Lloyd O Sullivan http://www.lloydosullivan.co.uk/blog Our Blog Wed, 20 Sep 2017 13:18:31 +0000 en-US hourly 1 Gender income gap http://www.lloydosullivan.co.uk/blog/gender-income-gap/ http://www.lloydosullivan.co.uk/blog/gender-income-gap/#comments Tue, 19 Sep 2017 09:00:19 +0000 http://www.lloydosullivan.co.uk/blog/?p=743 Minimising the impact on your retirement income

The gap between women’s and men’s annual average expected retirement incomes in 2017 has grown by £1,000 in the last year, according to new research[1].

Future financial plans

The unique annual research has, over the last ten years, tracked the future financial plans and aspirations of people planning to retire in the year ahead. This year’s Class of 2017 research shows that women expecting to retire this year will be £6,400 a year worse off on average than their male counterparts, and nearly £200 a year worse off than women who retired in 2016.

Annual retirement income

Women this year expect an average annual retirement income of £14,300, which is the second highest on record, although slightly down on the £14,500 for those retiring in 2016. However, this year’s female retirees are feeling slightly more confident about their finances, with 50% saying they are financially well-prepared for retirement, compared with 48% in 2016.

Women’s incomes stagnate

Meanwhile, as women’s incomes stagnate, men’s expected retirement incomes have shown a fifth consecutive year of growth. Men retiring this year expect an annual retirement income of £20,700 – £900 a year more than last year, which is helping drive the gender gap to its highest level for three years.

Tracked retirement income

The study, which has tracked the retirement income gender gap for ten years, shows that men retiring this year will be 45% better off than women. The gender gap was at its widest in 2008 when the average expected retirement income for men was 84% higher than that expected by women.

Financially well prepared

It is encouraging that many women planning to retire this year feel financially well prepared for their years in retirement. In fact, women’s expected retirement incomes this year are the second highest on record.

Personal pension pots

However, the gender gap in retirement incomes continues to grow, probably reflecting the fact that many women will enter retirement having taken career breaks and changed their working patterns to look after dependants. Unfortunately, as a result, many women will end up with smaller personal pension pots, and some are also likely to receive a reduced State Pension.

Minimise the impact

For anyone who takes a career break, maintaining pension contributions and, where possible, making voluntary National Insurance contributions after returning to work should help to minimise the impact on their retirement income. The best way to secure a good quality of life in retirement is to save as much as possible from as early as possible in your working life.

Looking for a tax-efficient way of saving for retirement?

To explore which options which could work for you and your retirement goals, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk for a personal review, and we’ll help you make the right informed choices.

Source data:

[1] Research Plus conducted an independent online survey for Prudential between 8 and 22 November 2016, among 10,605 non-retired UK adults aged 45+, including 1,000 planning to retire in 2017.

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Retirement taxation http://www.lloydosullivan.co.uk/blog/retirement-taxation/ http://www.lloydosullivan.co.uk/blog/retirement-taxation/#comments Mon, 18 Sep 2017 09:00:19 +0000 http://www.lloydosullivan.co.uk/blog/?p=741 Understanding the bottom line

Retired households handed over an average of £7,400 each in tax last year – the equivalent of nearly 30% of their annual income, according to analysis of newly released data[1] by Prudential.

The total annual tax bill for the UK’s 7.1 million retired households was £52.7 billion from direct and indirect taxes, according to the most recent available figures from the ONS.

Retired household taxes

The average retired household saw its tax bill rise by around £400 in the 12 months to April 2016, increasing the total tax received by the exchequer from pensioners by around £1.7 billion. But the good news is that average retired household incomes, including the State Pension, private pensions, benefits and other earnings, increased by around £1,200 to just over £25,000.

Direct taxation increase

Retired household tax bills mount up from direct taxes such as Income Tax and council tax which cost an average of just over £3,050 during the same period, and indirect taxes such as VAT, insurance premium tax and vehicle excise duty which cost an average of £4,360. The majority of the increase came from direct taxation.

Average working household

Pensioners paid a slightly lower proportion of their income in taxes than those who were still working – the total tax take for retired households was around 4 percentage points lower than the 34% paid by the average working household.

Giving up work

It’s important not to forget that stopping working doesn’t mean you’ll no longer be paying taxes, and many retired people will still need to consider Income Tax bills as well as all the other indirect taxation on expenditure that they will continue to face when they give up work.

Want to find out more?

Even in retirement, there is still the issue of tax to reckon with, making it best to be prepared and to take steps to ensure you don’t pay any more than is due. If you are planning to give up work, you should make sure you don’t underestimate the impact that tax will have on their income in retirement. To find out more, contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk to review your situation.

Source data:

[1] The Effects of Taxes and Benefits on Household Income: Financial Year Ending 2016
www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/theeffectsoftaxesandbenefitsonhouseholdincome/financialyearending2016

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Savings behaviour http://www.lloydosullivan.co.uk/blog/savings-behaviour/ http://www.lloydosullivan.co.uk/blog/savings-behaviour/#comments Tue, 12 Sep 2017 09:00:14 +0000 http://www.lloydosullivan.co.uk/blog/?p=738 savingbehaviour

UK pension system is sustainable but inadequate

It’s been estimated that 18% of earnings need to be saved each year to achieve an adequate income during retirement, an International Longevity Centre (ILC) report has concluded.

It said the contribution level, which is nine times higher than current auto-enrolment rates, would help savers accumulate an income of 70% of their pre-retirement earnings.

Income adequacy

The results also showed 20% of earnings must be saved every year to match the income adequacy that is enjoyed by current retirees. The international report, which was conducted between November 2016 and January 2017, explored the pension systems of 30 high income countries and regions, measuring performance according to affordability, adequacy and intergenerational fairness.

Savings behaviours

In addition, a bespoke survey was commissioned to examine savings behaviours in five different countries. Collected by Ipsos Mori, this found just 12.4% of 1,100 people in the UK were saving over 15% of earnings, and more than 30% of people between the age 25 and 44 had no savings whatsoever.

Economic environment

Backed by Prudential, the ILC report said young people today are faced with monumental savings challenges to ensure a decent retirement income. It argued that low investment returns and interest rates, sluggish economic and wage growth, and the gradual decline of defined benefit (DB) schemes means those entering the workforce today will face a hostile economic environment in which to build their pension funds.

Failing to save

The report further suggested, despite auto-enrolment, that many are still failing to save adequately and argued many who are self-employed or in part-time work are left out of such initiatives.

Pension coverage

ILC UK assistant economist Dean Hochlaf said this combination means today’s young people will need to save more to enjoy their retirement. He argued: ‘The Government must do more to extend pension coverage and ensure that contributions towards private schemes are sufficient, especially amongst overlooked groups such as the self-employed and those on low incomes who have yet to benefit from initiatives designed to improve private savings.’

Looking for a tax-efficient way of saving for retirement?

Saving as much as possible as early as possible throughout our working life is the best way to ensure that we have control over our financial futures and are well-prepared for a comfortable retirement. To review the options available to you, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk.

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.

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UK pension savings gap http://www.lloydosullivan.co.uk/blog/uk-pension-savings-gap/ http://www.lloydosullivan.co.uk/blog/uk-pension-savings-gap/#comments Mon, 11 Sep 2017 09:00:36 +0000 http://www.lloydosullivan.co.uk/blog/?p=736 ukpensions

The need for a greater awareness of what must be saved today

If savers want a particular standard of living at retirement, then they will need a greater awareness of what must be saved today.

Despite efforts by the Government to tackle the savings gap through auto-enrolment and raising the pensions age, challenges still exist. People are living longer, many would rather spend today rather than save for tomorrow, and few know how much they actually have tucked away. Separately, the Government is no longer as generous with tax incentives. As a result, we’ve seen significant changes in pensions over the last few years.

Security in retirement

A report from the World Economic Forum (WEF) has calculated that the UK pension savings gap will rise from £6 trillion to £25 trillion by 2050. With people born today having a life expectancy of more than 100, the WEF said the cost of providing security in retirement for a rapidly ageing population was the financial equivalent of climate change.

Biggest pension crisis

The WEF has warned the huge and spiralling cost would imperil the incomes of future generations and set the industrial world up for the biggest pension crisis in history. The retirement age in Britain and other leading developed countries will need to rise to 70 by the middle of the century to head off the biggest pension crisis in history, according to the WEF.

Pre-retirement income

The three primary reasons for the stark forecasts are increasing life expectancy, lower birth rates and, crucially, not enough being saved for retirement. The report based its estimates of the pension savings gap on the amount of money needed to provide every person with a retirement income equal of 70% of their pre-retirement income.

Standard of living

According to the Organisation for Economic Co-operation and Development, a target of 70% of pre-retirement income roughly equates to an unchanged standard of living, because once people retire they save less and pay less tax.

An ageing population

The WEF said the funding gap would continue to grow at a rate higher than the expected economic growth rate, often 4% to 5% a year, driven in part by the effects of an ageing population – a growing population of retirees who are expected to live longer in retirement.

Pension system strain

Although Britain’s retirement age is due to rise to 68 in 2039, the WEF said further increases would be needed to forestall a predicted increase in the pension savings’ gap, with half the children born in 2007 expected to live until they are 103, putting a strain on the pension system.

Auto-enrolment savings

The WEF report praised the UK for its decision to ensure that 8% of earnings will automatically be saved in a pension for each individual after 2019, noting that auto-enrolment had already boosted saving for 22 to 29-year-olds and low income workers by £1.91 billion a year.

How will your finances stand up to the changing face of retirement?

With the Government shifting financial responsibilities onto the individual, it is more important than ever to make sure you close any retirement savings gap that might apply to your particular situation. One way to build a larger income for retirement is to increase your pension contributions or the amount you set aside in other savings. To review your retirement planning options or for further information, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk.

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.

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Wealth generation http://www.lloydosullivan.co.uk/blog/wealth-generation/ http://www.lloydosullivan.co.uk/blog/wealth-generation/#comments Tue, 05 Sep 2017 09:00:05 +0000 http://www.lloydosullivan.co.uk/blog/?p=733 wealthgen

Are you getting tax-efficiencies on the gains you make from the money you invest?

Whatever you’re putting money aside for, there’s likely to be a role for Individual Saving Accounts (or ‘ISAs’). If you’re looking to grow your money over many years – perhaps to fund a dream purchase or help you in retirement – cash might not be the right option, especially when the interest rates on Cash ISAs are near all-time lows.

Here are five reasons why you might consider investing some, or more, of your savings in a Stocks & Shares ISA, which could help you realise your long-term financial ambitions.

1. Inflation can be the enemy of cash savings

One of the appeals of cash savings is that you can access them when you want. Your interest is also generally fixed, so their value won’t swing up and down like share prices can. It’s sensible to keep enough cash to cover any short-term needs, but keeping too much of your savings in cash can carry a cost. However, when the price of goods and services or inflation is rising faster than the rate of interest you receive on, say, your cash savings in a UK bank or building society, the ‘real’ value of the amount is eroded, which could leave you worse off.

By accepting some level of risk and investing your money in assets such as company shares, bonds and property, you could potentially achieve higher returns than cash alone can offer.

2. Diversify your assets

Relying on any one asset could expose you to an unnecessary risk of losing money. The key to managing risk over the long run is holding the right blend of assets that can collectively perform in different circumstances.

A wide range of investments can be held in a Stocks & Shares ISA. As well as individual company shares and bonds – both government and corporate – you can invest in funds that package several assets. Some funds focus on one type of asset, and sometimes even one region, while others hold a mix of assets from around the world. A broad and diversified portfolio should help spread the risk of individual assets failing to deliver returns or falling in value.

3. Protect your investments from tax

When you invest through an ISA, any income you receive and any capital gains from a rise in value of your investments will be free from personal taxation, irrespective of any other earnings you have.

It’s important to remember that ISA tax rules may change in the future. The tax advantages of investing through an ISA will also depend on your personal circumstances.

4. ISA portfolios can be flexible

Professional fund managers are constantly preparing for and reacting to changing market conditions, adjusting their portfolios accordingly. Your circumstances – and attitude towards investment risks – are also likely to evolve, meaning different types of assets will become more or less appropriate over time.

For example, if you’re close to retirement, you may want to reduce the level of risk in your portfolio or move towards income-generating assets. It’s sensible to review your investments regularly – even as a long-term investor.

Within an ISA, you can reallocate your portfolio according to your outlook and needs at any time without losing any of the tax benefits. You can also move money from your Cash ISA to your Stocks & Shares ISA, or vice versa, as your short-term cash needs change.

5. Investing in a Stocks & Shares ISA

You can choose to invest a lump sum or set up a regular savings plan that fits your circumstances and your financial goals. It’s important that you only invest in products that are suitable.

For the tax year starting 6 April 2017, the ISA allowance is £20,000 for Cash ISAs or Stocks & Shares ISAs, and £4,128 for Junior ISAs.

Get the most from your ISA allowance

Whether you’re a novice or an experienced investor, we could help you get the most from your 2017/18 Stocks & Shares ISA allowance. To help you establish an investment approach that is right for you, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk.

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.

STOCKS & SHARES ISA INVESTMENTS DO NOT INCLUDE THE SAME SECURITY OF CAPITAL THAT IS AFFORDED WITH A CASH ISA.

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Financially unprotected http://www.lloydosullivan.co.uk/blog/financially-unprotected/ http://www.lloydosullivan.co.uk/blog/financially-unprotected/#comments Mon, 04 Sep 2017 09:00:13 +0000 http://www.lloydosullivan.co.uk/blog/?p=731 financiallyunprotected

Dads putting their family’s financial security at risk if the unexpected were to happen

What would happen to you and your family in the event of unforeseen circumstances, such as the diagnosis of a serious illness or premature death? Worryingly, research from Scottish Widows reveals that more than half (53%) of men in the UK with dependent children have no life cover, meaning that 3.9 million dads[1] are potentially putting their family’s financial security at risk if the unexpected were to happen.

Insuring against serious illness

Only 16% of dads have a critical illness policy, leaving many more millions at financial risk if they were to become seriously ill. Fathers are, in fact, more likely to insure their mobile phones (21%) than to insure themselves against serious illness.

More than a fifth (22%) of dads admit their household would be placed at financial risk if they lost their income due to unforeseen circumstances, and 28% say they could only pay their household bills for a minimum of three months. Two fifths (40%) say they’d have to dip into their savings to manage financially, but 42% say that their savings would last for a maximum of just three months.

Basic level of support

The research shows that in the event of themselves or their partner dying, 22% of men with dependent children believe they could rely on state benefits to support their family. While this provides a basic level of support, we would firmly advise people to make their own provision for themselves and their families in order to provide peace of mind with the knowledge that there’s a financial safety net in place.

Many fathers don’t consider having insurance as a necessity, with 18% saying they don’t see critical illness cover as a financial priority, 19% saying they don’t think they need it and 17% saying they can’t afford it.

Bereavement Support Payment system

With a new Bereavement Support Payment system now in place, it’s more important than ever for dads to review their financial protection needs. You may be able to get Bereavement Support Payment if your husband, wife or registered civil partner died on or after 6 April 2017.

It’s estimated that 91% of widowed parents will be supported for a shorter period of time (now just 18 months) than they would under the previous system, which could pay out until the youngest child left school, according to research from the Childhood Bereavement Network. In 2014, 70% of claimants were female[2], so it’s important that fathers seek advice to make sure their household is covered.

Claiming for bereavement benefits

This is especially the case for cohabitees, who are not eligible to claim for bereavement benefits, despite the fact that 21% of couples with children are not married, according to figures from the Office for National Statistics for 2016.

There are many things to consider when looking to protect you and your family. Being diagnosed as suffering from a specified illness or the loss of income need to be considered as part of an effective protection planning strategy.

Do you have appropriate provision in place to protect your financial plans?

No matter what our personal circumstances, it is vital for all of us to ensure we have an appropriate plan in place to protect our finances, helping avoid the need to dip into our savings, which could present even greater challenges further down the line. If you have any questions or queries, or you’d just like to know more about how to protect yourself and your family, get in touch with us on 0208 941 9779 or email info@lloydosullivan.co.uk, and we’ll be happy to help.

Source data:

Scottish Widows’ protection research is based on a survey carried out online by Opinium, who interviewed a total of 5,077 adults in the UK between 16 and 27 March 2017.

[1] Percentage of adult population that are fathers with dependents = 735/5077 = 14.48%; 14.48% of adult population of 51,339,000 = 7.4 million; 53% of these don’t have cover, so 3.9 million.

[2] Childhood Bereavement Network submission to the Commons Work and Pensions Select Committee

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Planning for your retirement http://www.lloydosullivan.co.uk/blog/planning-for-your-retirement-2/ http://www.lloydosullivan.co.uk/blog/planning-for-your-retirement-2/#comments Wed, 30 Aug 2017 09:00:29 +0000 http://www.lloydosullivan.co.uk/blog/?p=728 planningfor yourretirement
Getting ready to slow things down

One of the critical aspects of retirement planning is how you structure your financial affairs to make sure you have sufficient money if and when you stop working.

Making sure you have enough money in retirement to enable you to spend your time the way you want to, doing those things you always intended to do, is likely to be at the heart of planning for your retirement.

Too complicated to think about

People surveyed for BlackRock’s Investor Pulse survey stated that their biggest financial priority was ‘funding a comfortable retirement’. Yet many people spend more time planning their holiday than their own retirement – perhaps because planning for retirement seems too complicated to think about?

Don’t know where to start

We are all living longer, the State Pension Age is increasing and pensions legislation is ever-changing. Understandably, we want an active, comfortable retirement but often don’t know where to start the savings process. If confusion and a lack of understanding around your retirement needs have led you to put off planning and saving anything, you’re not alone. In fact, over half of people in the UK are in the same position.

You can start now though. Planning will help you think about the changes you could make and enable you to take steps towards securing a better future.

Step 1 – Target

Know what you need – set yourself a target.

The closer you are to retirement, the more likely you are to know how much income you will need to cover your outgoings. If you have longer to go until retirement, it is still good to have an idea of what you are aiming for – and you can review this each year as you get closer.

Step 2 – Plan

Know what you already have.

The second step is simple – understanding what you have already saved. Knowing what you already have will help you to understand how far you are towards your retirement target. If you have a lot of different pensions, it may be worth considering bringing those all together into one account if appropriate.

Step 3 – Action

What you need to think about.

Are you contributing the right amount?

Are you invested in the right kind of fund?

When can you realistically retire?

Don’t put off planning for retirement. By following these simple steps and reviewing your retirement plan at least once a year, you are planning for a better future.

How close are you to achieving your retirement goals?

We will help you understand your own situation using our expertise, because only then can you start to talk about what you want and need in order to form your retirement goals. When we know these, we can identify how close or not you are to achieving those goals based on your current planning. Don’t leave it to chance – contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk to discuss your requirements.

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.

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Pension freedoms http://www.lloydosullivan.co.uk/blog/pension-freedoms-3/ http://www.lloydosullivan.co.uk/blog/pension-freedoms-3/#comments Tue, 29 Aug 2017 09:00:27 +0000 http://www.lloydosullivan.co.uk/blog/?p=726 pensionfreedoms
Will the new retirement rule of ‘no rules’ offer people a better financial future?

Following pension reforms, there are now more options for using your private pension pot. Since April 2015, some people over 55 have greater freedom in how they can access their pension pots – the money they’ve built up during their working life.

The changes to private pensions affect those in a defined contribution pension scheme. This is one where you build up savings (your ‘pension pot’) throughout your life to fund your retirement. Before making any decisions, it’s important that you consider your options and the impact that your decision could have on your tax bill or benefit entitlements.

What best suits your needs

If you have a defined contribution pension, you have more options for how to use the money according to what best suits your needs. You are no longer restricted to simply buying an annuity. Instead, you can withdraw some or all of the money as a lump sum.

It’s important to obtain professional financial advice before making any decisions, as the options you choose could affect your income, overall retirement savings, benefits entitlements and how much tax you pay.

Most populous age group

New population data[1] shows that the new pension freedoms will face their peak test in the coming five years. The most populous age group in the UK today consists of those aged 51 – a total of 945,000 people. ‎This group will gain access to the pension freedoms in 2020. This year will test if the new retirement rule of ‘no rules’ will offer people a better financial future.

In the tax year 2016/17, 393,000 individuals took advantage of the freedoms across the UK, withdrawing £6.45 billion from their pensions. As the number of people reaching the age of 55 in the coming five years peaks – at 945,000 in 2020 – the pension freedoms will face their greatest test on whether they can offer a sustainable financial future[2].

Serious consideration of future needs

Recent government research identified that only one in three (34%) people in the 45-54 age group had given any consideration to how many years of retirement they may need to fund[3]. Entering the arena of the pension freedoms without serious consideration of future needs could spell trouble for many savers.

Thursday 6 April 2017 marked two years since the introduction of some of the most radical reforms to UK pensions in a generation. You can only take advantage of the pension freedoms from age 55. Anyone thinking of withdrawing lump sums from their pension fund should consider the impact this will have on future retirement income.

How will you decide what the best course of action to take is?

The choices you make for your pension fund can determine the level of income you receive for the rest of your life. For this reason, you should seek professional financial advice and guidance to decide the best course of action to take. For more information, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk.

[1]www.ons.gov.uk/releases/populationestimatesforukenglandandwalesscotlandandnorthernirelandmid2016

[2]www.gov.uk/government/uploads/system/uploads/attachment_data/file/610451/Pensions_Flexibility_April_2017.pdf

[3]www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/articles/earlyindicatorestimatesfromthewealthandassetssurvey/attitudestowardssavingforretirementcreditcommitmentsanddebtburdenjuly2014tojune2016#attitudes-towards-saving-for-retirement

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.

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Family succession planning http://www.lloydosullivan.co.uk/blog/family-succession-planning/ http://www.lloydosullivan.co.uk/blog/family-succession-planning/#comments Mon, 21 Aug 2017 12:05:06 +0000 http://www.lloydosullivan.co.uk/blog/?p=712 family
Taking advice early and developing a personal financial plan is crucial to meeting long-term goals

Succession planning may be one of the most challenging experiences facing any leader, especially an entrepreneurial business person who has built a family business from scratch, so it is crucial to get right. For a family business, transition is a once-in-a-lifetime decision. Perhaps no challenge has as much potential to exacerbate the special stresses – or, conversely, highlight the special advantages – of operating a family business.

Prosperity for generations to come

A good succession plan can be the first step in maintaining the strength of an enterprise and the family’s prosperity for generations to come. Discussing how a family business should continue beyond the career, or even the life, of the founder can be difficult, as it often crosses business and personal spheres. Its issues around succession planning make up four of the top ten worries keeping family business owners awake at night, according to research from Close Brothers Asset Management (CBAM), conducted by Family Business United.

Second and third generations

The challenges faced by the second and third generations are substantially different from that faced by the first generation. Also, given that the first generation is often highly entrepreneurial, they often tend to overlook succession planning until the last moment. This makes the process even harder.

Maintaining family values

A survey of family businesses found that management succession planning was a worry for 39% of business owners, while 35% cited engaging and developing the next generation as a concern. Ownership succession and developing responsible future owners was stated as a worry by more than a third (34%) of business owners. The same number also highlighted identifying and maintaining family values as an ongoing concern.

Remaining a profitable business

The day-to-day running of the business came in as the top worry for family business owners, with 40% saying that continuing to develop and remain a profitable business was a key concern. Personal finances also stood out, with worries about planning for later life highlighted by 38% of owners.

Regulation and legislation was a worry

Outside of family businesses’ immediate control, four in ten (39%) business owners said red tape, regulation and legislation was a worry. Family businesses employ almost 12 million people[1] and turn over an estimated £1.3 trillion each year, over a third of the turnover of the private sector[2].

Family-owned small businesses

UK SMEs face a multitude of challenges, and family-owned small businesses can have an especially hard time navigating regulation and adapting to changing policy while remaining loyal to their unique set of family values. Beyond that, all this must be done while running a profitable business.

Crucial to alleviating anxiety

Succession planning is naturally a significant concern for family businesses and requires careful consideration. Not only must owners consider developing their replacement, and ensure family values are adhered to, but they must also plan for their own retirement. Taking advice early and developing a personal financial plan is crucial to alleviating anxiety and meeting long-term goals.

Top ten worries keeping family business owners awake at night

1. Continuing to develop and remain a profitable business

2. Management succession planning

3. Red tape, regulation and legislation

4. Planning for later life

5. Engaging and developing the next generation

6. Ownership succession and developing responsible future owners

7. Identifying and maintaining family values

8. Extracting value from the business

9. Taxation

10. Developing effective marketing, social media and PR strategies

Looking to develop a sustainable organisation for years to come?

Handing a family business to the next generation is a major process, from selecting and developing the successors to protecting the brand reputation and retaining knowledge. However, the effort is crucial to develop a sustainable organisation for years to come. To discuss your requirements, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk for further information.

Source data:

The research was commissioned by Close Brothers Asset Management and conducted by Family Business United in Q4 2015. 173 family businesses were surveyed across the UK.

[1] Figures from Oxford Economics for the Institute of Family Business (IFB)

[2] Figures from research conducted by Family Business United (2015)

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Shopping around for a better deal http://www.lloydosullivan.co.uk/blog/shopping-around-for-a-better-deal/ http://www.lloydosullivan.co.uk/blog/shopping-around-for-a-better-deal/#comments Mon, 21 Aug 2017 09:00:26 +0000 http://www.lloydosullivan.co.uk/blog/?p=710 shopping
Consumers lost £130 million by sticking with the same pension provider in 2016

New research finds consumers could be missing out on thousands of pounds in retirement by not shopping around for their pension product. This means their pension pot may not stretch as far as they hope it will, yet a significant proportion of people expect their retirement income to cover much more than just the essentials.

Research conducted by the Pensions Policy Institute for LV= has found that in 2016, there were around 30,000 people who took out an annuity with their existing provider and missed out on additional income by not shopping around. In total, they lost out on an additional £130 million, which equates to on average £4,000 over the course of their retirement.

Shopping around to get the best deal

Buying an annuity is a way of turning all your pension savings that you’ve built up over the years into an income to last you the rest of your life. Since April 2015, you’ve been able to withdraw as much of the money as you want when you reach 55, although it will be taxed as income. Arranging an annuity is a complicated process, so it’s important to know what you need to do at each stage. And it’s vital that you shop around to get the best annuity rate, as you could miss out on a boost to your income if you fail to do so.

The research also identified that people are increasingly expecting their retirement income to cover more than just the essentials, which means their money needs to work even harder. Nearly six in ten (57%) of those planning to retire in the next five years want their retirement income to also cover home maintenance costs, while 53% want it to cover holidays and a quarter (24%) say they’d like to leave money behind as an inheritance. In addition, one in six (17%) want to be able to use their retirement income to help their children or grandchildren with a property purchase, and 14% would like care costs to be covered as well.

Professional financial advice

Taking professional financial advice is the best way for someone to ensure their retirement savings meet all their needs throughout retirement. While some people may not understand the need for advice, the value of it is clear to consumers who have used it. Nearly nine in ten (87%) of those who took advice feel confident they made the right choice about what to do with their money, while three quarters (75%) say financial advice helped get more for their money. Revealingly, one in five (19%) who didn’t take financial advice say even though they don’t regret not using it now, they worry they might in future.

Last year alone, consumers missed out on a staggering £130 million over their retirement by sticking with the same provider when taking out an annuity. This is echoed across the retirement space with consumers failing to access the best retirement products. People are expecting their pension pot to stretch even further nowadays, so it’s crucial they take control and get support to help them get the most from their savings.

Make sure you choose the option that’s right for you

If you don’t know what to do about your retirement options, let us help. We’ll explain the information you need to make an informed decision based on your individual needs. Please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk to review your situation – we look forward to hearing from you.

Source data:

Methodology for consumer survey: Opinium, on behalf of LV=, conducted online interviews with 2,404 UK adults between 12 and 27 March 2017. Data has been weighted to reflect a nationally representative audience.

Methodology for amount missed out on in retirement: the Pensions Policy Institute (PPI) reported that around 80,000 annuities are purchased each year, of which 52% are purchased from the existing provider. PPI calculated that if 80% of those who purchased an annuity from their existing provider continue to lose around 6.8% of retirement income, that could represent a loss of around £130 million over the lifetimes of those purchasing in annuities in 2016.

[1] LV= calculated that 52% of 80,000 annuities taken out each year with existing providers, 80% of which would lose out on retirement income, equating to 30,000 people. With 30,000 people missing out on £130 million, that works out as around £4,000 per person throughout retirement.

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.

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