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Flying back to the nest

Approaching retirement should be an exciting stage in your life; a time to unwind, travel and take up new hobbies. However, more and more people approaching retirement are having their dreams dashed. Plans to downsize and move to the country or go on that dream holiday are being shelved in order to resolve the financial problems of their children.

Research shows that those 10 years from retirement are facing some life changes, which are very different to those of their parents. As the high cost of living takes its toll and children remain financially dependent well into their adult years, more and more over 50s are supporting their children longer than expected.

 A report entitled 'Working Women', reveals that rather than coasting towards a comfortable retirement, women in their 50s are working for longer than ever, in order to give their adult children financial support. On average, parents have given their adult children (those aged over 21) £3,180 in handouts in the past year, with the figure rising to £4,840 for the middle classes (ABC1s).

What you feel may be a small handout, can over the course of time build up to be a considerable amount, which can have a significant impact on your own retirement income.

According to a report by Aviva, three quarters of those over-55s who had provided financial assistance to adult children said it had impacted on their own financial planning. More than a third said it has resulted in them dipping into their capital, resulting in less savings and investments than before. Many have delayed retirement or re-entered the workplace part-time to generate or replace the lost income.

Many of us wouldn’t stop to think about supporting a loved-one and we all know life rarely goes as planned; therefore, if you are approaching retirement, it is vital that you not only budget for any unexpected life changes, but that you take unbiased Financial Advice before you say “Yes” yet again.

Retirement and Investment Solutions have years of experience in advising clients on how best to deal with sudden unplanned costs and can help you protect your valuable retirement capital.  The earlier you start considering the possible financial events that could halt your retirement dream, the better.

Make the most of the new tax year

With the new tax year starting, now is the ideal time to review your tax affairs and take advantage of new, simple planning opportunities, which could reduce your tax liability over the year and beyond. New research from shows that despite the financial worries facing those in retirement, taxpayers are set to waste an average of £421 each by failing to take advantage of the incentives, reliefs and credits available to them.


  • New ISA limit— ISAs are an extremely efficient way of protecting your savings and investments from tax. The amount you can save tax-free in an ISA rises in 2013/14, from £11,280 to £11,520. A maximum of £5,760 can be saved in a cash ISA, and a further £5,760 can be invested in a stocks and shares ISA in the same year. The sooner you use your ISA allowance, the more money you will keep from the taxman.

  • Personal allowance increase for the Under 65s - The rules around personal allowances, the amount individuals can earn each year before paying tax, are changing. The personal allowance for under-65s increases from £8,105 to £9,440. However, please remember that the personal allowance for 65-74 year-olds has been frozen for the first time, at £10,500. The personal allowance for those aged 75 and over has also been frozen at £10,660.

  • State pension increase – Remember that the start of this new financial year also signals a rise in the basic state pension from £107.45 per week, to £110.15 per week in 2013-14.

  • Pension contributions — Currently, tax relief is available on pension contributions of £50,000 per tax year. However, from April 2014 this will reduce to £40,000.  The lifetime allowance will reduce from £1.5m to £1.25m at the same time.  If you are approaching retirement you should consider maximising pension contributions each tax year before the allowance reduces.

  • Inheritance Tax —The IHT threshold has been frozen at £325,000 for the third year running and will remain there until April 2018. However, there are schemes available which will help you pass on your financial legacy to loved ones, without having substantial sums go to the taxman.  Attend our free seminar Keeping your money in the family – how to have your cake and eat itto find out more.

Budget implications for the over 50s

Chancellor George Osborne revealed his 2013 budget plans this week, but what does it mean for you? How will it affect your future finances?

To help you digest the information, we have highlighted some of the key facts, which may impact on people in or facing retirement:

  • New Personal Allowances and higher rate tax threshold

George Osborne has announced that the personal allowance will rise to £10,000 by 2014. The threshold for income tax is currently £8,105; rising to £9,440 on April 6 this year, however, the point at which people will start paying higher-rate income tax will be lowered to £41,865 in April 2014.

  • Age related allowance remains frozen

As a way of simplifying the tax code, George Osborne announced that as well as increasing the personal allowance, he would freeze and work to remove the age-related allowances.

The Over-65s already receive a tax allowance of £10,500 up to age 74 and £10,660 after that. From 5 April 2013, those allowances, which only benefit pensioners with an income below £29,000, will be frozen.

  • Introduction of flat rate State Pension being brought forward from 2017 to 2016.

The Government is bringing forward plans to introduce a flat-rate state pension by a year. The new the single flat rate pension of £144 per week was due to be introduced in 2017, but will now begin from April 2016.Under the planned pensions transformation, people of state pension age will get a 'flat-rate' pension as long as they have paid at least 35 years of NICs. The Government claims that the new plan will prevent working mothers being penalised for taking a break to raise children.

  • Confirmation that maximum drawdown has been increased back up to 120% of GAD.

Drawdown savers, who saw income slashed by up to half, have been handed a lifeline by George Osbourne. The Chancellor has reversed a controversial plan introduced 18 months ago. The budget announced that those in drawdown plans would be able to take up to an extra 20 per cent income from their pension pot. This will affect around 400,000 pensioners, who have opted to keep their pension fund invested and draw an income from it, rather than buying an annuity.  The move back to 120 per cent will mean a 65 year old with a £250,000 pension pot could see his maximum drawdown income increase from £13,250 to £15,900.

  • IHT nil rate band frozen until 2017/2018

In 2012, the Government announced that the nil rate band for inheritance tax would be frozen at £325,000 until April 2015. It has now been announced that it will remain frozen at this level until April 2018, in order to help pay for the cap on ‘reasonable care costs’ of £72,000 for older people from April 2016.

  • State pension increasing by 2.5% from April 2013.

As mentioned previously in the Autumn statement, the government has announced that the basic state pension will increase by 2.5% to £110.15 per week from April 2013. As a result, pensioners will see a £2.70 increase in the basic state pension in 2013/14.

  • Consultation on allowing some element of residential property within a SIPP.

Savers who run their own pension funds may be allowed to invest in residential property for the first time.  Self-invested personal pensions or SIPPs give investors the ability to choose their own pension investments. However, not all types of investment are allowed. The Government are now considering a relaxation of the rules to allow unused commercial property to be converted to residential use within a SIPP.

If you have any questions regarding the forthcoming tax and benefit changes, please feel free to contact Retirement and Investment Solutions.

The Retirement Code of Conduct


From the 1st March, people approaching retirement will get clearer help and information to get the best possible pension deal, under an initiative by the Association of British Insurers.

The ABI Code of Conduct on Retirement Choices will help the 400,000 people who buy an annuity each year, better understand their options at retirement, choose the right annuity for their circumstances and shop around for the best deal, through clear and consistent information provided by insurers.

While most people approaching retirement are aware of their options, one in four people feel they do not fully understand their retirement options, with one in three not feeling informed enough to compare quotes from another provider.

The Code is intended to improve customers’ confidence in getting the right pension by:

  1. Providing clear, timely information, to help people approaching retirement understand what their options are. At least two years from retirement the insurer will encourage the customer to consider their retirement options. Six months from retirement and at least six weeks from retirement, the insurer will send details explaining the various options, such as combining small pots, and shopping around for the best annuity.

  2. Explaining the different ways to take retirement income. This will include providing for dependants, lifestyle or medical conditions that may mean they are eligible for an enhanced annuity and protecting against inflation.

  3. Encouraging shopping around for the right pension deal. The benefits of shopping around among other providers will be clearly highlighted along with sources of further advice. Insurers will no longer include annuity application forms, so there will be less chance the customer will buy from the current provider without first shopping around.

To monitor the effectiveness of the Code, the ABI will conduct consumer research to assess changes in people’s retirement awareness and pension purchasing. The impact of the Code will be reviewed in 2014.  As part of the industry’s commitment to greater pension’s transparency, the ABI will in the summer publish specimen annuity rates across a range of different products offered by members

Deciding how to structure income in retirement is one of the biggest financial decisions someone will make in their lifetime. With the shape of retirement changing and people enjoying a lengthier retirement, it is even more important that people make the most of their pension fund.

If you are considering purchasing an annuity and have any questions, feel free to contact us at Retirement and Investment Solutions.

The Bank of Gran and Grandad


The next instalment of our A-Z Guide to Financial Planning focuses on the letter G – Grandchildren.

In the current financial climate, the ‘bank of mum and dad’ often needs to stay open for longer. We are seeing more and more instances of grandparents wanting to help out their financially-stretched children and grandchildren. Grandparents are often keen to contribute to grandchildren's savings and investments, as a way of rolling wealth down the generations, with many also stepping in to help with higher education expenses, or deposits for their first home.  

Before kick starting or topping up your grandchildren’s savings, you need to consider all the options available and the best financial decision for both you and the child. 

Keep control

Child Trust Funds were phased out at the end of 2010 and replaced with Junior ISAs. However, parents who already have the trusts can still continue paying in.  Against the backdrop of rising university fees and living costs, it is little surprise the Junior ISA is being described as the new way to create a US-style 'college fund'. Once a parent or guardian opens a Junior ISA for their child, anyone, grandparent, friend or family, is able to make a contribution up to the annual limit, currently £3,600, with the child being able to access the money at 18.

This may seem an appealing option to save for your grandchild; however, before rushing in to invest, it is useful to understand the pros and cons of this type of saving vehicle.

With a Junior ISA, the child will receive the money in the account when they turn 18. For some, this could be useful in order to pay for university fees, but many grandparents would prefer more control over how the money is spent and when their grandchild can access the savings. It is unlikely many parents and grandparents, no matter how much they trust their child, would be comfortable with them receiving what could be thousands of pounds on their 18th birthday.

It is worth researching alternative options for saving for your grandchildren. They may not be as tax efficient, but could you earn as much interest by opening a regular savings account with a high interest rate?  Is opening a ‘bond’ (an agreement whereby your money is locked away in the account for a fixed period) a good option? If you wish to be in control of when your grandchild can access the money, both these routes might be viable, cost effective alternatives to the Junior ISA.

It is important to be aware of the implication on your own tax affairs when exploring these options, so if you have any questions, please feel free to give us a call.

It’s never too early to start a pension!

Yes, we know you may not have even retired yet, so paying into a pension for your grandchildren might seem pretty extreme; however, it might not be such a bad idea.

Obviously, any money put in a pension on their behalf would not be accessible until they retire. However, the main incentive is the tax relief available on any money paid into the pension. As such, it is an incredibly efficient way to invest in your grandchildren’s future, even if they may not benefit until they are grandparents!

According to data produced last year by Skandia, if grandparents put £240 a month (which equates to £300 a month gross contribution) into a pension for a grandchild each year for 18 years, when the grandchild reaches age 60, they could be a millionaire.

Where there’s a Will there’s a way

Another way to secure the future of your family is to make a Will, so that your assets will be distributed in accordance with your wishes. If you have not made a Will, the rules of intestacy apply, which mean that your grandchildren may not benefit from your estate.

If your estate is worth more than the Inheritance Tax threshold - £325,000 for the 2012-13 tax year - there are some important Inheritance Tax exemptions that allow you to make gifts to others and not have to pay tax on them when you die.

Gifts over the HMRC limits or not made out of surplus income, will fall outside of your estate if you survive for seven years.

There are number of options to consider if you are looking  to secure the financial future of your family, but before you start writing checks, be sure that you have enough saved for yourself. Have your reviewed your own pension, decided how you want to spend your time in retirement, or put in place plans to cover the potential cost of long-term care?  As more and more men and women are living longer, securing your own retirement plans first is essential.

If you have any questions, or would like to review your pension and retirement plans, please feel free to contact Retirement and Investment Solutions.

Jumping that Final Hurdle

Graham Payne, Senior Partner and Head of Wills & Probate at Eric Robinson Solicitors, explains the importance of making a Will to help protect both your estate and your loved ones.

Imagine a long distance runner who has been preparing for the most highly prestigious race of his career. He looks after himself, watches what he eats, trains hard, works with his coach and the big day soon arrives.

He starts the race, is doing well and rather enjoying himself.  Lap after lap he is feeling great and his fans and supporters are cheering him on. Then, in the final circuit, he slows down, stops and sits down metres away from the finish line for no apparent reason.  How do all the people involved in his life feel? Confused? Angry? Betrayed?

Now if we take that race to represent our everyday lives, I often meet the relatives of people who have passed away with very similar emotions to the supporters of that long distance runner. Why?  Well, an individual may have worked hard, looked after his/her family, been supported in old age, but then, having failed to make a Will, caused confusion, devastation and emotional carnage amongst loved ones after they died.

In recent research by Standard Life, it was discovered that two thirds of 35 to 44 year olds, two fifths of 45 to 54 years olds and over a fifth of all those over 65 years old had not made a Will. Over half of those people gave the reason for not having done so as simply ‘not having got around to doing it yet.’

This is really worrying. Maybe some people think the cost of making a Will is a barrier, but the legal fees involved in sorting out estates when someone dies ‘intestate’ can be more expensive for the family  than the Inheritance Tax bill!

Dying without having a Will in place can put an enormous stress on loved ones. When you die intestate the law sets out the rules as to who can deal with a person’s estate and what is to happen to the property. Regardless of the deceased’s wishes, a spouse or registered civil partner will not automatically inherit an estate - some will go to relatives. There is also no provision for unmarried partners, even if they have been cohabiting.

A Will needs to be accurate, unambiguous and comprehensive. It also needs to be updated if there are changes in circumstance (such as divorce, children or finances). Without it, you cannot decide how much money each of your family members gets, state who will become guardians of your children, leave possessions to friends or family or anything to charity.

People spend their lives tying to provide the best they can for their loved ones, but so many seem to be falling at that final hurdle by not protecting their futures when they are no longer here. Like the long distance runner, for all the people who have helped, supported or relied upon you, you owe it to them to finish that race properly.

Equity Release – What You Need to Know

Life is full of surprises. Even when you think your retirement plans are sorted, something can always crop up and hit your finances when you are least expecting it.

Covering the costs of unexpected medical bills, vital home improvements or simply replacing an ageing car, can have an impact on your retirement income.

With house price growth averaging nearly 590% in the last thirty years (Nationwide HPI), equity release is fast becoming an attractive option for those who want to enjoy their retirement in financial security.

Equity release enables home owners aged 55 or older, who are cash poor, but property rich, to unlock some of the wealth in their home via a cash lump sum, a regular income, or both, without having to move or sell their property. However, equity release is complex, so it is crucial to understand how the schemes work.

Lifetime mortgages are the most common equity release solutions and enable people to take out a loan on their property in return for a lump sum, an income or a combination of the two. Under the Lifetime mortgage scheme, borrowers continue to own the property. Usually, borrowers will not make monthly repayments and the debt will be repaid only when they die or go into long-term care. This results in the interest rolling up, quickly increasing what the borrower owes. Figures from the Money Advice Service show that a £45,000 loan taken out at a rate of 5% will have grown to £57,433 after five years and to £93,552 after 15 years. If the borrower lives for 25 years after taking it out, they will repay £152,387.

The most popular sort of lifetime mortgage is the "drawdown" version, designed for those who don't need a large cash lump sum at the outset. Instead, a pot of money is set aside for the borrower to draw from, as and when they need it. The borrower will only pay interest on the cash they release.

The Home Reversion schemes account for a small part of the market and mean people can sell all, or part, of their home to a company in return for a lump sum, or regular income and the right to remain living there. When the property is eventually sold, the borrower, or their estate only receives the percentage of the property's value that they still own. If, for example, someone sold 60%, they would only keep 40% of the final sale price.

The amount you can raise through equity release depends on a number of factors, including your age, your property’s type and value, and in some cases, your health and lifestyle.

The Financial Services Authority (FSA) currently takes responsibility for regulating equity release schemes, requiring members to adhere to a code of practice, including allowing borrowers to remain in their property for life.

Before you think seriously about equity release, consider your alternatives. Have you claimed all state benefits for which you are eligible, considered using other savings and assets, checked to see if your local authority can help you to pay for essential home improvements, reviewed you current retirement plans, or thought about renting out a room in your home? For many, the most effective way of releasing equity will be to downsize to a smaller property.

Like any financial decision you make, asking for advice is key. Extracting money from your home could impact upon many aspects of your finances, from your eligibility for means-tested benefits to the value of your estate when you die. You need to make sure you understand and plan for any negative financial implications associated equity release.

Financial Product Best Buys – March 2013

To help you make more from your money, each month Retirement and Investment Solutions will provide you with best buys for your savings. Please bear in mind that these rates change frequently.


  • Best instant access

Derbyshire BS (part of Nationwide): 2% AER

Min deposit: £1,000. Apply online


  • Best 1 year fixed rate

Co-operative Bank* / Britannia 2.31% AER

Min deposit:£1,000. Apply in branch or by post


  • Best 3 year fixed rate

Co-operative Bank/ Britannia 3% AER

Min deposit: £1,000. Apply in branch or by post


  • Best 5 year fixed rate

FirstSave 3.05% AER

Min deposit: £1,000. Apply online.


  • Best 1 year fixed rate Cash ISA

Nationwide 2.05% AER

Minimum deposit £1. Apply in branch


  • Best 3 year fixed rate Cash ISA

Halifax 2.6% AER

Minimum deposit £500. Apply online, by post, telephone or in branch


  • Best 5 year fixed rate Cash ISA

Halifax 2.7% AER

Minimum deposit £500. Apply online, in branch, or by telephone


  • Instant Access ISA         

Nationwide BS web ISA 2.25% AER

Minimum deposit £10,000. Apply online, in branch or by telephone


Parting with Protection

Graham Payne, Senior Partner and Head of Wills & Probate at Eric Robinson Solicitors, explains the importance of reviewing your Will every time your personal circumstances change.

It is a common belief that the three most stressful things that a person can face during his or her lifetime are divorce, death and moving house, but what seems to be less understood is how easily all these difficult situations can impact on each other and cause havoc to financial affairs.

The first time I encountered an example of this was when, many years ago, I was acting for a woman whose husband had initiated divorce proceedings.  The divorce petition had been issued and the process was moving along when, suddenly, the soon-to-be ex-husband passed away.

It transpired that the gentleman in question had not made any changes to his Will since he was first married and consequently his entire estate and fortune was received by his wife.  The decree absolute had not been issued, the couple were still technically married and so the wishes expressed in the Will had to be honoured as a legally-binding document.

Of course in this instance, my client was the one who financially benefited from the unchanged Will, but I remember being struck at the time by the contradiction of a man who was so focused on making sure his wife would no longer be part of his life, that he paid no attention to ensure she would no longer be part of his financial affairs.

As I continued my career, this situation has occurred on several cases which, in my opinion, amounts to a surprisingly regularity.  Spouses have passed away whilst still technically being married to the partner they were in the process of divorcing and the intended divorcee walked away with everything the deceased had wanted to ensure they didn’t get during divorce proceedings.

The moment a client comes to our firm determined to initiate divorce proceedings, we feel we have a duty of care to suggest they change their Will in accordance with their intentions for the next stage of their lives.

The one piece of advice that I always give to those seeking to protect their financial affairs after they are gone, is that a Will needs to be reviewed every time there is change in personal circumstance.  In the same way that insurance companies need you to contact them if you move house or change your car a Will needs to be updated and managed.

As life changes, make sure your Will keeps up.

Financial Product Best Buys – January 2013

To help you make more from your money, each month Retirement and Investment Solutions will provide you with best buys for your savings. Please bear in mind that these rates change frequently.


  • Best instant access
Post Office: 2.1% AER

Min deposit: £500, Apply online, by phone, or in branch

  • Best 1 year fixed rate

Virgin Money 2.25% AER

Min deposit: £1. Apply online

  • Best 3 year fixed rate

FirstSave 2.95% AER

Min deposit: £1,000. Apply online


  • Best 5 year fixed rate

Shawbrook Bank 3.1% AER

Min deposit:£5,000. Apply online

  • Best 1 year fixed rate Cash ISA

Halifax 2.05% AER

Minimum deposit £500. Apply by post, in branch, or telephone


  • Best 3 year fixed rate Cash ISA

BM Savings 2.4% AER

Minimum deposit £10,000. Apply by post


  • Best 5 year fixed rate Cash ISA

Halifax 2.5% AER

Minimum deposit £500. Apply online, in branch, or by telephone

  • Instant Access ISA         

Scottish Widows Bank E-Cash ISA 1.80% AER

Minimum deposit £10. Apply online


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