Tag: rates


NS&I – New Pensioner Bonds – 65 Plus Bonds


In January 2015 NS&I are launching new Bonds for investors aged 65 and over. These are the Bonds announced by the Chancellor in his March 2014 Budget statement.

Full details of the Bonds will be available when they go on sale in January 2015.

The new Bonds at a glance;

What are the Bonds?
• Lump sum investments providing capital growth
• Choice of terms – 1-year and 3-year
• Designed to be held for whole term, but can be cashed in early with a penalty equivalent to 90 days’ interest

When do they go on sale?
• January 2015 – exact date to be announced
• Available for a limited period only

Who can invest?
• Anyone aged 65 or over
• Invest by yourself or jointly with one other person aged 65 or over

How much can I invest?
• Minimum for each investment £500
• Maximum per person per Issue of each term £10,000

What about interest?
• 1 Year Bond 2.80% gross/AER* (2.24% after basic rate of tax)
• 3 Year Bond 4.00% gross/AER* (3.20% after basic rate of tax)
• Fixed rates, guaranteed for the whole term
• Interest added on each anniversary

The tax position
• Interest taxable and paid net (with basic rate tax taken off)
• Higher and additional rate taxpayers will need to declare their interest to HM Revenue & Customs (HMRC) and pay the extra tax due
• Non taxpayers, and those eligible to have any of their interest taxed at the new 0% rate (which starts from April 2015), can claim back the tax from HMRC
• NS&I are not currently part of the R85 scheme so we can’t pay the interest gross on these Bonds


The government has set the total limit of subscription to £10 billion –  Applications will be dealt on first come, first served basis and investors will be able to apply by post, online and by phone.


building your financial future

Keeping one eye on a 2015 interest rate rise

It is now six years since emergency measures were put in place to protect the global financial markets from imploding when the banking crisis spiked in 2008. To stave off a liquidity disaster, many global policy makers decided to cut interest rates to record low levels.

At that juncture most experts, commentators and the investment community assumed this would be a short term effort; an emergency measure, maybe lasting months, if not months then just a year or two. Virtually no one could see interest rates remaining so low for so long.

We have been waiting for a reversion to the mean ever since; surely, normal interest rates have to come back into play at some point. However, this begs many questions: what is a normal rate of interest? Are we still, in effect, in the aftermath of the banking crisis, with limited, real corrections to market conditions yet to come? Aren’t governments still as indebted (if not more?) than they were in 2008? Is a secondary banking crisis, or crash, a possibility?

Put another way, have those “temporary” emergency measures done nothing more than put some difficult decisions out into the long grass? And was the 2008 crisis actually a multi-year one, which could drag for years to come from here?

There is a simple premise here to consider… maybe nobody knows the answers! In the past few weeks, oil prices have tumbled; falling at the time of writing to around $80. Just a few weeks ago, the consensus of the major oil analysts was that the short term outlook for oil was in the range of $100-$110. Even those people whose job it is to sit behind a desk and study the fundamentals couldn’t see the fall that has taken place.

Markets and market prices are notoriously unpredictable and are virtually uncontrollable (over time). Interest rates are no exception. Central bankers and governments cannot ultimately control interest rates; they can and do control them to a point and most certainly for a time but as John Major found out in the early 1990s, if markets dictate then governments can get caught out. This lesson is found time and time again in the history of markets.

Market conditions have been perfect for central bankers to maintain low base rates; most notably the lack of any inflationary pressure has taken away the one economic condition that would force interest rates higher.

As we enter 2015 there is little doubt that the consensus is to stick with low interest rates and to try and maintain the wider UK economic recovery, which seems fragile at best. It is likely therefore that we will see more of the same for some time to come. But watch out for any sign that inflation is starting to take hold; as any sailor will tell you, a storm can appear more quickly than you can move your boat and so it is with inflation – it can rise from seemingly nowhere. Any signs that inflation may be rising would suggest that policymakers would have no option but to start increasing rates and this could happen far quicker than anyone may realise.

The message here? Make sure your financial planning is structured to cater for the unexpected.


building your financial future

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

building your financial future


Undersaving Britain

Pension saving is at its lowest level for 10 years according to recently published Department of Work and Pensions (DWP) analysis by the Family Resources Survey (FRS), a key source for pension information. The analysis came from interviews with around 25,000 private households across the UK in 2009 and 2010.

Only 38% of working-age people, 11.6 million out of 30.4 million people are saving into a private pension. In reporting the analysis, the DWP highlighted that this shows exactly why automatic enrolment into pension schemes being introduced from October 2012, is so critical.

The figures show a steady decline in pension saving between 1999/2000 and 2009/10, with the decrease being most dramatic among men and the under 40s. While the overall number of people saving into a private pension fell from 46% in 1999/00 to 38% in 2009/10, pension saving among men fell from 52% to 39%. And among people aged between 20 and 39 years old pension provision fell from 43% to 31%.

The analysis also reveals a map of pension provision across the UK in 2009/10, with higher pension provision in the South East (43%), Scotland (42%), the South West (41%) and the East (41%), and lowest pension participation in Northern Ireland (33%), London (34%) and the West Midlands (34%).

Minister for Pensions, Steve Webb, said: “These are alarming figures and they underscore exactly why our pension reforms will be so vital. With fewer people saving into a pension, lower annuity rates and an average of 23 years in retirement, many people could face a poorer future in their later lives.

“We simply must put a stop to this trend and get people saving. Automatic enrolment, beginning for the largest employers later this year, will get millions of people saving, many for the first time.”
Automatic enrolment in a nutshell

  • Beginning in autumn 2012, many more people will have access to a pension at work, to help them save for their later years.
  • Employers will have to enrol all eligible employees into a pension and make minimum contributions into the scheme.
  • If you are eligible, your employer will enrol you automatically into a pension.
  • You will be able to opt out if you want to but will therefore miss out on an employer contribution of around £600 a year once minimum contributions are established – 3% of average earnings of £26,200 for full-time workers (ONS 2011 Annual Survey of Hours and Earnings)


Should you want more information please do not hesitate to contact us on 01737 225665 or advice@conceptfp.com

For our 2 most popular guides please just click on the links below

Guide to making the most with savings

Guide to planning for retirement

or for all of our guides please see below