Pension Scams:

 a lifetime’s savings lost in a moment

24 July 2014

 

The Pensions Regulator has launched a new campaign to warn people of the dangers of being enticed into

· trying to access their pension pot as a lump sum or loan before age 55, or

· moving their retirement savings into unregulated high-risk or bogus investments.

Arrests have been made, and websites have been closed down, but it is clear that more needs to be done to discourage often vulnerable people from following some very dangerous advice.

The Regulator’s press release mentions that “the Victims of pension scams have warned of the devastating impact of losing thousands of pounds in retirement savings”. It notes that “the known amount of funds paid into pension scams now stands at £495m in total. However, it is suspected that this amount is likely to be substantially higher and not all activity is reported.”

As part of the new awareness drive, The Pensions Regulator has refreshed its ‘Scorpion’ campaign material to reinforce the message to consumers not to be ‘stung’ by cold calls, text message spam or website offers claiming to be able to help them cash in their pension. The regulator is urging pension trustees and providers to include the leaflet in the next annual statement sent to members, and anyone who requests a transfer in the meantime.

Pensions minister Steve Webb has warned: “Although quick-fix pension release schemes may seem tempting, particularly when times are tough, people should make sure they understand all the implications before they sign on the dotted line. A joint industry and Government operation is working to stamp out these unethical, exploitative, poor value offers – but I would urge anyone who is approached to think carefully, consider seeking advice and, if in doubt, steer clear.”

The new campaign is being led by the Department for Work and Pensions, The Pensions Regulator, The Pensions Advisory Service, Money Advice Service, Financial Conduct Authority, Serious Fraud Office, HMRC, Action Fraud, National Crime Agency and City of London Police.

Visit www.pension-scams.co.uk for more information.

Bevan & Buckland Accountants Swansea Tel: 01792 410100

Bevan & Buckland Accountants Haverfordwest Tel: 01437 760666

Bevan & Buckland Accountants Pembroke Tel: 01646 682383

Bevan & Buckland Accountants Carmarthen Tel: 01267 233115

Bevan & Buckland Accountants St David’s Tel: 01437 720352

Bevan & Buckland Accountants Cardiff Tel: 02920 459960

 Bevan & Buckland Accountants Newton Abbot Tel: 01626 361484

Budget 2013 – Never mind BEER, what about PENSIONS?

Bevan & Buckland Accountants logoAway from the headlines about beer, children and mortgages in yesterday’s Budget was some generally positive news for anyone with a pension, writes Bevan & Buckland’s Financial Planning Manager, Gareth Tregidon.

Pre-Retirement

The first thing to note is that, in the main, there was nothing new announced that we weren’t already aware of.  The constant “tinkering” with pensions by successive Governments is one of the key reasons why I believe people lose confidence in this important area of financial planning.  Not having anything “new” is therefore very much a positive thing.

We were already aware that the annual allowance (the maximum amount you are allowed to pay into a pension each year and still receive tax relief) would reduce from £50,000 to £40,000 from next year.  This, together with a reduction in the Lifetime Allowance (the total amount that can be held within a pension whilst still qualifying for full tax benefits) were announced in the Chancellor’s Autumn Statement.

For those whose planning involves significant contributions, either through personal or company schemes, there are four main issues to be aware of.

  1. If you are one of those lucky enough to be a member of a final salary pension, pay close attention to the total level of contributions being made.As the employer has to ensure that enough money is paid in to guarantee your benefits, this can represent a significant contribution, particularly for those on higher incomes.  (Your scheme administrators should be able to confirm the total level of contributions if you are unsure).
  2.  Find out when your “PIP” starts.The new £40,000 limit applies not to the Tax Year but to your Personal Input Period (PIP).  In some cases, particularly with personal pensions, this may be the same as the Tax Year, however in many cases the dates will differ.  For anyone who’s PIP commences after 6th April 2013 you will fall under the new limits almost immediately.  Your adviser, pension provider or scheme administrator can confirm what the date is, what contribution limits will apply and when.
  3. The Lifetime Allowance calculations are not always as straightforward as you may think, especially if you are a member of a final salary scheme.For those with a personal or money purchase company scheme, the position regarding the total amount held in your pension is easier to work out.  If you are due to retire in the next few years, however, be careful to take into account future contributions and growth as well, and look at what you your fund may be worth in the future.

    Be careful as well if you receive an increase in your income during the year (for example, due to a promotion), as this could potentially increase your benefits beyond the limit.

    The Government has announced that certain levels of protection will be available to help people who, due to the reduction in the limits, will now exceed the allowance.  Full details have not yet been announced, and are to be included in the next Pensions Act.

Post-Retirement

There are two main announcements that could affect either those already utilising certain pension contracts to generate an income, or those who may do so in the near future.

This principally affects those with Capped or Flexible Drawdown contracts (more commonly called Income Drawdown).  If you’ve got one you will already know what they are, but in simple terms it is a way of leaving a pension invested rather than buying an annuity, and then drawing an income from the fund.

Until April 2011 the level of income that could be taken under a drawdown contract is based on the rates determined by the Government Actuaries Department (GAD). These GAD rates were designed to mirror the amount an individual could receive if they had purchased an annuity.

Over recent years these GAD rates have shown less resemblance to standard annuity rates, which led to a call for the system to be reviewed and revised.  This review has now been announced, which we hope will lead to increased rates for policy holders.

An additional benefit which comes into effect next week is the increase in the maximum percentage of the GAD rate that can be taken.

Until April 2011, a drawdown policy holder could take up to 120% of the prevailing GAD rate as an income.  This was reduced to 100% from that date which, combined with other factors such as falling annuity rates and erratic investment returns, led to some pensioners seeing a significant reduction in their incomes.  It has been confirmed that the maximum rate will return to 120% for all policies where the review date is 26th March 2013 or later.  Where a review date falls before 26th March the new limits will take effect at the next annual review.

Summary

Whether you are planning ahead for retirement or you have already reached that point, the announcements yesterday need to be considered carefully as the potential implications are significant.

As with any financial planning, if you are at all unsure take professional advice.  If you don’t already have an adviser, or would simply like a second opinion, please contact me and I will be happy to explain how we can help.

Gareth Tregidon.

Gareth Tregidon is manager of Bevan & Buckland’s Financial Planning Department, which operates from the firm’s Swansea, Pembroke and Haverfordwest offices. The department provides fee-based advice to personal and business clients, both from within the firm and elsewhere.

As well as having over 25 years’ experience in the provision of financial advice, Gareth is a Certified Financial PlannerCM and an accredited Later Life Adviser with the Society of Later Life Advisers (SOLLA).  He is former Chairman of the Institute of Financial Planning in South Wales, and an assessor for the internationally recognised Certified Financial PlannerCM licence. 

http://www.bevanbuckland.co.uk/services/financial-planning

Bevan & Buckland Accountants Swansea Tel: 01792 410100

Bevan & Buckland Accountants Haverfordwest Tel: 01437 760666

Bevan & Buckland Accountants Pembroke Tel: 01646 682383

Worried about auto enrolment?

Bevan & Buckland Accountants logoWORRIED ABOUT THE IMPACT OF PENSIONS AUTO-ENROLMENT?

As you will have seen from the latest series of Government-sponsored TV adverts, pension auto enrolment has finally arrived. Well, for large employers, at least!

If you haven’t seen them yet, the Department for Work & Pensions now has its own YouTube channel (with a grand total of 1 clip on it) which you can watch here (it’s only 42 seconds long!).

What the advert doesn’t make clear is when this important piece of legislation will affect different types and sizes of employers, which employees are covered and how much is this all going to cost.

You may recall that we previously issued a short guide for employers, which we have now updated to reflect the amended implementation dates announced earlier this year.  You can get a free PDF copy of the guide by clicking here.

Although much touted as the most significant piece of pensions legislation in decades, our view is that the bigger issue will be the effect on

 

 employers’ cashflows, and the additional administration headache that this could bring.  This will include making sure your payroll can cope with the additional reporting requirements, as well as the likelihood that not all employees will want to join at the same time, so causing additional administration.

As you would expect, we can help you with all of these areas, be it gaining a better understanding of the legislation, analysing existing pension arrangements to see whether these are suitable (or just need small adjustments to make them so), assessing the potential impact on your cashflow, or making sure your payroll process can cope with the additional workload.

Please remember that we are able to help if you have any questions regarding the auto enrolment legislation, your responsibilities under

 

the law, or which pension options are likely to suit you and your business.  We offer a free initial consultation, either in our offices in Swansea, Haverfordwest and Pembroke, or at your business premises. 

If you would like independent and impartial advice on any aspect of financial planning for your business, please contact either Julie Richards or myself on 01792 410103 or pensions@bevanbuckland.co.uk

Gareth Tregidon

 

Gareth Tregidon is manager of Bevan & Buckland’s Financial Planning Department, which operates from the firm’s Swansea, Pembroke and Haverfordwest offices. The department provides fee-based advice to personal and business clients, both from within the firm and elsewhere. 

As well as having over 25 years’ experience in the provision of financial advice, Gareth is a Certified Financial PlannerCM and an accredited Later Life Adviser with the Society of Later Life Advisers (SOLLA).  He is former Chairman of the Institute of Financial Planning in South Wales, and an assessor for the internationally recognised Certified Financial PlannerCM licence. 

 

http://www.bevanbuckland.co.uk/services/financial-planning

Bevan & Buckland Accountants Swansea Tel: 01792 410100

Bevan & Buckland Accountants Haverfordwest Tel: 01437 760666

Bevan & Buckland Accountants Pembroke Tel: 01646 682383

Need help with auto enrolment?

Bevan & Buckland logoAre you an employer?  Want some help dealing with Auto Enrolment?

When considering your responsibilities as an employer, the prospect of having to deal with the challenges that the auto enrolment legislation will throw at you can seem daunting, writes Gareth Tregidon, Financial Planning Manager at Bevan & Buckland Chartered Accountants.

One of the duties of an employer under the automatic enrolment regime is that you are required by law to provide in writing:

  • the right information
  • to the right individual
  • at the right time

This covers all eligible workers, including certain fixed-term contract workers, and excludes certain other groups.  Deciding who is, and who is not, eligible can be a challenge in itself.

Thankfully, help is now available via The Pensions Regulator’s (TPR) website.

The TPR has created a template tool to help employers ensure they send the right letters, to the right people, at the right time. And best of all, it’s free!

The tool can be accessed here.

Please remember that we are able to help if you have any questions regarding the auto enrolment legislation, your responsibilities under the law, or which pension options are likely to suit you and your business.  We offer a free initial consultation, either in our offices in Swansea, Haverfordwest and Pembroke, or at your business premises. 

If you would like independent and impartial advice on any aspect of financial planning for your business, please contact either Julie Richards or myself on 01792 410103 or pensions@bevanbuckland.co.uk

Gareth Tregidon

Gareth Tregidon is manager of Bevan & Buckland’s Financial Planning Department, which operates from the firm’s Swansea, Pembroke and Haverfordwest offices. The department provides fee-based advice to personal and business clients, both from within the firm and elsewhere. 

As well as having over 25 years’ experience in the provision of financial advice, Gareth is a Certified Financial PlannerCM and an accredited Later Life Adviser with the Society of Later Life Advisers (SOLLA).  He is former Chairman of the Institute of Financial Planning in South Wales, and an assessor for the internationally recognised Certified Financial PlannerCM licence. 

http://www.bevanbuckland.co.uk/services/financial-planning

Bevan & Buckland Accountants Swansea Tel: 01792 410100

Bevan & Buckland Accountants Haverfordwest Tel: 01437 760666

Bevan & Buckland Accountants Pembroke Tel: 01646 682383

 

Auto Enrolment – The Story So Far!

Bevan & Buckland logoAuto Enrolment  – The Story So Far!

As you may recall from previous posts, auto enrolment will start to affect larger employers later this year, phasing in to affect all employers by 2017 (2018 for new employers).

The National Employment Savings Trust (NEST) commissioned independent research to examine employer’s readiness for automatic enrolment and their views of NEST, focussing mainly on the (larger) employers in the first six to nine months of staging.  So far NEST has only published “top line results”, but has promised more data “at the end of the year”, i.e. after auto enrolment has started. 

The main findings are:

Employers with 5,000+ workers (“large” employers”):

  •      54% stated they have already confirmed their provider(s) for automatic enrolment
  •      34% say they “have a good idea” of the provision they will put in place, but …
  •      11% say they are still at the early stages of planning, and …
  •      16% remain undecided 

Employers with 1,000 – 4,999 workers (“medium” employers):

  •      48% have confirmed their provider(s) for automatic enrolment
  •      35% say they “have a good idea” of the provision they will put in place
  •      17% are still at early stages

When choosing a pension provider, all of the employers surveyed consider ease of day-to-day administration and clear communications to be key factors in their decision making.

88% of employers are aware of NEST, however positive views of NEST are “less likely” from medium-sized employers than from larger firms.  

As can be seen from the above, due to the implementation times only larger firms have so far been canvased.  As far as we can tell, the awareness of auto enrolment is rising amongst smaller firms, although with some years still to go it before it will affect many businesses it is not currently high on the agenda. 

What is interesting from the figures is the proportion of employers that have still not decided what they are going to do.  Bearing in mind many of these firms will already have some form of staff pension scheme in place, and in most cases the legislation will take effect from October this year, this seems very surprising.

On a similar note, the Department for Work & Pensions (DWP) and The Pensions Regulator (TPR) have launched a new website to help employers with auto enrolment.  The site, which can be found here, provides free guides, newsletters and other information, most of which can be customised to suit the employers’ own requirements.

Although more pressing issues like cashflow and basically staying afloat are rightly taking up business owners attention at present, auto enrolment will need to be dealt with at some stage in the near future, and the earlier planning starts the better.  With over 20 years’ experience in helping business owners and employers manage their pension arrangements, if you would like to discuss the implications of auto enrolment or the options available please get in touch with either your usual contact at Bevan & Buckland or myself.

Gareth 

Gareth Tregidon is manager of Bevan & Buckland’s Financial Planning Department, which operates from the firm’s Swansea, Pembroke and Haverfordwest offices. The department provides fee-based advice to personal and business clients, both from within the firm and elsewhere. 

As well as having over 25 years’ experience in the provision of financial advice, Gareth is a Certified Financial PlannerCM and an accredited Later Life Adviser with the Society of Later Life Advisers (SOLLA).  He is former Chairman of the Institute of Financial Planning in South Wales, and an assessor for the internationally recognised Certified Financial PlannerCM licence. 

http://www.bevanbuckland.co.uk/services/financial-planning

Bevan & Buckland Accountants Swansea Tel: 01792 410100

Bevan & Buckland Accountants Haverfordwest Tel: 01437 760666

Bevan & Buckland Accountants Pembroke Tel: 01646 682383

Pension lump sum seized by trustee in bankruptcy

Bevan & Buckland logoPENSION LUMP SUM SEIZED BY TRUSTEE IN BANKRUPTCY

A recent Court case highlighted that your pension fund may not be protected from your creditors after all, writes Bevan & Buckland debt advice specialist, Alun Evans.

In April 2012 the High Court held that where a bankrupt has a personal pension and is at least 55 Years of age (and so entitled to take the benefits), the Court may make an income payments order requiring him to take both the lump sum and the annual income and to pass this on to his Trustee in Bankruptcy for the benefit of his creditors. (Raithatha v Williamson (2012) EWHC 909 Ch).

In this particular case Mr Williamson had a pension policy valued at £1m.  He was nearly 60 years of age and because he was still in work he had not drawn down his pension funds.

The judgement is a surprise as most Trustees in Bankruptcy had assumed that the law was well established under Section 11 Welfare Reform and Pensions Act 1999 which states that a pension cannot be seized if you become insolvent.

However, in this case the Judge referred to Section 310 Insolvency Act 1986.  This section specifically defines income as including any payment under a pension scheme’.

This case is expected to be appealed.

Advice for individuals with financial difficulties

It is suggested that if a person has a significant pension fund it may be beneficial to delay petitioning for bankruptcy until the appeal has been heard and certainty is obtained.  At the moment any individual who is a subject of the bankruptcy order (post April 2012) risks losing their personal pension fund.

Alun

Alun Evans is the partner at Bevan & Buckland’s Haverfordwest office specialising mainly in accounts, tax, debt and insolvency.  Alun is happy to meet for advice in any of our offices – Cardiff, Carmarthen, Haverfordwest, Pembroke, St Davids and Swansea.

Alun is a chartered accountant and licensed insolvency practitioner and a member of the ICAEW Tax Faculty.

Bevan & Buckland Accountants Swansea Tel: 01792 410100

Bevan & Buckland Accountants Haverfordwest Tel: 01437 760666

Bevan & Buckland Accountants Pembroke Tel: 01646 682383

 

COST OF CARE AT HOME INCREASES

Bevan & Buckland AccountantsCouncils are charging more for providing care services to help elderly and disabled people in their homes, and have increased the hourly costs they charge yet again writes Bevan & Buckland’s Financial Planning Manager, and accredited Later Life Adviser, Gareth Tregidon.

According to a survey conducted under a freedom of information request by the Labour Party, the number of elderly people having their home care services fully paid for by their local authority has fallen by 11% over the past two years, in spite of the ageing population.

The figures showed the average charge for an hour of home care increased by over 10% between 2009/10 and 2012/13, however there were wide variations across the country.  Some councils provide the care free whilst others charge up to £21.50 per hour.

And these variations are not limited to the hourly cost.  Although some councils cap the weekly costs people are required to pay for home care, this varies from around £90 to £900 a week.  Additionally almost half of the councils who reported having a cap on home care charges in 2009/10 have now removed it.

The increase in home care charges means the average annual cost for an older or disabled person who pays for 10 hours of home care a week has increased to £7,077 a year in 2012/13 – up more than £680 since 2009/10, according to the Labour Party.  Shadow care minister Liz Kendall called the increases “a stealth tax on the most vulnerable people in society”, citing not only the increase in hourly costs but also the reduction in the numbers receiving free care. 

Taken in isolation these figures are worrying, and probably not that surprising.  However, this is only part of the story.

Figures published by SAGA earlier this year suggested that inflation for retired and elderly people is higher than the more often quoted inflation rates of RPI and CPI.  Indeed, for the over 75’s it estimates that the increase in living costs for the 4 years to October 2011 was over 20%.  Add this to the above figures and it’s a very worrying position for anyone directly or indirectly looking at funding care costs.

Taking proper advice on funding care costs has never been more important.  Organisations like SAGA and The Society of Later Life Advisers (SOLLA) can provide useful guidance and literature.  Alternatively, for a free initial discussion with a specialist in financial planning for later life and retirement, please give me a call. 

Gareth Tregidon

FinanciaCertified Financial Plannerl Planning ManagerFinancial Skills PartnershipSociety of Later Life Advisors

HSBC financial services division redundancies

Bevan & Buckland AccountantsDo you (or should I say “did you”?) get financial advice from your bank?

HSBC’s announcement yesterday that they are making 650 people redundant from their financial services division may have been missed by many.  This follows the 460 made redundant from the same division plus those from its NHFA independent arm in 2011. In this post Certified Financial PlannerCM and manager of Bevan & Buckland’s Financial Planning department, Gareth Tregidon, explains what this means and why it is an important development?

HSBC announced the closure of its tied advice division yesterday as part of a total 2,217 job losses.  The tied advice division provides advice to the majority of the bank’s customers through their branch network, including pensions, investments and insurance policies.  The bank is apparently retaining an independent advice offering, although this appears to cover only their Premier and Private banking operations. 

So why has HSBC taken this decision, and what are the implications?

Firstly it is important to note that anyone with an existing pension, investment or insurance does not need to worry about their policies.  HSBC will still be managing the money held in a pension or investment fund, and providing the insurance cover.

The bank has stated that the decision has been taken as it will no longer be able to afford to offer “mass-market financial advice” once the Retail Distribution Review (RDR) comes into effect on 1st January 2013.  We are planning more on the RDR and the impact this will have on the provision of financial advice in future posts, but what it means in this instance is that banks have been reviewing how much money they make from financial advice, what it will cost them to become compliant with the new rules, and whether they can make enough money from this in the future. 

HSBC are the second major bank to pull out of providing branch-based financial advice, following Barclays’ lead earlier this year.  With the major changes being introduced from next year, is this move really a surprise?  Well, to most of us who have been around this industry for a while, the answer has to be “No”.  However I have to admit to having mixed feelings on the subject.

Firstly, anything that reduces public access to financial advice is, in my view, a bad thing and the banks have provided advice for many years to people who otherwise wouldn’t have received it.  Whilst some areas of advice back then were poor (mortgage endowments spring to mind), we also had more people with life assurance, and a greater number putting money away for retirement, than we do now.  Much of this was due to the availability of advice from the banks and people like “the man from the Pru”!

This is not a reflection on all bank advisers.  I spent several years working for what was then Midland Bank (initially as a tied adviser and latterly as an IFA), and then as an IFA for a firm that was subsequently bought by Barclays.  During this time I worked with many individuals that I would trust implicitly.  The banks in general have provided advice to a far greater percentage of the population, and to different segments within it, than can be covered by most IFAs.

However, with an increased pressure on sales targets financial advice from many banks has appeared, in general terms, to get worse over recent years.  Several of the main banks having been fined by the regulator over poor quality advice: Barclays received fines of £1.1m & £7.7m (plus a £60m+ provision to repay affected clients), HSBC £10.5m, RBS/NatWest £2.8m all in 2011, and Santander £1.5m in 2012. 

This latter point is particularly relevant when considering what’s ahead in 2013, and how this will affect anyone who receives financial advice.  The indications are that a significant number of advisers either have or will be leaving the industry, and the increasing regulation and requirements on firms in the future will push up costs.  Many firms that are currently independent will become what the FSA have termed “Restricted”, although in reality this will not mean a change to the advice their clients receive. Gareth Tregidon

The landscape for financial advice will be changing significantly in the next few months, however more on that to follow in the near future!

Gareth Tregidon

Financial Planning Manager

Certified Financial PlannerCM

Accredited Later Life Adviser

 

 

 

 

DWP confirms revised Auto-Enrolment details for small employers

Bevan & Buckland AccountantsIn November 2011, the Government has announced that it would defer the introduction of pension auto-enrolment for employers with less than 50 eligible employees.  The aim was to give smaller employers more time to adjust to the changes, in particular due to the continuing tough economic conditions.

The revised timetable was announced to Parliament in a written Ministerial Statement today by Department For Work & Pensions Minister, Steve Webb.  We have updated our employer helpsheet on auto-enrolment and NEST, which can be accessed here.

Also announced was a delay to the date when compulsory employer contributions would have risen from 1% of earning to 2%.  This will come into force a year later on 1st October 2017 for all employers.

At the Parliamentary Committee meeting today, Steve Webb also announced that he didn’t see a need for small firms to take (or pay for) advice on auto-enrolment.  In our view this is very misguided, as if they follow this view and simply enrol all employees in the NEST scheme most smaller employers will have to carry the full burden of administration and advice themselves.  We are already aware of at least one alternative scheme to NEST, from Dutch provider NOW:Pensions, with the real possibility of further schemes from leading UK insurance companies as well.  If an employer simply selects NEST over the alternatives are they then deemed to have given regulated pensions advice to their workforce?  When employees ask for details of the funds into which their money will be invested, will the employer be able (or indeed want to) help them decide which to choose?

Gareth Tregidon

Gareth Tregidon

There is no doubt that many smaller employers will have no trouble dealing with the

multitude of issues that auto-enrolment will bring.  For everyone else, please ask us and we’ll do what we can to help.

Gareth Tregidon

Manager, Financial Planning

 25th January 2012