Galleon Wealth Management Blog

This week, the government has made two major policy announcements that are likely to directly affect your finances.

A much-anticipated National Insurance rise will result in an increased burden on workers including, for the first time, those above State Pension Age.

In addition, the government has suspended the State Pension triple lock, meaning that pensioners will receive a much more modest increase than anticipated.

Read on for everything you need to know about these policy changes.

The new “health and social care levy” will push up National Insurance bills by 1.25%

Despite a clear commitment in their last election manifesto not to raise taxes, the government has unveiled a 1.25% hike in National Insurance contributions from April 2022. This is to raise additional revenue to fund health and social care.

From April 2022, employees will begin to pay the levy through an increase in their National Insurance contributions. The 1.25% increase will also be levied on employers.

This additional contribution will then become a “health and social care levy” from April 2023 and will appear as a separate deduction on payslips.

According to the Guardian, an individual earning £50,000 can expect to see their National Insurance contributions rise from £4,852 to £5,357 each tax year, equivalent to a £505 tax increase. If you earn a salary of £100,000, you can expect your annual contributions to rise by £1,131.

The government says that, for the next three years, the tax increase will generate an additional £12 billion a year for health and social care. Of this, they have earmarked £5.4 billion over the period specifically for social care, with another £8.9 billion going on what is termed a “health-based Covid response”.

Once the NHS backlog starts to clear, ministers say that more of the money will go to social care, although how this will happen has not been set out.

Extra money will also be sent from Westminster to Scotland, Wales, and Northern Ireland, which the prime minister said would receive more money than they paid in, as a “union dividend”.

A million working pensioners will pay National Insurance for the first time

In another radical reform, around 1 million working pensioners will pay National Insurance contributions on their earnings from 2023.

Under the current system, taxpayers stop making National Insurance contributions when they reach 66, the point at which the State Pension kicks in.

It will be the first time that a government has asked pensioners to pay, with contributions starting at a rate of 1.25% in April 2023.

The Telegraph reports that a working pensioner earning £60,000 a year will go from paying nothing to paying £630 a year in National Insurance on top of Income Tax.

The government has proposed a cap on lifetime social care costs

Currently in England, if people have assets worth more than £23,250 then they must pay for their social care and there is no cap on the costs.

Under the new system, anyone with assets below £20,000 will not have to pay anything towards their care. Those with assets from £20,000 to £100,000 and above will have to contribute, on a sliding scale. This depends on contributions from local authorities, which deliver much of social care.

People in this bracket will not contribute more than 20% of their assets each year and, once their assets are worth less than £20,000, they would pay nothing more. However, they might still contribute from any income they receive.

Those with assets above the £100,000 threshold must meet all fees until the value of their assets fall below this amount.

Boris Johnson also announced a lifetime social care “cap” of £86,000, meaning that no individual will be asked to pay more than this sum for care in their lifetime.

This new means test system and the £86,000 cap will come into force in October 2023.

Dividend Tax is set to rise from April 2022

Alongside the National Insurance rise, Dividend Tax rates will also increase by 1.25% from April 2022. This change will mostly affect investors and business owners.

Tax band	Current Dividend Tax rate	New Dividend Tax rate from 2022
Basic rate	7.5%	8.75%
Higher rate	32.5%	33.75%
Additional rate	38.1%	39.35%

If you take home more than £2,000 a year in dividends, you will face a slightly higher bill regardless of your Income Tax band.

For example, if you’re a basic-rate taxpayer receiving £3,000 in dividends then you will pay Dividend Tax on £1,000. The government’s proposed changes mean that your bill will rise from £75 to £87.50.

Alternatively, if you’re a higher-rate taxpayer taking £10,000 in dividend payments then you would pay 33.75% on £8,000 of dividends. This would result in a Dividend Tax bill of £2,700, up £100 from the current system.

The government will suspend the State Pension triple lock for one year

In a move designed to save the government around £8 billion a year, work and pensions secretary, Thérèse Coffey, broke a second manifesto commitment by announcing that she was suspending the State Pension triple lock for one year.

She told the House of Commons that sticking to the triple lock – which promises that the State Pension will rise by the highest of inflation, earnings, or 2.5% – would be unfair, given that wages were increasing at a rate of well over 8% a year.

The distortion to national average earnings has been caused by the pandemic, as earnings fell at the start of the first lockdown before rising sharply as the furlough scheme ended. Had the government stuck to its commitment, pensioners would have expected an increase of between 8% and 9%.

Instead, the State Pension will rise more modestly in 2022 – either by 2.5% or price inflation. All eyes will now be on September’s inflation figure (announced in October) to determine how much the State Pension will rise next April.

Get in touch

If you have any questions about how the National Insurance increase, Dividend Tax rise, or triple lock suspension will affect you and your finances, please get in touch.

While economies continue to recover from the effects of the pandemic, there are signs that the pace of growth is beginning to slow.

According to the Organisation for Economic Co-operation and Development (OECD), the recovery of the world’s major economies is losing momentum. The organisation said consumers remain reluctant to eat out, visit attractions, and shop like they did pre-pandemic. As a result, growth figures are expected to slow over the coming months.

Businesses around the world are also being hampered by supply and stock issues, with many struggling to access the materials and skills they need to maximise operations.

Globally, the situation in Afghanistan is also impacting markets. As of 30 August 2021, the last American military plane departed from Afghanistan, ending the 20-year long Afghanistan war. However, a huge amount of uncertainty remains, and the situation could affect markets for some time.

UK

The National Institute of Economic and Social Research has revised UK economy forecasts upwards. The organisation now expects the UK to grow by 6.8% in 2021, an increase of 1.1% on the forecast given in May, and by 5.3% in 2022. However, the figures will still mean the UK economy is behind where it would have been expected to be if the pandemic had not occurred.

One of the challenges investors could now face is rising inflation. In the latest report from the Bank of England’s Monetary Policy Committee, inflation was forecast to rise significantly. The Consumer Price Index (CPI), which measures the rising cost of living, is expected to increase by around 4% in the fourth quarter of 2021. This is double the Bank’s 2% target. The committee has not taken any action yet, but acknowledged that it could in the coming months to stay on target in the medium term.

UK wage growth also jumped 8.8% in June, the highest since records began in 2001. It could mean interest rates, which have been low for over a decade, begin to rise sooner than expected.

From a business perspective, shortages are causing problems. Brexit combined with the impact of Covid-19, including staff self-isolating, is affecting business operations.

A survey conducted by the Institute of Directors found that 44% of businesses are currently experiencing staff shortages. 65% attributed this to the UK’s long-term skills gap. However, 4 in 10 said they are struggling with a lack of workers from the EU, and 2 in 10 said self-isolation was having an impact.

The latest Industrial Trends Survey from the Confederation of British Industry also found UK factories are being hit by the worst stock shortage since records began in 1977. Businesses are struggling to access electronics and plastic products, in particular.

Other headline figures this month include:

• UK factory output remains in growth mode. According to IHS Markit data, the PMI (Purchasing Managers Index) for July was 60.6, where a reading over 50 indicates growth. The reading is below May’s record high, but is still positive.
• The service sector is also growing with a reading of 59.6. Again, it’s fallen from 62.4 when compared to a month earlier, but remains in growth territory. Shortages, in both staff and supplies, are one of the reasons for the fall.
• Overall, the UK PMI fell from 59.3 to 55.3 in July. It’s the lowest reading since February 2021 and worse than expected. However, it signals the UK economy is still growing.

Europe

IHS PMI data shows that business activity in the eurozone remains high, reaching an almost 15-year high.

Factory output, in particular, remains high. The PMI for July was 62.8, well above the 50 benchmark that signals growth. In line with rising demand, Eurostat data reveals factories are increasing their prices, which could signal rising inflation. In June, factory prices increased by 10.2% year-on-year.

Despite positive economic data overall, research group Sentix find investor morale is falling. A survey found investors are fretting about economic prospects and the risk of new lockdowns after 18 months of uncertainty.

US

Figures from the US show signs of a strong recovery, but business confidence is weakening.

US manufacturing has now risen about pre-pandemic levels after output increased by 1.4% in July. US job openings have also reached a record high. According to the US Bureau of Labour Statistics, there were over 10 million job openings at the end of June – 590,000 more than May.

The job opening figures suggest businesses are reopening, and perhaps expanding. But it also highlights that some firms are struggling to attract workers to fill vacant roles. The National Federation of Businesses found that confidence is falling, with labour shortages playing a key role in this sentiment.

Tesla stocks have experienced high growth in the last year as pioneers of self-driving technology. But after a series of crashes, Tesla’s autopilot feature is being investigated by US regulators. The results could impact not only Tesla, but other businesses in the industry.

Asia

China continues to recover from the impact of Covid-19. However, industrial output hasn’t been as strong as expected. Year-on-year industrial output increased by 6.4% in July, according to the country’s National Bureau of Statistics. The figure is below July 2020’s figure.

However, the PMI data for China’s recovery sector is accelerating. The PMI in July was 54.9, up from 50.3 in the previous month. While positive, there are concerns that the spread of the delta variant of Covid-19 could affect the recovery.

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.

Employees are placing greater importance on flexible working. For business owners, embracing the trend could help them retain staff and attract new talent. However, while flexible working has benefits, it can also present challenges. Read on to discover some tips if you’re thinking about implementing flexible working.

According to Legal and General, 44% of employees at SMEs (small- and medium-sized enterprises) say flexible working is a top requirement. In fact, it came only behind recognition for work well done (45%) when asked what improves wellbeing in the workplace.

Flexible working options have been linked to improved mental wellbeing for a variety of reasons, including enabling employees to spend more time with their families. The survey found that feeling mentally well was the top wellbeing priority among 61% of SME workers. So, it’s not surprising that more employees hope to adopt this practice.

The restrictions of the last 18 months mean flexible and remote working are things many businesses have put in place, even if only temporarily.

If you’re thinking about introducing flexible working long term, these seven tips could help.

1. Focus on effective communication

Communication becomes more important than ever when embracing flexible working. Emphasising effective communication across the business can minimise mistakes. It’s not just the discussions about work that are important, if staff aren’t in the office, they can miss out on those informal chats that are just as important. Finding some way to facilitate these chats can improve your operations and how employees work together.

2. Outline what flexible working means for your business

Flexible working can mean many different things. For some businesses, it may mean employees can work wherever they like. For others, it may include employees working at times that suit them. The nature and needs of your business will affect what type of flexible working is possible, so it’s important to set out restrictions from the outset. Will employees need to work core hours or come into the office on certain days, for instance?

3. Review your equipment and employee needs

When staff first moved to flexible working you may have reviewed equipment with a short-term outlook. If it’s something you plan to instil within the company permanently, it’s worth taking this step again. Do all your employees have access to what they need to do a good job? Investing in new equipment for employees to use at home or better communication tools can make the transition to flexible working smoother.

4. Set out clear processes

With staff potentially working more independently under a flexible working model, clear processes are important. They can help ensure everyone is on the same page and understand how tasks move forward within the team. One of the challenges of flexible working is effectively onboarding new employees. Having clear processes from the outset can be useful when inducting new staff and helping them settle into their new role as quickly as possible.

5. Give employees a clear set of objectives

Flexible working can make it difficult to measure performance and feed this back to employees at all levels. Setting out clear objectives or key performance indicators can help keep everyone on track and working towards company goals. Objectives also provide you with an opportunity to feedback to your staff. As well as highlighting where there are areas to improve, remember to recognise positives.

6. Plan social events for your team to get together

While your initial focus may be on ensuring projects and work continue to run smoothly, don’t forget about the importance of company culture. With staff potentially working remotely or different shift patterns, it can be easy for teams to feel disconnected. Planning frequent socials, both virtual and in-person, can help bring the team together and give everyone a sense of common purpose and improve your company culture.

7. Regularly review how your employees are working

Embracing flexible working may be a big change for your business. Don’t be afraid to look at the change as a work in progress, rather than making one decision that you’ll stick with. Over the coming months and years, you may find that adaptions need to be made to ensure operations can continue efficiently. Setting up a regular review gives you a chance to reflect on mistakes you may make and learn what works well for your business.

While protection for scam victims is improving, the startling truth is that most scammers are not caught, and victims lose their money. It can have a devastating impact on your financial security now and in the future.

According to new statistics from Quilter, just 1 in 700 incidents of fraud resulted in a conviction in 2019. The findings also show that the conviction rate is falling. Since 2011, fraud convictions have fallen by 10% on average year-on-year. With many cases of fraud thought to go unreported, the gap could be even larger.

There are many reasons why convictions for fraud are low. It can be difficult to prove, and the cost of investigating is high. However, for victims, it often means they don’t get the justice they deserve or compensation. Being vigilant is important to keep your savings safe.

It can be easy to think you’ll never fall for a scam. But the last year has proven how inventive scammers can be and that they will pray on victims when they’re vulnerable. Taking advantage of pandemic confusion, some fraudsters have been posing as NHS Test and Trace staff to gain access to people’s home and personal details, leading to Action Fraud issuing a warning.

Figures from Action Fraud highlight the huge impact fraud can have on financial security:

• In the first four months of 2021, £1.8 million was lost to pension fraud
• Over £63 million has been lost to social media investment fraud.

Just as worrying is that victims of scams are often targeted again. Fraudsters may pose as someone offering help or even share your details with other scammers. According to data from the National Fraud Intelligence Bureau, over £373 million was lost by repeat victims in 2019/20, with the average victim losing £21,121. For those falling prey to investment fraud, the figure was £84,604.

What protection do scam victims have?

In many cases, victims of a scam cannot get their money back. However, there are some protections in place.

Banks have often refused to provide compensation because, in many cases, the customer has technically authorised the transfer. This applied even when a victim was targeted by a sophisticated scammer, who may have appeared to be calling from the bank or other reputable organisation.

Since 2019, some banks have committed to a code of conduct to refund victims of scams. However, this usually requires customers to take due care when authorising payments, such as checking bank details. As a result, it’s not guaranteed that you’ll receive the amount you’ve lost back even if you use one of these banks.

There is also little protection in place if you transfer money from an investment account or a pension. In most cases, the money is not recoverable. As a result, it’s vital that you take steps to protect your assets and carefully think through any financial decisions you make.

If you’re making financial decisions, here are three things to keep in mind to reduce the chance of falling victim to a scam.

1. Don’t rush into making decisions

If you’re approached with an exciting offer, it can be tempting to jump right in and start benefiting from it. Even more so if the offer has a time limit on it. But you should always take a step back and thoroughly weigh up the pros and cons.

What may seem like a good choice when you first hear about it, can rapidly change when you delve into the details. A fraudster will try to encourage you to make a knee-jerk decision and limit the amount of time you have to think an offer through. Always take a step back to look at the finer details and think about how it’d fit into your overall plan.

2. Always check who you’re speaking too

Scammers may pose as someone genuine and trustworthy to gain your confidence. Some may even appear to be associated with genuine businesses. For instance, through number spoofing, a call may look as though it’s coming from your bank when it’s not. Or a scammer may claim to be from a real financial advice firm.

Don’t take someone’s word for it when they say where they are calling from, especially if the contact is out of the blue. A genuine professional will understand why you’re being cautious. Your first step should be to check the Financial Conduct Authority register. Here, you can find the details of regulated financial firms. You should use contact details here to get in touch with the firm directly.

Those few minutes you spend checking could save you thousands of pounds.

3. Compare the offers to other options

When you look at other options, how does the offer compare? Remember, if it sounds too good to be true, it probably is.

For example, all investments come with some level of risk. An opportunity that claims to provide guaranteed returns or to be low-risk, high-return is likely to be a scam. Or a pension that you can access earlier than usual, currently 55 and rising to 57 in 2028, should set alarm bells ringing.

If you’ve been approached with an opportunity and aren’t sure if it’s a scam, please contact us. We’ll help you understand what your options are and highlight the risks.

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

Financial advice is a complex topic and often requires a professional planner to get right. The very idea of seeking it can seem daunting, with many people unsure of where to start or who to go to.

A recent trend has seen an increase in the viewership and production of content on social media that gives various forms of financial advice.

CNBC report that nearly half of teenagers are learning about investing from some form of social media. The trend, which is especially prevalent on TikTok and Instagram, is thought to have been partly linked to the GameStop saga in January 2021.

Since the events in January, the subreddit responsible (r/WallStreetBets) now has a userbase of more than 10 million, more than double what it was at the start of 2021. Investment News report that TikTok videos tagged with “#personalfinance” have accumulated a total of 3.5 billion views.

But with TikTok themselves banning the promotion of various financial services on their platform, and warning users over taking any financial advice on social media, is taking such advice really such a good idea?

Social media financial advice does have some positives

The very nature of social media is that it is public domain and, thus, freely accessible. This also means that any available information on social media is typically broken down and easy to understand.

For a younger audience, this is especially important, as the world of finance is complex at the best of times. Social media allows for small, easily digestible chunks of information to be delivered in a snappy video format, which is usually more memorable than learning it from a book or newspaper.

It fills a void that is typically left empty throughout the education system. As the Financial Times reported in 2019, just 8% of young people said they learned the most about money skills in school, as opposed to learning from their parents or their own experiences. 82% of students said that they wanted to learn more about money in school.

These informative videos can then act as building blocks from which a substantial amount of knowledge can be added with further research. In developing this knowledge of finance, it may spark an interest or make someone consciously aware of how important financial decisions are.

At the very least, even if the advice or information isn’t entirely accurate, it spreads awareness of the importance of your financial wellbeing. It may prompt an individual to review and understand their own financial situation or seek out professional financial advice.

You should always be careful when following advice from social media

Financial or otherwise, social media advice isn’t known for its reliability. First and foremost, the easy-to-understand nature of information provided tends to mean that a topic’s complexities have been removed.

This could prompt you to make a financial decision or investment without the necessary knowledge to do so. Not only is it important to know the intricacies of every decision when your finances are involved, but it’s also vital to understand how it will affect your personal situation.

No two people are in the same situation with their finances, so it’s important to distinguish when a piece of advice may not be relevant or beneficial for you. General advice, when not tailored to your needs, may end up hurting your finances.

Also, it is impossible to verify the credentials of an individual on social media. There is no way to prove that the person you are watching is actually qualified, or even knowledgeable on the subject that they give advice on.

Compounding this is that social media is often riddled with sponsorships and product placements. It won’t take long to find a TikTok that recommends a certain investment platform or service thanks to a paid promotion.

In this case, the content creators giving these endorsements may not even believe in their own advice. This may make it difficult to determine what services are genuinely recommended and worthwhile, and which have simply paid to be promoted.

Lastly, and perhaps most importantly, social media is an international medium for communication. Why is this important? Because every country has completely different rules, laws, and regulations when it comes to finance.

Each country operates with vastly different levels of Income Tax and Corporation Tax. They may use different methods of financial regulation or have different options for financial protection. Advice that may be relevant to an American audience may be incorrect and even harmful for UK and other international viewers. Tax allowances, restrictions, and payments will vary hugely.

As a simple example, a basic-rate taxpayer in the UK will pay 20% tax. In the US, the federal tax rate is 10%, with the other various factors possibly increasing this number. Taking the advice of an “adviser” who is based outside of the UK could be dangerous, since their country and yours may operate differently.

Social media is great for raising awareness…

… but maybe not too much else. At the very least, if you plan on taking the advice of a social media influencer, be sure that you are aware of all the possible associated risks. Be sure to consider any legal differences if they are based internationally and do your research to make sure they are qualified, and that their advice is correct.

It’s undeniable that social media has raised the awareness of the importance of personal finance among the younger generation. Awareness, however, does little if you don’t understand the complexities around finance.

If you are seeking financial advice but you are unsure where to start, consider speaking to a financial planner before heading to social media. Not only can they provide professional, relevant advice for your personal situation, but they can also advise you of any risks involved with the process. If you’d like to discuss your finances or have any questions, 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.

Are you thinking about relocating when you retire? If you are, you’re not alone. Millions of over-50s are planning to move away from their current home as a direct result of the pandemic. It can be an exciting way to kickstart retirement, yet there are things you need to think carefully about first.

According to Legal & General, 3 million people aged over 50, the equivalent of 12%, now plan to relocate in retirement after a year of lockdowns. Covid-19 restrictions have led to many people thinking about their priorities and plans for the future. You may be planning a very different retirement from the one you had hoped for before the pandemic.

The research found there are a variety of reasons why those nearing retirement are considering moving. The top reason was to have a better quality of life, followed by moving closer to family and friends, or to live abroad. Before jumping into planning your relocation, these three questions can help you understand what impact it could have on your retirement.

1. Will it change your income or living expenses?

It’s no secret that the cost of living varies from place to place, even if you plan to remain in the UK. Taking some time to review whether relocating will impact your expenses is important. From the large costs, like buying a house, to the smaller ones, such as travelling to visit loved ones or entertainment, it can help you create an accurate picture of your outgoings.

If you plan to move abroad, you also need to consider if relocating will affect your income. You can still claim the State Pension if you live abroad, but you may not benefit from annual increases. The annual increases may seem small, but over a retirement they can add up and protect your spending power when inflation increases the cost of living. Some countries have an agreement with the UK that means your State Pension will increase, but this isn’t always the case.

2. What impact will it have on your lifestyle? 

You may plan to relocate to achieve a better quality of life and the retirement lifestyle you want. Whether this is the main reason or not, setting out how you want to spend your time in retirement is important.

Relocating may mean moving away from your family and friends. Will this have an impact on your social life? When planning retirement, it’s often the big-ticket items people focus on, like an exciting holiday, but the smaller, everyday things are just as important for providing satisfaction later in life. Being close to facilities or amenities that you can take advantage of can boost your wellbeing and happiness. By thinking about what you want your day-to-day life to look like, you can find the right place to retire for you.

3. Will you have family and friends close by to offer support if you need it?

If you’ll be moving away from family and friends, it’s important to think about the support network you’ll have in your new home.

If you hope to move away, travelling back to see them frequently may be part of your plan, but will that still be possible in 20 years? It can be difficult to think about needing additional support in your later years, but it’s an important consideration. If you need some extra help in the future, would you have someone close by that can lend you the support you need?

Your outgoings can change drastically if you need to pay for some form of care or support, even if it’s just someone to do day-to-day tasks you can no longer manage. While this may not be needed, it’s something you should consider.

The key to getting the most out of retirement is to have a plan, whether you hope to relocate or not. Setting out your goals, and how your finances will allow you to achieve them, can be difficult. If you’d like to discuss your retirement with a financial planner, please get in touch.

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

The age you can access defined contribution (DC) pensions is rising. Research suggests that many people are unaware of this, but it could affect your retirement plans.

At the moment, you can access money saved into a DC pension scheme from the age of 55. However, from 2028, this will rise to 57. If you’d hoped to access your pension at 55, whether you plan to retire then or not, the additional two years may mean you need to rethink your plans.

The pension age is rising as longevity increases, which means your pension will need to last longer. When it rises in 2028, it will be 10 years before you can claim your State Pension. This provides retirees with some flexibility to retire sooner and create the lifestyle they want. The government could also announce further increases to the pension age in the future.

7 in 10 adults aren’t aware of the rising pension age

While 83% of UK adults are aware there is a minimum age to access a DC pension, many are unsure when this is, according to an Aegon survey. Two-thirds of people questioned correctly identified 55 as the current minimum. But just 22% knew that the minimum pension age will increase to 57 in 2028.

If you don’t turn 55 until after April 2028, will the change affect your pension plans?

You don’t have to be planning to retire at 55 to be affected. Perhaps you’d hoped to take a lump sum from your pension to pay off the mortgage early or travel before returning to work. Or you may have been hoping to cut back your working hours, using your pension to bridge the gap before you can claim the State Pension.

Two years may not seem like much, but if you’d planned to use your pension in some way before turning 57 it can leave a hole in your finances. It may mean plans you’re looking forward to are no longer possible without adjustments. Understanding if it’ll affect your goals now can help keep you on track.

So, if after looking at your plans you realise that the rising pension age will have an effect on them, what can you do?

1. Push your plans back

The simplest solution is to simply push back your plans that relied on accessing your pension back by two years. In some cases, these two years may make little difference to your overall lifestyle and goals. If this is the case, it’s something you may want to consider. And if this is something you’re thinking about, you should weigh up your priorities now and in the future.

2. Change your plans

Depending on what your plans are, adjustments may mean they’re still achievable without having your pension to tap into. If you’d hoped to cut back working hours, cutting back your disposable income in the short term could make sense. Or if you’d planned to take a lump sum from your pension to travel, a shorter trip may still mean you’re able to do this. Reviewing what your goals are can help you figure out what changes make sense for you.

3. Increase your savings now

If your 50s are still some time away, knowing that the pension age is rising gives you time to act. Putting more money away in a savings or investment account that will cover your plans means you won’t have to make changes in the future. If you’re not sure which is the best way to save for your future, please contact us.

4. Use other assets to bridge the gap

You may be able to use other assets to fill the pension gap. This could include savings, investments, or property. Depleting other assets now means you can forge ahead with plans, even if your pension isn’t accessible. However, keep the bigger picture in mind: could using these assets now affect longer-term plans or your financial security?

If the rising pension age could affect you, we’re here to help. Please get in touch to discuss your retirement aspirations and how your assets can be used to help you achieve them.

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.

Have you thought about how you’ll pass wealth on to those who are important to you? Traditionally, this has been done through inheritance, but it’s becoming more common to gift during your lifetime.

Our latest guide explains why more families are choosing to gift during their lifetime and the pros and cons of each option. Whichever option you decide is right for you, our guide will enable you to fully understand your situation and make sure your wishes are carried out, and will explain everything from writing a will to calculating the long-term impact of gifting.

It can be difficult to think about how you’ll pass on wealth to loved ones, but it’s important to set out a plan.

Download Leaving an inheritance vs gifting during your lifetime to discover the steps you should take.

If you have any questions about passing on wealth, please contact us. 

When you think about your future, how far ahead do you plan? Perhaps you’ve thought about what your life will look like in 10 years, but have you considered your later years?

While retirement planning is common, it’s often the early years of retirement that people focus on. However, your needs and lifestyle wishes can change drastically over a retirement that could last decades. It’s just as important to think about how you’ll spend your later years as those first years when you are still celebrating retirement.

You can download The guide to later-life planning and care to start thinking about your long-term plan. It’s here to help you understand why it’s important and what steps you can take. It covers:

• Reasons to make later-life planning part of your financial plan
• How to create long-term financial security
• Why care is something you should think about.

If you have any questions about your long-term plan or care, please contact us.

September will mark the first Income Protection Awareness Week. Income protection can provide financial security when you need it most, but it’s often something that’s overlooked. If you recognise these five scenarios, it may be worth looking at how income protection could fit into your wider plans.

1. Your employer doesn’t offer sick pay

It’s worth looking at the benefits your employer offers when weighing up the pros and cons of income protection. You should check what your employer’s sick pay policy is and how long it lasts.

Many employers offer an enhanced sick pay policy that means you’d continue to receive an income in the short term if you were unable to work. However, it’s worth noting that these policies rarely go beyond 12 months. So, an income protection policy with a long deferment period may still be beneficial.

If your employer doesn’t offer sick pay, you will usually receive Statutory Sick Pay (SSP) if you need to take time off. SSP pays £96.35 each week in 2021/22 up to a maximum of 28 weeks. Relying on SSP alone can mean you face serious financial difficulties if your income did stop due to illness.

2. You are self-employed

If you’re self-employed, taking time off work can have a huge impact on your income and may even affect long-term projects. It may mean you’re tempted to work despite being ill or that you rush back too soon without giving yourself enough time to recover. Receiving a reliable income through an income protection policy means you can focus on your health without having to worry about financial security.

3. Your emergency fund wouldn’t cover essentials

If you have to rely on your emergency fund, how long would it last? An emergency fund is an excellent option for providing short-term financial security if the unexpected happens. This money should be readily accessible and ideally cover three to six months of expenses.

If your emergency fund wouldn’t be enough to provide peace of mind, income protection could help.

While your emergency find may provide security for a few months, if a long-term illness affected you, you could still find that you face financial insecurity. Again, income protection with a long deferment policy can give you confidence while reducing premiums in this case.

4. Your salary is the main income source for your family

Your income may be essential for your family’s finances. If you have dependents, taking additional steps to ensure financial security if the unexpected happens becomes even more important. Losing income even for a few months could mean significant lifestyle changes for your family and may affect long-term prospects if you’re forced to dip into savings.

5. You don’t have any passive sources of income

If you have a passive income, such as from investments or rental properties, you may be able to cover the essentials and maintain your lifestyle without your salary. However, if your entire income relies on you being able to go to work, it’s worth thinking about how income protection could provide certainty.

How much does income protection cost?

Income protection will pay out a regular income if you’re too ill or injured to work until you can return, retire, or the policy ends. It can be difficult to put a value on that, but often income protection is cheaper than you think.

Many things will influence the cost of income protection. This includes decisions you make when selecting a policy, like the level of cover you want or how long you’ll need to wait before making a claim. Your health and lifestyle can also have an impact, from your age to whether you smoke. As a result, it’s important to receive quotes that are tailored to you but don’t simply dismiss income protection as expensive.

As with all financial decisions, you need to consider if income protection is right for you. Spending some time contemplating how you’d cope financially without your income can help you assess if income protection can add value to you. If you’d like to discuss whether it makes sense for your circumstance or need help choosing an appropriate income protection policy, 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.