News

Sam Binstead achieves Chartered Financial Planner status

sam-binstead

Last month our adviser Sam Binstead attended the Chartered Insurance Institutes annual award ceremony to receive his Charter.  Sam has been studying hard over the past few years to pass the series of demanding technical exams in his quest to become our second Chartered Financial Planner.   At Chilvester Financial we are dedicated to supporting all our staff in developing their personal skills and furthering their knowledge, professional qualifications are a recognised way of demonstrating the depth of knowledge necessary in today’s financial environment.  We are pleased to have supported Sam with this study.

Sam is delighted to have achieved this prestigious professional award and is looking forward to sharing this broad knowledge with clients, both old and new.  We congratulate Sam on this achievement and will allow him a moment to bask in this glow of his success for a few moments before he gets back to advising his clients.

 

Income from savings; where has it gone?

With the Bank of England base rates now at historic lows we are finding that the major banks just do not want to hold instant access monies and their rates of interest are plummeting.

As examples, many popular savings accounts are all falling this autumn

Barclays Everyday Saver drops to 0.05%

HSBCs Flexible Saver already sits at 0.05%

NatWest Instant Saver falls to 0.01%

For those who need income from savings (and for those who are looking for capital appreciation) the returns from both access accounts and term deposits are getting ever lower and it has never been more important to shop around for anything decent in the way of returns from deposits. Whilst we all hope that they will not go any lower, with base rates now at 0.25% they do still have scope to fall further.

Fixed term deposits do not fare much better with the vast majority of two year fixed rates lower than 1.5% at best and the very best five year fixed rates paying a very maximum of 2.0%. Historically many term deposits were accessible early with a penalty payment, but now most are not accessible at all until maturity so if you are locking in for the long term, do make sure that you can live without the capital until then.

The security of deposits is the key factor why large sums are retained in cash but, as we can see above, they often no longer form a realistic source of income. As well as struggling to maintain the value against inflation, the likelihood of eroding capital to live with interest rates as they are now is so much greater. There are a number of other investments strategies that may be better suited to long term income production than deposits at the moment, some of which can also offer the opportunity for rising capital values over time.

Simon Foreman is an Investment Adviser with Independent Financial Advisers, Chilvester Financial. He specialises in later life matters including advising on income strategies in retirement and can be contacted through their Marlborough office on 01672 500600.  All interest rates quoted above are gross per annum.

Equity release; an advisers view

With extended life expectancies and the steady demise of the better final salary pension schemes, equity release arrangements to fund capital or income needs in later life from the monies tied up in ones home is becoming a more frequently used tool.

This is a market to which a wide range of organisations are increasingly committing funds and the breadth of equity release providers is growing all the time. Traditionally it was the insurance companies and some specialist providers that provided equity release arrangements but nowadays some of the mainstream mortgage lenders are also moving into this arena.

Whilst the vast majority of providers are members of the Equity Release Council and these all agree to adhere to the ERC standards, their products all have different features which make some products better suited to some particular individuals needs than others. As most of these products also usually have greater early repayment penalties than mainstream mortgages, it is even more important to get the right solution at outset to suit your individual requirements.

Equity release is the one area above all the others that I advise on where it is really vital to take independent advice from someone who can source the most suitable solution for your particular needs and circumstances. Please do use a firm who advise from across the whole marketplace rather than to go through a firm who can only advise on a limited or ‘selected’ range of products. Going directly to a provider selected on the basis of their name, the company who was most suitable for someone else in the family, or even the one with the largest marketing budget is not an option I would recommend.

 

Kirsty is a specialist Mortgage and Equity Release Adviser with Independent Financial Advisers, Chilvester Financial. She can be contacted through their Marlborough office on 01672 500600.  

All the money has to do is last …….

It is said that retirement is the point in life where you have earned all the money you are going to and now all you have to do is make sure that it does not run out before you do.

Historically for many this was achieved by an employer guaranteeing to fund a pension income for their long standing staff. Nowadays, final salary schemes are no longer the norm and for the vast majority of individuals now retirement is about living off accrued capital, be it monies within pensions, their savings and other investments or from the value of their home. With state pension dates moving later over time, the importance of planning how to make the best use of existing capital has never been higher.

New legislation allows us all to have much greater control in how we establish our retirement income streams. It may be that the regular lifetime income needs just to cover the continuing regular bills whilst in the early years of retirement, individuals wish to establish extra to fund travelling or to further fund a hobby or pastime. Whilst the purchase of guaranteed incomes for life is still an option for many to consider, particularly to cover ongoing bills, the more flexible options that have developed recently do allow retirees to also apply variable scenarios to match their retirement objectives

As a fundamental part of our At Retirement Review our advisers will take into account both short term demands and longer term income needs to create a considered action plan based on your lifestyle hopes and aspirations. We are realists and will not promise what cannot be achieved but more often than not the agreed strategy will allow for many of those objectives to be realised in the most tax efficient manner.

Chartered Financial Planner and a director of Chilvester Financial, Tony Capener is a specialist in pensions and later life matters. If you need confidence in how to effectively to establish your retirement income streams, please call Chilvester on 01672 500600.

The value of independent mortgage advice

As a result of the credit crunch, now nearly 10 years ago, the number of mortgage lenders in the UK shrank dramatically. Over the last couple of years however we have seen the re-emergence of new banks and other sources of mortgage funding becoming available. These lenders are all looking to win business from the traditional banks and this has helped to drive down costs.

As a result we have seen borrowers benefit from what is now a highly competitive mortgage marketplace. We currently have the lowest mortgage interest rates in living history and now may well be a good time to conduct a mortgage review to see how much you can save on your mortgage payments by just shopping around.

All mortgage applications now need to be supported by a qualified adviser, which means that direct to lender discussions are ending up with long winded telephone interviews or in-branch mortgage appointments being rationed so you cannot speak to anyone for weeks. My thoughts are that if you are going to invest your time and effort in taking advice, it makes sense to take it from a firm that has access to products from all lenders rather than just those from a single lender.

With many of the most competitive products currently coming from smaller building societies and other lenders that are often not on our high streets, it pays to use an independent mortgage broker to help source the most suitable product for you. Not only will they source the most suitable rate, they will help to make sure that you are fully aware of the product terms so there are no surprises for you at a later date.

Kirsty Mathis is a Mortgage Specialist with Chilvester Financial who are Independent Financial Advisers with offices in Marlborough and Calne. Kirsty can be contacted on 01672 500600 or via advice@chilvester.co.uk.

Marlborough Living speaks to Andrew Tottman, a director of Chilvester Financial about their new move into the town.

Andy, you have an established business based in Calne, why open a second office here in Marlborough?

 

Since 1999 our growth has been supported from a single location in Calne, but this new High Street office will allow us to better service our existing and new clients who live or work in the west of the County.

 

So what does Chilvester Financial do for their clients?

 

As Independent Financial Advisers (IFAs), we advise on matters including investing for growth and/or income, pension strategies both before and at retirement, and mortgage finance. We do also advise small business owners on workplace pensions and general business financial planning.

 

What differentiates you to the other financial advisers in the town?

 

We are the only chartered financial planning firm in Marlborough, an award which demonstrates our depth of knowledge, ethics and our commitment to professional advice. Our team of advisers include specialists in matters such as pension transfers, trustee investments and a SOLLA accredited later life adviser. We are a panel adviser to Wiltshire Councils Court of Protection team of deputies.

 

What do your ideal clients look like?

 

Whilst we have no strict entry requirements, we do enjoy working with those who do want to ensure that they are making the most of the capital they have. We believe in building strong and lasting relationships with our clients based on earning their trust.

 

Our clear and fair pricing policy means that we get paid for the advice we give and not on the basis of product sales, which gives complete reassurance that we will never try to sell clients something that they simply do not need.

 

How can potential clients contact you?

           

We will be delighted to speak to new clients. Our initial meeting is always without cost or obligation and it allows prospective clients to understand how work and for us both to decide if we wish to work together going forwards.

 

Location:         Angel House, High Street (behind Seasalt) Marlborough SN8 1AA

Telephone:      01672 500 600

Email:              advice@chilvester.co.uk

The (tax) benefit of marriage = £212

Introduced this month is a new tax benefit which means that a spouse or civil partner may now be able to transfer some of their unused personal allowance to the other.  This is aimed directly at couples where one partner does not earn enough to fully utilise their personal allowance and is only available to couples where neither is a higher rate tax player.

This new transferrable personal allowance allows spouses to transfer up to £1,060 of unused personal allowance from the partner that has taxable income below the personal allowance threshold (currently £10,600) to their higher earning spouse, as long they are just basic rate taxpayers.

If your income is below £10,600, and is likely to remain so for the rest of this tax year, and your spouse, or civil partner, earns below the £42,385 higher rate threshold, you can apply to have this personal allowance transferred.

The benefit of such a transfer is that as a couple you will pay up to £212 less tax this year than you would do if you don’t apply.

This is not something that will be automatically actioned on your behalf by HMRC, you will need to apply.  To request this transfer of personal allowance, you currently need to register on the HMRC website at https://www.gov.uk/marriage-allowance and they will then contact you to ensure eligibility.

Should you have any questions about this, please do speak to your accountant or your adviser here at Chilvester Financial.

Pension Freedom

So you’ve seen all of the press, read all about it and you’re ready to cash in your pension for a lump sum. But is that really the right thing for you to do?

In a rather unexpected announcement, George Osborne revealed in his 2014 Budget that from April 2015 pensioners would have completely flexibility to access their pension savings. No longer would they have to buy an annuity for life or utilise the rather strict income drawdown rules, quite simply you will be able to take as much, or as little, as you want whenever you want.

To relieve the burden on the state pension system, in recent years we have seen the introduction of workplace pensions whereby employers have had to automatically enrol employees into a pension scheme. With the added introduction of these new freedoms from April, the government are rather relying on pensioners being responsible for their own future and expecting them to manage their income appropriately. But, as the pensions minister Steve Webb alluded to, there’s nothing to stop somebody from blowing their whole pension fund to buy a Lamborghini and then expecting to rely on the fallback security of the state pension – exactly what the government have been trying to avoid.

So, is taking the whole of your pot as a lump sum a good idea? Well, that will depend on individual circumstances and taking proper advice is paramount – but there are a number of very important factors that you should be aware of.

Future income

You work for 30 to 40 years (or even more) of your life, all the while saving into a pension that you intended would provide your income in retirement. Taking some or all of your pot as a lump sum might sound an attractive thing to do, but by splurging on that new car or round the world cruise you’re writing off the benefit of any future income that a pension might’ve provided and that you saved for all those years.

If you have no other pension provision you’ll be heavily reliant on the state pension which is designed to provide not much more than a basic sustenance (£151.20 per week for 2015/16).

Means tested state benefits

Taking a large amount of cash from your pension could affect entitlement to benefits that are tested against capital/savings, like pension credit, housing benefit and council tax support.

The government intends to issue guidance on how pension freedoms will interact with Department for Work and Pensions rules, however, as things stand currently, withdrawing cash from a pension and putting it into cash or other investments might put you above the means tested limit and make you ineligible for benefits, meaning you may end up having to spend that cash on rental payments or council tax that you could otherwise have had help with.

Tax

Whilst in most cases the first 25% of any lump sum will be paid tax free, the rest of the lump sum will be added to the rest of your taxable income and will be subject to income tax at your highest marginal rate.

Pension providers will be obliged to deduct basic rate tax at source (20%) and any amount that lifts you into the higher rate tax bracket (£42,385 for 2015/16) will be subject to tax at 40%. That tax will most likely be collected by an adjustment to an individual’s tax code, so for someone still in employment taking a lump sum from a pension could actually have a negative effect on take home pay.

Reduced annual allowance

HMRC rules currently allow individuals to contribute up to a maximum of £40,000 per year to a pension and still get tax relief on contributions. To stop people from abusing these rules by withdrawing large sums from their pensions and immediately paying it back in to benefit from tax relief, the government have introduced a new reduced annual allowance of £10,000 for anybody who flexibly accesses their pension after April.

Whilst this reduced limit might not pose much of an issue for many, anyone still contributing large sums to their pension might be adversely impacted.

In summary, whilst the headlines make the notion of pension freedom sound very appealing, never has it been more important to take advice about your pension before making any decision. The government have introduced the new guidance service under the guise of Pension Wise, however this is essentially an information service. Thankfully, Pension Wise will be signposting people toward independent financial advisors such as ourselves. If you’d like to skip the guidance step and come straight to us, please contact us for a no-obligation meeting with one of our consultants.

Who will pay for your funeral?

Such a lovely topic should always start with a quip.

“In the city a funeral is just an interruption of traffic; in the country it is a form of entertainment. ”
― George Ade

It is said that the only certainties in life are death and taxes but often the cost of a funeral can be a burden on your loved ones with the average cost of a burial now £4,6901. According to Engage Mutual, 40% of families would be unable to cover the cost of a funeral2 unless they had access to the deceased’s money. Waiting for probate, which officially allows the deceased’s estate to be distributed, often takes 3 months but if there are complications this can drag on for some time longer.

Prepaid funeral plans are becoming more popular and growing demand allows for more choice; such as the quality of your coffin and the number of cars. The other big advantage of funeral plans is that it ensures that your funeral arrangements are discussed in advance, rather than leaving the arrangement wholly to loved ones.

Prepaid funeral plans are available to all over the age of 50 and are designed to keep pace with inflationary costs, so however long you live, you have the peace of mind that the cost of the funeral will be covered even before your estate has been distributed.

Should you want to find out more, contact us at advice@chilvester.co.uk

 

(1) The Engage Mutual 2014 Funeral Costs Tracker Report based on commissioned research from Brass Insight
(2) Engage Mutual One Poll Research, December 2014

At last a decent interest rate for the older saver

National Savings and Investments (NS&I) have today launched the much awaited new issues of the 65+ Guaranteed Growth Bonds.  As promised, the key points are

  • There are two issues; a one year and three year fixed term deposits

Investment terms

  • The investment is restricted to those individuals over the age of 65 at the time of application or jointly when both parties are over the age of 65
  • The maximum deposit per person per issue is £10,000
  • Investment can be made online by phone or by post

Interest

  • The interest accumulates and is paid at the end of the term
    • There is no ‘monthly income’ option
  • The 1 year bond is paying 2.80% gross/AER
  • The 3 year bond is paying 4.0% gross per annum/AER

Access

  • The account can be closed early but will suffer 90 days loss of interest

Taxation

  • Interest is paid net of basic rate tax (20%)
    • Nil taxpayers will have to reclaim the tax paid as there is no provision to have the interest paid gross
    • Higher rate taxpayers will have to pay additional tax through their Self-Assessment return

Protection

  • The Financial Services Compensation scheme does not apply to NS&I products however these deposits are 100% guaranteed by the UK Treasury
  • There are no cancellation rights to this investment so please ensure that it is suitable for you before you invest

This is a limited tranche of investment and NS&I will withdraw this once they have received the £10bn of monies.

If you feel that this may be of use to you or a family member, more information is available direct from NS&I , either online at http://www.nsandi.com/65-guaranteed-growth-bonds or by phone on  0500 500 000.