Vivian Slattery

A New year and a fresh start, but what will 2023 bring?
As usual I am writing this article prior to Christmas and to begin with I opened the piece I wrote last year with the realisation, little did I know what 2022 would bring. It has certainly been an interesting year: The Ukraine war, cost of energy increasing sharply, three Prime Ministers and the very unfortunate passing of our Queen.

When you look at the statistics I think it’s fair to say that we didn’t think it was going to be an easy year. Statistics showed only 36% of the UK public expected to see their personal financial situation improve over the course of 2022, whilst half of the population (50%) thought it unlikely. Younger people were more hopeful, 51% of under 35s thought their situations were likely to improve compared with 28% of 35-75 year olds.*

However I do think we need to consider the positives as well. This is the first Christmas for two years that I will be having a normal Christmas, whereas last year our Christmas party was cancelled because people were still worried about COVID. Also in 2022 I was able to start travelling again as holidays had been hard for me during the pandemic. Although at the same time many of my clients said that during the pandemic, when our lives slowed down, that they would not allow their lives to become hectic again, unfortunately I have observed that many of them have done just that.

So what then for this year?
I don’t think it is going to be very easy but I always love January when you have closed the door on last year and start afresh. I do consider that times are not at all easy for many, and goal setting and budgeting is probably even more important than it has ever been. I believe that goal setting gives direction, strength and purpose in uncertain times. With soaring bills, and high inflation, budgeting has it’s own importance.
As I have said many times before if you need help with goal setting or budgeting pick up a phone and book a free without obligation consultation.

*www.ipos.com

The answer to this will be different for everyone and it will depend upon each individual’s circumstance, but it may be the right time to consider this if your Pension is in drawdown. A Pension annuity provides an income for life and is taxed as income. As the market in the last few years has been volatile and if you are taking income from drawdown it may have been concerning you, even causing sleepless nights. If this is the case it may be worth getting an annuity quote, even if only to confirm this is not the right course of action for you.

An annuity based on a level, single life annuity for a 65 year with a purchase price of £100,000 is up a record 47% or £2,400.00 during 2022 reaching a 14 year high. This is due to the central bank base rate rises and the mini budget uncertainty. Based on the same example in Feb 2008 £100,000 bought you an income of nearly £8,000pa, in Aug 2016 it reached an all time low of less than £5,000pa. In June this year it had gone up to just under £6000pa and in October it had gone up to over £7,000pa*.

Obviously no one knows how long the uncertainty or higher interest rates will last, so we don’t know how long annuity rates are going to remain as attractive as they are now, they may even improve further as providers may not have factored all the points in. The above is also based on a level Pension with no guarantees. I would always recommend that you look at all the options available to you including guarantees.

With a guarantee, the annuity will pay out whether you are dead or alive for a predetermined time (usually either 5 or 10 years), but continues afterwards if you are still living. Often when we have quoted there is very little difference in the amount when we have included a 5 or 10 year guarantee and including this can be beneficial.

If you would like to see what annuity rates are available for you please pick up the phone today. We would always recommend that advice is sought for this as once you have bought an annuity you will not be able to change it.

<sub>*Sharing Pension 31st October 2022 based on annuity rates on the 15th October 2022

The content included on this page is based on our understanding of the UK tax law at the time of publication. It may be subject to change and may not be applicable.</sub>

Many new clients are often embarrassed about how little they know about their current investments, but I would say that often clients have very little financial knowledge so I thought it could be useful to go through some typical scenarios.

Retirement planning is a key area that we work in and many clients who have approached us at this stage have a collection of different policies with very little knowledge about them or how they can take the benefits. Often they are looking to consolidate Personal Pensions.

Individuals often don’t realise that care needs to be taken when consolidating Personal Pensions as each Pension is different and it could have a guaranteed investment growth or guaranteed annuity rate which are worth keeping. But with Pensions it’s not just about the underlying Investment funds, there is often the tax implication to consider when deciding how to take the benefits. Yet it’s not just income tax but also lifetime allowance charges, so sometimes the simplest route is not the most tax efficient.

The starting point with retirement planning has to be how much income you need at retirement and then projecting ahead and ensuring that this level is sustainable with the current investments. Annuities are often ruled out but another of my key phrases is that when you make any financial decision you should look at all the options and I think annuities can still have their place for covering basic expenditure needs in retirement. The guaranteed income they provide can also give a person some peace of mind, especially in times of market volatility.

Looking at the entire portfolio of holdings is key and then putting the equivalent of a business plan together about how to fund your income needs. Also it doesn’t stop there, reviewing them and tweaking them on an ongoing basis is also important, for example in the current climate of market instability, if you are taking income for a drawdown pension and have a large amount on deposit, one consideration may be to use your funds on deposit instead to fund your income needs. If you are approaching your retirement and would like to have some help why not pick up the phone today and book a free without obligation consultation with us.

I think the passing of the queen could make this, using her own words, an “Annus Horribilis”. Having said this, I do not think I would complain if I had lived an active life until the age of 96 years old. I thought reflecting on some of the financial changes during the reign of Queen Elizabeth II could offer some real perspective on the length and breadth of this time.

As most of us have a good understanding of house prices I thought this was a good starting point. After the war, if you could afford to buy a house it was often a new one. In the 1950s the average cost of a new house was £1,891, and the average salary was roughly £365pa, so it wasn’t easy to become a property owner even in those times, with average house prices representing more than 5 times salary.^1*

When you look at the increase of other basic commodities you get a sense of how long ago this really was, with a loaf of bread costing 4p, a pound of butter 18p and a pint of
milk 3p.

Also, in the 1950’s and 60’s the highest rate of tax was 90%. It wasn’t until Margaret Thatcher came to power in 1979 when the top rate was 83% and basic rate 33%, that action was taken, as Margaret Thatcher’s beliefs were that the state should receive more of its revenue from indirect taxes such as VAT and National Insurance.^2*

For me, looking at the figures helps me to reflect on the number of years Elizabeth has been our queen and some of the changes during this time. I am sure many who read this article will remember some of these changes too.

But most of all at this time, my thoughts are with the family, as it’s never easy to lose someone close to you.

^1* www.sunlife.co.uk
(12th July 2022)
^2* www.familymoney.co.uk
(14th July 2017)

With the deadline for the registration of trusts looming we are spending a lot of our time making sure that clients are registering their trusts. Do you have any trust funds and if so have you registered them? They need to be registered by the 1st September. Even if the deadline has passed by the time you read this article, your trust will still need to be registered.

The benefits of putting funds into a trust includes: Protecting your assets in your lifetime and ensuring your estate is securely and safely passed on.

The Trusts Registration Service (TRS) is a new online service that provides a single route for trustees and personal representatives of complex estates to comply with their registration obligations under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

There are some exceptions to registering trusts and these include:
• Holds money or assets of a UK registered pension scheme – like an occupational pension scheme.

• Holds life or retirement policies (as long as the policy only pays out on death, terminal or critical illness or permanent disablement, or to meet the healthcare costs of the person assured).

• It’s a charitable trust that is registered as a charity in the UK or which is not required to register as a charity

As with most regulation changes this can often lead to confusion, so if you would like to have your hand held through the registration process please pick up the phone and give us a call today and book a free without obligation consultation.

The content included on this page is based on our understanding of the UK law at the time of publication. It may be subject to change and may not be applicable.

I have talked about market falls in recent articles, but I don’t think I have pointed out the fact that this is not at all unusual after an event such as the Ukraine invasion. For those individuals who have recently invested and whose investments are currently in negative territory the situation can be daunting but understanding how historic events have panned out can help your perspective.

After 9/11 the S&P 500 (The Standard and Poor’s 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 large companies listed on exchanges in the United States) fell by more than 14%¹. There has even been research² that there was some unusual trading shortly before and after the event, including specific investments in American Airlines and Morgan Stanley. However, there is no proof that it was the terrorists who made these investments.

The FTSE 100 (a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalisation) was adversely affected after the London bombing 7/7, but not as sharply.

I have always said that one of the best ways we can help clients is by being a sounding board, and at times like this I think this is even more relevant. When the markets have gone down it is a particularly worrying time, therefore a simple conversation and informed reassurance can be invaluable. There is never a guarantee that markets will go back up and even if they do how long this will take. But as long as investments are retained they are only losses on paper.

So during these uncertain times if you do need to speak to someone please do not hesitate to pick up the phone today and we will be happy to talk to you.

¹ Investopedia; ²Hugh McDermott(https://truthout.org/authors/hugh-mcdermott)

Many of us realised that life was not going to be easy after most of the COVID restrictions were lifted, but of course we did not know there was going to be a war in the Ukraine. This has impacted the equity markets, whilst inflation concerns and rise in interest rates have affected corporate bonds and gilts, which in turn affect investments.

As I have said previously, my advice remains that when an investment has fallen in value, don’t panic, sit tight. I always think that observing the percentage drop is always less frightening than looking at the monetary drop. When markets are down it is generally a good time to invest, as Warren Buffet said, “Be fearful when others are greedy. Be greedy when others are fearful.” I always think the biggest concern with this is that you don’t know how far the markets are going to fall.

With energy bills soaring, interest rates on the rise and when even trying to escape from it all on holiday has its own problems, noticing that your investments are going down could be even more depressing, and that’s why I believe that talking to a financial adviser is even more important during this difficult period. We can hold your hand through times like this. As I have often said, I perceive that our most important role is being a sounding board, which brings to mind another famous proverb, “A problem shared is a problem halved.”

We offer a free without obligation consultation, so if you would like to talk to someone concerning your investments why not pick up the phone and give us a call.

The value of an investment can go down as well as up so you may get back less than you have put in. Past performance isn’t a reliable indicator of future performance.

I think many of us suspected that life after lockdown was not going to be easy, even before we knew that there was going to be a war in the Ukraine. We are now seeing the cost of energy on the increase, together with the Bank of England base rate being increased again this month to 1%, which is the highest level for 13 years.*1

With the price of many of our essentials on the increase, what would my advice be for approaching this period of time? My first piece of advice, as I have said many times before is to budget. None of us know how long this duration of increased prices will continue and I think it’s important to avoid getting into debt. Many of the people I have talked to during lockdown said that they enjoyed the simple life and I do think it can help to look back at this time.

It is very easy at times like this to think about stopping Pension and life insurance premiums. However, yet again COVID has taught many people that we don’t know what is round the corner, and therefore this is a reminder of the importance of insurance.

With Pension premiums it can often be hard to see the benefit of putting aside money for a period of time that we may not see for many years ahead, whilst at the same time we are struggling to put food on the table and pay for heating. Nevertheless my advice, yet again would be to think very carefully about this.

Time goes by very quickly and we can always find reasons for not reserving funds for our future. However, it is important to remember that retirement is a time that generally we will have little or no income coming in, and we will be totally reliant on the assets and savings we have accumulated. If you have not already done this exercise I would suggest looking at the income needed in retirement and then also looking at whether you are on target to be able to fund this level at your chosen retirement age.

We do offer a free without obligation consultation so if you do need help with budgeting why not pick up a phone today and book a free without obligation consultation.

*1bbc news 05.05.2022