Price Ferguson https://www.priceferguson.com/financialnews Latest Financial News Wed, 04 Jul 2018 07:10:06 +0000 en-GB hourly 1 Transferring ISAs https://www.priceferguson.com/financialnews/transferring-isas/ https://www.priceferguson.com/financialnews/transferring-isas/#comments Wed, 04 Jul 2018 07:10:06 +0000 http://www.newsfin.co.uk/news/?p=2405 Read more »]]> Time to bring your investments together?
If you have accumulated a number of Individual Savings Accounts (ISAs) over the years, keeping them all in one place could give you better control and help you save money. There’s a common misconception that you can’t move your existing ISAs from one provider to another. Transferring your ISAs doesn’t affect its tax-efficient status, but you should make sure that you don’t have to pay penalties or give up valuable benefits.

If you want to switch from an existing ISA provider to a new one, you’re perfectly within your rights to do so. Much like a mortgage, you shouldn’t feel as though you’re saddled forever with your first ISA provider choice. Transferring your ISAs could allow you to widen your range of investment choices, as the range on offer can differ between providers.

Easier to monitor and manage
Another reason to switch is that you could find you’re better off because another provider is offering lower fees and charges. You may also want to move because you prefer to keep all your investments conveniently in one place, where they’re easier to monitor and manage.

You can transfer your ISA from one provider to another at any time. You can also transfer from one type of ISA to a different type of ISA – for example, you can move money held in a Stocks & Shares ISA into a Cash ISA, or from a Cash ISA to a Stocks & Shares ISA. Similarly, money held in an Innovative Finance ISA can be transferred into a Stocks & Shares ISA or into a Cash ISA.

Not all ISA providers accept transfers
Remember that not all ISA providers will accept transfers. Also, bear in mind that the ISA provider you are moving from might charge you for the transfer. If you transfer cash from an existing ISA into a Lifetime ISA, it will count towards your £4,000 Lifetime ISA allowance for the year and qualify for the government bonus, but will not count towards your overall ISA allowance of £20,000 in 2018/19. It is not advisable to transfer from a Lifetime ISA.

Transferring your ISAs won’t affect their tax-efficient status, provided you follow the correct process. You might think that to make a transfer from one ISA to another, you’ll need to close down your existing account, make a withdrawal, then open up a new account and pay in. But closing down your current ISA means you’ll immediately lose all the tax benefits, so never withdraw your savings to pay into a new ISA.

Additional permitted ISA allowance
Instead, if you want to make a transfer, we’ll contact your provider to inform them and manage the entire transfer process for you. Remember that tax rules can change in future, and their effect on you will depend on your individual circumstances.

If you are looking to transfer ISA tax benefits following the death of your spouse or registered civil partner, the survivor can now inherit their ISA tax benefits. This will be in the form of an additional permitted allowance equal to the value of the ISA at the holder’s death and will be in addition to your own ISA allowance.

INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.

PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.

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Back to the future https://www.priceferguson.com/financialnews/back-to-the-future/ https://www.priceferguson.com/financialnews/back-to-the-future/#comments Wed, 04 Jul 2018 07:09:44 +0000 http://www.newsfin.co.uk/news/?p=2403 Read more »]]> Visualising what really matters to you is the key to the planning process
Have you ever thought about writing a letter to yourself to describe your ideal future life, long-term life goals and the process of how to plan for them? Imagining what you want your life to be like in the long term when you retire can help you think much further ahead than you might ever have done before. Research conducted for a new campaign[1] shows that over half (54%) of people plan their lives only days (31%) or weeks (23%) ahead.

The participants were asked to look deep into their future lives in a bid to uncover what really matters to them. When asked to write a letter to describe their ideal future lives, people were very good at imagining it. But many didn’t know how they were going to achieve it or how to take the next step to build a bridge from now to that future self by putting a plan in place to get there.

Key well-being aspirations
The writing exercise uncovered how people really envisage their life in the future. The letters illustrate that well-being in old age pivots on simple hopes (family, health and happiness) rather than extravagant financial ambitions. A well-balanced life was a key aspiration for many respondents. The letters confirm a clear hierarchy of needs and aspirations in life that many of us would have expected: family/partner, followed by career and financial security, followed by hobbies and interests, including friends.
While a handful of the respondents hope for lottery wins or gold medal glory, the overwhelming majority express their desire to remain healthy and active in old age and to live ‘comfortably’ with some degree of financial security. The letters revealed a nation aspiring to much more grounded ambitions: the centrality of family, a desire to travel to learn throughout life and to have fulfilling but balanced careers with a good work/life balance.

Family, health and happiness
It’s not surprising that family, health and happiness are central pillars of people’s well-being. What is surprising is how unprepared most people are to achieve the dreams they have described. The letters are wonderfully optimistic, but there is a reality check. The findings showed that people underestimate their required size of pension pots by up to £550,000, while many people who have the capacity to save aren’t doing so.

By using the letter as a catalyst, once you know what your goals are, the next step is to plan for them. To support the letter writing campaign, a study was also commissioned to gauge people’s current well-being and life goals[2]. The survey indicates a fundamental disconnect between the life people aspire to and their life now.

Prevention barriers in equal measure
The study found over half (54%) of people plan their lives only days (31%) or weeks (23%) ahead. While 14% of respondents said they plan for years ahead, very few (4%) plan for future decades. This may explain why only 11% of UK adults with life goals know how they will achieve them.

When it comes to life goals for the future, travel is a primary ambition for over two in five people (44%), followed by eating well (40%), getting fit (39%), more time with friends and family (36%) and better work/life balance (20%). Money is the main thing (33%) preventing people from achieving their goals, then motivation (28%), followed by energy and time as barriers in equal measure (26%).

Path to financial freedom
When it comes to financial goals, one in five people (20%) have none whatsoever. Among those with goals in mind, the same percentage of people (20%) have not worked out a strategy and don’t know how they will achieve their specific goals. The top financial goals are: save for a rainy day (43%); earn more money (32%); save for a special occasion (21%); reduce or clear debts (19%); and buy property and pay off mortgage (both 17%).

Your finances touch just about every aspect of your life. Your personal life and your financial life are not separate – they intertwine with each other. Your path to financial freedom means identifying and harnessing your dreams and bringing them alive. We can help you find an answer. Whatever stage of life you’re at, we can guide you through the opportunities and challenges you face.

Source data:
[1] The Brewin Dolphin letter writing project asked 500 UK adults to write a letter to their future selves deep into old age – a letter their ‘future self’ may discover and read as they reflect back on life. Methodology: online survey completed by 500 economically active respondents aged 18–65. Fieldwork by Trajectory from 12–20 April 2018.
[2] The survey polled over 2,000 UK adults about their life now, their well-being and attitude to money, plus what they want in the future – personal and financial goals, and how they’ll achieve them. Methodology: online survey was completed by 2,004 UK adults (18+). Fieldwork by Opinium from 11–14 May 2018.


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Driving towards the next phase of your life https://www.priceferguson.com/financialnews/driving-towards-the-next-phase-of-your-life/ https://www.priceferguson.com/financialnews/driving-towards-the-next-phase-of-your-life/#comments Wed, 04 Jul 2018 07:09:18 +0000 http://www.newsfin.co.uk/news/?p=2401 Read more »]]> Getting the date right can help you reach your destination sooner
At some point you’ll say ‘goodbye’ to your co-workers, get into your car and drive towards the next phase of your life – retirement. But when will that be? The move to retirement is one of the most important decisions you’ll make, so it’s not surprising that determining the date is harder than you may ever expect.

However, most over-45s are not making plans to match their hopes for the future according to new research[1]. The vast majority (86%) of those aged 45 or over are already dreaming about escaping their working life for retirement, but only 8% of the same age group have recently checked the retirement date on their pension plans to make sure it is still in line with their plans. Over half (56%) don’t have a clear idea of when they want to retire, and only one in ten (10%) have worked out how much income they’ll need when they decide to stop working.

The study reveals that it doesn’t get much clearer as you go up the generations. Less than a fifth (17%) of those aged between 55 and 64 have recently checked to see if the retirement date on their pension policy still fits in with their plans.

Some people will have set their retirement date when they were in their 20s or 30s, and a great deal will have changed since then, including their State Pension age and perhaps their career plans. It may seem like a finger-in-the-air guess when you’re younger, but the date that you set for retirement on a pension plan does matter. It will often dictate how your money is being invested and the communications you receive as you get nearer to that date.

Reasons to keep your retirement plans up to date

Right support, right time
If the date you plan to retire changes or you simply want to take some of your pension without stopping working, it’s important to tell your pension company provider. Otherwise you may not receive information and support about your pending retirement at the most helpful times, as they’ll be basing this on your out-of-date plans.

De-risking investments
Some investment options will start to move your pension savings into lower-risk investments as you get closer to retirement. If you don’t have the right retirement date on your plan, you could be moving into these investments at the wrong time. For example, if you move into them too early, you could potentially miss out on investment returns that could increase the value of your pension savings. But if you move too late, you could be exposing your life savings to unnecessary risk.

Investment pot
The size of pension pot you need to build up to maintain your lifestyle when you come to retire will depend on when you plan to do so.

Income
If you’re planning to buy an annuity at retirement, which will guarantee you an income for the rest of your life, the amount of income you’ll get will depend on the size of your pot and annuity rates at that time. If you prefer to use your pension savings more flexibly, you can keep your money invested and take it as and when you require it. You’re then responsible for making sure your life savings last as long as you need them to.

Source data:
[1] Research was carried out online for Standard Life by Opinium. Sample size was 2,001 adults. The figures have been weighted and are representative of all GB adults (aged 18+). Fieldwork was undertaken in November 2017.

PENSIONS ARE A LONG-TERM INVESTMENT.

THE RETIREMENT BENEFITS YOU RECEIVE FROM YOUR PENSION PLAN WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE VALUE OF YOUR PLAN WHEN YOU DECIDE TO TAKE YOUR BENEFITS, WHICH ISN’T GUARANTEED AND CAN GO DOWN AS WELL AS UP.

THE VALUE OF YOUR PLAN COULD FALL BELOW THE AMOUNT(S) PAID IN.

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To transfer, or not to transfer? https://www.priceferguson.com/financialnews/to-transfer-or-not-to-transfer/ https://www.priceferguson.com/financialnews/to-transfer-or-not-to-transfer/#comments Wed, 04 Jul 2018 07:08:58 +0000 http://www.newsfin.co.uk/news/?p=2399 Read more »]]> More than 100,000 people transferred out of Defined Benefit (DB) pensions in 2017/18[1]. A DB pension scheme is one where the amount you’re paid is based on how many years you’ve worked for your employer and the salary you’ve earned.

The figures show that a large number of people are still transferring out of traditional salary-related pensions, but whether this is a good idea or not depends crucially on your individual circumstances.

For many people, a guaranteed salary-related pension that lasts as long as you do, and is unaffected by the ups and downs of markets, is likely to be the best answer. But there will be some who want extra flexibility or are focused on passing on some of their pension wealth for whom a transfer might be the right answer. It is vital to take, and listen to, professional financial advice before making a big decision of this sort.

Five reasons why a pension transfer might be suitable

1. Flexibility – instead of taking a set pension on a set date, you have much more choice about how and when you take your pension. Many people are choosing to ‘front load’ their pensions, so that they have more money when they are more fit and able to travel, or to act as a bridge until their State Pension or other pension becomes payable.

2. Tax-free cash – some DB pension schemes may offer a poor deal if you want to convert part of your DB pension into a tax-free lump sum. Although the tax-free cash is in theory 25% of the value of the pension, you often lose more than 25% of your annual pension if you go for tax-free cash; in a Defined Contribution (DC) pension, you get exactly 25% of the pot as tax-free cash.

3. Inheritance – generous tax rules mean that if you leave behind money in a DC pension pot, it can be passed on with a favourable tax treatment, especially if you die before the age of 75. In a DB pension, while there may be a regular pension for a widow or widower, there is unlikely to be a lump sum inheritance to children.
4. Health – those who live the longest get the most out of a DB pension, but those who expect to have a shorter life expectancy might do better to transfer if this means there is a balance left in their pension fund when they die, which can be passed on. Please note that HM Revenue & Customs may challenge this for those who die within two years of a transfer.

5. Employer solvency – while most pensions will be paid in full, every year some sponsoring employers go bankrupt. If the DB pension scheme goes into the Pension Protection Fund (PPF), you could lose 10% if you are under pension age, and may get lower annual increases; if you have transferred out, you are not affected.

Five reasons why a pension transfer might not be suitable

1. Certainty – with a DB pension, you get a regular payment that lasts as long as you do; with a DC pot, you have to face ‘longevity risk’ (not knowing how long you will live).

2. Inflation – a DB pension has a measure of built-in protection against inflation, but with a DC pot you have to manage this risk yourself, which can be expensive.

3. Investment risk – with a DC pension, you have to handle the ups and downs of the stock market and other investments; with a DB scheme, you don’t need to worry – it’s the scheme’s problem.

4. Provision for survivors – by law, DB pensions have to offer minimum level of pensions for widows/widowers etc., whereas if you use a DC pension pot to buy an annuity, it dies with you unless you pay extra for a ‘joint life’ policy.

5. Tax – DB pensions are treated relatively favourably from the point of view of pension tax relief. Those with larger pensions could be under the lifetime limit (currently £1.03 milion) inside a DB scheme, but the same benefit could be above the limit if transferred into a DC arrangement.

Source data: 
[1] An FOI request to the Pensions Regulator from Royal London showed that there were an estimated 100,000 transfers out of DB pensions in 2017/18, up from 80,000 in 2016/17. The average transfer was around £200,000, suggesting around £20 billion in total was transferred out in 2017/18.

PENSIONS ARE A LONG-TERM INVESTMENT.

THE RETIREMENT BENEFITS YOU RECEIVE FROM YOUR PENSION PLAN WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE VALUE OF YOUR PLAN WHEN YOU DECIDE TO TAKE YOUR BENEFITS, WHICH ISN’T GUARANTEED, AND CAN GO DOWN AS WELL AS UP.

THE VALUE OF YOUR PLAN COULD FALL BELOW THE AMOUNT(S) PAID IN.

ACCESSING PENSION BENEFITS EARLY MAY IMPACT ON LEVELS OF RETIREMENT INCOME AND YOUR ENTITLEMENT TO CERTAIN MEANS TESTED BENEFITS.

ACCESSING PENSION BENEFITS IS NOT SUITABLE FOR EVERYONE. YOU SHOULD SEEK ADVICE TO UNDERSTAND YOUR OPTIONS AT RETIREMENT.

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When I’m gone https://www.priceferguson.com/financialnews/when-im-gone/ https://www.priceferguson.com/financialnews/when-im-gone/#comments Wed, 04 Jul 2018 07:08:38 +0000 http://www.newsfin.co.uk/news/?p=2397 Read more »]]> How a simple list can help your loved ones after your death
Although it may not feel like it, your family finances are probably more precarious than you think. It’s all well and good when the breadwinners are healthy and working, but if something unfortunate were to happen, the outlook for those around you could change instantly.

Research from Macmillan[1] highlights the worrying fact that two in three people living in Britain don’t have a Will – including 42% of over-55s. Without an up-to-date Will, the law could supersede a person’s final wishes and leave treasured possessions, money, property and even dependent children with someone they may not have chosen.

This news comes despite official guidance recommending that people review their Will every five years and after any major life changes[2], yet a quarter of Wills have not been updated for at least five years[3].

Top five things to do to help your loved ones after you have gone:

1. Write a Will
A Will ensures that the right people inherit from you, and while most of us know how important it is to have a Will and keep it up to date, many of us don’t do it. The research shows that three in five adults (60%) don’t have a Will, and a quarter (26%) of those are aged 55 and above. It’s especially important for cohabitating couples to have a Will, as the surviving partner does not automatically inherit any estate or possessions left behind.

2. Think about care of children
If you have children, it’s important to decide on guardians, but three in five (58%) parents with children under 18 haven’t chosen guardians should they die. Think about who you would want to step into this role, and ask them if they’d be happy to do so. Then make sure you appoint them as guardians in your Will.

3. Write a ‘when I’m gone’ list
More than one in ten (12%) adults admitted that it would be very difficult for anyone to handle their financial affairs after they died. Pulling together all your personal and financial information into one simple document can really help your loved ones when you’re gone.

4. Make a plan to pay for your funeral
Research shows that the average cost of a funeral is around £3,800, with one in six people (16%) saying they struggled with the cost. Having a plan in place to pay for your funeral will mean your family won’t have to find several thousand pounds at a difficult time.

5. Have a conversation with your family
Having a conversation with your family about your wishes can remove a great deal of uncertainty for them in the event of your death. The research shows that of those who have had to arrange a funeral, two in five (41%) were not left any instructions from the deceased. Starting a conversation might include talking about your funeral wishes with your loved ones or showing them where your important documents are kept.

Source data:
[1] Macmillan/Opinion Matters online survey of 2,000 UK adults. Fieldwork conducted 1–4 December 2017. Figures based on total population.
[2] Office for National Statistics. UK population mid-year estimate for adults aged 18 or over. Available from: https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/datasets/populationestimatesforukenglandandwalesscotlandandnorthernireland [Accessed 12 December 2017]
[3] https://www.gov.uk/make-will/updating-your-will

PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.

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Protecting you and your family’s finances https://www.priceferguson.com/financialnews/protecting-you-and-your-familys-finances/ https://www.priceferguson.com/financialnews/protecting-you-and-your-familys-finances/#comments Wed, 04 Jul 2018 07:08:10 +0000 http://www.newsfin.co.uk/news/?p=2395 Read more »]]> Top reasons people gave for not taking out protection
There are many things to consider when looking to protect you and your family. It may not be the most exciting of subjects, but it answers one of our most basic desires – to keep safe all that we hold dear.

The State of the Protection Nation report[1] reveals that the top reason people gave for not taking out protection was that they think premiums are too expensive (69%). They also believe they won’t get ill and they don’t need insurance. Despite this, many people want to protect their lifestyle and loved ones from the financial impact of dying or becoming seriously ill.

Nearly half of the people surveyed (46%) felt they were unlikely to go on sick leave for three months or more, 44% thought they were unlikely to have an accident that meant they were unable to work, and a third (34%) felt it was unlikely they would contract a serious health condition or illness. Research[2] shows that the chance of being off work for two months or more before age 65 is 26% for males and 37% for females.

Even if illness struck, nearly half (43%) felt they could manage for a year if they were unable to work due to serious illness or injury, 55% said they would manage for six months, and 71% would manage for three months.  Yet the reality is that only two in five could survive financially for more than six months if they were unable to work.

Inertia plays a part in people’s decision
Despite only a small percentage of consumers saying they had life insurance (3%), critical illness cover (3%) and income protection (5%) through their employer, the majority of people felt they didn’t need income protection (58%), critical illness cover (47%) and life insurance (34%).

The results revealed inertia plays a part in people’s decision not to buy, as 20% of full-time working people recognise they need income protection but don’t have a policy. Over a third (38%) of people working full-time feel they don’t need income protection, but just 8% said they didn’t need it because they had cover with their employer.

Lack of cover in line with people’s needs
The figures show that 58% of people with a mortgage have life cover in place if the home owner dies, leaving 42% unprotected. But worryingly, 71% of people with a mortgage would have no protection in place if they were diagnosed with a critical illness, and 81% of mortgage owners have no income protection in place.  The reason this is concerning is that people are far more likely to be diagnosed with a critical illness or have an injury that stops them working than to die before retirement age, so more people should consider critical illness or income protection.

A quarter (25%) of people who don’t own any life insurance, critical illness cover or income protection said they were confident that this lack of cover was in line with their needs. This figure doesn’t get much better when we look at those in full-time employment (30 hours a week or more), with 27% saying they were confident.

Source data:  
[1] Royal London’s ‘State of the Protection Nation’ report conducted by Opinium. 2,005 UK adults aged 18+ were surveyed from 9–12 January 2018. Results have been weighted to nationally representative criteria.
[2] Source: Pacific Life Re, March 2018. These figures have been produced based on their interpretation of the Institute and Faculty of Actuaries’ Continuous Mortality Investigation insured lives incidence rates together with their estimate view of future trends. Incidence rates for the entire population may be different to those lives that take out insurance products. 

LIFE ASSURANCE PLANS TYPICALLY HAVE NO CASH IN VALUE AT ANY TIME, AND COVER WILL CEASE AT THE END OF THE TERM. IF PREMIUMS STOP, THEN COVER WILL LAPSE.

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Averting a later-life financial crisis https://www.priceferguson.com/financialnews/averting-a-later-life-financial-crisis/ https://www.priceferguson.com/financialnews/averting-a-later-life-financial-crisis/#comments Wed, 04 Jul 2018 07:07:48 +0000 http://www.newsfin.co.uk/news/?p=2393 Read more »]]> More retirees drawing pensions without LPAs
People are generally living longer these days. Increasingly, more people are living well into their 80s and 90s – and some even longer. This may mean you have a long time to budget for. That’s why it is very important to consider all of your options carefully and think about what will matter to you in retirement.

You can now access your pension in more ways than ever before, after the Government introduced wide-ranging changes in April 2015. These changes give you more options, so it’s important that you take time to think carefully before you decide what to do with your money.

Later-life financial crisis
Nearly 80% of retirees using the UK’s pension freedoms to manage their retirement savings face a potential ‘later-life financial crisis’ as they have not set up a Lasting Power of Attorney (LPA), a recently published report [1] has warned. There are two types of LPA. These are the Health and Welfare Lasting Power of Attorney, and the Property and Financial Affairs Lasting Power of Attorney.

The research found that 345,265 pensioners accessing their pension pots in this way have not yet given a family member or friend the legal authority to make decisions on their behalf if they were no longer able to do so.

Responsibility of managing income
The analysis underscores the scale of an issue that has emerged since the British government abandoned the requirement to buy an annuity at retirement. It has come to light that twice as many people are now opting for drawdown over annuities. In effect, this puts the responsibility of managing income in retirement on the individual.
Registering an LPA has become even more important since the pension reforms. Thousands of people are now making complex decisions on their pension into old age, when the risk of developing a sudden illness or condition such as dementia increases. Despite this, many are unprepared for a sudden health shock or a decline in their mental abilities. The time to set up an LPA is well before you need it.

Potentially creating problems
With more and more people moving into drawdown, this is potentially creating problems that could leave thousands of people facing a possible later-life financial crisis. It is vital to plan for a time when managing your pension might become hard, or even impossible, and obtaining professional financial advice is one of the best ways to do this.

Discussions with your family or others
An LPA can be a very important part of advance planning for a time when a person will not be able to make certain decisions for themselves. It allows you to choose someone you trust to make those decisions in your best interests. This can be reassuring, and making an LPA can start discussions with your family or others about what you want to happen in the future.

The stigma around the LPA, as with dementia, is compounded by its links to mental capacity. Some people are reluctant to consider a future where they may not be able to make their own decisions due to the connotations they associate with this. In cases where LPAs are not in place, assets and equity may be lost, or those in a vulnerable position may be forced to make decisions they are no longer able to cope with.

Source data:
[1] The study for Zurich UK is based on a YouGov survey of a UK sample of 742 people who have moved into drawdown since the pension freedoms were introduced in April 2015. The survey was carried out between 14 December 2017 and 24 January 2018.
FCA Data Bulletin (issue 12) shows 345,265 pots moved into income drawdown between October 2015 and October 2017. Assuming the number of people moving into drawdown continued at a similar rate from November 2017 to April 2018, this would equate to a further 86,316 people in drawdown. 345,265 + 86,316 / 5 x 4 = 345,265 people.
345,265 / 2 years of drawdown data = 172,632 x 10 years = 1,726,325 people.

PENSIONS ARE A LONG-TERM INVESTMENT.

THE RETIREMENT BENEFITS YOU RECEIVE FROM YOUR PENSION PLAN WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE VALUE OF YOUR PLAN WHEN YOU DECIDE TO TAKE YOUR BENEFITS, WHICH ISN’T GUARANTEED, AND CAN GO DOWN AS WELL AS UP.

THE VALUE OF YOUR PLAN COULD FALL BELOW THE AMOUNT(S) PAID IN.

ACCESSING PENSION BENEFITS EARLY MAY IMPACT ON LEVELS OF RETIREMENT INCOME AND YOUR ENTITLEMENT TO CERTAIN MEANS TESTED BENEFITS.

ACCESSING PENSION BENEFITS IS NOT SUITABLE FOR EVERYONE. YOU SHOULD SEEK ADVICE TO UNDERSTAND YOUR OPTIONS AT RETIREMENT.

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Pensioner debt https://www.priceferguson.com/financialnews/pensioner-debt/ https://www.priceferguson.com/financialnews/pensioner-debt/#comments Wed, 04 Jul 2018 07:07:22 +0000 http://www.newsfin.co.uk/news/?p=2391 Read more »]]> Worrying increase on last year’s figure
The over-65s in the UK are expected to owe around £86 billion by the end of 2018, according to latest figures from the Centre for Economics and Business Research (CEBR) and More 2 Life. Total debt had increased on last year’s figure of £78 billion, as borrowing grew £35 billion in just three years. The research forecast that all types of secured and unsecured debt to retirees would exceed £142 billion by 2027.

When conducting the research, CEBR took borrowing including mortgages, credit cards, overdrafts, loans, car finance, hire purchase, student loans, payday loans and store cards into consideration.

Researchers have suggested that this increased level of debt is down to a number of factors, including this generation’s use of interest-only mortgages, current borrowing trends and relatively modest pension savings.

University of Birmingham’s college of social sciences Louise Overton said: ‘Worryingly, this report indicates that a significant minority are carrying secured and unsecured debt to help manage cash flow problems and make ends meet.’

Dave Harris, chief executive officer at More 2 Life, said the rapid increase in the retirement lending market ‘will only be exacerbated by an ageing population, people buying houses at a much later stage, and shrinking pension pots resulting in low retirement incomes.’

He added: ‘For growing numbers of people aged 65 and over, financial products that draw on the resource of housing wealth may well turn out to be the optimal way for them to solve the financial challenges they and their families have to face in future.’

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‘Pretirement’ https://www.priceferguson.com/financialnews/pretirement/ https://www.priceferguson.com/financialnews/pretirement/#comments Wed, 04 Jul 2018 07:06:59 +0000 http://www.newsfin.co.uk/news/?p=2389 Read more »]]> Half of pensioners plan to work past retirement age
The onwards march of ‘pretirement’ – where people scale back on work or slow their retirement plans down rather than giving up entirely – is continuing, according to new research[1].

A recent study found half (50%) of those retiring during 2018 are considering working past State Pension age. This is the sixth consecutive year where half of people retiring would be happy to keep working if it meant guaranteeing a higher retirement income.

Cost of day-to-day living concerns
More than a quarter (26%) of those planning to delay their retirement would like to reduce their hours and go part-time with their current employer, one in seven (14%) would like to continue full-time in their current role. An entrepreneurial fifth (19%) would try to earn a living from a hobby or start their own business.

The research shows that many people expect their retirement to last an average of 20 years. Around one in 12 (8%) of those scheduled to retire this year have postponed their plans because they cannot afford to retire. Nearly half (47%) of those who cannot afford to retire put this down to the cost of day-to-day living which means their retirement income won’t be sufficient.

Keeping mind and body active and healthy
The research also found that the decision to put off retirement isn’t always a financial one. Over half (54%) of those surveyed who are already or are considering working past their State Pension age say it is to keep their mind and body active and healthy. Over two fifths (43%) admit they simply enjoy working, while just over a quarter (26%) don’t like the idea of being at home all the time.

The shift to pretirement in recent years shows that many people reaching State Pension age aren’t ready to stop working. Reducing hours, earning money from a hobby or changing jobs are all ways to wind down from working life gradually and for many to avoid boredom and maintain an active mind and body.

Financially well prepared for retirement
However, not everyone has the luxury of choosing their retirement date due to their financial situation not allowing them to give up work and others may be forced to stop working for health reasons. Saving as much as possible as early as possible in their career is the best way for people to ensure they are financially well prepared for a retirement that starts when they wish, or need, it to.

As people are increasingly treating retirement as a gradual process, obtaining professional financial advice can help to make sure that your retirement finances are sufficient to allow you as many options as possible.

Source data:
[1] Research Plus conducted an independent online survey for Prudential between 29 November and 11 December 2017 among 9,896 non-retired UK adults aged 45+, including 1,000 planning to retire in 2018.

PENSIONS ARE A LONG-TERM INVESTMENT.

THE RETIREMENT BENEFITS YOU RECEIVE FROM YOUR PENSION PLAN WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE VALUE OF YOUR PLAN WHEN YOU DECIDE TO TAKE YOUR BENEFITS WHICH ISN’T GUARANTEED, AND CAN GO DOWN AS WELL AS UP.

THE VALUE OF YOUR PLAN COULD FALL BELOW THE AMOUNT(S) PAID IN.

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Taking early retirement https://www.priceferguson.com/financialnews/taking-early-retirement/ https://www.priceferguson.com/financialnews/taking-early-retirement/#comments Wed, 04 Jul 2018 07:06:29 +0000 http://www.newsfin.co.uk/news/?p=2386 Read more »]]> Making the most of the next chapter in life
With increasing numbers now working past traditional retirement ages[1], stopping work can seem a long way off, especially for younger people. However, new research[2] reveals that the early retirement dream lives on. Nearly two thirds (60%) of those stopping work this year are doing so before their expected State Pension age or company pension retirement date.

The study which tracked the finances and aspirations of those planning to retire during the year ahead also found that those planning on retiring early could be facing a considerable reduction on their annual retirement income to the value of £3,394. The average expected retirement income, inclusive of savings and State Pension, for those retiring early is £18,567, compared to £21,961 for those not retiring early.

Planning to escape the daily grind
It appears that those planning to escape the daily grind early feel the most comfortable when it comes to their financial situation in retirement – with over half (56%) saying they feel financially well prepared compared with 49% of those working towards their expected retirement date. That’s reflected in the numbers taking professional financial advice – 68% of early retirees are seeking advice compared with 60% of those working until their projected retirement age.

The average age of those retiring early is 57, and early retirees will be making the most of their free time – over a third (37%) plan to take up a new hobby or sport, 27% will start voluntary or charity work and nearly a fifth (17%) are planning a long-term holiday or gap year.

Vital for funding our whole retirement
For many people stopping work early, it is not about planning to put their feet up. They want to keep busy and active by taking up hobbies, sports and charity work, and some are even planning a post-work gap year. With many of us set to live longer than ever before, it is vital to ensure we can fund our whole retirement.
The East Midlands is the early retirement capital of the UK with 72% of its retirees retiring early, closely followed by Wales (69%) and Yorkshire and the Humber (67%).

Source data:
[1] https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemploy eetypes/articles/fivefactsaboutolderpeopleatwork/2016-10-01
[2] Research Plus conducted an independent online survey for Prudential between 29 November and 11 December 2017 among 9,896 non-retired UK adults aged 45+, including 1,000 planning to retire in 2018.

PENSIONS ARE A LONG-TERM INVESTMENT.

THE RETIREMENT BENEFITS YOU RECEIVE FROM YOUR PENSION PLAN WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE VALUE OF YOUR PLAN WHEN YOU DECIDE TO TAKE YOUR BENEFITS, WHICH ISN’T GUARANTEED, AND CAN GO DOWN AS WELL AS UP.

THE VALUE OF YOUR PLAN COULD FALL BELOW THE AMOUNT(S) PAID IN.

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