Helping employers identify a pension scheme for automatic enrolment

The Pensions Regulator (TPR) has opened consultation on a proposal to publish a list of pension schemes that are available to any employer, regardless of the number or workers the employer has or their levels of pay.

According to research carried out by the Department for Work and Pensions 48% of small and 79% of micro employers currently have no pension scheme and will have to choose a new one as they prepare for automatic enrolment.

TPR state they are ‘aware of 30-40 providers who offer a scheme for automatic enrolment. Of these, a much smaller number of schemes have indicated they will not reject employers on the basis of size or low value. Even fewer schemes have indicated they will accept all employers who approach them.’

To read more about this issue and the consultation visit the link below.

Web link: thepensionsregulator.gov.uk 

Tax Efficient alternatives to Pensions

2014 is the year that people were granted the freedom to plan a retirement suited to their lifestyle[1], however with the restriction of an annual allowance currently set at £40,000 (although it is possible under certain circumstances to go back 3 years to top up any unused previous allowances), a number of people might wish to look at tax efficient alternatives. Some examples could be:

• Individuals who are in danger of exceeding their lifetime or annual allowances;

• Individuals who are concerned about the income tax treatment of large withdrawals from pension, and may wish to look at alternatives;

• Business owners looking to sell – shelter any capital gain – and plan for their retirement in a tax efficient manner;

• Younger investors who would be keen to explore alternatives that could be used to replace or compliment pension arrangements.

The good news is that there are alternatives available that could be considered as potential solutions.

Two alternatives that could be suitable are Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EIS). These have been in existence for over two decades and each offer advantageous tax reliefs. There is no stigma of tax avoidance as these are well established, government backed schemes designed to encourage investment in high growth entrepreneurial companies.

Investors need to be aware of and comfortable with the risks associated with investing in VCTs and EISs, and this would be an integral part of any discussions between potential investors and Ward Williams Financial Services Ltd as Independent Financial Advisers.

We expect that in retirement there will be a significant shift to alternative tax efficient investments alongside pensions and investors of all ages should give these careful consideration.   

For more information do not hesitate to contact Cliff Pocock or Nigel King at Ward Williams Financial Services Ltd on 01932 830664 or by email on wwfs@wardwilliams.co.uk

[1] Subject to sufficient monies being set aside

Pension flexibility

The Government has announced that people who wish to access their defined contribution pension flexibly will be able to go to a local Citizens Advice Bureau across the UK for expert free and impartial face to face guidance or receive telephone guidance from the Pensions Advisory Service.

In Budget 2014 radical changes to the way individuals can access their pensions were announced. The Government promised that those able to take advantage of these flexibilities would be entitled to free and impartial guidance on their available choices as they approach retirement.

Pension expert Dr Ros Altmann CBE said: 

‘This is a big step forwards in ensuring the pension revolution announced in the Budget will have a meaningful impact on pension savers. It is clear that, currently, most people saving for a pension don’t understand all the vital issues, and it’s really important that they receive impartial help to make the best decisions for themselves.’

‘Both the Pensions Advisory Service and Citizens Advice have longstanding experience in helping the public with financial issues; and it is really important that people do trust the scheme, otherwise they remain at risk of stumbling into poor decisions.’

Internet link: News

www.wardwilliamsfs.co.uk

The Continuing Pension Revolution

Pension legislation is set to change in April 2015; people will have the freedom to take as much pension income, taxed at their marginal rate, as they wish.

The Government, last week, announced they will abolish the pension’s death tax charge.

What are the current rules?

If a person were to die before age 75, their defined contribution (DC) pension can be passed on tax-free to their beneficiaries as long as they have not drawn any money from it.  If they have, the residual pension will be taxed at 55% before it is passed on.

If over 75, whether in drawdown or not, the pension will be taxed at 55% unless passed to a spouse or dependant under the age of 23.

What will change?

Under the age of 75, the pension will be passed on tax-free, whether untouched or in drawdown.

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.

If over 75, their pension will be passed on to a beneficiary who will be able to drawdown the inherited pension at their own marginal rate of income tax.  Beneficiaries will also have the option of receiving the pension as a lump sum payment, subject to a tax charge of 45%.

If you have any queries about your retirement & Estate planning, please call us on 01932 830664 to arrange an initial meeting, held at our cost, with one of our qualified Financial Advisers at Ward Williams Financial Services Ltd.

Source: HM Treasury, gov.uk website, 29 September 2014

Mystery Shopper - WWFS awarded 'Shopper's Choice'

 

In order to maintain and improve standards, Unbiased, the UK’s biggest IFA search site undertakes a Mystery Shopper exercise, the results of which are published in the Financial Adviser magazine.  Each week a mystery shopper seeks advice from a randomly selected group of independent and tied advisers from regions in the UK.  The aim is to find out whether advisers are delivering the goods when it comes to the all-important initial telephone contact between client and adviser.  It is only intended to evaluate this first interview, and it is understood that further meetings would be necessary before final decisions could be made. 

Ward Williams Financial Services were called as part of the programme staged in Watford during a week in September.  The scenario was that a potential client and his partner had saved money in a Cash ISA for years, and were looking to put their £60,000 savings into something that yields more than 1.2%.  He was concerned about the prospect of not having access to his savings, so wanted somewhere easily accessible.

The outcome of the exercise was that Ward Williams Financial Services were awarded the ‘Shopper’s Choice’ and scored 33/35.  You can read the article online by following this link:

http://www.ftadviser.com/2014/09/17/ifa-industry/companies-and-people/mystery-shopper-watford-SXVjoBMpwa75SQYO1JVQMM/article-1.html

If you wish to review your financial affairs, please contact Ward Williams Financial Services Ltd on 01932 830664 or email wwfs@wardwilliams.co.uk.