Pensions Archives - Oakhill Independent Financial Services Limited

The Week in Review – 18 May

“This is a supremely difficult balance to strike”

Further details of the government’s next steps in the fight against coronavirus were laid out in a statement in Parliament on Monday, accompanied by a 50-page three step plan. The Prime Minister continued to emphasise the conditional nature of the plan, “This is a supremely difficult balance to strike…the government is submitting to the House today a plan which is conditional and dependent as always on the common sense and observance of the British people, and on continual re-assessment of the data.”

COVID-19 secure guidelines were issued for UK employers on Monday, to help them get their businesses back up and running, and workplaces operating safely. The guidance covers eight workplace settings which are now permitted to be open, including construction sites and factories.

Increasing divergence

Scotland and Wales have chosen not to adopt the ‘stay alert’ slogan. Ahead of the weekend, Scotland’s First Minister Nicola Sturgeon said changes to lockdown would not take place and will be “careful and gradual” when they are. She will share her thinking on the changes to lockdown this week. In Wales, First Minister Mark Drakeford said he did not think it was the “right time” to change to the new message.

Further fiscal measures to support the workforce

On Tuesday, Chancellor Rishi Sunak announced the extension of the Job Retention Scheme to the end of October, confirming that employees will continue to receive 80% of their monthly wages up to £2,500. The government will ask companies to start sharing the cost of the scheme from August.

The scheme will facilitate greater flexibility to support the transition back to work, allowing employers to bring furloughed employees back part-time from August.

On the move again

Last week, in England, the property market reopened for business after the government said estate agents could recommence viewings and home moves could proceed. Official guidance strongly advises online viewings where possible and warns that buying and selling a home will not return to normal.

Testing extended to all care home residents and staff

On Friday, the Downing Street briefing was led by Health Secretary Matt Hancock, who announced a further £600m has been made available to care homes in England and that all care home residents and staff will be tested for the virus by June. On Saturday, Welsh Health Minister, Vaughan Gething announced that testing will be extended to all care home residents and staff. In Scotland, staff and residents are tested if there is at least one confirmed case. On Sunday, Business Secretary Alok Sharma, pledged an additional £84m to accelerate the search for a vaccine.

Back to school

Concerns have been expressed over the re-opening of primary schools on 1 June, with unions representing teachers in England conveying fears over safety. At Saturday’s briefing, the Education Secretary Gavin Williamson said he will be cautious, reiterating the government would only reopen schools providing the five tests had been met. He hoped that all schools would put the child centre-stage, “I would hope that any school, wherever it is in the country…is making sure we are delivering the very best for every single child in this country. Making sure we do everything we can do to give them the opportunity to get back in school, get learning and having the benefit of being with their teachers once more.”

Economic undulations

At the end of last week, stock markets responded positively to some solid industrial data from China, as production returned to growth in April. Sterling fell against the dollar on Friday, after third round post-Brexit trade talks between the EU and the UK broke up with little progress. As fuel demand strengthens, crude oil prices increased 7% on Friday to their highest price since March.

Onwards and upwards

We are here to guide and support you through these uncertain times. Financial advice is key, so please get in touch with any concerns or queries you may have.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

18 May 2020/by motive

Home Finance, Housing Market, News, Pensions, Retirement

Stamp duty penalises older people for moving

Think tank, the Adam Smith Institute, believes that Stamp Duty Land Tax, to give stamp duty its full name, should be scrapped. Amongst many reasons why they think it should be abolished is the belief that its existence prevents older people from downsizing.

The prospect of paying stamp duty on a smaller home acts as a disincentive. For example, when buying a retirement property priced at £250,000, stamp duty adds another £2,500 to the cost of moving home, along with solicitor’s fees, surveys, valuations and removal costs. (Figures differ under Land and Buildings Transaction Tax in Scotland and Land Transaction Tax in Wales.)

Those looking to raise cash to bolster retirement income are increasingly turning to equity release. It represents a way of accessing some of the value tied up in a property that avoids all the costs and upheaval of downsizing to a smaller property. With equity release, although there are set-up fees, most of the costs are delayed until you die or go into permanent residential care.

It’s important to remember that equity release means in most cases that the loan you take out against the equity tied up in your property will increase over time as interest is rolled up. When you die, the property will be sold, and the loan repaid. Although interest rates on equity release plans are higher than on a conventional mortgage, with average interest rates having fallen over the last few years, equity release has become more attractive to many.

It is however important to discuss equity release with your family as it will have an impact on the amount that they are likely to inherit.

Interest-only Mortgages

Equity release is increasingly coming to the aid of those approaching retirement with an interest-only mortgage where they do not have the funds to pay back the capital on maturity and their retirement income may not cover ongoing interest costs. Whilst they may not have paid off any capital, they have probably built up equity, offering them a lifeline that allows them to stay on in their home.

Think carefully before securing other debts against your home. Equity released from your home will be secured against it. Your home may be repossessed if you do not keep up repayments.

24 September 2019/by motive

News, Pensions, Retirement, Savings

Transfers of wealth – who gets what

Data from the Office for National Statistics⁵ show that various patterns are emerging in how wealth is transferred down the generations.
Unsurprisingly, gifts and loans are more commonly made to those aged 25–34, with 11% in this age bracket receiving more than £500 during the previous two years, with the average across all age groups being £2,000. This illustrates that parents are stepping in to help their offspring cope with times of major expense, like buying a house or starting a family.

Inheritances come later in life

The average inheritance across all age ranges during the previous two years was £11,000, with those aged 55 to 64 most likely to receive larger inheritances, receiving on average £33,000. Those aged 65 and over inherited on average £20,000. This money was put into savings or investments by around 49% of recipients.

This research serves to highlight that those who rely on receiving an inheritance instead of putting adequate pension provision in place might find they’ve reached retirement before they inherit. With gifts often given earlier in life, inheritances may be smaller in the years to come.

⁵ONS, Oct 2018

22 July 2019/by motive

Managing your money, Pensions

Self-employed? Prioritise your pension in 2019

There are now around 4.8m self-employed¹, representing around 15% of the UK workforce. Being your own boss brings freedom but could mean that you won’t have a workplace pension scheme to rely on when you retire.

A recent nationwide study² revealed that many self-employed people aren’t making provision for their retirement years. More than two-fifths (43%) do not have a pension, with 36% saying they can’t afford to save into one. Nearly a third (31%) expect to rely on the State Pension to fund their retirement.

How to plan for the future

If you’re self-employed, contributing to a pension can be a more difficult habit to develop than it is for those in employment. Irregular income patterns can make regular saving difficult, but there are plans available that can give you the flexibility you need, and the good news is that your contributions are topped up by Income Tax relief.

Despite often having more complex financial requirements, just 10% of self-employed people regularly see a financial adviser.

¹Office for National Statistics, Feb 2018
²Prudential, Aug 2018

12 March 2019/by motive

Home Finance, News, Pensions

Equity release topped £3bn in 2017

Many people approach retirement owning a family home and want to benefit from the cash tied up in what’s probably their biggest asset. For some, the thought of downsizing and moving in later life to release cash is too daunting to contemplate. An equity release plan allows you to turn some of the capital value of your home into cash, without having to sell up and move away.

For those reaching retirement, equity release continues to be a way to top up their income, carry out home improvements, have a holiday of a lifetime, or pass on capital to other family members. In 2017, more than £3bn was released, according to figures from the Equity Release Council.

Lifetime mortgages – a type of equity release – have a seen a major surge in popularity amongst older homeowners, and have become the fastest-growing sector of the mortgage market.

Independent professional advice is essential; equity release isn’t the right solution for everyone. Releasing cash from your home reduces the value of your estate and the amount of inheritance you leave, so you should discuss it with your family.

Think carefully before securing other debts against your home. Equity released from your home will be secured against it.

20 May 2018/by motive

Inheritances come later in life

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