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Rossmore news: February 2017

A week in the news

  • One in seven businesses is failing to auto-enrol its employees in a workplace pension before the new deadline, new figures from Aviva reveal.
  • An index fund that tracks companies in the FTSE 250 but excludes investment trusts has been launched by Legal & General Investment Management.
  • Coventry for intermediaries has launched new offset mortgages and reduced the rates on some of its buy-to-let products.
  • Scots Widows has scrapped exit fees on all personal pension products.

Thousands of over 55’s lose out from pension freedoms

Hundreds of thousands of vulnerable over-55’s could be left worse off this year if they take advantage of pension freedoms to access cash lump sums, Just has warned. Just Retirement and Partnership said that 2017 would see the highest ever number of people reaching 55, the age at which pension freedoms kick in.

Interest-only ‘prison’ to spur equity release

A flood of interest-only mortgage maturities in 2017 is set to ‘turbo-charge’ the equity release market, with one provider predicting demand will more than double over the year. The FCA has highlighted 2017 to 2018 as the first year in which a large number of interest-only mortgages sold would reach maturity and it estimates that almost half those with such a mortgage will be unable to pay the loan.

Scammers Pose as FSCS

The FSCS has warned consumers to “be on their guard” against an email scam promising a high-value payment. The compensation body said scammers were posing as the FSCS and attempting to entice consumers to provide personal information with the promise of a $5.7m (£4.5m) payment.

Scottish Widows unveils £30m workplace pension investment

Scottish Widows will invest £30m in its workplace pensions business to expand the range of products and services available to its workplace customers.

Cost of cyber crime to rise 40%

Financial services firms will be forced to spend millions more to guard against digital crime this year, as some industry professionals warn more needs to be done to educate businesses of the dangers.

For Financial planners the big risk is that you, or your staff, make an error that leads to a client falling victim to fraud.

What is your State Pension age

Key points from an Age UK document entitled “Later Life in the UK” published in 2016 serve to illustrate just how things have changed and are still changing. With a UK population of 65.3 million:-

  • 6 million people are aged 65 or over
  • Over 1.5 million are aged 85 or over
  • The number of centenarians living in the UK has risen by 72% over the last decade to 14,450 in 2014
  • UK life expectancies at age 65 are 85.9 years for women and 83.4 years for men
  • By 2040, nearly 1 in 4 people will be aged 65 or over
  • The proportion of the population aged over 75 is projected to double in the next 30 years
  • Nearly 1 in 5 people will live to 100, including 29% of people born in 2011.

Pension Contributions by age per £10,000 per annum of retirement income

Current Age State Pension Age Approximate monthly contribution required per £10,000 of income*
20 68 £110
30 68 £165
40 67 £275
50 67 £510

* Contribution assumptions – Level before 20% basic tax relief
* Growth assumptions – Capital growth of 6% net of charges
* Income assumptions – At-retirement gross income before tax: adjusted for 2% inflation; 6% annuity rate; no tax free lump sum taken.

Increasing life expectancy means the State Pension Age goalposts could move even further away in the future, with people working into their 70’s and 80’s to make ends meet.

Conditions re Pension Advice Allowance

Can be used a total of three times, only once in a tax year, allowing people to access retirement advice at different stages of their lives, for example when first choosing a pension or just prior to retirement.

  • Will be available at any age, allowing people of all ages to engage with retirement planning.
  • Can be redeemed against the cost of regulated financial advice, including robo-advice as well as the traditional face-to-face advice.
  • Will be available to holders of defined contribution pensions and hybrid pensions with a defined contribution element, but not defined benefit or final salary type schemes.

Auto enrolment – Review by Department for Work and Pensions

The DWP is conducting a review of auto-enrolment considering three themes, coverage, engagement and contributions.

Coverage – Consideration is being given to changes in the current earnings trigger of £10,000, age criteria and self-employed.

Engagement – Informing individuals that state pensions will not be sufficient in their retirement, employers matching contributions, people have a responsibility to fund their retirement.

Contributions – Rates need to rise above the 8% minimum planned for 2019, learn from the US experience of timing contribution increases with wage rises.

Budget 2016: Eight key announcements

As ever, the Chancellor’s Budget contained a raft of information that could affect our clients and their families. Here we take you through the most important updates:

1. Lifetime ISA: a new £4,000 ISA that you can use to save for retirement or to buy your first home

From April 2017, any adult under 40 will be able to open a new Lifetime ISA. Up to £4,000 can be saved each year and savers will receive a 25% bonus from the government on this money.

Money put into this account can be saved until you are over 60 and used as retirement income, or you can withdraw it to help buy your first home.
The total amount you can save each year into all ISAs will also be increased from £15,240 to £20,000 from April 2017.

2. The Personal Allowance will increase to £11,500, and the higher rate threshold will rise to £45,000 in April 2017

The Personal Allowance is the amount of income you can earn before you start paying Income Tax. This is currently £10,600 – it will already rise to £11,000 in 2016, and will now increase further to £11,500 in April 2017.

The point at which you pay the higher rate of Income Tax will increase from £42,385 to £43,000 in 2016 and to £45,000 in April 2017.

3. New tax allowances for money earned from the sharing economy

From April 2017, there will be two new tax-free £1,000 allowances – one for selling goods or providing services, and one income from property you own.
People who make up to £1,000 from occasional jobs – such as sharing power tools, providing a lift share or selling goods they have made – will no longer need to pay tax on that income.

In the same way, the first £1,000 of income from property – such as renting a driveway or loft storage – will be tax free.

4. Cutting business rates for all rate payers

From April 2017, small businesses that occupy property with a rateable value of £12,000 or less will pay no business rates.

Currently, this 100% relief is available if you’re a business that occupies a property (e.g. a shop or office) with a value of £6,000 or less.

There will be a tapered rate of relief on properties worth up to £15,000. This means that 600,000 businesses will pay no rates.

5. Capital Gains Tax rates will be cut from 6 April 2016, but residential property will still be taxed at current rates

Capital Gains Tax is a tax on the gain you make when you sell something (an ‘asset’) that has gone up in value. It is paid at a basic or higher rate depending on the rate of Income Tax you pay.

From April 2016, the higher rate of Capital Gains Tax will be cut from 28% to 20% and the basic rate from 18% to 10%.
There will be an additional 8 percentage point surcharge to be paid on residential property and carried interest (the share of profits or gains that is paid to asset managers).

Capital Gains Tax on residential property does not apply to your main home, only to additional properties (for example a flat that you let out).

6. Employers will pay National Insurance on pay-offs above £30,000 from April 2018

From April 2018 employers will now need to pay National Insurance contributions on pay-offs (for example, termination payments) above £30,000 where Income Tax is also due.

For people who lose their job, payments up to £30,000 will remain tax-free and they will not need to pay National Insurance on any of the payment.

7. Corporation Tax will be cut again to 17% in 2020

The main rate of Corporation Tax has already been cut from 28% in 2010 to 20%, the lowest in the G20. It will now be cut again to 17% in 2020, benefitting over 1 million businesses.

8. Class 2 National Insurance contributions (NICs) for self-employed people will be scrapped from April 2018

Currently, self-employed people have to pay Class 2 NICs at £2.80 per week if they make a profit of £5,965 or over per year. They also pay Class 4 NICs if their profits are over £8,060 per year.

From April 2018, they will only need to pay one type of National Insurance on their profits, Class 4 NICs.

Paying Class 2 NICs currently enables self-employed people to build entitlement to the State Pension and other contributory benefits.

After April 2018, Class 4 NICs will also be reformed so self-employed people can continue to build benefit entitlement.

Pension & retirement benefits from April 2015

UPDATE: Pension & retirement options are changing – the date is getting closer, so here’s a reminder of some useful information.

Wondering how the new pension rules will affect you? Thanks to one of Rossmore’s trusted and respected partners, we have access to information for those considering a pension, or currently navigating their way through one. The guides present the changes in a straightforward and understandable format, so why not download this guide from Aviva to get to grips with the pension changes coming up in April 2015, or simply watch the video below.

Please note: This web content and post does NOT constitute advice or a recommendation, as it is for information purposes only – you should seek professional independent advice on your own personal circumstances. Please contact Rossmore Financial Services for further information.

These changes may seem simple and easy at first glance, however, if you do the wrong thing, it could affect your standard of retirement dramatically.

Contact us for advice

State Pension changes from 2016

It’s a new year which means the State Pension rules are changing – again. Stay on the money with our clear, factual guide from Government, available to download here.

DWP 1 - CURRENT State Pension scheme-Jan 2015

Worried about you retirement benefits, either from the State, or you own arrangements? Talk to Rossmore Financial.



Aged 40? Access to pension money may be blocked until 63


Little attention has been paid to crucial detail from the March 2014 Budget on the age at which you can access your pension savings.

When will you retire? Or at least, when do you hope to start dipping into your savings pot to enable you to pull back from the relentless 9 to 5 (or is it 8 to 7 now?).

Most of us are coming to terms with a later state pension age: both Conservative and Labour governments have pushed through plans that will see us all work longer with minimal resistance.

But what about the age at which you can access your own pension money?

Up until 2007, turning 50 meant you had the option to start drawing on your money and crucially, take out 25pc of it as a tax-free lump sum.

But Gordon Brown, then Chancellor, raised the qualifying age to 55 as part of sweeping, and changes to the pensions system.

That overhaul was dwarfed by the changes announced by George Osborne in March 2014 Budget.

He dramatically improved the appeal of pension saving by unveiling plans to give total pension freedom from next year, at least once they reach the qualifying age of 55.

But there is a rub for the younger half of the population.

As was reported at the time (but not shouted out), it is proposed that the age of access will rise to 57 in 2028, affecting those aged 40 or under today. No exact date was given because a consultation has to take place first.

What was less widely reported was that the Government also said it “was keen to hear views from respondents about whether the minimum pension age should rise further to allow more time for people to accumulate pension wealth before they reach retirement.”

Guidance for this later retirement was even stated, suggesting the pension access age should be “five years below the State Pension age instead of ten years”.

For those aged 40 the state pension age under current intentions is 68, tweaked from 67 under Labour’s plans. It could be later.

That could mean access to your pension pot is delayed until 63.

The Government, which gets a gold star from international financial markets (and cheaper borrowing rates) every time it raises pension ages, has signaled an intention to link the state pension age to life expectancy. Again, the detail is yet to be decided on that, but some academics have speculated that the retirement age for younger Britons could be early seventies or later.

Once again, these ever-moving goalposts could undermine the confidence among younger Britons to trust pensions as a savings product.

Many forty-something’s have built financial planning around their pensions, such as using a tax-free lump sum to help clear the mortgage. Yes, pensions should be used to fund a retirement but our financial and working lives have grown more complicated, with many planning to work later. Pensions, which offer the best tax breaks, have inevitably featured in that planning despite the ongoing uncertainty.

Savers should certainly be braced for more shifts in the numbers on retirement!

Contact Rossmore Financial Services for individual advice about your own circumstances.

This article is a commentary only, designed to inform, encourage interest, and debate. It does not constitute financial advice, and should not be taken as such.

1 in 7 people retires with no private pension

Women three times more likely to have no retirement savings, Prudential finds – while many over-estimate state pension size

unhappy older woman
Many people think the state pension is worth more than it is – and will have an uncomfortable retirement. Photograph: Troels Graugaard/Getty Images

One in seven people will retire with no pension other than the basic state pension, according to research by Prudential, with women three times more likely than men to have no savings for retirement.

Many people over-estimate how much they will receive from the basic state pension and will live their lives in retirement in poverty, the report warns. According to the Joseph Rowntree Foundation, a single pensioner needs at least £8,600 a year to reach a minimum socially acceptable standard of living, while a retired couple needs an annual income of more than £12,500. But the basic state pension is equal to just £5,881.20 for an individual or £11,762.40 for a couple.

The report found that the lowest level of pension saving is in the north-east of England, where 20% of people retire without any personal pension provision. Women are more reliant on the state pension than men – on average the state pension makes up 42% of women’s expected retirement incomes compared with 28% for men.

Read more: HERE



Auto-enrolment pension savings ‘insufficient’

Auto Enrolment

Automatic enrolment into pensions started in October 2012

Concerns have been raised that insufficient pension savings are being put into new, auto-enrolment workplace pensions.

Nearly 2.9 million people have been signed up under the scheme, figures from the Pensions Regulator show.

For many, the scheme means some money is being put aside for retirement for the first time.

But some say that contributions from employers are too small.

‘Risk of disappointment’

Automatic enrolment started in October 2012. A slice of an employee’s pay packet is automatically diverted to a savings pot for their pension, assuming they are aged 22 or over and earning at least £9,440 a year.
Employers are obliged to pay in as well, with the government adding a little extra through tax relief.

At first, an employee only sees a minimum of 0.8% of their earnings going to their workplace pension. Tax relief adds another 0.2%. Meanwhile, an employer is obliged to add a contribution that is the equivalent of 1% of the worker’s earnings.

The biggest pension managers have told BBC News that only the minimum possible level was being contributed by between 66% and 90% of employers under the scheme.

These amounts will increase to a minimum 4% contribution from the employee, 3% from the employer, and 1% in tax relief from October 2018, but there are fears that this will still be insufficient.

“There is certainly a risk of disappointment, unless we can encourage people to put more money into their pensions. For now getting started is great, but it is only a start,” said Tom McPhail, pensions expert at Hargreaves Lansdown.

Read more: HERE 
Source: BBC NEWS 

Pensions boom ‘is coming to an end’

A new study by the Institute of Fiscal Studies (IFS) has warned that  people born in the ’60s and ’70s are likely to become the first generation since World War II who will be worse off than their parents in retirement.

The finding is due to the flower power generation being less likely to own a property, having smaller state and private pensions, and having no more savings or income than their parents. The IFS study attributes this to:

  • ‘Lavish’ spending that eroded this generation’s ability to save
  • The end of final salary pension schemes
  • Rising property prices making it harder to get on the housing ladder

As a result, the IFS says that the only hope this cohort has of being more financially secure is tied to the wealth of their parents, as 70% of those born in the late ’70s expecting to receive an inheritance. The study therefore concluded that only those who are left a large cash or property inheritance from their parents or grandparents can expect to enjoy a more comfortable retirement than their forebears.

But any inheritance is at risk of being lower than expected due to the rising costs of old-age. Labour estimates the cost of retirement and old-age care to be £150,000, and while the government disputes this figure, reforms to the state pension system are underway.

For advice on your retirement, please contact us online or by telephone on 01926 658387.

Auto-enrolment staging dates


With auto-enrolment coming into full swing this year it is important to make sure that if you are an employer, you are prepared. If you’re just getting to grips with auto-enrolment then you can view our presentation, “7 Questions to Help Your Business Prepare”. 

Once you’ve covered the basics, it’s time to start thinking about staging dates.

What are they?

Every employer will have a date from when the automatic enrolment duties come into force for them. This is called an employer’s ‘staging date’. Automatic enrolment is being staged in over a period of six years, which started with the largest employers in 2012.

Staging dates are determined by the size of an employer’s PAYE scheme at 1 April 2012, based on the latest PAYE scheme information from HMRC held by us at that date. The more people in the PAYE scheme at that time, the earlier the staging date. If you use more than one PAYE scheme, your staging date is based on the total number of people in the largest one that you use.*

Can I change my staging dates? 

Yes, you can.

Do bear in mind, you can’t postpone your staging date except in the circumstances described above. However, you can usually bring it forward, for instance to coincide with a convenient accounting period or your pension scheme renewal date.

If you intend to bring forward your staging date, you must notify the Pensions Regulator in writing.*

How can I find out my staging dates?

Learning this information has been made relatively simple with our guide to staging dates. If you’re an employer, this clear and helpful guide is available to download for free HERE

Any further questions, do not hesitate to contact us and we’ll be there to help.


*Source: The Pensions Regulator 

Employer’s guide to auto-enrolment pensions

Since being launched October 2012, auto-enrolment pensions are being introduced to businesses all over the UK. Contrary to opposing myths, these changes will affect all employers over the next few years – whether you manage 100 employees or 10. And so it’s important that you know what to expect.

Without the correct, clear guidance, the new auto-enrolment legislation can be onerous for employers. That’s why Rossmore are committed to presenting you with an easy-to-follow approach. Equipped with knowledge and financial expertise, we’ve gathered 7 pivotal questions to guide you through the process and avoid any pitfalls along the way.

[slideshare id=24866920&doc=autoenrolment-7waysyourbusinesscanprepare-130802065742-phpapp01]


To download this presentation simply click here and select “Save”.