Some new facts...

A few facts taken from our recent eNewsletter...

House prices have remained fairly static throughout the second quarter of 2011 with the Nationwide house price index showing a modest 0.1% rise over the quarter. The possibility of of an interest rate rise some time within the next year and uncertainty over employment prospects are unlikely to encourage prices upwards.

Sterling gained considerably against the dollar in April, but fell back during May and June to end the quarter just 0.15% higher. A relatively weaker pound is good for exporters, which is just as well, because it fell by -2.43% against the euro during the quarter, and may fall further if interest rates in Europe rise again.

Visit the Financial Planning Partners online. Our team of IFA's can advise you on all aspects of financial planning including pensions, SIPP's, mortgages, savings and investments.

Income Protection

Since 6th April, Statutory Sick Pay (SSP) has been worth £81.60 a week, for those earning at least £5,304 a year. SSP lasts for just 28 weeks, after which other forms of benefit may be available.

If you are earning £25,000 a year and suddenly become ill, your net income will fall from around £1,610 a month net, to £353.60 a month; a reduction of more than 75%. If you are only ill for a week or so, this is not likely to cause you any significant inconvenience, but should incapacity last much longer, then the financial consequences could be disastrous.

Some employees are better off
Employees working for forward-looking businesses may be members of a group sick pay scheme that provides a much higher percentage of income whilst they are incapacitated and this can last for quite a long time. However, with many companies still cutting costs to compete in the post-credit crunch world, such generous schemes may become rare. In any event, they may not be available to new recruits. If such a scheme is open to you, then you may not even have to do anything to benefit — your human resources department will be able to advise you on where you stand.

What about the rest of us?
For the majority of employees, however, SSP is all they have to look forward to, so making personal provision is essential if families are not to be considerably worse off in the event of serious accident or illness. Fortunately, you can arrange various types of insurance to provide an income should things go wrong. Annually renewable personal accident and sickness insurance can provide, amongst other things, a weekly income if you are incapacitated. This can generally last for up to one or two years and the cost is based on your occupation and the amount of cover required.

For longer-term incapacity

Some illnesses can last for much longer, so permanent health insurance (PHI) is available to provide for this. PHI pays out a monthly benefit, after what is called a waiting period, until: the end of the illness; a pre-agreed age; or prior death. The waiting period is the time after the onset of each illness or accident that you have to wait before benefit payment starts and it can range from 4 to 104 weeks. The longer the waiting period, the lower the monthly cost. The premiums, once set, remain level for the entire term, unless a basis for increases is agreed in advance – perhaps to allow for indexation of benefits, or occasionally to reflect a significant change in occupation. This form of insurance is age related (although gender will no longer be a rating factor from 21st December 2012, thanks to a recent decision of the European Court of Justice) and, as mentioned above, occupation also influences costs.

You should take individual professional advice before making any decision relating to your personal finances.

Take advantage of our online health insurance calculator and find out more about life assurance. Our team of IFA's can also advise you on a number of other financial services including pensions, SIPP's, mortgages and investments. Based in Crowthorne, Berkshire, visit us online.

Offset mortgages revisited

For some borrowers, low interest rates have provided an easy route towards accelerated capital repayments. ‘Offset’ mortgages are arrangements whereby monthly interest is due not on the entire mortgage balance but on the difference between this figure and the total value of any money deposited with the lender in ‘associated’ accounts. Those with significant savings with the lender may decide that there is less need to consider seeking more favourable rates than those whose sole relationship with the lender is a conventional mortgage.

Sounds strange?
By holding money in an ‘offset account’, the effective interest rate you receive is equal to the rate of interest on the mortgage itself (which is likely to be higher than you could get from any savings account). A rise in the mortgage rate means that you are in effect getting more for your savings. More importantly – especially for higher rate taxpayers – there is no tax liability (unless savings are higher than the outstanding mortgage); the interest element of each monthly payment is simply reduced. Money invested anywhere else except in an ISA is normally subject to tax on the interest.

What happens to repayments?
Those with offset arrangements do not pay less each month. Instead, the repayment level set at the outset (adjusted for any change in interest rates) remains the same and any excess brought about by the fact that savings ‘offset’ borrowings is used immediately to reduce the outstanding balance. The following month, even less interest will be due, but as repayments remain the same, the effect is further to accelerate repayments. Borrowers, who maintained the initial level of repayment during the two years of very low interest rates, should have reduced their debt by a considerable margin. This would suggest that continuing current repayment levels will ensure ongoing overpayments which will eventually reduce the mortgage term. For those who do wish to consider a fixed rate mortgage, some offset mortgages now offer this option. Mortgages are complicated and there are many differing plans available. It is therefore important that you should seek professional advice before making any decision relating to your personal finances.

Your home may be repossessed if you do not keep up the repayments on your mortgage. A fee may  apply for mortgage advice and you must ask your adviser for details before making any decision relating to a new mortgage as the actual amount will depend on your personal circumstances, but in most cases is unlikely to exceed 0.5% of the loan value (on a typical £100,000 mortgage, this would be £500).

For mortgage advice please contact the Financial Planning Partners or Mark Bugden. For additional financial services such as pensions and SIPP's visit us online. Our IFA's operate in Ascot, Sandhurst, Bracknell, Wokingham, Reading, Crowthorne and Berkshire.

Planning for later State Pensions

Investors may be pleased to learn that they no longer have to purchase an annuity with their pension fund by the time they reach 75, but news that they could have to wait a very long time for their state pension will be less welcome. The state pension age, already set to rise to 66 by 2020, could soon be subject to a new ‘automated’ approach towards future age increases based on regular, independent reviews of longevity. So, as people continue to live longer, they will have to wait even further into old age before the state pension starts. So 66 could eventually become 70, 75 or even later.

A retrograde step? 

Actually, the Old Age Pension, as it was then called, was introduced by Lloyd George in a 1909 Act to provide a (noncontributory) pension for those aged 70 or over. This was at a time when few people could expect to reach such an age, so the fact that our new system is still intended to start providing benefits well before people reach the end of their lives means it remains superior. The 1909 version paid a weekly pension of between 10p and 25p a week (the pre-decimalisation equivalent) or 37.5p a week for married couples (roughly a quarter of today’s basic state pension in real terms). Only workers earning less than £31.50 per year and of ‘good character’ could become entitled to the pension.

Personal provision was essential even then

The level of benefit was deliberately set low to encourage workers also to make their own provision for retirement. The need for personal provision remains today, which is why the Government is also introducing the National Employment Savings Trust for all employees who do not have access to an occupational pension (although they can opt out). Today, the basic state pension is worth about £102 per week for a single person or £163 per week for a married couple – clearly not sufficient to live on comfortably, so it is important to ensure that you have adequate private provision either via an employer’s scheme or a personal pension. Those who fail to make adequate provision could find themselves with insufficient income when they come to retire.

Covering the delay

Those who previously had no intention of working beyond age 65 (or even 60 for women) now face the prospect of working much longer before they receive their basic state pension. A key advantage of private pensions is that they are available when you want to retire, rather than when the Government says it can afford to start paying you an income. By managing your own retirement plans effectively, the basic state pension can become the ‘icing on the cake’ with the main retirement benefits coming from your own (or an employer’s) pension plan.  It is important to seek independent financial advice before making any decision regarding your finances. The value of investments is not guaranteed; you may get back less than you put in.

For specialist pensions advice and retirement information contact the Financial Planning Partners Ltd.

Long-term absence hurts businesses

One issue that may not occur to many business owners, until it actually happens, is the potential impact on profitability should one or more employees suffer from long-term illness. While this primarily affects the employee and his or her family, businesses themselves can also suffer the consequences of someone being off sick for a long period. When asked, in a survey run by a leading insurance company, half of all employers agreed that long-term absence is a potential issue for their business, while a third are concerned about how they would balance their obligations towards employees, while managing the business.

Not just the bottom line

It is not just profitability that can be affected by employees being off sick. Other workers may be concerned about potential issues in the workplace if colleagues are off sick for long periods as a result of stress, accident at work or even illness. In addition, workloads could be pushed onto other employees – or they may fear that this will happen – when a colleague is absent for a sustained period. Even if a temporary replacement is recruited, this can result in others having to undertake training or cover for inadequacies of experience.

What can a business do to protect itself?

The immediate financial implications of long-term incapacity can be addressed by putting a group sick pay scheme in place. This can be done at a level that is both affordable to the business and also ensures that employees are able to carry on living comfortably while not working. This is far from being simple altruism. By ensuring that employees do not have to worry about money, you may facilitate a far faster recovery from many conditions, which may be exacerbated by stress. It may also be worthwhile to arrange a group private medical insurance scheme that gives employees (and their families) access to private medical care when it is needed. This can not only ensure faster access to treatment in the first place, but may further shorten ‘downtime’ if specialist private treatment also speeds recovery.

What about the business itself?

In the case of certain ‘key’ employees, the business could suffer a disproportionately large financial impact from the temporary loss of his or her services. It is possible to arrange insurance that pays out to the company, in the event of a long period of incapacity of a key person, in order to facilitate recruiting a high calibre temporary replacement – which is likely to cost more than the key person’s salary, by virtue of recruitment/ agency fees and compensating the replacement for the short-term nature of the assignment. As with any form of financial decision, it is important to always seek independent financial advice before making any decision regarding business-related insurance.

For additional advice on all aspects of health insurance including critical illness cover, long term care, income protection and private medical insurance visit us online and contact our team of IFA's based in Crowthorne, Berkshire. Other specialist areas we cover include pensions and retirement planning, investments, life asssurance and mortgages.

Suffering from low interest rates?

Recent economic data suggests that we are unlikely to see interest rates rising substantially for some time to come. In fact, the good weather and Royal Wedding in April may have been counter-productive: while some aspects of consumer spending may have been given a boost, it is likely that when the final figures are available (which may not be for a month or two yet, because they are often revised up or down), the all-important manufacturing output is likely to have suffered from a virtual two-week holiday. Another economic problem is that inflation is likely to rise during the latter part of this year, partly due to higher energy costs. The Bank of England’s Monetary Policy Committee must inevitably be cautious about how quickly interest rates are increased to help bring rising prices under control, as premature action could further slow economic growth.

Should we be gloomy?

While inflation is bad for savers and those on fixed incomes, it is not necessarily so for investors. There are strategies that can help those investing lump sums or regular amounts to avoid the worst pitfalls of inflation. These can include investing in sectors that are likely to benefit from what is going on, such as energy companies, and those areas where growth may be expected, such as alternative energy businesses. Before considering such an approach, however, it is essential to discuss this with us, because some investments can carry higher risks than some individual investors may feel comfortable with. In any event, a balanced approach is likely to be more beneficial than putting all your eggs in one basket.

Lower risk alternatives

One option is to consider investing in bonds. Some of these are government backed, others are issued by businesses. In essence, those issued by the UK and some other governments are likely to carry the lowest practical risk although, as we have seen from recent events, some governments that have failed to bring borrowing under control have recently seen their credit ratings reduced – and in some cases downgraded almost to the lowest level. This means that their bonds could – in theory at least – become worthless. However, bonds issued by National Savings and Investments can be considered relatively secure and it is expected that NS&I will issue some RPI linked bonds within the next year, which could be of interest as part of a balanced investment strategy. Overall, it is likely that the economy will recover faster than the worst predictions forecast, but more slowly than optimists may hope. 

We are, after all, in this together. Why not ask us to review your investments now? Visit the Financial Planning Partners online. The areas our team of IFA's serve and our products are listed on the website.

Flexible Drawdown Opportunities

So you are a 50% taxpayer approaching retirement. When you retire you will have lifetime income from your company pension and the State of over £20,000.

You have some spare capital now which you may wish to access early in retirement so you can’t afford to lock the money away or take any investment risk. Right now the money is sitting in cash making very little return.

Here’s a thought – you haven’t paid anything into your pension plan this year and neither has your employer so you have the scope to make a £40,000 contribution without going above the annual allowance. The provider would add basic rate tax relief to this and gross your payment up to £50,000. This can be invested in a cash fund to remove investment risk. As a 50% taxpayer in this tax year you will be able to claim additional tax relief from HMRC equal to £15,000. So, you now have a £50,000 pension fund at a cost to you of £25,000.

You retire next year and start to draw your company and State pensions. As these amount to over £20,000 a year you can transfer the above pension fund into Flexible Drawdown. You take 25% tax free cash equal to £12,500 and, under flexible drawdown rules, withdraw the balance of the fund as income. You will pay tax on the income but even if you are still a 50% taxpayer you would receive a net income of £18,750.

End result is that you have received back a net £46,250 at a cost to you of £40,000 or a return of over 15%. OK, you need to factor in some charges but you’re happy you didn’t leave the money in the bank.

40% taxpayers using the same plan could return £45,000 or a 12.5% return before charges.

As always it is important you take independent financial advice before taking any action. The above is based on our understanding of current legislation which can change.

For more information visit us online and contact our expert team of IFA's. The Financial Planning Partners operate in and around Berkshire including Ascot, Crowthorne, Camberley, Bracknell, Sandhurst, Wokingham, Reading and Guildford.

Planning for your financial future

Information taken from an article published in Money Marketing online July 4 2011
Dilnot: Govt should invest in LTC advice strategy
The Dilnot Commission has called on the Government to invest in a major information and advice strategy to help people when they need long-term care.

The Commission on Funding of Care and Support, set up by the Government a year ago and chaired by economist Andrew Dilnot, published its proposals on long-term care funding.

The report confirms the recommendations trailed ahead of the report’s publication for a cap on individuals’ lifetime contributions to their social care costs of between £25,000 and £50,000, with £35,000 the recommended figure. When the cap is reached individuals would then be eligible for full state support.

Read the complete article here.

For help and information about planning for your retirement and securing your financial future, visit us online or contact our team of IFA's.

The Financial Planning Partners Ltd.

Should you consider Guaranteed Funds?

The key challenge when making retirement planning decisions is to make sure you get the right income.

Guaranteed pension and bond products do not suit everyone. Those who want the maximum possible income at retirement should probably avoid them while those who have a high tolerance for risk should also steer clear.

However for many others, guaranteed products can have a role to play in helping to achieve retirement planning aims.

For example, there is often a case for guarantees for more cautious individuals who, without guarantees, are exposed directly to downturns in the stock market. When markets recover it makes sense to lock in gains along the way particularly if you are close to retiring and cannot afford sudden losses.

Guaranteed products ensure investors always get a minimum amount back while having the potential to lock-in returns on their investments. Guarantees can be used in conjunction with investments such as bonds or when saving for retirement and also once you have retired and want a secure income from your retirement savings.

As always you should seek independent advice on the suitability of this type of investment.

For expert independent financial advice from our team of advisors please visit us online. Operating in and around Berkshire and Surrey including Ascot, Bracknell, Sandhurst, Camberley, Wokingham, Reading and Guildford we can advise you on all aspects of your financial future including SIPP's, pensions, savings, investments, mortgages, tax and insurance.

Are you planning your finances effectively?

Money Marketing released an article reporting the largest quarterly drop in unemployment since the three months leading to August 2000 - unemployment fell by 88,000 to reach 2.43 million. Read the complete article.

The Financial Planning Partners offer expert advice on all aspects of financial planning. Operating in and around Berkshire our clients come from Guildford, Ascot, Camberley, Bracknell, Sandhurst, Crowthorne, Wokingham and Reading although we do have clients overseas and across the UK. Visit our website online and contact our expert team of advisors for information about pensions, SIPP's, savings, investments, bonds, mortgages and taxation.

Lasting Power of Attorney

Whilst many people will have written Wills it is our experience that very few will have considered drawing up Lasting Powers of Attorney.

A Lasting Power of Attorney is a legal document that allows you to appoint someone that you trust as an ‘attorney’ to make decisions on your behalf. Attorneys can make decisions for you when you no longer wish to or when you lack the mental capacity to do so.

Having a Lasting Power of Attorney in place can help avoid having to go through the Court of Protection and the kind of problems that have been highlighted in the press.

Former solicitor Irene Cox had to pay legal fees of £4,000 in order to access £5,800 of her own money to pay four personal bills, including dental fees. It took the Court of Protection five months to release the money.

Ian Johnson managed the affairs of his aunt. When she moved into a care home he needed to pay the £35,000 bill. It took the Court of Protection five months to agree he could use the money from the sale of her house to pay the bill, and even then they only released £25,000.

The system is in place to quite rightly protect the vulnerable but being a national system it cannot hope to have knowledge of the individuals involved and their circumstances. Court proceedings can be expensive and sometimes result in unfair decisions and can be avoided by having a properly drawn up Lasting Powers of Attorney.

For more information and to contact us visit the Financial Planning Partners Ltd online. We offer our services in and around Berkshire including Ascot, Sandhurst, Bracknell, Guildford, Farnham, Guildford, Camberley, Wokingham, Crowthorne and Reading. Our team of advisors are expert in all aspects of your financial future including taxation, pensions, SIPP's, retirement planning, Will's, savings and investments.

Is now the time to re-mortgage?

Interest rates have been low for a long time now. In fact the Bank of England’s base rate has been at historically low levels since March 2009.

Low interest rates are great for borrowers – although most do not have ‘trackers’ that directly follow the Bank of England’s base rate, so they are likely to be paying much more than 0.5% at the moment. When interest rates are so low, repayments are less than might originally have been budgeted for and many people will therefore be taking the opportunity to ‘over-pay’ each month, in order to reduce the outstanding balance faster than planned, as this can save a lot of interest later on.

Is this the only consideration?
Good as it is to cut down your mortgage as quickly as possible, there are other issues to consider such as what is likely to happen to interest rates over the next few years. Base rate is likely to rise during the course of 2011, largely because inflation refuses to calm down and this is one of the few weapons available to the Monetary Policy Committee (MPC). One member, Dr Andrew Sentance, has been arguing in favour of this strategy for months. Of course, lenders are not tied to what the Bank of England does (except for base rate tracker mortgages) but as a general rule if base rate rises, home loan rates tend to follow suit. So mortgage rates are likely to rise during the year.

Fixed rates
It is, however, possible to arrange a ‘fixed rate’ mortgage although rates are generally only fixed for a limited period – seldom much longer than 60 months, or so – and are often initially higher than for standard variable rate mortgages or trackers. This is because lenders also expect rates to rise and are already factoring-in an allowance for this. Lenders’ arrangement fees can also be higher than for some other loans and this needs to be taken into account when considering whether the costs involved (and a possibly higher interest rate than you are currently paying) justify moving from your present mortgage. You may also be tied-in to a higher standard variable rate than would apply under your current deal, at the end of the fixed period, and may then have to accept additional costs in order to make alternative arrangements. This is not a simple matter and consulting an independent mortgage or financial adviser before making any decision, is essential. Your home may be repossessed if you do not keep up the repayments on your mortgage. A fee may apply for mortgage advice and you must ask for details before making any decision relating to a new mortgage as the actual amount will depend on your personal circumstances, but in most cases is unlikely to exceed 0.5% of the loan value (on a typical £100,000 mortgage, this would be £500).

For expert financial and mortgage advice learn about our team of IFA's by visiting us online. Contact the Financial Planning Partners Ltd.

New Index Linked National Savings Certificates

NS&I have just relaunched its five year tax free inflation linked savings certificates. Interest is added tax free on each anniversary from purchase with the return based on the increase in the Retail Price Index plus an average 0.5% bonus a year. The bonus is scaled and will be lower in the earlier years but will average 0.5% if the investment is held for the full five years.

Based on the current increase in the Retail Price Index of 5.2% this provides a very attractive tax free offering. There is of course no certainty that inflation will still be at its current level when the first and subsequent anniversaries come around but, provided you hold the certificate for at least one year, you can cash in your investment without penalty and receive a proportion of the 0.5% bonus.

Savings certificates can be purchased by phone or online but are not available at Post Office branches. Maximum deposit is £15,000.

For more information and to contact us, visit the Financial Planning Partners Ltd online.

Living to 100 and beyond ...

According to a report in the Telegraph (29th December 2010), 10 million people who are alive in the UK today will live to more than 100 years old.

That is both good and bad news. Of course, nobody wants to die, so the prospect of living to more than a hundred years of age sounds appealing. There are, however, a number of issues that, while not necessarily detracting from what is really good news, should at least give us pause for thought. All it takes is a little planning to ensure that increased longevity is the bonus that it should be.

Making your savings last longer
The key issue for most of us, especially those who are already over 50 (and therefore have less time to build up additional pension funds) is that our money is going to have to last much longer for us. Purchasing an annuity with your pension fund when you retire may sound a good idea, as this gives you a guaranteed income for the rest of your life. Unfortunately, because insurance companies know that we are living longer, and as interest rates are currently very low, annuity rates are nothing like as high as they once were. This means that we will receive a smaller annual pension, for a given pension fund, than a decade or so ago. The solution to this comes in several stages. The first is to maximise the amount we put into our pension provision so that we have more money available to live off later on in life. The second is to consider gradually ‘phasing in’ retirement, rather than giving up work on one day, using the changeover period to enhance our retirement pots. This is made easier by a rule change that means we can now manage the way we take income from our pension plans without having to buy an annuity. In fact many of us will not even have to buy an annuity when we reach the age of 75 as once was the case.

Health is an issue
As we get older our health may deteriorate and we could start to need more assistance in coping with activities of daily living. There are forms of investment designed to assist with what is called ‘long term care’ and these can be funded in a number of ways, including lump sum investments and funding by releasing equity from the family home. Hopefully, improvements in health care will ensure that many of us remain far fitter for longer than was once the case, so the average time for which long term care is required is not much longer than at present. It is important always to seek independent financial advice before making any decision regarding your finances. The value of investments is not guaranteed; you may get back less than you put in.

The Financial Planning Partners Ltd are a dedicated team of advisors covering all aspects of financial advice including SIPP's, retirement planning, taxation, corporate planning, investments and savings. Visit us online to speak to one of our IFA's.

Families Lacking Insurance Protection

According to Professor Stephen Hawking, adding one equation to his book would halve sales. It is therefore with some trepidation that we include some statistics in this article. On the other hand, few people reading financial articles are likely to share the ‘popular’ fear (even ignorance) of statistics, and their use can make things much clearer.


So here we go. According to research undertaken by Aviva for its Family Finances Report (19th January 2011):
• 93% of families do not feel they have adequate financial protection;
• 89% are without income protection insurance;
• 87% do not have critical illness insurance; and
• 61% do not even have basic life insurance.
Perhaps even more worryingly, two-thirds of all divorced parents with two or more children said they have no, or inadequate, financial protection.


Why do people ‘not bother’ with insurance?
According to the research, one in five people believe that life insurance will be too expensive, while one in twenty think it “never pays out”, so is not worthwhile. In fact, Aviva’s own figures show that cover can cost as little as £5 a month and it says it pays out on 99% of all life insurance claims. The average claim, it says, is for more than £50,000. Critical illness insurance can be more expensive and the older you are when you start your critical illness or life cover, the higher the premiums will be. There are clearly very good reasons for taking out cover as early as possible, while you are young and healthy.


Perhaps they don’t know how important it is?
According to Aviva, a quarter of the families questioned said that they had already experienced what it is like to have the main breadwinner out of commission and unable to work due to illness, so they know how important that can be. Furthermore should the breadwinner die, there is no chance of getting better and going back to work.


A plan of action
The importance of adequate protection cannot be overstated. Of course you cannot do everything at once, especially if money is tight, so addressing the most important issues first is a good idea. With careful planning, you can ensure that costs are not too high. For example, using family income protection (which provides an income rather than a lump sum, on death) rather than level term insurance, can be less expensive. Selecting a longer ‘waiting period’ – the time after the onset of illness before a claim starts to be paid – can also reduce the cost of income protection insurance. In some cases, critical illness insurance may be an alternative, although this will not pay out in every instance, whereas income protection tends to be more comprehensive in its scope. You should take individual professional advice before making any decision relating to your personal finances.


The Financial Planning Partners Ltd offer extensive insurance and income protection advice from our firm of advisers as part of our comprehensive service. Visit us online.

The Impact Of Inflation On Savings

Even if interest rates rise throughout 2011, it is unlikely that they will rise high enough for savers to achieve a positive return, in real terms, any time soon. On the basis of Consumer Prices Index inflation at 4% a year, a basic rate taxpayer needs to earn 5% before tax, if the impact of inflation at this level is not to erode the purchasing power of their non-ISA cash savings. Matching the Retail Prices Index figure, which is usually higher, makes achieving real growth even more difficult. This situation may encourage investors to adopt higher risk strategies, to secure a better return. 


Is risk a bad thing?
Risk is an integral part of investment; generally, the greater the risk, the higher the potential reward. However, the value of investments really can go down as well as up — if you accept greater risk in return for the prospect of larger profits, you could lose part or all of your money. On the other hand, leaving your cash on deposit can simply mean that its value withers over the years, in any event.


Unacceptable risk
What is unacceptable, in terms of risk, is leaving yourself open to potential losses that you are not aware of. This can happen with some forms of derivative-backed investments that look as if they are guaranteed; but the protection evaporates under certain circumstances, such as default by the guarantor.


Acceptable risk
‘Nothing ventured, nothing gained’, they say. You cannot afford to go through life in cotton wool, but must accept some degree of risk if you are to achieve any growth. To do this successfully you must understand what risks you are exposed to with various types of investment, and consider an asset allocation strategy that gives you the best chances of success.  Asset allocation strategies involve ensuring that you do not have all your eggs in one basket. Of course, if you knew in advance which horse would win the Grand National, you could put all your money on it to win. But in reality, the future is a closed book. If we cannot put all our money on a ‘sure winner’, spreading our investments avoids putting everything on a ‘loser’. Selecting different shares to invest in, for example, means that you have a greater chance that, if one sector performs less strongly, another might shine. Not everyone will require the same strategy, but looking at separate business sectors, company sizes and geographical locations could be a good start. For those with larger sums to invest, it may also be worth considering inclusion of a wider range of assets such as commodities and property. These, however, have different risk profiles compared with more traditional assets such as shares and most collective investments, so individual advice is essential. It is important always to seek independent financial advice before making any decision regarding your finances. The value of investments is not guaranteed; you may get back less than you put in.


For independent, excellent advice from one of our IFA's visit the website. Our services including pensions, retirement, corporate, taxation and SIPP advice are offered around Berkshire - inclusive of Ascot, Wokingham, Camberley, Bracknell and Sandhurst.

A budget for making things...

The aim of this most recent Budget was to help the UK recover its position as a manufacturing country. To achieve this, we need to make it easier for businesses to start up and thrive, as well as to reduce the proportion of GDP represented by the state. According to the Budget Statement, GDP growth forecasts have been cut from 2.1% to 1.7% due to weaker than expected 4Q10, higher inflation and increased commodity costs. However, the future looks stronger with the economy set to grow by 2.5% next year, rising to 2.9% in 2014. Additionally, borrowing for the year is forecast at £146bn, falling to £29bn by 2015/16 and CPI inflation is likely to remain between 4% and 5% for 2011, before reducing to 2.5% next year and to 2% in two years’ time.

Personal taxation
The personal allowance – already set to rise by £1,000 to £7,475 – will be increased for 2012/13 by a further £630 to £8,105, for under-65s. The government will consult on merging the tax and National Insurance systems, in order to simplify their operation for businesses. This will not affect pensions or other forms of income. The 50% income tax rate is not seen as permanent, but future tax indexation will be in line with the CPI rather than the (generally) higher RPI. This means that thresholds will not keep pace with the higher measure of inflation in future. This also applies to ISA limits from April 2012. The tax relief available on Enterprise Investment Schemes increases from 20% to 30% and the capital gains tax entrepreneurs’ lifetime relief is doubled to £10 million. The fuel duty escalator announced in 2009 Budget is abolished and replaced by a ‘fair fuel stabiliser’, paid for by a levy on oil companies. The main fuel duty rate was cut by 1p per litre from Budget day.

Business taxation
The main rate of corporation tax is cut by 2% rather than the 1% previously announced, producing a rate of 26% from April 2011. It will be cut by a further 1% each year, until it reaches 23%, making it lower than in France and the US. The tax system is being simplified with the removal of more than 100 pages of code. To help small businesses in particular, £350 million worth of specific regulations are being removed and 21 new Enterprise Zones are being created, offering businesses up to 100% discount on rates, new super-fast broadband and the potential to use enhanced capital allowances in zones where there is a strong focus on manufacturing. The small business rate relief holiday has also been extended by one year from 1 October 2011. Overall, it is to be hoped that, while there is little short-term joy for families, there is real potential for an economic recovery that can make us all better off over the longer term.

Exert taken from the Financial Planning Partners Ltd eNewsletter. More news to be released in future blogs - for independent, excellent advice from one of our IFA's visit the website. Our services are offered around Berkshire - including Ascot, Wokingham, Camberley, Bracknell and Sandhurst.

Pensions, SIPP's and Retirement

Money Marketing released an interesting article about options outlined by the government aimed at linking the state pension to life expectancy. An exert is below:

"A Department for Work and Pensions green paper unveiled last Monday confirmed plans to introduce a link between the state pension age and longevity.

The paper, A State Pension for the 21st Century, presents two proposals for calculating future increases in the pension age.

The first would involve introducing a formula linked to life expectancy which would mean that increases in life expectancy would automatically adjust the state pension age to reflect rev- isions in projected longevity.

The alternative would be a review at regular, predetermined intervals which would be informed by an independent report to allow life expectancy projections and socio-economic factors to be taken into account."

With people living longer, what do you think about these proposals to help the pensions crisis? Influential opinions contained in the article at - read the complete pensions article.

For pensions advice, including retirement planning and SIPPS, visit the Financial Planning Partners Ltd 

Wecome to our FPP team!

Welcome to the Financial Planning Partners Ltd team. A dedicated selection of independent financial advisers (IFA's), we offer advice within and around Berkshire, including Crowthorne, Ascot, Wokingham, Bracknell, Sandhurst and Camberley.

Budget summary for financial advisors: http://www.moneymarketing.co.uk/politics/budget-2011-financial-planning-opportunities/1028829.article. The article details taxation changes - none too surprising but relevant to the general public. Interesting comments for savers and those paying into SIPP's or other pensions also in the article.

Visit http://www.fpp-ifa.co.uk/ for advice on all aspects of your financial wellbeing.

SIPP Advice from your Independent Financial Adviser (IFA).

For specialist advice including SIPP's and retirement planning, speak to one of our Independent Financial Advisers (IFA's) by going to the Financial Planning Partners Ltd website. We serve Crowthorne, Berkshire in addition to Wokingham, Bracknell, Sandhurst, Camberley, Ascot and Reading. 

Get the latest SIPP advice from your IFA in addition to all other aspects of financial planning.

Visit http://www.fpp-ifa.co.uk/ for all your financial needs.

Have you planned for a secure financial future with your IFA?

Check out http://www.fpp-ifa.co.uk/aboutus.php for the Financial Planning Partners company information.

Major Changes to Pension Regulations in 2011

As you may be aware, there are significant changes being made to rules regarding how much you can save into your pension and how you can eventually take your benefits. Perhaps the most significant change is the removal of the need to buy an annuity by the age of 75 and the greater choice this gives you in how you secure your retirement income and what happens to the fund on your death.

From April 6th, the maximum amount that you can save into your pension and receive tax relief will be £50,000. Any employer contributions will also have to be included in this amount. Whilst this level of allowance will be more than sufficient for most people, you are able to carry forward any unused allowance from the previous three tax years to boost the amount on which you can receive tax relief.

Tax relief on your contributions will be at your marginal rate of income tax and so additional rate tax payers may be able to receive 50% tax relief. If you have taxable income of more than £100,000 then the tax savings can be even more significant. Individuals on this level of income lose £1 of personal allowance for every £2 earned over £100,000 resulting in tax rates of up to 60%. Making a pension contribution reduces your taxable income and potentially saves you from these higher rates of tax.

Don’t forget that basic rate tax relief is given on contributions even if the contribution takes your taxable income below the personal allowance. This can be useful where one partner is a low earner but you wish to build up their pension fund in order to fully use their tax allowances in retirement.

The current rule which pretty much forced you to by an annuity by age 75 or face punitive tax charges on your fund on death is being removed. You now have a broad range of options for securing your benefits in retirement including short term annuities, income drawdown, asset backed annuities as well as the traditional lifetime annuity with no cut off age. These options can be used in isolation or combined to provide you with the income guarantees and flexibility that meet your needs. Depending on your selected option, in most cases the fund can be passed on to your family even if you have no dependants at the time of death. The fund would be taxed at a rate of 55% but the risk of also paying additional inheritance tax on the benefit has effectively been removed.

Income drawdown has been an option for a number of years allowing individuals flexibility in the level of income they withdraw within specified limits. Although the maximum permitted income withdrawal is being reduced, it will remain an option worth considering for larger pension funds or if you have significant other resources and require the flexibility it offers. Withdrawals above the reduced limits will be permitted through a new option called Flexible Drawdown. If you have a minimum guaranteed lifetime income of at least £20,000 (including State benefits) then you can make unlimited taxable withdrawals from your pension fund.

When considering funding for your retirement, remember that the State pension age (SPA) is set to rise to age 66 for both men and women by 2020. The process will be gradual, beginning in December 2018. Before this starts, women’s SPA must first come into line with men’s SPA. This increase, which has already started, was originally planned to gradually occur between 2010 and 2020 but will now be accelerated bringing women’s SPA to 65 by December 2018. State benefits will now be paid later than expected for anyone under age 57 as at 6^th April 2010.


For pension advice visit The Financial Planning Partners Ltd. 

Financial Planning Partners Ltd launches new website

View the new Financial Planning Partners Ltd website at http://www.fpp-online.co.uk/.

Welcome to the Financial Planning Partners Ltd. We are a firm of independent financial advisers (IFAs) based in Crowthorne, Berkshire where we have been serving clents in the surrounding areas of Wokingham, Bracknell, Sandhurst, Ascot and Reading for over 25 years.

Whether you are looking for advice on a specific area such as retirement planning, savings and investments, life insurance, inheritance tax planning or need a general review of your finances, we have a wealth of experience in the firm to help and assist you.

Our independent status means that any advice we give you will be unbiased towards any company or product and will be clearly detailed to you in writing in clear and understandable terms.

If you require a more detailed review of your finances we are also able to offer a bespoke cashflow modeling service. This will not only show you how you currently stand but also the likely affect of your actions on your future finances. Clients find this invaluable when considering when retirement will be possible, whether they can afford to gift funds, will the family be covered on death or serious illness, etc.

We hope that you have the time to browse our new website and look forward to hearing from you.