Cameron and Company helps with financial education in schools

The Personal Finance Society is set to launch a free nationwide financial education programme for schools this September. The initiative, called Education Champions, aims to help the PFS establish a link with every secondary school and college of further education in the country. It aims to build on the society’s existing discover fortunes programme, which uses gamification to demonstrate key financial scenarios.

Eugenie Cameron, Director of Cameron and Company Financial Planning in Malvern, is one of the 250 advisers to have registered an interest in becoming a volunteer trainer to help the wider community. Eugenie says “Getting better financial education in schools is long overdue. We owe it to the younger generations to get them as equipped as possible for real life when they leave school. Sadly financial literacy is still very poor and anything that can be done to improve the situation should be explored. Helping children and young adults grasp a basic financial understanding is a wonderful way that professional financial planners, like myself and my team, can contribute to the community”.

Cameron and Company Financial Planning Ltd are Chartered Financial Planners and Independent Financial Advisers based in Malvern, Worcestershire.

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Financial Freedom

Written by admin

Deciding what to do with pension savings – even if you’re still working
It might seem like a far off prospect but knowing how you can access your pension pot can help you understand how best to build for the future you want when you retire.
On 6 April 2015, the Government introduced major changes to people’s defined contribution (DC) private pensions. Once you reach the age of 55 years, you now have much more freedom to access your pension savings or pension pot and to decide what to do with this money – even if you’re still working.

Depending on the scheme, you may be able to take cash lump sums, a variable income through drawdown (known as ‘flexi-access drawdown’), a guaranteed income under an annuity, or a combination of these options. This means being faced with the choice of deciding how much money to take out each year and setting an appropriate investment strategy. It goes without saying that your income won’t last as long if you take a lot of money out of the pension pot early on.

What are your retirement income options?
There are many things to consider as you approach retirement. You need to review your finances to ensure your future income will allow you to enjoy the lifestyle you want. You’ll also be faced with a number of different options available for accessing your pension. Being faced with such an important decision, it’s essential you obtain professional financial advice and guidance. We’ve provided an overview of the main options.

Keep your pension pot where it is
You can delay taking money from your pension pot to allow you to consider your options. Reaching age 55 or the age you agreed with your pension provider to retire is not a deadline to act. Delaying taking your money may give your pension pot a chance to grow, but it could go down in value too.

Receive a guaranteed income for life
A lifelong, regular income (also known as an ‘annuity’) provides you with a guarantee that the income will last as long as you live. A quarter of your pension pot can usually be taken tax-free, and any other payments will be taxed.

Receive a flexible retirement income
You can leave your money in your pension pot and take an income from it. Any money left in your pension pot remains invested, which may give your pension pot a chance to grow, but it could go down in value too. A quarter of your pension pot can usually be taken tax-free, and any other withdrawals will be taxed whether you take them as income or as lump sums. You may need to move into a new pension plan to do this. You do not need to take an income.

Take your whole pension pot in one go
You can take the whole amount as a single lump sum. A quarter of your pension pot can usually be taken tax-free – the rest will be taxed. You will need to plan how you will provide an income for the rest of your retirement.

Take your pension pot as a number of lump sums
You can leave your money in your pension pot and take lump sums from it as and when you need until your money runs out or you choose another option. You can decide when and how much to take out. Any money left in your pension pot remains invested, which may give your pension pot a chance to grow, but it could go down in value too. Each time you take a lump sum, normally a quarter of it is tax-free and the rest will be taxed. You may need to move into a new pension plan to do this.

Choose more than one option and combine them
You can also choose to take your pension using a combination of some or all of the options over time or over your total pot. If you have more than one pot, you can use the different options for each pot. Some pension providers or advisers can offer you an option that combines a guaranteed income for life with a flexible income.

Significant effect on the amount of income available
The earlier you choose to access your pension pot, the smaller your potential fund and income may be for later in life. This could have a significant effect on the amount of income available to you, meaning it may be less than it could have been, and it could run out much earlier than expected.
Taking an appropriate income or money from your pension is very complex. We’ll help you access your options. Remember: if you choose to only withdraw some of your money, what’s left will remain invested and could go down as well as up in value. You could also get back less than has been invested. Also, if you buy an income for life, you can’t generally change it or cash it in, even if your personal circumstances change. And the inheritance you can pass on depends on what you decide to do with your pension money.

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.

PENSIONS ARE NOT NORMALLY ACCESSIBLE UNTIL AGE 55. 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 VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.

PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.


Make it a date

Written by admin

Keeping your target retirement plans on track
Most over-45s are not making plans to match their hopes for the future, according to research from Standard Life[1]. The vast majority (86%) of those aged 45 or over are already dreaming about escaping their working life for retirement, but only 8% of the same age group have recently checked the retirement date on their pension plans to make sure it is still in line with their plans.
Over half (56%) don’t have a clear idea when they want to retire, and only one in ten (10%) have worked out how much income they’ll need when they decide to stop working. The study also reveals it doesn’t get much clearer as you go up the generations: less than a fifth (17%) of those aged between 55 and 64 have recently checked to see if the retirement date on their pension policy is still fitting in with their plans.

Setting your retirement date on a pension plan does matter
Some people will have set their retirement date when they were in their 20s or 30s, and a great deal will have changed since then, including their State Pension age and perhaps their career plans. It may seem like a finger in the air guess when you’re younger, but the date that you set for retirement on a pension plan does matter. It will often dictate how your money is being invested and the communications you receive as you get nearer to that date.

Why you need to keep your retirement plans up to date

Right support, right time
If the date you plan to retire changes or you simply want to take some of your pension without stopping working, it’s important to tell your pension company. Otherwise, you may not receive information and support about your pending retirement at the most helpful times, as they’ll be basing this on your out-of-date plans.

De-risking investments
Some investment options will start to move your pension savings into lower-risk investments as you get closer to retirement. If you don’t have the right retirement date on your plan, you could be moving into these investments at the wrong time. For example, if you move into them too early, you could potentially miss out on investment returns which could increase the value of your pension savings. But if you move too late, you could be exposing your life savings to unnecessary risk.

Investment pot size
The size of the pension pot you need to build up to maintain your lifestyle when you come to retire will depend on when you plan to do so.

Income for life
If you’re planning to buy an annuity at retirement, which will guarantee you an income for the rest of your life, the amount of income you’ll get will depend on the size of your pot and annuity rates at that time. If you prefer to use your pension savings more flexibly, you can keep your money invested, and take it as and when you need. You’re then responsible for making sure your life savings last as long as you need them to.

Work longer or retire earlier
Reviewing your retirement date regularly as you get older makes real sense, and most modern pension plans enable you to change and update this date whenever you choose. It needn’t be the same as your State Pension age – you might want to work longer or retire earlier. Some people who plan to slow down or stop work earlier are using money from their private pension savings to bridge the gap until they can start claiming State Pension. All you need to do is inform your pension company of your plans, even if they change again in future.

Source data:
[1] The research was carried out online for Standard Life by Opinuium. Sample size was 2001 adults. The figures have been weighted and are representative of all GB adults (aged 18+). Fieldwork was undertaken in November 2017.

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.

PENSIONS ARE NOT NORMALLY ACCESSIBLE UNTIL AGE 55. 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 VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.

PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.


Cameron and Co sign The Women In Finance Charter 2018

We are really pleased to announce that Cameron and Company Financial Planning Ltd have signed the Women In Finance Charter. You can see the official announcement here https://www.gov.uk/government/news/prime-minister-backs-women-in-finance-as-charter-tops-200-signatories

As you might already know, we are an all female team here at Cameron and Company Financial Planning Ltd. We believe passionately in providing outstanding financial advice to all and we need a great team of people to do that. I am proud of our eight exceptional ladies here and the loyalty and support they provide to our clients.  Happy staff = happy clients. Bravo to that!


ISA and Pension Contributions – End of Tax Year Planning

Have you utilised all your year-end tax planning deadline opportunities?

As we near the 2017/18 tax year end on 5 April, if appropriate to your particular situation, we’ve provided some tax planning tips to help you maximise the use of your various tax allowances and minimise the tax you pay.

We take a personal approach to your tax needs. Informed by our detailed knowledge of your affairs, we explore some of the best options which you could consider to help manage your tax obligations most effectively.

Income Tax planning
Ensure income-producing investments are held by the spouse who has the lowest tax rate
Make use of the transferable married couple’s allowance where one spouse is not fully using their personal allowance and the tax- paying spouse only pays the basic rate of tax
If your income is around the £100,000 figure, look at ways of preserving the personal allowance. You could consider making Gift Aid payments or pension payments to help minimise loss of this allowance
Consider topping up any Individual Savings Accounts (ISAs) you or your spouse have to the maximum limit, which is £20,000 each
Make use of any unused annual pension allowance brought forward before it is lost
Make use of the £5,000 dividend allowance available when considering salary and dividend options
If your company car arrangement is coming up for renewal, consider opting for cars with lower emissions and list prices to help minimise an Income Tax charge

Inheritance Tax (IHT) planning
Use your annual exemption for gifts of up to £3,000 per tax year; this exemption can be carried forward to the next tax year
Regular (qualifying) gifts out of net incomeare exempt from IHT – consider establishing a pattern of regular gifting to take advantage of this tax break
Wedding or civil ceremony gifts of up to £1,000 per person (£2,500 for a grandchild or great-grandchild, or £5,000 for a child) are exempt from

IHT
Small gifts exemption up to £250 – you can give as many gifts of up to £250 per person as you like during the tax year, providing you haven’t used another exemption on the same person

Capital Gains Tax planning
Make use of the annual exemption – currently £11,300 – and remember that assets can be transferred between spouses and registered civil partners tax-free

THE INFORMATION CONTAINED IN THIS ARTICLE DOES NOT CONSTITUTE INDIVIDUAL ADVICE. ALWAYS OBTAIN PROFESSIONAL ADVICE RELEVANT TO YOUR OWN CIRCUMSTANCES.

ANY REFERENCE TO LEGISLATION AND TAX IS BASED ON OUR UNDERSTANDING OF UNITED KINGDOM LAW AND HM REVENUE & CUSTOMS PRACTICE AT THE DATE OF PRODUCTION. THESE MAY BE SUBJECT TO CHANGE IN THE FUTURE. TAX RATES AND RELIEFS MAY BE ALTERED.

THE VALUE OF TAX RELIEFS TO THE INVESTOR DEPENDS ON THEIR FINANCIAL CIRCUMSTANCES. NO GUARANTEES ARE GIVEN REGARDING THE EFFECTIVENESS OF ANY ARRANGEMENTS ENTERED INTO ON THE BASIS OF THESE COMMENTS.


Reach your financial goals

Helping you realise your retirement vision

We’ve now entered a new age of retirement planning with the introduction of pension freedoms. Your retirement is likely to be the most important time in your life you’ll even plan for – you could be retired for 20 years or more.

Thinking about pensions sooner rather than later can mean the difference between a comfortable retirement and struggling to make ends meet. Unfortunately, some people put off retirement planning when they are young because they think they’ve got time on their side. However, the earlier you start saving for your future, the bigger the pension pot you’ll end up with when you’re older.

7 pension tips for nurturing your nest egg in 2018
Research shows we’re more likely to achieve our financial goals if we write them down and start with a clear plan of action. Work out what financial goals you want to achieve, then break them down into realistic steps that will lead you there. We’ve provided seven pension tips for you to consider to keep your retirement plans on track at the start of the New Year.

1. Consider consolidating your pension pots – while it might be hard to keep track of pensions with job changes, the Government offers a free Pension Tracing Service. Bringing your pension pots together may help you manage them, but take care to understand the benefits associated with the existing contract, along with any potential risks/disadvantages of transferring the funds – and always seek professional financial advice to see if it’s suitable for you.

2. Make use of your tax reliefs on pension contributions – when you are able to do this, particularly at higher rates, this can be beneficial. The Government may well revisit pension tax relief post-Brexit to help ‘balance the books’.

3. Maximise your workplace pension contributions – if your employer pays a contribution that is linked to your contribution, see if it’s affordable for you to pay the maximum in order to receive your employer’s maximum.

4. Invest for the long term – there have been various moments of uncertainty in the markets – think back to the ‘crash’ of 1987 which now looks like a ‘blip’. Keep an open mind, and don’t panic or have knee-jerk reactions. You must remember that when investing in the stock markets, it is inevitable that there will be times of volatility and you can weather the storm.

5. Review your State Pension entitlement – given so many changes, it is worth keeping your finger on the pulse and looking at what you may need to do to top up to the maximum entitlement available.

6. Review your expected expenditure in retirement – it’s key that you clearly establish ‘essential’ and ‘discretionary’ spending, so in poor market conditions you can always look to reduce income from pension funds if necessary to cut back on discretionary expenditure that can wait for another day.

7. Ensure your income in retirement is set up as tax-efficiently as possible – making full use of all available tax allowances/exemptions is crucial. Don’t forget to look at how different tax wrappers can work for you.

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.

PENSIONS ARE NOT NORMALLY ACCESSIBLE UNTIL AGE 55. 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.

ACCESSING PENSION BENEFITS EARLY MAY IMPACT ON LEVELS OF RETIREMENT INCOME AND IS NOT SUITABLE FOR EVERYONE. YOU SHOULD SEEK ADVICE TO UNDERSTAND YOUR OPTIONS AT RETIREMENT.


February 2018 Sleepwalking into retirement

Sleepwalking into retirement

Lack of pension knowledge among UK adults

The UK’s middle-aged workers could be sleepwalking into retirement poverty. Four in ten people aged between 40 and 65 cannot accurately estimate their total pension savings for retirement.

Just over a third of 60 to 65-year-olds who took part in a questionnaire by the JLT Employee Benefits research do not know the size of their retirement fund. Additionally, two thirds of 40 to 65-year-olds with pension savings of under £250,000 still believe their pension pot will end up paying out more than the UK State Pension.

Benefit of employment
However, current estimations suggest that £250,000 of savings would actually provide less than £159.55 per week – the current full State Pension. Only 29% of participants in the survey said they received enough support at their workplace to manage pensions. Two thirds of recipients said they would welcome retirement planning as a benefit of employment.

So far, nearly nine million people have been automatically enrolled since the system was launched five years ago in 2012, with the figure expected to reach 11 million by 2018.

Thought-provoking findings
Four out of five Britons are unhappy with the amount they are putting into their pension fund every month, while one in four people regret not starting to save for retirement earlier in life, according to research from Pension Geeks.

It is evident that there is a lack of pension knowledge among UK adults, with less than one in ten confident they have an in-depth understanding, according to the study. The research uncovered some thought-provoking findings on the state of pensions and pension awareness in the UK.

Complicated to understand
Almost nine in ten think there is not enough information about pensions readily available to them, and 25% believe the information that is available is too complicated to understand.

The latest Scottish Widows Retirement Report has revealed that the number of people saving sufficiently for retirement has stalled at 56% for the third consecutive year, with almost a fifth of the UK adult population not saving at all – that is more than nine million people. τ

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.

PENSIONS ARE NOT NORMALLY ACCESSIBLE UNTIL AGE 55. 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.


January 2018 – Grow your money and live the life you want

Grow your money and live the life you want

The New Year is the perfect time to overhaul your life for the better, and one excellent place to start is by making solid financial resolutions that can help get you closer to your money goals, whether it’s increasing your retirement savings or setting enough money aside for a down payment on a house.

Investing is not just about what you know but also who you are. The key to successful investing isn’t predicting the future – it’s learning from the past and understanding the present. Investing offers potential to grow our money, reach our goals and live the life we want. Regardless of the market conditions at the moment, the keys to successful investing are always the same.

Cash savings vulnerable to erosion by inflation
Investors often think of cash as a safe haven in volatile times, or even as a source of income. But even though we have seen a recent small rise in interest rates, we’re still experiencing a period of ultra-low interest rates which have depressed the return available on cash to near zero, leaving cash savings vulnerable to erosion by inflation over time. With interest rates expected to remain low, investors should be sure an allocation to cash does not undermine their long-term investment objectives.

Cash left on the sidelines earns very little over the long run. Investors who have deposited their cash in the bank may have missed out on the impressive performance that would have come with staying invested over the long term.

Please note that these investments do not include the same security of capital which is afforded with a deposit account, and you may get back less than the amount invested.

Making an enormous difference to your eventual returns
Compound interest has been called the eighth wonder of the world. Its power is so great that even missing out on a few years of saving and growth can make an enormous difference to your eventual returns.

You can make even better use of the effects of compounding if you reinvest the income from your investments to enhance your portfolio value further. The difference between reinvesting – and not reinvesting – the income from your investments over the long term can be significant.

Be prepared upfront for the ups and downs of investing
Every year has its potential roller coaster ups and downs. Volatility in financial markets is normal, and investors should be prepared upfront for the ups and downs of investing rather than having a knee-jerk reaction when the going gets tough. The lesson is, don’t panic: more often than not, a stock market pullback is an opportunity, not a reason to sell.

Investors should look to keep a long-term perspective
Market timing can be a dangerous habit. Pullbacks are hard to predict, and strong returns often follow the worst returns. But often, investors think they can outsmart the market, which they may later regret. As the saying goes, ‘Good things come to those who wait.’ While markets can always have a bad day, week, month or even a bad year, history suggests investors are much less likely to suffer losses over longer periods. Investors should look to keep a long-term perspective.

Reducing risks while potentially improving returns
The last decade has been a volatile and tumultuous ride for investors, with natural disasters, geopolitical conflicts and a major financial crisis. Among the most important tools available to investors is diversification. Diversification allows an investor to reduce investment risks while potentially improving investment returns.

A diversified portfolio is typically split across a range of different asset classes, with exposure to different companies, industries and types of market from different regions around the world. In a diversified portfolio, the assets don’t correlate with each other. When one rises, the other falls. It lowers overall risk because, no matter what the economy does, some asset classes will benefit. τ

INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.

PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.


Calm after the Storm

ISA season is over – thank goodness. The team have been busy funding our client’s ISAs for the new tax year.

Further changes in pension legislation are creating plenty of enquiries from puzzled retirees. Pension rules are hard enough for us to keep up to date with let alone the lay person. The value of independent financial advice really does come into its own when it comes to retirement decisions.

We are proud to continue to be the only Chartered Financial Planning firm in the area, the closest being in Worcester and Cheltenham.

We have welcomed a new administrator to the Team, Goss Lumsden and will be adding him to the website in due course.

Eugenie graduated as a Fellow of The Personal Finance Society – she now has her eye on a Masters in Financial Planning – starting early 2017. Watch this space.


Depressingly small pensions

The average 35-year-old has to save £660,000 into a pension plan if they have any hope of matching the standard of living enjoyed by today’s pensioners – but have so far managed to put aside just £14,000.

The challenge facing young adults today is “frightening” admitted pensions company Royal London, which carried out the research in September 2015.

While many pensioners benefit from generous final-salary style schemes which give them a guaranteed income based on their salary before retirement, the majority of today’s 35-year-olds working in the private sector will have to rely on how their pension savings accumulate on the stock market.

Royal London found the average expenditure by pensioners is currently £1,183 a month, not including the state pension. Adjusted for inflation, that will rise to £2,930 by the time today’s 35-year-olds retire in 2050 – and to secure an income of that amount will require a pension pot of £660,000, it said. “This is to be able to secure a monthly income which will only just maintain the same standard of living of today’s retirees,” it said.

Many face serious poverty in retirement, Royal London said. “Worryingly the research found that today’s 30- to 40-year-olds have a median pension pot of only £14,000, well short of the fund they require to secure a monthly income that will just cover the basic £1,715 cost of essentials in 2050. Unless this group start to save more, they could face a retirement in poverty.”

The government’s auto-enrolment pension programme has seen 5.4 million low- to middle-income workers automatically enrolled into workplace pensions over the past three years. But employer and employee contribution levels are so low that critics say it won’t be sufficient to provide security in retirement.

Despite the auto-enrolment programme, which is expected to reach another 5 million workers in small business over the next two to three years, around 40% of 30- to 40-year-olds do not have any pension saving, Royal London said.
More than half (54%) of 30- to 40-years-olds not saving for retirement said it was because they couldn’t afford to and a further one in 10, (10%) believe that it was too early to start saving in a pension. One in 10, (10%) said it was because they didn’t know enough about pensions and thought it was now too late to start.

The research also highlights a yawning gap between expectations among young adults about their retirement income and the financial realities. On average, young adults said they would need 60% of their salary to live on in retirement, whereas even today’s pensioners typically survive on less than half of their pre-retirement salary.

The Royal London research comes as the government’s consultation on pensions tax changes announced in the July budget comes to a close. Many in the pensions industry are calling for a flat rate of pensions tax relief set at 33% for all. Under the current system, lower paid employees only benefit from 20% tax relief compared to the 40% relief enjoyed by higher paid workers.

Speak to one of our team if you are concerned about funding your retirement.