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Search the internet and you’ll find a myriad of self-help sites aimed at helping you to improve your life and get the most out of it. Our latest guide explores some practical steps you can take to improve your overall wellbeing now and in the future.

Among the steps that can help create a better you are:

  • Setting out your goals
  • Making your mental wellbeing a priority
  • Spending time on the things you enjoy
  • Getting outdoors
  • Creating a financial plan.

Download “10 simple but effective ways to create a better you” to discover some of the things you can do to improve your life in the short and long term.

Taking on the responsibility of becoming a Power of Attorney can be daunting. If you’ve been named a Power of Attorney, whether you’re acting on someone’s behalf now or could do so in the future, understanding what it means is important and can help you make the right decisions.

What does being a Power of Attorney mean?

A Power of Attorney gives someone the ability to make decisions on someone else’s behalf if they lose the mental capacity to do so. This could be due to a range of reasons, such as dementia or a serious accident.

By naming a Power of Attorney, you can ensure someone you trust can make decisions for you and act in your best interests. It’s an important step to take to provide a safety net when it’s needed most.

However, if you’re named as someone’s Power of Attorney, it can be scary to take on this level of responsibility. Understanding what it means and what decisions you’ll need to make can help you feel more comfortable in the role. Here are seven things you need to know if you’re a Power of Attorney.

1. There are 2 types of Power of Attorney

First, there are two different types of Power of Attorney, and you may be named for both or have responsibility for just one area.

A health and welfare Power of Attorney may be required to make decisions about a person’s daily routine, medical care, or life-sustaining treatment. A property and financial affairs Power of Attorney can make decisions relating to money and property, including managing bank accounts or selling a person’s home.

2. A person can name more than 1 Power of Attorney

If you’re a Power of Attorney, you may not be the only person acting on the individual’s behalf. There is no limit on how many Power of Attorneys can be appointed. Individuals can also name replacement attorneys to step in if an original attorney is unwilling to act or becomes unable to do so.

If there is more than one Power of Attorney, it’s important to pay attention to how you can make decisions. You may need to make decisions “jointly”, meaning you must always make and agree on decisions together, or “jointly and severally”, which means attorneys can make decisions on their own as well as together.

In some cases, there will be tasks that must be made together, such as selling property, while others can be made separately. The person naming a Power of Attorney must set out how they want you to work.

3. There may be restrictions on what you can do

When naming a Power of Attorney, a person can set out restrictions and conditions, which are legally binding. These may limit the power that you have and it’s important to understand what they are from the outset. For instance, as a Power of Attorney you may have control over a person’s bank account and their bills, but not have the authority to sell their home.

4. The individual may also provide guidance

While any guidance provided isn’t legally binding, it can help you understand the person’s wishes and continue to act in their best interest. When naming a Power of Attorney, for example, they may have set out what type of care or medical treatment they’d prefer if they need support.

5. You may be paid for out-of-pocket expenses

Acting on someone’s behalf may incur some expenses, such as postage or photocopying costs, for example. You can claim these expenses back. You should keep an account of these expenses, including relevant receipts. However, it’s important to note you cannot claim for the time spent carrying out your Power of Attorney duties unless you are a professional attorney, like a solicitor.

6. You must act in the best interests of the person

When acting as a Power of Attorney there are certain principles you much follow. You have a legal responsibility to act in the best interests of the individual and take reasonable care when making decisions on their behalf. Where possible, you should also work with the individual to help them make their own decisions, offering practical advice to support them.

7. It is possible to end a Power of Attorney

Being a Power of Attorney isn’t always a commitment until the person passes away. In some cases, a Power of Attorney may be used in the short term. For instance, perhaps the person has been involved in an accident and only needs support until they recover.

You may also decide you no longer want to act as a Power of Attorney and you can step back if you wish to. This is known as “disclaiming”. To do so, you must fill in an LPA 005 form and send this to the donor, the Office of Public Guardian, and any other attorneys.

Acting on the behalf of someone else can be challenging and you may not know which decisions are “right”. We can offer you financial advice and support throughout the process, as well as helping you to set your own affairs in order, including naming a Power of Attorney if necessary. Please contact us to speak to one of our team.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate estate planning.

Inheritances are growing and becoming more important to household wealth, research finds. As the Inheritance Tax (IHT) thresholds are now frozen for five years, it’s essential those planning to leave money and other assets behind for loved ones consider the impact that tax could have and take steps to minimise it.

According to the Institute for Fiscal Studies, inheritances have been growing as a share of national income in the UK since the 1970s. It’s a trend that’s expected to continue. When compared to lifetime income, those born in the 1980s are expected to receive inheritances that are twice as large as those born in the 1960s. It’s also estimated that those born in the 1980s will receive an inheritance worth 16% of household lifetime income.

This trend is expected for two reasons:

  1. Older generations are holding on to more wealth than their predecessors.
  2. Younger generations are being affected by wage stagnation.

Growing inheritances as a portion of household wealth mean it will play a crucial role in the financial security and freedom of younger generations.

As inheritances grow, more families could be affected by IHT too. Around 1 in 20 estates currently pay IHT, but the chancellor froze thresholds in the 2021 Budget. So, more families could find they face an IHT bill.

When is Inheritance Tax due?

If the value of your entire estate, which includes all your assets from property to savings and material goods, is below £325,000, you do not need to pay IHT. This threshold is known as the “nil-rate band”. If you’re leaving your main home to a child or grandchild, you can also take advantage of the residence nil-rate band. This means you can leave a further £175,000 behind without worrying about IHT.

As a result, an individual can have an estate worth up to £500,000 before needing to consider IHT. If you’re married or in a civil partnership, you can pass any unused allowance to your partner. Effectively, this means as a couple you can leave up to £1 million to loved ones before IHT is due.

Usually, the nil-rate band and residence nil-rate band would rise in line with inflation. However, the thresholds will now remain where they are until 2026. This means that as the value of assets rise, more families will be affected by IHT. With a standard rate of 40%, IHT can have a serious impact on the value of the inheritance you leave behind for loved ones.

6 things you can do to minimise Inheritance Tax

If your estate may be affected by IHT, there are often steps you can take to reduce the eventual bill. However, planning is important to make full use of your options. Here are six ways to manage an IHT bill:

1. Write a will

When putting together an estate plan, writing or updating a will is an essential step to take. It can help ensure you’re making full use of your allowances, for example, specifying that your home is to go to your children to ensure you are eligible for the residence nil-rate band. A will is also the only way to ensure your estate is distributed in line with your wishes.

2. Gift some of your assets now

Making a gift to loved ones during your lifetime can reduce the value of your estate, as well as allowing you to provide financial support sooner. However, not all gifts are considered immediately outside of your estate for IHT purposes, and may be included for up to seven years. Making use of allowances that are outside of your estate immediately can make sense if you’re worried about the impact of IHT. To discuss lifetime gifting and the allowances you can use, please contact us.

3. Use a trust

Trusts can be used as a way to remove certain assets from your estate, so they aren’t included for IHT purposes. In some cases, you can still benefit from these assets. For instance, you may still be able to receive an income from investments placed in trust. Trusts are complex and there are several different types, so it’s important you seek both financial and legal advice before proceeding.

4. Leave some of your estate to charity

You can have a positive impact while reducing IHT by supporting charities. Donations made in your will to a charity are free from IHT. As a result, charitable gifts can be used to bring the value of your estate under the thresholds. If you leave more than 10% of your entire estate to charity, the Inheritance Tax Rate will fall from 40% to 36%. In some cases, this means your beneficiaries will receive more from their inheritance.

5. Take out a life insurance policy

A life insurance policy doesn’t reduce how much IHT is due, but provides a way to pay the bill, leaving your estate intact for beneficiaries to inherit. A life insurance policy would pay out a lump sum on your death. You will need to pay regular premiums for the policy, the cost of which will depend on a variety of factors, including your health and lifestyle. It’s also essential the policy is placed in a trust – otherwise, the lump sum may be included as part of your estate and increase your IHT bill.

6. Spend it during your lifetime

Making the most of your wealth to enjoy your life now could bring the total value of your estate under IHT thresholds. If you’ve been living on a budget, splurging a little can help you reach goals and reduce the bill. 

These six options do not make up an exhaustive list of how to minimise IHT. Depending on your circumstances and goals, there may be other options and allowances you’re able to take advantage of. Please give us a call if you’d like to discuss your estate plan and what you can do to reduce Inheritance Tax.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate estate or tax planning, or will writing.

The Bank of England interest rate has been below 1% for 12 years. If you’re a saver, you may think there’s little point in shopping around for the best deal or opening an ISA. But there are still valid reasons for making the most of your ISA allowance.

Each tax year, you can deposit up to £20,000 into an ISA. If you don’t use this allowance during the tax year, you lose it. In the past, ISAs offered an effective way to save with interest rates that helped your money grow. However, the low-interest rate environment means that savings have been earning little for more than a decade. But that doesn’t mean you should discount your ISA just yet, here are five reasons to use your allowance.

1. ISAs provide a tax-efficient way to save

Most people benefit from the Personal Savings Allowance, the amount you can earn in interest from your savings before Income Tax is due. Your Personal Savings Allowance depends on your Income Tax band:

  • Basic-rate taxpayers: £1,000
  • Higher-rate taxpayers: £500
  • Additional-rate taxpayers: No allowance

If the interest earned in a tax year exceeds your allowance, or you don’t have an allowance, the interest earned will count as income and increase your tax bill. ISAs are a tax-efficient way to save, so you won’t have to pay any Income Tax on the interest you earn.

2. A fixed-rate ISA could give you access to higher interest rates

If you opened an ISA a couple of decades ago, you may have expected an interest rate of 5%, but now the rates on offer are much lower. However, by shopping around, you can find some accounts that are higher than the average. Often, these ISAs will mean you need to lock your money away for a certain period. If you’re saving for medium- or long-term goals, this type of savings account could suit you.

3. It provides a way to invest tax-efficiently

ISAs aren’t just an efficient way to save. You can use them to invest tax-efficiently too. The money you earn in returns is not subject to Capital Gains Tax. So, if investing is part of your financial plan, it makes sense to use your ISA allowance first.

A Stocks and Shares ISA offers you a way to invest your money, which can help you generate higher returns than a savings account. However, investing does come with some risks and the value of your investments may fall as well as rise. To smooth out the volatility of the investment markets, it’s advisable to invest with a long-term timeframe in mind.

4. A Lifetime ISA could boost your savings

If you’re eligible for a Lifetime ISA (LISA), it could provide a 25% boost to your savings. To open a LISA, you must be between 18 and 40. You can only deposit £4,000 each year into a LISA, but you’ll receive a 25% bonus from the government so it’s worth taking advantage of if you can.

One thing to keep in mind is when you’ll want to access your savings in a LISA. If you make a withdrawal before you turn 60 for a purpose other than buying your first home, you’ll lose the bonus and a portion of your own savings. Money in a LISA can either be held in a cash account or invested.

5. An ISA can make financial sense as part of your estate plan

If you’re married or in a civil partnership, an ISA can make sense as part of your estate plan. When you pass away, a surviving spouse will automatically receive a one-off additional ISA allowance. For instance, if your partner has £100,000 held in ISA when they pass away, you’d be able to deposit this amount in your own ISA, alongside using your usual £20,000 allowance.

This means your partner will be able to inherit your savings or investments and continue to hold them in a tax-efficient way. The additional prescription applies even if the money is intended for someone else. So, even if you want to leave your ISA savings to your children, your spouse will benefit from an increased ISA allowance.

Don’t forget about Junior ISAs

As well as an effective way to save and invest for yourself, a Junior ISA (JISA) offers a way to build a nest egg on behalf of a child. Each tax year, a child can have up to £9,000 deposited on their behalf into a JISA. Like adult ISAs, they offer a tax-efficient way to save and invest. However, keep in mind, the money will be locked away until the child turns 18.

If you’d like to discuss how ISAs can help you reach your goals, please contact us.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

When you review your pension, it’s likely to be the forecast that you focus on. This figure is designed to give you an idea of how much your pension will be worth when you reach retirement age. However, the sum is based on certain calculations, and a report suggests some results could be too optimistic, potentially leaving you with less money in retirement than you expect.

What is a pension forecast?

Most workers are now paying into a defined contribution (DC) pension. This is when you and, in most cases, your employer make contributions that are then invested. Once you reach retirement age, you’re able to access this lump sum to create an income. As a result, the amount you have for retirement depends on contributions and investment returns.

You should receive an annual statement from your pension provider, which will include a pension forecast. However, this sum is not guaranteed and is based on certain assumptions. These assumptions could include investment returns, your contributions rising due to pay increases, or the rate of inflation. These assumptions differ between pension providers.

The assumptions made can have a huge impact on the forecast that’s given.

Pension investment returns have fallen, and it could affect the accuracy of your forecast

A new report from Interactive Investor suggests the assumptions made about investment returns can vary widely and some providers are being too optimistic, especially as returns have fallen in recent years.

The Financial Conduct Authority (FCA) publishes pension investment performance figures every four to five years to ensure projections are realistic.

The findings show return assumptions are not consistent, ranging from 4% to 7% for shares. In fact, data shows the average real rate of returns could be significantly below this range. In 2007, the average rate of return on pension statements was 4.2%, and in 2017 had fallen to 2.4%.

Lower than expected returns when saving for a pension could have a huge impact on how much you have. An example in the report highlights this:

A worker automatically enrolled into a pension at age 22 and on a typical wage for someone in their twenties, would have a pension forecast of £131,000 assuming an investment return rate of 4.2%. However, using the most recent return assumptions (from 2017) of 2.4%, the forecast would fall to £85,000.

Basing your retirement plans solely on a pension forecast could mean you fall short and need to make adjustments.

How does your pension forecast relate to your retirement plans?

As well as assumptions affecting pension forecasts, it’s also important to consider what a pension forecast means for your retirement lifestyle. How much do you need to save to secure the retirement you want?

There are lots of “rules”, such as needing two-thirds of your working income to maintain your lifestyle in retirement. But this doesn’t consider your circumstances or what you want your retirement lifestyle to look like.

To understand if your expected pension lump sum is enough for you, you first need to think about the retirement you want. If you will still have debt when you enter retirement, such as a mortgage, the amount you need once giving up work is likely to be higher than the rules suggest. On the other hand, you may plan to spend more in retirement if you want to travel or upgrade your home.

You’ll also need to think about other factors when assessing your pension lump sum, such as:

  • How long will your pension need to last?
  • Will your income needs change throughout retirement?
  • Do you need to plan for potential care costs?

So, it’s not just how the pension forecast is calculated that you need to work out if you’re saving enough, but what you want your retirement to look like.

How financial planning can help you understand your pension savings

Financial planning can help you understand both how your pension contributions may increase over your working life and the lifestyle you can then look forward to. By taking a tailored approach, you can make sure your pension is on track to achieve the retirement you want.

It also provides you with an opportunity to consider potential risks to your plans and take steps to minimise them. For instance, what would happen if your pension investments underperformed? And could you afford to retire early if you become ill?

Financial planning can help you have confidence in the steps you’re taking to prepare for retirement. If you’d like to discuss your pension, please contact us.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.

Seven in ten (72%) UK adults have saved money due to the pandemic, but just a fraction plan to add these savings to their pension, according to an LV= survey. While considering short- and medium-term goals is important, making a one-off pension contribution can mean your money goes much further.

Average pandemic savings are almost £5,500 per household

Reduced costs over the last year have meant some households have been able to put the money they’d usually spend on commuting, childcare, or going on holiday into their savings account. On average, these households have been able to put away £5,500 in the last year. Some 8%, the equivalent of 4.4 million households, have saved over £10,000 as a result of Covid-19.

If you’re among the pandemic savers, what do you plan to spend the money on?

While some savers will use the money to cover essentials and improve their financial security, many plan to use it to enhance their lifestyle now. The survey found the most popular plans were:

  1. Pay into savings or a Cash ISA (28%)
  2. Book a holiday (21%)
  3. Home improvements (19%)
  4. Essential everyday living costs and bills (13%)
  5. Essential home or car repairs (12%)
  6. Non-essential everyday living, such as days or meals out (11%)
  7. Pay off debt (10%).

In contrast, just 5% said they’d add their savings to their pension. Even if retirement is some way off, adding a one-off lump sum to your pension could be beneficial and, in fact, could mean your money goes even further.

4 reasons to add your savings to your pension

1. You’ll receive an instant boost from tax relief

When you deposit money into a pension, the government will add some of the money that you would have paid in tax to your retirement savings. Tax relief is paid on your pension contributions, both regular and one-off payments, and the level depends on the rate of Income Tax you pay. A 20% tax relief provides an immediate boost to your savings. If you’re a higher- or additional-rate taxpayer, you can claim more.

2. A pension allows you to invest tax-efficiently

If you’re saving for retirement, a pension is a tax-efficient way to do so. Your money will usually be invested and can grow free from Income Tax and Capital Gains Tax. Instead, you will pay tax when you withdraw money as part of your income in retirement.

3. The compounding effect can help your money grow faster over time

As your money is invested for the long term, you have an opportunity to benefit from the effects of compounding. This is where investment returns are themselves invested to generate additional returns. Over time, it can help your money to grow faster. The longer your money is invested, the longer you’ll have to benefit. However, you need to keep in mind that your savings won’t be accessible until you reach pension age; currently, this is 55 and will rise to 57 in 2028.

4. It can help you create the retirement lifestyle you want

Your retirement lifestyle might not be something you’ve thought about yet, but to achieve the lifestyle you want it’s important to plan early. Even if retirement is decades away, building up your pension now means you’re taking steps to reach goals in your later life, whether you want to retire early, spend time travelling, or are looking forward to spending more time with family.

Is a lump sum pension contribution right for you?

While there are benefits to adding your savings to your pension, it’s not the right option for everyone.

If, for example, you don’t have an emergency fund to fall back, putting the savings in an accessible account can boost your financial security. Or, if your regular pension contributions mean you’re nearing either the pension Annual Allowance or Lifetime Allowance, a one-off contribution could mean an alternative is more suitable. As a result, you should consider your circumstances and goals before depositing money in your pension.

Please contact us to discuss how you can use your pandemic savings to help you achieve goals, whether you’re thinking about retirement or short-term plans.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.

If you’re planning to retire this year, do you know how long your pension will last? Your pension savings will have an impact on the lifestyle you can afford and your financial security later in life. Yet, research indicates that two-thirds of retirees risk running out of money.

According to a Standard Life report, the average person retiring in 2021 is 60 and has a pension value of £366,000. However, a third have less than £100,000 in their pension.

The research found the average retiree plans to spend £21,000 per year, around £10,000 less than the national average wage. Based on this income, retirees need a pension of around £390,000 on top of their State Pension to cover a 30-year retirement. As a result, even those with average savings could find their pension doesn’t stretch far enough.

While 93% of those planning for retirement think they are financially ready to do so, 37% admit they worry about not having enough money to last the rest of their life. Having concerns as you retire can mean you don’t fully enjoy the next part of your life. Planning now can mean you retire with confidence.

There are many ways those hoping to retire can prepare. Among the most common options are:

  • Researching options online (55%)
  • Asking friends and family for advice (30%)
  • Getting support and information from their employer (23%).

However, the majority are missing out on professional retirement advice that’s tailored to them. Just four in ten soon-to-be retirees have spoken to a financial adviser. While it’s on a to-do list for some, 44% say they have no intention of meeting with a financial planner.

A financial planner can help you understand how your pension savings, as well as other assets, will translate into an income for the rest of your life. It’s a step that means you can have certainty that your pension will last throughout retirement, so you can focus on enjoying the next chapter of your life.

As well as understanding how your pension can provide an income, financial advice can help you manage other risks you may face in retirement that could mean you run out of money.

2 retirement risks 2021 retirees need to consider now

1. Inflation risk

Retirees on average plan to take an income of £21,000 a year to support them in retirement. However, over time this income will buy less and less. Inflation means the cost of living rises each year. The difference in a year can be too small to notice but over a retirement, it can have a significant impact on what you can buy.

The Bank of England’s inflation calculator shows the impact inflation can have. Let’s say you decided you needed an income of £21,000 when you retired in 2000. To have the same standard of living in 2020, your income will have needed to increase to £36,148.26. If you haven’t considered inflation when calculating how to use your pension you could find your income no longer covers your desired lifestyle.

2. Life expectancy

To make sure you don’t run out of money, considering life expectancy is important. How long will your pension need to last?

Life expectancy has increased and it’s now common to spend decades in retirement. To have peace of mind you need to consider how your pension will last over this time. Remember, an average life expectancy is just that, many retirees will live beyond the average, failing to consider this could mean you’re not financially secure later in life.

Previous Standard Life research found a quarter of those aged 55-64 who are still working are only budgeting for their retirement income to last ten years or less. One in ten (12%) are planning for their retirement income to support them for just one to five years. Current life expectancy is around 82, meaning these retirees could face more than a decade without pension savings to rely on.

How can you ensure your pension doesn’t run dry?

If you’re nearing retirement, taking steps now can provide security for the rest of your life. Taking some time to understand what your income needs will be, and how they may change over time, is one of the first steps to take. From here, you can understand how you can use your pension, as well as the State Pension, savings, investments, and other assets.

As part of the financial planning process, we can work with you to create a retirement plan that suits your goals and provides confidence. That means having a plan that considers how your savings will keep pace with inflation to maintain your lifestyle, how long your assets need to last, planning for the unexpected, and much more.

Please contact us if you’d like to arrange a meeting to discuss your retirement.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.