News and blog

Retirement without a pension - is your spouse or partner protected?

Thousands of widowed women every year are sentenced to a life without regular retirement income because their husbands took the wrong financial advice at retirement. Those in the baby boomer generation, who are now reaching retirement, tend to rely on their husband's pension, but worryingly, six out of ten married men purchase a single life annuity when they retire, leaving their partners with very little when they die.

Single life annuities pay a higher level of income than joint lifeannuities, but payouts stop when the annuitant dies. A joint life pays less each month, but guarantees to pay a pension to the widow for as long as she or he lives. This could either be a reduced payment, meaning you will get bigger payouts while you are both still alive or you could choose for payments to remain the same, even in the event of a death.

According to Aviva, only 41% of married men aged over 65 who buy an annuity choose a joint life annuity, which would provide a widows’ pension. This figure drops to 29% for those under 65. Pensioners are often making this decision because they’re not aware of all the options available to them, instead they are keen to maximise their immediate retirement income through a single life annuity.

Information and quotes for annuity rates, which are sent to customers, are typically based on single life annuities.  This highlights the importance of taking advantage of The Open Market Option, which means you don't have to take the pension offered to you by your pension provider. Instead, you have the right to take your built-up fund to another provider to get a better annuity rate. It costs nothing to take advantage of this option and new Association of British Insurers’ rules mean that your insurance company must now tell you about it.

Buying an annuity is one of the biggest financial decisions you will make.  Once you have bought one, there's no going back, so making sure you get it right is vital. Taking the time to speak to your family and a financial adviser about the decision will help ensure it is the best one for you.

Inheritance Tax – An Introduction to Business Property Relief (BPR) and How Business and Non-Business Owners Can Benefit From It

For those who could not attend our seminar in May, we have created a short article that tackles the hot topic of Inheritance Tax and how to reduce your tax liability through Business Property Relief (BPR).

Tax is always a popular subject and if there is one topic in particular that is guaranteed to rattle some cages, it is Inheritance Tax. No one likes the prospect of giving away 40% of the estate they’ve worked so hard to accumulate over their lifetime, to the Government when they die. Despite Inheritance Tax being one of the more contentious taxes, many people fail to take steps to mitigate it effectively during their lifetime.

According to research by Legal & General, 69pc of people are aware they could have an Inheritance Tax liability, but have taken no action to address the problem. Common reasons not to address the liability include: ‘I can’t afford to give it away’, ‘it’s too risky and complex’, or ‘we don’t know where to start’.

With the Inheritance Tax threshold frozen at £325,000 until 2018 at the earliest, Inheritance Tax planning is as important as ever. Inheritance Tax can cost your loved ones £100,000s in the event of your death. However, with a bit of careful planning, it is possible to legally mitigate against Inheritance Tax, Business Property Relief is one way of doing this.

What is Business Property Relief (BPR) and how can this help me avoid Inheritance Tax?

The more traditional routes of IHT mitigation are through gifts and trusts. However, money given away before you die is usually still counted as part of your estate, so if you die within seven years of giving the gift, it will be subject to Inheritance Tax.

Business Property Relief (BPR) for those that own a business?

If you run a business, there are generous inheritance tax reliefs available that operate to make assets used in the business exempt or partially exempt from IHT. Business Property Relief (BPR) allows you to pass on either 50% or 100% of your business, tax free when you die. BPR was introduced by Labour government in 1976 with the intention to encourage and help family businesses to continue and be passed down the generations. However, not all businesses qualify for Business Property Tax Relief.

Business property relief will be given at 100% on the following assets:

  •  A business (that is a sole trader’s business) or an “interest in a business” (typically, a partnership)
  •  Shares in an “unquoted” (not traded on a Stock Exchange) company – note that shares traded on the AIM or USM are treated as “unquoted”. This is the relief that can apply to family companies.

Business property relief will be given at 50% on the following assets         

  • Land, buildings, machinery and plant used by a business run by a partnership of which the owner is a partner, or by a company in which he/she owns a controlling interest.

A business or company will not qualify if more than half of its business involves:

  • Dealing in stocks and shares
  • Dealing in land or buildings
  • Making and holding investments

In order to claim BPR, the individual must have owned the relevant business property for at least 2 years before his or her death, the relevant business property must not be subject to a binding contract for sale at the time of its transfer and the business must be actively trading.  

It is important not to assume that your business or company qualifies for 100% IHT relief. There are no lights that start flashing if your business stops qualifying for BPR, so it is vital that you consult a financial advisor to find out whether full business property relief is available on your business.  If not, they will be able to advise you on the other options available.

What if you don’t own a business, can you still benefit from Business Property Relief (BPR)?

The quick answer is yes and what is more it is actually very simple.

There are investment products out there specifically designed to take advantage of BPR with a view to IHT planning.

A common way to mitigate the IHT on your estate is to gift money or assets to a relative or loved-one. The downside to this is twofold. Firstly, it generally takes seven years before the gift is fully exempt from IHT. Secondly, because it is a gift, the money or asset is no longer yours and you lose control of it.

Despite the best laid plans, no one can be sure of what the future holds, so not having control over money you’ve worked hard for, in an effort to mitigate IHT, is less than ideal.

Investment products have now come on to the market, utilising BPR, which let investors mitigate their IHT liability whilst still retaining control of their money. Unlike traditional gifting, investments in these products are exempt from IHT within 2 years. On top of this and unlike other IHT solutions, you retain access to your investment at all points and what is more, you can choose to take a regular withdrawal from the product or leave any returns in the investment.

If it sounds too good to be true, it is worth pointing out as always, that with all the benefits, comes a degree of risk and there is always a chance that the value of your investment may go down as well as up.

However, with IHT currently at 40%, many will feel the benefits far outweigh the risk.

So, whether you stand to inherit or leave the money, it's time to sit down and tackle the issues of Inheritance Tax with both your family and a financial adviser. By taking the time to receive appropriate financial advice, you can reduce or eliminate your potential Inheritance Tax liability, without losing control of your estate.

To find out more about how these BPR investment products work and if they are right for you and your situation, feel free to give us a call on 01489 878 300 or email This email address is being protected from spambots. You need JavaScript enabled to view it. .

Is the stock market bubble about to burst?

Specialist wealth management firm, Berry Asset Management, give their reasoning why the stock market bubble doesn’t have to burst and how careful financial planning from the Government can help avoid it.

Asset price bubbles are like buses right now: you wait a while and then several turn up at once. The bond bubble has been inflating for quite some time and has been well documented, but there are increasing signs of a bubble in prime residential property and now the world’s equity markets. What is going on? Why are the prices of assets being driven to such heights when the world’s financial and economic woes are nowhere closer to being solved than they were a few years ago?

A key characteristic of this bull market has been the continual, generally disparaging, cry that it has been powered by Quantitative Easing (QE) and the loosest monetary policy in centuries. This has been described as a form of ‘oxygen’ to push markets ahead. This may be so, but the current market recovery is no less real because of this: all bull markets are powered by something, and it is nearly always liquidity.

Without excess liquidity, there is no spare cash to buy assets. Granted, the scale of liquidity to hand is much greater this time around, and it is the scaling back of this which will eventually present the ultimate challenge to central banks. It is not impossible, however, to believe in an environment where QE is gradually throttled back, precisely in tune with a global economic outlook that gets better by the day. We

are not suggesting that this is happening now, but there are clear signs that the US is recovering, and in due course Europe will too. It will be a delicate operation, but the metaphorical 'oxygen' that has been provided to markets can be slowly withdrawn as the economic recovery starts to provide its own, real,oxygen.

Any such manoeuvre will inevitably be hazardous and there will be periods when markets will think that central banks have got it all wrong. These will be the days and weeks when markets exhibit the sort of

behaviour that Japan demonstrated last week. But it is a possible outcome, and it continues to be the irrefutable case that investors face the dilemma of where to put their money: inflation is a resting beast that could awake at any time, cash is not a viable option, and equity markets are probably the smallest bubble but, crucially, the one that does at least offer value, growth prospects, rising dividends, and, over time,

protection from the general debasement of currency and other hazards looming over the horizon. It remains a time for strong nerves, but those who have them should be adequately rewarded.


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Lost pension - missing since 1995!

More than £3 billion is currently laying unclaimed in lost pensions. Could any of this be yours?

Research suggests that around 5 million people could be missing out on income when they retire because they have lost track of some of their pension savings. According to the charity Age UK, nearly a quarter of adults have overlooked at least one pension.

The main issue seems to be that most people now do a number of jobs in their lifetime. According to the Department for Work and Pensions, people work for an average of 11 employers over the course of their working lives. Moving from employer to employer can result in a string of small pension pots, which even if they do not go missing, can end up being worth less than if the money was held all in one place.

Lucy Harmer from Age UK’S head of services, says it is vital that people take time to work out what pensions they are owed: "We strongly advise people to seriously think about planning for retirement and the kind of lifestyle they want – it's never too early."

So how do I locate my missing pension?

A lost pension pot doesn’t have to be a disaster. To help you find any lost pension pots, the first step is to search through your old paperwork and see if you have details of any schemes you have forgotten about. If you find paperwork which has a former postal address for you, make sure you write to the scheme provider giving you current contact details.

The government offers an online pensions tracing service, which you can also access by phone (0845 6002 537).  The service will ask for your national insurance number and information about the employer you worked for when you had the pension, what your job title was and contact details for the employer and/or the pension provider. Alternatively, you could contact your previous employer to ask for details of its pension provider

When I find my lost pension what should I do next?

There are a couple of options to consider after you have located your past pension pots. You could leave it where it is or move the lost pension and consolidate your funds. If you decide to move the lost pension, you will need to consider any exit penalties on your fund and any benefits you may lose by moving it. When you have tracked down all your schemes, you can contact your providers to get a quote for the transfer value of the pension pots. Ask for a statement, which should include details of any penalties you will face, as well as a final value.

If you do decide to consolidate your pension funds, make sure you store written details somewhere, just in case a family member has to manage your affairs for you.  

When it comes to lost pension funds, it is important that you seek financial advice to help you research the different options available and find the best course of action to support your future retirement income.


Is your retirement in the red?

We all recognise the struggle first time buyers have when trying to get their first step on the property ladder, but increasingly, pensioners face the same battle trying to stay put!

According to the Office for Nation Statistics (ONS), more than one in 10 pensioners are worried about mortgage debt, with a rising number of pensioners retiring in the red.  House prices may have risen, but so has the debt attached to the cherished family home.

Of the 11.2million mortgages in Britain, around 35 per cent are interest-only, meaning that the homebuyer pays only the interest every month and not a penny of the capital. Over time, the homeowner should save up to pay off the capital. However, a recent report from the new City watchdog said more than 2.6 million interest-only mortgages would be due for repayment over the next 30 years and one in 10 people on these deals had no repayment plan. Some home owners have been saving, but they have been extremely disappointed by how their investments, such as endowments, have performed. Research indicates that the borrowers facing the most urgent problems are typically high-income individuals approaching retirement, largely based in the south of England.

Over the next 12 months, more than half a million home owners whose loans are due to mature before 2020 will be contacted about their repayment plans. Martin Wheatley, the FCA's chief executive who has previously compared interest-only mortgages to a ‘ticking time bomb’ stated "By acting now we are aiming to nip this problem in the bud. My advice to borrowers is not to bury your head in the sand – take action now."

The ageing borrowers affected will be faced with decisions, such as: switching to a capital and repayment mortgage, which will increase their monthly payments and impact on their current living costs, using up savings, which are not earning much interest at present or releasing equity from their family home to pay off the remaining debt.  More drastic solutions include: selling their property and buying a smaller one or renting to release cash to pay off the mortgage.

If you are concerned about your mortgage debt, it is vital that you speak to both a financial advisor and your lender to help establish the best course of action that will have least impact on your retirement income and future quality of life.

Download a copy of our Inheritance Tax seminar presentation

Thank you to everyone who attended our Inheritance Tax seminar last week at the Botleigh Grange Hotel. We hope you all enjoyed the evening and found the hot topic of Inheritance Tax useful.

As promised, we have uploaded our presentation to the website. To view the slides please click here.

If you have any questions, would like to organise a free no-obligation meeting to discuss any of the topics covered or to arrange a free Retirement Review, please feel free to contact us on 01489 878 300 or email This email address is being protected from spambots. You need JavaScript enabled to view it. .



And finally...A not-so-legal way to boost your retirement income

Retirement and Investment Solutions recently stumbled across this brilliant example of not-so-legal entrepreneurial spirit in Bristol.  We are still not sure if this is a true story or a modern urban legend.

From The London Times: A Well‐Planned Retirement

A perfect example of government mismanagement.

Outside England 's Bristol Zoo there is a parking lot for 150 cars and 8 buses. For 25 years, its parking fees were managed by a very pleasant attendant. The fees were for cars (£1.40), for buses (about £7).

Then, one day, after 25 solid years of never missing a day of work, he just didn't show up; so the Zoo Management called the City Council and asked it to send them another parking agent.

The Council did some research and replied that the parking lot was the Zoo's own responsibility.

The Zoo advised the Council that the attendant was a City employee.

The City Council responded that the lot attendant had never been on the City payroll.

Meanwhile, sitting in his villa somewhere on the coast of Spain or France or Italy ... is a man who'd apparently had a ticket machine installed completely on his own and then had simply begun to show up every day, commencing to collect and keep the parking fees, estimated at about £560 per day ‐‐ for 25 years.

Assuming 7 days a week, this amounts to just over 7 million pounds ... and no one even knows his name.

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Has gold lost its glitter?

If you’ve been following the finance columns of late, you may have noticed that the value of gold has hit a two-year low. Last week saw the biggest plunge in the price of gold for more than 30 years.

The price is now more than 25% lower than its peak of $1,921 in September 2011 and has dropped from $1,580 an ounce to $1,380, dragging other metals down too.

But what is behind this sudden drop and why is it relevant to you?

During the recent global recessions, investors piled into gold, seeking refuge from the banking crises and economic downturn that were ravaging stocks and shares. Investors bought the metal to protect themselves against inflation and because of its widely perceived position as a financial ‘safe haven’. Low interest rates on savings accounts, high inflation and lack of faith in the stock markets all helped increase its appeal to investors and this was reflected in its increasing price.

So what's making gold dull?

Market experts are pointing towards various reasons behind the falling price of gold. Speculation that Cyprus may sell its excess gold reserves to raise €400 million (£340 million) to help fund its debts was certainly a contributor, alongside news of the US economic situation and a slowdown in Chinese growth.

Is there a light at the end of the tunnel for investors?

If you have invested in gold there is no need to panic. Unless there is an emergency, it is not advisable to sell gold at this point. Although a further drop in prices cannot be ruled out, experts still believe that gold will deliver good returns in the long term.

This is a good time for traditional buyers looking to purchase gifts or wedding rings. However, for those looking to seriously invest, it is advisable to err on the side of caution and watch for any further changes in the price of gold.

Last week’s drop illustrates the importance of spreading the risk of your portfolio, by diversifying across a mixture of asset classes, industry sectors and areas of the world. Even suggested ‘safe havens’ have risks.  Instead of following the herd or making drastic decisions, it is important that you review your investments regularly, in order to make the best decision for your future.


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