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.

Volatile Markets

We’ve had a very lively start to the year in the markets. 2015 proved to be a little disappointing in terms of investment returns and we hope that 2016 provides better opportunities for our investors. The recent widespread volatility experienced in the markets has proven why it is absolutely vital to have the right risk profile within your investment portfolio.
We are very busy providing retirement planning advice to our clients old and new. There are so many options available to people now at retirement it’s vital to consider all, but choose the route that is best for you.

Office Move

For those of you who are local, you may have noticed that we have left our town centre, three storey Victorian office for a more modern office on the Enigma Business park just off Townsend Way. We now have plenty of client parking and disabled access, both of which were quite a struggle previously.

We look forward to welcoming our clients, new and old to our new premises.


Welcome to our blog. We hope you will find our views on all matters financial interesting. As always, if you have any questions please do get in contact with us.