Tag: retirees


Government launch date for 120% drawdown limit …

The new drawdown limit of 120% will be introduced from 26 March, the government has revealed.

Chancellor George Osborne announced plans to return the limit for capped drawdown to 120% of  GAD (the Government Actuary’s Department) rate in his Autumn Statement in December 2012, but gave no date for the change.

In April 2011 the government changed the drawdown limit from 120% of the GAD rate, reducing it to 100%.

Prior to this, individuals could take 120% of the income level set by GAD. This was reduced to 100% in order to prevent investors from depleting their savings too quickly.

The move to reinstate the 20% uplift at the end of last year followed growing pressure from pension providers and MPs, who received complaints from retirees hit by cuts of up to 50% in their income as the GAD rate tracked annuity rates downward.

How providers are going to facilitate this change we are unsure at the moment, although welcome for retirees in drawdown they still have to wait until March.


For further information please do not hesitate to contact us on 01737 225665 or advice@conceptfp.com


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Source: Citywire NMA Alex Steger

Tough Times Ahead For Families

The above headline could have easily read “Tough Times Ahead for Everyone” but it is likely that the effects of the austerity budget, and the financial deficit it aims to redress, will be felt more acutely by the younger generations and these effects are likely to last for many years.

With inflation out pacing wage growth, tax credits being withdrawn, child benefit frozen and the Child Trust Fund abolished, families are becoming progressively worse off.  Undoubtedly the elderly on low incomes will also be hit by higher inflation but it is worth noting that winter fuel payments, free bus passes and free TV licenses have all been retained and that the basic state pension was the only benefit to be increased.

If this was a case of short term pain for long term gain things wouldn’t be so bad but unfortunately the longer term picture looks even less rosy.

The NHS is the only major department whose Budget has been increased and it is reckoned that around 45% of total spending goes to the 16% of the population who are over 65. This is perhaps not surprising, after all, it is inevitable that people will require more medical care towards the end of their lives but this generation are taking out more than they have put in.

To redress this the state pension age has increased, and we are likely to see further increases over the coming years as the working population are forced to contribute to the welfare system for many more years.

The counter argument is that money is now passed down the generations, as increased home ownership provides the next generation with a level of inherited wealth not previously enjoyed.  However, inherited wealth cannot be relied upon as increased longevity and rising long-term care costs force more people to sell or borrow against their homes.

So what can be done?  The key issue to recognise is that while there may be less spare money available, saving for the longer term should not be the first victim of household budget cuts.  Because of the effects of compound growth, a pound not saved now will be far more damaging to your longer-term wealth than a pound not saved in later years.

The Value of Retirement Advice

A recent report by Unbiased, the Independent Financial Adviser search website, has revealed that 36% of those seeking independent financial advice do so in relation to retirement planning.

The large number of people seeking advice in this area is perhaps not surprising.  Despite “Pension Simplification” retirement planning remains complex.  Increased job mobility means that by the time they retire many people hold a range of pension plans, some occupational, some personal and unsurprisingly these plans are often not fully understood by those that hold them.

There may be a strong temptation to consolidate pensions in order to cut down on paperwork and ease the administrative burden but before undertaking any consolidation exercise, the benefits offered by your existing schemes should be thoroughly explored.  While older contracts may have higher charges they may also offer useful features such as guaranteed minimum growth rates or guaranteed annuity rates (the rate at which the capital will be turned into income once you retire).  If you have final salary pensions then a thorough analysis should be carried out to determine the viability of a transfer.

When you come to take benefits from pension schemes the options are again many and varied but unfortunately most people end up buying an annuity from their existing pension provider.  If annuity purchase is deemed to be the most suitable means of drawing income, it pays to shop around to get the best possible annuity rate.

Whilst it is crucial to take advice on making the most of your retirement funds it is equally important to ascertain the competence of your adviser.  Unfortunately the Financial Services Authority continues to uncover examples of poor advice in relation to retirement planning.  With increased longevity the effects of the decisions you make regarding your retirement could be long lasting and it is therefore vita that you take good advice and make the right choices.

Election Rivals Set Out Pension Promises

With the 6 May 2010 General Election fast approaching, below is a summary of how the rivals intend to deal with pensions, should they be elected.


  • Reduce tax relief for those earning more than £130,000.
  • Introduce employer duty to enrol staff into a pension scheme from 2012; known as auto-enrolment.
  • Review default retirement age of 65 for employees.
  • Restore state pension annual increases to earnings in 2012; currently increases in line with inflation.
  • Gradually increase State Pension Age to 68, starting from 2024.


  • When resources allow, start to reverse the effect of the decision in 1997 to abolition dividend tax credits for pension schemes.
  • Scrap the rule forcing policyholders to take their pensions before age 75.
  • Review the auto-enrolment rules.
  • Cap public sector pensions over £50,000.
  • Restore state pension annual increases to earnings before end of next parliament; currently increases in line with inflation.
  • Hold a review to bring forward the start date of current government’s plan to increase the State Pension Age from 2024 to 2016 (for men) and 2020 (for women).

Liberal Democrats

  • Scrap higher rate tax relief on pension contributions; basic rate only, regardless of earnings.
  • Give pension policyholders early access to their funds; currently earliest age is 55.
  • Scrap the rule forcing policyholders to take their pensions before age 75.
  • Scrap default retirement age of 65 for employees.
  • Replace state pension with a citizen’s pension, available to all at pension credit rate.
  • Immediately restore state pension annual increases to earnings; currently increases in line with inflation.
  • Retain current government’s plans to gradually increase State Pension Age to 68, starting from 2024.

Concept Financial Planning

Thanks to TPAS

People do not grow old like they used to ……

People are rejecting traditional ideas about retirement and want payback from a lifetime of hard work.

 Currently in the UK the 50+ or baby boomer generation, are 20 million strong, accounts for 80% of the nation’s wealth, and are charging towards retirement. Attitudes have changed and retirement is no longer the end destination but a continuation of the life journey. Most people hope that their retirement will be a time they can enjoy and maintain their current lifestyle.

A client I spoke to last week said “I was 60 last month and when my dad was 60 and my mum was 60 they were old people and I really only think of myself as 40. They were thinking of coming to the end of their life but I have no intention of thinking this way”.  However, life expectancy is increasing, and currently a 65 year old man can expect to live until 86, and a woman 88.

 When asked, 56% of baby-boomers said they are not confident about having enough money in retirement. There are two challenges when investing for your pension, which is longevity and inflation. It is the emotional risk attached to losing money that stops people investing.  In order to grow a pension to maintain a desired standard of living, investing funds in cash can not be a long term strategy. Increased longevity combined with inflation could cut a retirees spending power by up to 40% over 25 years. So what are your options? Do nothing? The bank? Property? The stock market? Something else?

With the challenges the credit crunch has presented a strategy is needed to help you protect, repair, and recuperate your pension. Market cycles show it will recover but no one knows when and to what level. Whatever you decide, you cannot afford to do nothing.  Retirement planning may be painful at the time, but it is not as painful as reaching retirement with inadequate provision and having to give up things you have taken for granted during your working life.