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Saving a little bit more will go a long way

Many working age people in the UK could secure a financially comfortable retirement by making some small changes to their saving habits, according to new research published by the Department for Work and Pensions (DWP). While government action to transform British pensions has brought about radical improvements to the retirement prospects of future pensioners, millions are still not saving enough to ensure they can maintain their standard of living into old age – estimating that 11.9m people in the UK need only to make modest changes to safeguard their financial future.

The research finds that landmark reforms of the State Pension system, working to reinvigorate workplace pension schemes and efforts to help older job-seekers get back into employment, are all playing a crucial role in tackling the problem of under-saving. The introduction of the triple lock – the commitment to increase the state pension by whichever is highest out of earnings, prices or 2.5% – has also made a major impact.

Of the 11.9 million people who are saving too little, a large number of these are already on the right savings path and could safeguard their financial future by putting away just a little more. The analysis finds that of the 11.9 million, almost half are at least 80% of the way towards achieving their retirement income target, while only 8 per cent are less than 50% of the way there.

But with the government’s pension reforms having had the biggest positive impact on lower earners, the spotlight is now turning to people in middle and higher income groups, who are amongst the worst. While the problem exists amongst all income groups, it is people in the middle and higher income ranges who, statistically, now face the biggest income hit when they give up work.

The research finds that higher income groups could benefit significantly from higher contribution rates but recognises the danger that, if set too high, these could prove punitive for lower earners and encourage more people to opt out of workplace pensions entirely. On this basis, the DWP considers that further work is needed to consider pension contribution rates which strike the right balance between providing improved retirement outcomes for all but without having a detrimental impact on working life incomes.

The DWP research highlights three key factors leading to poor retirement income prospects:

  • Not having a full work history can result in a reduced entitlement to the State Pension (because of insufficient National Insurance contributions) as well as a reduced capacity for private pension saving. This factor is most typical amongst lower-income groups.
  • Not contributing to private pensions while in work, which is more typical of people in the middle-income groups.
  • Not contributing enough to private pensions to generate a large enough retirement income, which is more typical of people in the higher-income groups.

The research document sets out the scale of the savings challenge facing the UK, as the average age of the country’s population continues to rise. The number of people classed as under-saving is defined by a replacement rate which measures retirement income as a percentage of working age income.

The DWP research concludes that:

  • the maintenance of the triple lock guarantee – introduced by the government in 2010 – into future years will prevent the number of under-savers increasing further
  • further action to increase employment levels amongst people aged between 50 and State Pension age has an important role to play, as does discouraging people from opting out of workplace pensions
  • increasing contributions paid into workplace pensions could have a positive impact on reducing under-saving.

Sources: https://www.gov.uk/government/news/take-action-now-to-safeguard-your-retirement-pensions-minister


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SMEs need to take care in the complicated insurance arena

“Small businesses are experts in their particular field but are often not experienced in buying insurance. That is why they need to be able to trust their insurance intermediary to act in their best interests. If there are conflicts of interest that are not identified or properly managed, that trust is put at risk.” (Clive Adamson, Director of Supervision at the Financial Conduct Authority)

The FCA has focused a recent review on insurance selling to small business customers. It stated that they have more complex insurance needs than retail clients but are not always more sophisticated buyers of insurance. Small businesses often rely on insurance intermediaries for advice, where actually an independent adviser may be a more suitable source of assistance. The FCA wanted to establish how the flow of revenue from insurers or other sources to intermediaries could affect how customers were treated. It found that:

  • there was increased risk of conflicting interests where firms fulfilled multiple roles in the distribution chain and acted as agent for both the customer and insurer in the same transaction;
  • the control framework and management information in some firms had not developed in line with changes in the size and complexity of the business;
  • some intermediaries relied on disclosure as the main way to address conflicts of interest rather than having effective control frameworks in place;
  • disclosure provided to customers was sometimes very generic and unlikely to meet their information needs or enhance their understanding; and
  • conflicts of interest were not always effectively mitigated in relation to add-on insurance or services, premium finance or where the cost of insurance is borne by a third party.

Consumer research also revealed that small businesses are not aware of the differing roles intermediaries can perform. Many (68%) believed that intermediaries acted as their agent when selecting and placing their insurance. Further, a large majority (86%) of small business policyholders expected their insurance intermediary to search for more than one quote, which was not consistent with placement processes within some intermediary firms.

The FCA is concerned that if conflicts are not properly managed there is the risk that decisions are made in the interest of insurance industry firms rather than their small business customers. This could result in some small businesses over-paying or buying products they don’t need. Whilst the FCA’s review has focused on larger firms, all intermediaries should take note of the findings and ensure any conflicts are appropriately managed. The regulator will be working closely with the industry to communicate the results of the review and, with the firms involved, will use appropriate regulatory tools to address specific issues.

Sources: http://www.fca.org.uk/news/fca-calls-on-insurance-intermediaries-to-better-manage-conflicts-of-interest



That’s why at Concept we collaborate with Executive Insurance – they hold values true to our ethos of looking after the client – should you wish to contact them just call 01323 444999 or email   admin@execinsurance.co.uk

ISA ? …NISA ? …. Change is here …. Welcome to the new rules

In March this year the Chancellor announced a series of changes to the way in which people can save. As of today you can now put up to £15,000 into your individual savings account (ISA). In addition to this increase from £11,880, the government also added some flexibility to the way in which your ISA allowance can be used.

Previously only half your allowance could be saved in cash, whereas now you can put your entire allowance in cash. Another added benefit is that you can now switch between cash and stocks and shares whenever you like!

It’s not just about adult ISA’s – Junior ISA allowance increases from £3,840 to £4,000 !


ISA Rules 2014 2015

Some things about ISA’s you may not know ….

  • Only 26% of individuals earning between £100k – £150k maxed out their ISAs
  • 2012/13 subscriptions Cash £40 billion, Stocks ‘n’ Shares £16billion
  • £443 billion was held in ISAs (as at April 2013) split 50:50 cash/stocks ‘n’ shares

Source – A National Statistics publication



‘Changing lives one client at a time’

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The 8 most important points from the 2014 Budget

The Chancellor may have gone for the popular phrase from Chancellors of yore by taking ‘a penny off a pint’, but what were the real big announcements during The Budget 2014? We summarise the 8 main points:

1. Changes to pensions mean many more options than just buying an annuity

In measures to be introduced in April 2015, pensioners will have complete flexibility on how much of their pension they want to take at retirement, effectively eliminating the need to buy an annuity. This opens up many more options for what to do with your pension in your retirement years.

2. ISA revisions are great for savers

The ISA limit was increased to £15,000 a year and it was announced that Stocks & Shares ISAs and Cash ISAs would be merged into a New ISA. Again, this gives savers much more flexibility and potentially allows more of their income to be shielded within the tax free accounts.

3. New additions to the bonds market

A new Pensioners Bond will be introduced at the start of 2015 with what were described as ‘market leading rates’, thus giving pensioners another option for what to do with their newly released pension savings! There were also changes to Premium Bonds, with an increase in winners promised.

4. Personal tax allowance increase

The personal tax allowance was confirmed as increasing to £10,500 in April 2015, with the increase at the start of the tax year in April going to £10,000. Good news in that a little more of our money is saved away from taxation!

5. Small pension limits increased

For any small pension pots currently held, there was an increase in the total amount of individual pot that can be taken as a lump sum to £10,000. The Chancellor also announced an increase in the total number of pots, up to this size, that could be taken to three, meaning £30,000 could be taken in total.

6. Flexible drawdown limits reduced

In yet another pensions related matter for what was a busy Budget for the industry, savers now only need to have £12,000 (as opposed to £20,000) in their pot in order to access flexible drawdown.

7. Small measures for individuals and businesses; fuel duty, minimum wage and apprenticeships

Whilst these might not be the headline grabbers in overall cost terms, they will have an impact for many individuals and business owners. Fuel duty has been frozen in another attempt to get the current high costs down, whilst both the minimum wage and the number of apprenticeships were increased, with the Chancellor promising to ‘double’ the latter.

8. The new pound coin!

Perhaps it’s not actually one of the most important points from The Budget (though the Chancellor would point to the increased percentage of forged pound coins, which cost the economy) but it will certainly be one of the more visible ones when the new coin starts to enter circulation at some point around 2017.

Sources: gov.uk

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The end of (some) £50 notes: time to unstuff the mattress?

Hopefully you don’t keep all of your savings stuffed in or under the mattress of your bed but if you do happen to keep a ‘rainy day’ store of £50 notes, you had better check your bed linen, otherwise you may find that the value of your assets suddenly goes down in the not too distant future!

The Bank of England has announced that the £50 banknote carrying the portrait of Sir John Houblon, the first Governor of the Bank of England, will be withdrawn from circulation on 30 April 2014. From that time, only the £50 notes featuring Matthew Boulton and James Watt, which was introduced in November 2011, will hold legal tender status. Members of the public who have Houblon £50 notes can continue to use them up to and including 30 April.

After 30 April, retailers are unlikely to accept the Houblon notes as payment. However, most banks and building societies will continue to accept them for deposit to customer accounts. Agreeing to exchange the notes after 30 April is at the discretion of individual institutions. Barclays, NatWest, RBS, Ulster Bank and the Post Office have all agreed to exchange Houblon £50 notes for members of the public – up to the value of £200, but only until 30 October 2014.

The Bank of England will continue to exchange Houblon £50 notes after 30 April, as it would for any other Bank of England note which no longer has legal tender status. So if you forget to check your mattress, you can still pack your £50 Houblon notes in a case and take a trip to the Bank of England!

Sources: www.bankofengland.co.uk


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The Risk and Cost of Flooding

The risk of flooding in the UK is growing and could seriously affect the value and amenity of your home or business premises. It is suggested by the Royal Institute of Chartered Surveyors (RICS), amongst others, that there will be an increasing number of floods in the future, due to changes in weather patterns, the amount of new buildings on low-lying areas and other local factors.

The RICS paper which formalised these claims went on to say that many properties which have not previously been at risk of flooding, now are. Of the 28 million homes in the UK, over five million are currently at risk, as well as over 300,000 business premises and many more public and utility services buildings. For most of these properties, the risk of being flooded in any one year is still small but for several hundred thousand properties, especially those which have been flooded in recent years, the risk is more significant.

The increasing risk of flooding can reduce the value of your home or business premises and may make it more difficult and expensive to get insurance cover. A flood can threaten your safety, cause serious damage to your property and its contents, and will result in many months of dislocation and disruption. A flood can happen to any property, from one or more of these causes. For most property in the UK, the risk is still small. Some properties are more at risk than others due to their geographic location and particular local situation.

How will the flood risk affect the value and insurability of my property?

The value of a property at risk from flood is less than that of a similar property that isn’t at risk. Flood risk will affect the value for two reasons. First is the impact of a flood on the continued use of the premises, the health and safety of the occupants and any consequential damage and disruption. The second is obtaining building insurance cover for the property. If it is difficult to arrange cover it will affect the ability to arrange a mortgage for the property. As building insurance is so important in determining whether a property is mortgageable and therefore the market value of the property, owners and prospective purchasers are advised to verify this cover is provided and maintained by determining the property’s flood risk. The reduction in value may range from negligible to severe, depending on the particular circumstances of the property’s location, situation, type of construction, and flood defences, both to the geographic area and to the property in particular. The impact on value can be reduced by ensuring better flood resistance (flood defences) are in place and by increasing the flood resilience of the property and its contents – making the property construction and facilities less prone to damage by flood.

Sources: www.rics.org.uk

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Budget 2014


Radical changes proposed in today’s Budget could herald the biggest shake-up to UK pensions ever. And it could happen as soon as 2015.

These welcome proposals would give pension savers more freedom, choice and flexibility than ever before over how they access their pension savings.

In this brief budget over view we cover the following – more information will be issued when we have more details.

1. New ISA
2. NS&I – Premium Bonds / Pensioners Bond
3. Pensions – Retirement Income
4. Tax Allowances and Thresholds


In a major simplification for savers, the annual subscription limit will be increased to £15,000 (from £11,520), and there will no longer be a lower cap on the amount saved into a cash account. So your clients can save any combination of amounts up to £15,000 overall between their cash and stocks and shares ISA.

The simplified product will be known as a NISA (New ISA), and all existing ISAs will become NISAs. Savers may also transfer their stocks and share ISA to cash.

This measure is intended to give greater choice and flexibility for savers but, in the current climate of low interest rates, clients should be carefully advised about switching fully to cash.

The annual subscription limit for Junior ISA and Child Trust Fund (CTF) will also be increased from £3,840 to £4,000.

All of these changes will have effect from 1 July 2014

Two key measures were announced for savers with National Savings and Investments. Premium Bonds get a decent fillip: increased investment (£30,000 to £40,000 in June 2014, up again to £50,000 in 2015/16) and bigger prizes (two £1M prizes a month from August 2014).

The proposed fixed rates on the Pensioner Bond look attractive – 2.8% gross/AER for a one year term, and 4.0% gross/AER for a three year bond.

But there’s a £10,000 maximum investment limit and the income will be taxable

Pensions – Retirement Income

The detail isn’t set in stone. But this signals a clear Government desire to give savers more control, and responsibility, over their destiny in life after work. It could represent pension utopia, but only with advice to solve an increasingly complicated retirement equation.
These proposals will be consulted on this year, but in recognising the need for flexibility there is a boost for drawdown users almost immediately.

The chancellor has announced two welcome changes to income drawdown rules from 27 March:
•Capped income drawdown – limit up 25%: The maximum yearly income allowed under the pension capped drawdown rules will increase by 25%, from 120% to 150% of the GAD basis amount, for income years starting after 26 March 2014.
•Flexible income drawdown – MIR cut to £12k: The yearly secured income needed to meet the ‘minimum income requirement’ to access flexible drawdown will be cut from £20,000 to £12,000 for those applying to start flexible drawdown after 26 March.

Taken together, these changes give pension drawdown users even more flexibility to dial income up or down to adapt to changing circumstances.

Pension triviality limits increased

The Chancellor has announced welcome changes to the pension triviality rules from 27 March 2014:
•Triviality limit up to £30k: Individuals over age 60, with total pension savings of £30,000, or less can take it all as a trivial commutation lump sum – the current limit is just £18,000;
•Stranded pot rules relaxed: Small stranded pension pots of up to £10,000 can be taken as a lump sum – a significant increase from the current £2,000. And the number of small stranded personal pension pots that can be taken as a lump sum is increased from two to three.

These changes improve choice for more consumers who may otherwise have been forced to receive very small regular pensions for life, with limited ability to shop around for the best annuity. In both cases, up to 25% of the lump sum can be paid tax-free with the balance taxed as income.

55% Drawdown death benefits charge set to be cut

It’s been a day full of good news for drawdown users with the announcement of a consultation on the 55% tax charge on drawdown lump sum death benefits.

With much greater freedom proposed on taking pension benefits, there are plans to cut the rate of tax payable on drawdown death benefits from April 2015 to make it more closely aligned to income tax charges on drawdown.

Having a rate of tax on death which is greater than the income tax on withdrawing income could see the tax tail wagging the retirement income dog. The Government have recognised the need to have a tax system where pension savers are not penalised by only taking what they need from their pension fund.

This should see the ability to pass on pension death benefits to loved ones given a further boost and make the use of bypass trusts even more appealing.

Tax allowances and thresholds

Income tax:
•The personal allowance, set at £10,000 for 2014/15, will rise to £10,500 in 2015/16 for those born after 5 April 1948. At the same time, the level at which income tax becomes payable at higher rates will rise by 1% to £42,285, meaning that higher rate taxpayers with incomes below £100,000 will also be better off by £184 – a little less pressure on the ‘squeezed middles’.
•Age related allowances will remain at £10,660.
•From the 2015/16 tax year, a spouse or civil partner who doesn’t have income to fully use up their personal allowance, will be able to transfer up to £1,050 to their partner, provided that partner is a basic rate taxpayer.

Capital Gains Tax
The annual exemption will rise by £100 to £11,000 in 2014/15, and to £11,100 in 2015/16


As always should you require more information please do not hesitate to contact us on 01737 225665 or advice@conceptfp.com


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Annuity review highlights importance of advice and shopping around

The startling headline finding from The Financial Conduct Authority’s (FCA) recent review of the annuities market proved to be the fact that some 80% of people who purchased an annuity from their pension provider could have received a better deal from an alternative source.

The report found that the annuities market was not working as it could for consumers, with many reporting that they found it difficult to review the suitability of the annuity offered by their pension provider, when compared to the alternatives available.

In monetary terms, the FCA found that, on average, retirees who buy an annuity from their pension provider miss out on around £71 per year. With the average length of retirement being around 19 years, that figure works out to meaning retirees are over £1,300 worse off: a figure that could represent a very nice holiday for many, an investment on behalf of the grandchildren or one of several other very rewarding ways to spend a retirement income.

As part of their findings, the FCA have launched a more in-depth review of competition within the annuities marketplace to assess how it could be better organised with consumers in mind.

The message though is clear: shopping around when purchasing your annuity can really benefit you in your retirement years and, if you find the marketplace too complex to navigate on your own, a financial planner may well be able to assist.

Taking account of your retirement goals and your current financial situation, we’ll look at your various options for living your desired lifestyle in retirement, including whether purchasing an annuity would be a suitable solution and, of course, then assessing which annuity would be best for you.

We’ll also be keeping a close eye on the FCA’s further review of the market, to see how it will impact annuities in the future and how that would work for consumers.

Sources: fca.org.uk

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I’m not a Magician !

Blog by Adrian Elliott

Would you visit you Doctor and say the following?

Patient: “Doctor I don’t feel well, please make me feel better”
Doctor: “What are your symptoms?”
Patient: “I’m afraid I can’t tell you that.”
Doctor: “May I ask why?”
Patient: “I am not prepared to disclose any of my personal details to you.”
Doctor: “OK??…………!!! ”

What would your Doctor Say?

Recently the same scenario happened to myself (‘No, I wasn’t giving any Medical advice before you start getting concerned!’).

A perspective client called and wanted us to provide advice. Prior to any appointment we send our clients a ‘welcome pack’ with a covering letter confirming their appointment. Within the welcome pack we include a fact find and we kindly ask our clients to complete this prior to their introduction meeting and give a rationale why this is important.
The new clients I was due to meet, prior to their appointment rang to inform us that they found the fact find intrusive and they would not be completing it.
When I met the clients, they asked me for advice on investing a lump sum of money.
When we ask them for details about themselves they weren’t prepared to disclose anything as they did not believe that this was relevant.
Now with the best will in the world, I am not a magician ….. There are some many factors that need to be considered;

  • Tax circumstances – income tax / inheritance tax to name but 2 !
  • Used allowances for the tax year?
  • Risk they are willing to take
  • Their capacity to loss
  • Do they have any debts?

So many things that need to be answered and facts revealed

The doctor would never prescribe any tablets or drugs without all the information and a full examination and nor would I be willing to give professional advice without knowing all the facts – it’s dangerous for your wealth !

Take a look at our past blog ‘The trouble with facts is that there are so many of them!’

Adrian Elliott

Certified Financial Planner

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