Secondly, the government is limiting to £50,000 a year how much one can save into a pension. By most people’s reckoning it is difficult to put aside £50,000 into a pension, but it will affect more people than previously thought. If one’s pension entitlement rises by £3,125 a year (inflation adjusted), then by the Government’s calculation this is an annual pension contribution of £50,000. The government capitalises the entitlement by a factor of 16, and £3,125 by 16 is £50,000.  Any excess over £50,000 is charged to the member at their highest rate of tax.  For example, if the pension contribution is deemed to be £60,000 for a higher rate tax payer, then the tax charge is 40% of the excess over £50,000, ie £4,000.  There is a three year annual allowance carry forward rule, and ongoing arguments as to who should pay this tax, the employer or the employee. We recommend that if you are concerned you speak initially to your pension scheme administrators.

At the other end of the scale the government is encouraging pension saving through the work-place pension saving reforms which we have previously covered.  Whilst the government’s efforts to encourage mass retirement saving is commendable, it is restricting the top end of the scale which is causing complications that are not completely appreciated by those potentially affected.

Disclaimer: This article is for general information only. Do not act on its contents without seeking professional advice tailored to your particular circumstances.

Nowadays, they are more sophisticated but still serve more-or-less the same purpose. For instance, one can insure their ability to earn an income with Income Protection Insurance (IPI). This pays a regular income to the insured person if they are unable to work due to a long-term injury or illness.  There is also Critical Illness Cover (CIC) which pays a lump sum on the diagnosis of a specific critical illness.

However, more common is life assurance.  Confusingly, the word assurance (rather than insurance) is generally associated with insuring against death, as it refers to provision of coverage for an event that is certain (or assured) to happen – ie death.  Insurance refers to coverage for an event that might happen. Even more confusingly insurance against death within specific term – where death might happen, is called Term Assurance (TA).

It is generally recommended that those with dependents or liabilities such as mortgages have some form of protection in place. These policies can also be quite cheap.  A 32 year-old, non-smoking man can get life assurance of £200,000 over a 25 year term for £11.80 a month. It is also recommend that one visits an independent financial adviser (IFA) who can interpret the jargon, consider the levels and types of policies one may need, and access the most suitable insurance products from the whole of the market. Even though it is not nice to think about your death or events after it, it is important to educate yourself as to your options and have a back up plan.

Disclaimer: This article is for general information only. Do not act on its contents without seeking professional advice tailored to your particular circumstances. Heritable Financial Planning are a trading style of Johnston Financial Services Ltd who are authorised and regulated by the Financial Services Authority.

Both cash and stocks and shares JISAs are available, and the range of qualifying investments is broadly similar to ‘grown-up’ ISAs.  The contribution limit is £3,600 per tax year and this can be split between cash and stocks and shares in any proportion (CTF contribution limits have moved up from £1,200 to £3,600 to be in line with JISAs).  The limit will go up with inflation from 6th April 2013 onwards.

Unlike grown-up ISAs where the investor can open and subscribe to new ISAs in each tax year, a child can only hold up to two JISAs (ie one Cash JISA and one Stocks and Shares JISA) in total.  Anyone can contribute to a child’s JISA.  When the child reaches 18 it effectively becomes and continues to exist as a normal adult ISA.  It is only at this point that the funds in the JISA can be accessed.

A person with parental responsibility manages the child’s JISA until age 16.  This person is known as the ‘registered contact’. Children have the right to manage their accounts (ie decide how to invest it) from age 16.  If you are a parent or a grandparent and you would like to save for an eligible child, the JISA would seem to be the savings plan of choice.

Disclaimer: This article is for general information only.  Do not act on its contents without seeking professional advice tailored to your particular circumstances.  Heritable Financial Planning are a trading style of Johnston Financial Services Ltd who are authorised and regulated by the Financial Services Authority.

Essentially, everyone will make pension contributions 8% of their qualifying earnings, of which employers contribute a minimum of 3%.  Qualifying earnings are between £5,715 and £33,540 (exact range isn’t yet confirmed).  Employees will be “auto-enrolled” into a pension, but can opt out if they wish (any “opt-outs” will be re-enrolled every 3 years). Where an employer already has a pension scheme they can continue to use it so long as it meets certain criteria (including the minimum contributions levels). There will be a default option called the National Employment Savings Trust (NEST) for employers who don’t have a qualifying scheme in place.

Employers without a pension scheme can choose to set up their own qualifying arrangement using a pension adviser, or use NEST. The advantages of using your own scheme are that it can be set up tax efficiently using salary exchange, and employers can outsource the auto-enrolment and the monthly calculations. Smaller employers may be forced to use NEST as pension companies do not always offer schemes to those with 5 or less employees. Despite the extra burden on employers, most people don’t save enough for retirement so anything that encourages people to build up their own assets is a step in the right direction.

Disclaimer: This article is for general information only. Do not act on its contents without seeking professional advice tailored to your particular circumstances. Heritable Financial Planning is a trading style of Johnston Financial Services Ltd, 49 Northumberland Street, Edinburgh, EH3 6JQ which is authorised and regulated by the Financial Services Authority.

From a business point of view it also makes sense. The SIPP owns the property but the business owner keeps control and is not at risk of being forced out. Buying property through combined SIPPs is now common among professional practices – where two or more partners combine their pension pots to buy their practices’ business premises. When a partner retires he is bought out by the remaining partners’ SIPPs. It must be noted that the purchase, rent and sale must be at market rates. Be aware that prices may dip when you come to sell the property and you can’t actually get the benefits of a pension until the after your 55^th birthday.

Make sure that you check your pension money is working hard to grow and is not held back by high charges and fees. Most importantly you need to check that you are saving enough.

Disclaimer: This article is for general information only. Do not act on its contents without seeking professional advice tailored to your particular circumstances.

Heritable Financial Planning is a trading style of Johnston Financial Services Ltd, 49 Northumberland Street, Edinburgh, EH3 6JQ which is authorised and regulated by the Financial Services Authority.

Readers should note that many of these low rate deals come with high arrangement fees.  Quite often, a higher-rate mortgage with a low fee and free “legals” will be cheaper than a low-rate mortgage with high fees.  It is certainly worth doing your research or asking an adviser to do it for you.

So if you are planning on staying in your existing property for the next five years and a 5-year fixed rate deal now is as good as or better than your current Standard Variable Rate maybe its time to review your deal.

Our charges are usually £1,000 per mortgage, but we offset this charge by any fees we receive from the lender.

Please note that your home may be repossessed if you do not keep up with re-payments on your mortgage loan.

Heritable Ltd is authorised and regulated by the Financial Services Authority.