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Clarke Nicklin Financial Planning

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November 2016

Consolidating your pension pots – Ensure you don’t lose out

Have you ever considered moving and consolidating your pension to another scheme or provider?

There are a host of reasons why people might want to do this before they reach retirement. Better fund performance, lower charges or better death benefits; others are simply changing jobs.

Most schemes will allow you to move your pension pot to another scheme, which could be a new employer’s workplace pension scheme, a personal pension scheme, a self-invested personal pension (SIPP) or a stakeholder pension (SHP) scheme.

Moving to a new employer

When you move jobs, you are treated as having left the workplace pension scheme, but you don’t lose the benefits accrued. You may decide that you want to consolidate your pot to the scheme offered by your new workplace.

It is important to do it for financial – and not emotional – reasons. Don’t move your pension pot out of a first-rate scheme simply because you want to cut all links with an old employer.

Better performance

If your scheme is performing poorly, you may well want to move your money elsewhere.

Once again ask yourself whether you are prepared to invest in higher risk funds to potentially obtain a better return. If you are approaching retirement age, think particularly carefully before making such a decision.

There is no guarantee equal or higher returns will be achieved when compared to your existing arrangement(s).

Access to a wider range of funds

Consolidating your pension may sound like a good option if you want to gain access to a wider range of funds than offered by your current scheme?

Alternative death benefits

If you feel the death benefits offered by your current scheme don’t match those offered by more modern schemes.

You might, for example, want to move your money into a scheme that allows one of your relatives to inherit your pension when you die, rather than simply spouses or dependents. The same might apply if you are not married to your long-term partner but want them to inherit your pension once you’re gone.

Consolidating several pensions

As people change jobs more frequently, they often accumulate a number of small pensions along the way. It can be hard keeping track of schemes, and difficult to really know how much your total retirement is worth.

Think carefully before making the switch

You need to be careful before moving your pension pot out of certain schemes – including public sector schemes, such as the nurses’ or teachers’ schemes – as these offer extremely generous benefits which can be hard to replicate elsewhere.

Equally, if you are thinking about moving your personal pension to another provider, you must check that the benefits are not outweighed by any exit penalties and entry charges.

Professional, expert financial advice

If you’re a member of a defined benefits pension scheme and the value of your benefits is more than £30,000, you will need to take professional, expert financial advice to ensure that the value you are offered represents good value and that this is in your best interests – you may be giving up guaranteed pension benefits, especially if you’re moving your pension pot to a defined contribution pension scheme. Please contact us for more information.

A PENSION IS A LONG-TERM INVESTMENT. THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS. THE TAX IMPLICATIONS OF PENSION WITHDRAWALS WILL BE BASED ON YOUR INDIVIDUAL CIRCUMSTANCES, TAX LEGISLATION AND REGULATION, WHICH ARE SUBJECT TO CHANGE IN THE FUTURE.

Auto Enrolment soon to hit ‘new employers’

If you are a still in the early stages of business, the obligatory Auto Enrolment workplace pension scheme that the government imposed from 2012 may well be off your radar.

Firms on a PAYE scheme set up after 31 March 2012 are classed as ‘new employers’ under The Pensions Regulator and will be shortly reaching their staging date (see table below), it is imperative that you are ready.

New employer – PAYE income first payable between  Staging date for Auto Enrolment
1 April 2012 – 31 March 2013 1 May 2017
1 April 2013 – 31 March 2014 1 July 2017
1 April 2014 – 31 March 2015 1 August 2017
1 April 2015 – 31 December 2015 1 October 2017
1 January 2016 – 30 September 2016 1 November 2017
1 October 2016 – 30 June 2017 1 January 2018
1 July 2017 – 30 September 2017 1 February 2018

The Pensions Regulator are warning firms reaching their staging date that they are ill advised to ignore the ‘workplace pension’.

Non-compliance can lead to fines of £500 a day for employers of 5-49, £50 per day for 1-4 employees. 26,000 compliance notices were issued between July & September 2016, and although only 5% of those progressed to an escalating penalty notice it’s still 1300 over a three month period*

Take action sooner rather than later as there is a lot to prepare and consider. Early action can make the difference in being able to benefit from the most cost effective and appropriate scheme long term.

Clarke Nicklin Financial Planning specialise in Auto Enrolment, and have advised many companies on this. The pension review we perform helps you to clarify all options and implications, whilst advising on the best alternative which could result in significant cost savings or benefits.

We would be delighted to hold a free initial, no obligation meeting. Call 0161 495 4700 and ask for Kath, or email katha@cnfp.co.uk .

Source *http://www.thepensionsregulator.gov.uk/docs/automatic-enrolment-use-of-powers-sept-2016.pdf

Getting ready for life beyond work

Three-year growth in adequate retirement saving steadies

Changing life plans and priorities will mean we encounter varying income needs and goals throughout our life, and when saving for retirement certain innate behavioural traits will influence our decision-making. Savings levels in the UK are showing signs of steadying at the same time as the number of people expecting to receive a defined benefit (DB) pension continues to fall*.

Disengaged from the realities of retirement

Despite the decline of DB schemes underscoring the vital importance of saving for the future, the proportion of people not saving at all remains at one in five.

40-somethings save less as 30-somethings catch up

This year’s research revealed a troubling trend among those in the 40–49-year-old age group. Jointly with those aged 30–39, they have the lowest adequate savings levels (53%). This marks the first time that savers in their 30s are preparing for retirement as well as those in their 40s – despite the fact they have an additional decade of earning potential. The number of non-savers in their 40s is also up to 19% this year from 16% in 2015, despite the fact that, on average, there are fewer people not saving this year compared to last.

Success of auto-enrolment still evident

Auto-enrolment is likely to play a positive role in the coming years, with current figures reflecting levels of savings made by many at the very start of their saving journey.

The impact of auto-enrolment is also clear when looking at the non-savers: women (24%), the self-employed (24%), and those working for small businesses (25%) are all disproportionately not saving – three groups who are either currently less likely to be eligible for auto-enrolment, or yet to feel the full benefit of the relatively new legislation.

Brexit may cause confidence to dip – but intention to save is positive

When it comes to the impact of the EU Referendum result, 31% of people pre-Brexit said they felt optimistic about their retirement – this fell to just 21% following the vote.

However, the impact may be limited, with 53% saying Brexit will not affect the amount they will save, and only 11% saying they will be putting away less money as a result.

In fact, the uncertainty around the vote may even have spurred people on to engage more with saving, with 26% of young people (18–24-year-olds) suggesting they will now put away more money.

Fulfilling your retirement dream

Do you need to put a plan in place for your future retirement or want to improve your existing arrangements? To discuss how we can make sure you stay on track to meet your retirement goals, please contact us for further information.

Source data:

* The 12th Scottish Widows UK Retirement Report monitoring pension savings behaviour annually using the Scottish Widows Pensions Index and the Scottish Widows Average Savings Ratio. The research was carried out online by YouGov across a total of 5,151 nationally representative adults in April 2016. An additional piece of research was carried out by YouGov following the EU Referendum among 1,709 adults. Fieldwork was undertaken from 19–20 July 2016.

A PENSION IS A LONG-TERM INVESTMENT. THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS. THE TAX IMPLICATIONS OF PENSION WITHDRAWALS WILL BE BASED ON YOUR INDIVIDUAL CIRCUMSTANCES, TAX LEGISLATION AND REGULATION, WHICH ARE SUBJECT TO CHANGE IN THE FUTURE.

The Pension Regulator warn “Don’t ignore Auto Enrolment”

The Pensions Regulator (TPR) are warning firms reaching their staging date that they are ill advised to ignore the ‘workplace pension’.

The next two years will be the busiest period, reaching small and micro employers. Even a hairdresser, an architect or people who employ a personal care assistant will have certain legal duties to offer a workplace pension to your employees. Non-compliance can lead to fines of £500 a day for employers of 5-49, £50 per day for 1-4 employees.

26,000 compliance notices were issued between July & September 2016, and although only 5% of those progressed to an escalating penalty notice it’s still 1300 over a three month period. *

Pensions Minister Richard Harrington has commented “Automatic enrolment is a great success. So far, more than 250,000 employers are helping over 6.7 million people save into a workplace pension. The duty is being extended to all UK employers and they must ensure they enrol their staff into a scheme by the deadline for their firm, it’s the law.”

Take action sooner rather than later as it’s not going away and you could be left with a lack of choice in pension schemes and a lengthy lead time for set-up.  Seeking specialist advice to ensure you are on the most cost- effective and appropriate scheme long term is the best option.

We have advised many companies on Auto Enrolment, and as part of our service offer a pension and financial planning review to both employers and employees, to clarify all options and implications, whilst identifying the best options which could result in significant cost savings or benefits.

We would be delighted to hold a free initial, no obligation meeting. Call 0161 495 4700 and ask for Kath, or email katha@cnfp.co.uk

Source *http://www.thepensionsregulator.gov.uk/docs/automatic-enrolment-use-of-powers-sept-2016.pdf

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