficits Reach 12-Month High

Mercer’s Pensions Risk Survey data shows that the accounting deficit of defined benefit (DB) pension schemes for the UK’s largest 350 companies increased significantly during April.

According to Mercer’s latest data, the estimated aggregate IAS19 deficit for the DB schemes of FTSE350 companies stood at £111bn (equivalent to a funding ratio of 84%) at 30 April 2014 compared to £102bn (equivalent to a funding ratio of 85%) at 31 March 2014.

At 30th April 2014, asset values stood at £575bn (representing an increase of £4bn compared to the corresponding figure of £571bn as at 31 March 2014), and liability values stood at £686bn (representing an increase of £13bn compared to the corresponding figure at 31 March 2014). As at 31 December 2013, pension scheme deficits stood at £96bn corresponding to a funding ratio of 85%.

“It is disappointing that despite more than a 3% increase in the FTSE100 over April, pension scheme deficits still increased so significantly,” said Ali Tayyebi, Senior Partner in Mercer’s Retirement Business. “The driving factor was a significant increase in liability values which in turn resulted from a small reduction in long dated corporate bond yields, combined with a small increase in the market’s expectations for long term inflation.

“Despite the historically high deficit as at 30 April 2014, the three key drivers of the pension scheme deficit on the balance sheet, namely: corporate bond yields, market implied inflation and the FTSE 100 index, have all individually been at even more unfavourable levels over the last 12 months.

“This is a sobering thought for those inclined to assume that financial conditions are bound to get better and might therefore be deferring risk management or deficit correction actions on that basis,” added Tayyebi.

“According to the most recent data available from the Office for National Statistics , UK Companies contributed £63bn to UK pension schemes in 2010, and will likely have seen further increases since 2010. This is up from £25bn in 2000. It is clear that despite this increase in contributions funding levels are not improving. Companies and trustees need to explore other ways of controlling costs, managing risk and discharging liabilities. Companies that execute this efficiently will put themselves at a competitive advantage,” said Adrian Hartshorn, Senior Partner in Mercer’s Financial Strategy Group.

Mercer’s data relates only to about 50% of all UK pension scheme liabilities and analyses pension deficits calculated using the approach companies have to adopt for their corporate accounts. The data underlying the survey is refreshed as companies report their year-end accounts. Other measures are also relevant for trustees and employers considering their risk exposure. But data published by the Pensions Regulator and elsewhere tells a similar story.

Most Advisers Optimistic About Proposed Pension Reforms

Most Advisers Optimistic About Proposed Pension Reforms

Advisers are largely optimistic about the proposed savings and pension reforms and the advisory market in general, according to the latest Adviser Barometer from Aviva. A growth in the number of customers receiving advice, together with an increase in adviser firms looking to hire new staff provides clear signs of positivity in the market.

The study of more than 1,500 advisers found that almost two thirds (64%) claim to have seen an increase in the size of their “active” client base, which is a significant increase from 28% in September 2013. The bulk of their clients are new to the market (43%) rather than former clients of other advisers (34%). There also appears to be potential for growth in the size of adviser firms, with 35% of advisers expecting to hire new staff in the next year, and only a small minority (4%) thinking of leaving the industry.

The majority (86%) of advisers think the proposed package of savings and pension reforms will have a positive effect on the advice market, and almost a half (46%) say they are likely to offer a broader range of products to their customers. At least four out of five advisers predict they will see an increase in demand for advice amongst those aged 55 and over.

However, regulatory fees and levies remain the biggest concerns for the largest proportion of advisers (48%), with professional indemnity costs (43%) and ‘remaining profitable’ (42%) running close behind.

Andy Beswick, Aviva’s intermediary director, retirement solutions, said: “After the retail distribution review (RDR), the savings and pension reforms announced at this year’s budget are the biggest change to happen in the advice market in recent years and this has presented advisers with some interesting opportunities.

“What our research has identified is a clear shift in advisers’ attitude in the last six months. There appears to be an upturn in the number of advisers joining the market, growth in the number of ‘active’ clients being serviced, and a real expectation that there will be an increase in demand for advice amongst those in the over 55 age group. A growing number of advisers are already looking to broaden their range of services to meet their customers’ changing needs in this new era.

“Clearly, advisers still have concerns about regulatory fees and levies, but despite this the results of the latest survey show the most optimistic picture for the advisory market since we started tracking adviser opinions in 2009.
“Aviva has a key role to play in supporting advisers and we will continue to deliver practical solutions and support to help advisers take advantage of these new opportunities.”

Consumers Positive About Retirement Income Changes

Consumers Positive About Retirement Income Changes

Nearly two-thirds of yet-to-retire Brits (62%) say they think giving people more choice and flexibility in how they take their retirement income is a good idea, according to research from Aviva.

Awareness about the retirement income changes announced in this year’s Budget is high, with 80% of people saying they have some level of knowledge of them. In the 2014 Budget, the government announced it planned to give people more freedom in how they take their retirement savings, and from April 2015 people aged over 55 will be able to take their defined contribution pension savings as they want, subject to their marginal rate of income tax.

Just over a half (52%) of those asked in the Aviva research think people can be trusted to spend their retirement savings wisely. And there is strong support for having control over their finances (63%), which will allow them greater freedom to do what they want with their money (67%).

Restraint will be needed

Despite support for the changes, 61% of people say that as the pension rules are relaxed, individuals will need to show greater restraint in coming years to avoid spending all of the money earmarked for their living costs.

Running out of money

Nearly a quarter (22%) say they do not feel their retirement income will last for the whole of their lifetime, and 42% say it will last while they are still active. But a third (34%) feel their savings will last for the whole of their retirement. Men are much more likely than women to be confident that their money will last their lifetime (41% vs. 27%). In addition, 27% say they do not worry about their finances and 31% say they just live for today.

Most affected are the soon-to-be-retired

People retiring within the next year are more likely to say that the Budget changes will affect their retirement plans (57%), compared to those retiring in the next two years (21%), and in five years (17%). A third of people (34%) say the changes will make no difference to them and more than a quarter (27%) say they do not know how their plans will
be affected.

Family and friends are top for guidance

When it comes to guidance and support on their retirement plans, just under half of people say they turn to friends and family (45%), with women more likely than men (52% vs. 45%). Pension providers also rank highly (33%) together with independent financial advisers (28%) and the Pensions Advisory Service (24%).

While more than a quarter (28%) of people say they have enough knowledge to be able to make the right decisions about their retirement, 41% say that although they have some knowledge they would benefit from further help, and 30% admit they are lacking in their understanding. Women are more likely than men to say they have a lack of knowledge (39% vs. 23%). Being close to retirement is also an indicator of how well informed people feel about the changes, with those retiring in the next year saying they feel confident about their level of knowledge (72%).

Clive Bolton, Aviva’s managing director, retirement solutions, said: “It’s good to see that consumers support the government’s changes to retirement income, and are confident about the opportunities that increased flexibility and choice will bring them. It’s clear that people will need support and guidance as they choose how to make the most of their savings, particularly as many are concerned about running out of money over what could be a long and
varied retirement.

“With additional flexibility, people are increasingly likely to adjust or change their retirement income decisions as their needs evolve over the retirement years. Having access to a range of robust solutions that suit different needs, as Aviva offers, will be important. Retirement solutions such as pensions, annuities, income drawdown and equity release will continue to have a role to play in people’s retirement plans.”

For more information visit Aviva’s Retirement Centre at Aviva’s Retirement Centre HERE.


deVere Launches Workplace Solutions

deVere United Kingdom has today launched its Workplace Solutions division.

This new department within deVere United Kingdom, the UK arm of deVere Group, one of the world’s largest independent financial advisory organisations, will provide whole of the market advice to current and former employees of larger corporations on their workplace pension schemes in order to help them meet their long-term financial objectives.

Responsible for overseeing the development of deVere’s Workplace Solutions is Mitch Hopkinson, deVere United Kingdom’s Head of East Midlands. Commenting on the launch, Mr Hopkinson, says: “This new division has been established because there has been a tide shift in traditional retirement planning methods in the UK, which requires a fresh approach.

“The increasing demand for this department’s services is largely due to the unprecedented changes taking place with workplace pensions, driven by the demise of the ‘gold plated’ final salary pensions and the move to more flexible working patterns as well as the long term upward trend in mortality.”

He continues: “We are coming to the marketplace with a team who have a wealth of top-level experience in this field, having worked with major multinationals, including leading automotive and pharmaceutical companies. We have cumulatively advised more than 30,000 individuals on their workplace pension arrangements. Therefore, we might be entering this market as a new unit, but individually our people are already proven experts in the sector.

“In addition, our team are from an independent financial advisory background, and as such we are professionally and instinctively focused on ensuring improved pension outcomes from each member’s perspective.”

Mr Hopkinson notes: “The hot topics that will dominate our Workplace Solutions conversations with current and former employees are regarding existing final salary benefits when given options to alter them, and how best to approach retirement in light of the changing landscape of more flexible retirement options.

“For example, some employers will offer Pension Income Exchange where members decide on exchanging annual increases for a larger initial income. This might sound a good deal, but there are many things to take into account. Once we consider inflation and life expectancy, for example, it might not be the best solution. What is an absolute must though is access for the member to good independent advice – that can be trusted.

“It should be remembered that these options are often designed to reduce liabilities and lower future funding amounts which may mean that the individual – who is a liability of the scheme – could see benefits reduced if they enjoy a long retirement and inflation stays above trend.

“Money Purchase Schemes are now the most common form of funding retirement, this is where the member and employer will pay into a fund that is invested. It should be noted that because these schemes are solely dependent on investment returns there is no obligation on the company to make up the difference should there be poor performance. Therefore all the risk is placed upon the member and is not shared by the company.

“Increasingly it is apparent that workplace advice is required to ensure that staff are educated to understand the ‘savings culture’ and also have access to advice at retirement, or when needed most. This is where Workplace Solutions can help.”

Mitch Hopkinson concludes: “Workplace Solutions is designed with today’s working age population in mind. Naturally, these people will be of different ages; career levels and retirement planning knowledge and they will certainly have diverse requirements.

“Our bespoke solutions reflect all of this in order to meet their ultimate goals. It is almost as if George Osborne had this in mind when he announced the changes to pensions in the latest budget.”

UK Annuities Market Could Decline by up to 75%

UK Annuities Market Could Decline by up to 75%

The UK annuities market could decline by up to 75% after the recently announced changes to compulsory annuity purchase come into effect, according to PwC analysis supported by a new consumer survey.

The survey, which looks at consumer behaviour of people aged 50-75, reveals that 63% of consumers have or intend to ask for financial advice from an IFA on how they will access their pension pot. With half of respondents having pension pots of under £40,000, this questions the affordability of advice, and IFAs may not be able to provide value for money for small pension pots.

Results also show that the most important factors for consumers deciding how to manage their pension pot are having the certainty of a guaranteed income for life, followed by tax efficiency. Having a simple and understandable product ranked surprisingly low, just higher than dependants having security after death, which respondents considered their lowest priority.

PwC UK insurance leader, Jonathan Howe, said:

“It was clear that life insurers were in for a shake-up following the recent annuity announcements, but our survey quantifies the scale of the effect on the life industry. People still want to invest a small part of their pension pot in an annuity, but it’s crucial that insurers offer innovative new products to satisfy their customer demands and to fill the hole left by up to a 75% fall in annuity sales.

“63% of consumers have or intend to ask for financial advice from an IFA on how they will access their pension pot, which is likely to account for the low ranking in importance of having a simple product. However, the key point here is that many consumers may not have a big enough pension pot to justify significant advice fees, particularly as since the Retail Distribution Review came in last year IFAs now have to charge fixed service fees to customers. What we will see is an advice ‘black hole’ – a supply gap between what consumers want and what they can get.

The Government’s free guidance will no doubt have its limits, and consumers will turn to their product providers for help in deciding what to do.

“This is a good opportunity for financial institutions to react to customers and to offer new products and services that suit their needs. Our survey shows that over 50% of people still want to buy products offered by financial institutions, and given the key focus on guaranteed income for life, insurers’ expertise in the area of longevity risk will be key.”

Latin American Pension Industry Tops US$900bn in AUM

Latin American Pension Industry Tops US$900bn in AUM

The Latin American pension system has grown to more than US$900bn in assets under management, according to new research from global analytics firm Cerulli Associates.

“The pension industry in Latin America has been a key source of allocations for global managers and exchange-traded fund sponsors over the years, and promises to grow in importance as the size of these privatised social security systems quickly expand,” comments Nina Czarnowski, senior analyst at Cerulli. “Local capital markets will eventually be unable to absorb these additional flows.”

In their Latin American Distribution Dynamics 2013: Closed Markets Begin to Mature and Open report, Cerulli analyzes distribution and product development trends in the six key local mutual fund and pension fund markets–Brazil, Mexico, Chile, Colombia, Peru, and Argentina.

“Cross-border distribution to the regional pension industry remains the biggest opportunity. The good news is that, while highly competitive, it remains a fairly low-cost endeavor,” Czarnowski explains. “In fact, some of the top global managers in the region have succeeded in gaining more than US$5bn each without a local office, or a local product.”

To the credit of the pension managers themselves, performance, global expertise, and on-going support have been the most-sought-after characteristics when choosing among cross-border managers.

“There has been a flurry of merger and acquisition activity in the pension space in Latin America, beginning in the last quarter of 2012,” Czarnowski continues.

Cerulli’s research finds that the compulsory fund systems from Mexico to Chile are doubling in size every five to six years. As they amass large sums of assets, it will be imperative for them to channel greater percentages of their assets outside of their borders.