Martin Bamford on Share Radio on Pension Awareness Day

Today is Pension Awareness Day, so Martin was a guest on Share Radio earlier this week to chat about some topical pensions issues.

Pensions Awareness Day was first launched in 2014 and aims to alert the nation that it is not saving enough.

Martin was interviewed by Ed Bowsher for Pensions Awareness Day and was asked various question about pension and retirement options.

Martin was first asked whether people should buy an annuity.

“It used to be the case that annuities would be the default pension income option for most people”

“However, these days with low guilt yields and falling annuity rates and we are all living a lot longer as well.

“Those pension freedoms introduced last April mean that for most people now, annuity is probably not the default option and its not the automatic way to go.”

Discussing the alternatives to annuities:

“Well the main alternative now is pension drawdown and of course since the pension freedoms we’ve got no real limits on that anymore so you can take money out of your private pension pot now to the amount you need to each year.

“You have to think very carefully about sustainability when you do that. How much can you withdraw from your pension pot each year without really running the big risk of running out of money before the end of your life time?”

When suggesting taking your whole pension pot out in one go:

” You’ve got the freedom to take all of the money out of your pension pot, a quarter of it is tax free.

“The other three quarters, that’s where it will really hit you because you’re going to get subject to income tax.”

When asked how much money you would get back when you sell an annuity back to a pension provider, once the new secondary annuity market is launched:

“Well realistically not very much. Now we’ve got to wait until next April before the launch of this proposed secondary annuity market, where people will buy your annuity back from you.

“Providers will buy your annuities back from you, give you a cash sum in return.

“I suspect that is definitely going to be bad value for most people who consider it. Annuity rates are low, the companies buying annuities back are going to be offering fairly mislay rates for doing so.”

“I think that secondary annuity market, its an extension, a natural extension of the pension freedoms we saw introduced last April. I don’t think its going to be particularly popular.”

Ed finished by asking Martin if he was worried that some final salary pensions won’t live up to the promises they’ve made in the past?

“Well we in that final salary pension sector defined benefit pensions sector, there is a huge pension deficit at the moment, it is being made even larger as a result of falling gilt yields.

“So the gap between what the companies are promised and what they are able to fund with the assets of the scheme.

“I think the figures I saw most recently for FTSE 100 companies alone, the total pension deficit right now is £52 Billion and it’s rising all the time.”

Martin also pointed out that members of final salary pension schemes receive protection form the Pension Protection Fund.

If you have any questions about pensions on Pension Awareness Day, do get in touch and we will be happy to answer your queries.

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Informed Choice Radio 113: Jasmine Birtles, Putting Funny Into Money

Informed Choice Radio 113_ Jasmine Birtles, Putting Funny Into Money(1)

Jasmine Birtles, Putting Funny Into MoneyIn this episode of Informed Choice Radio, I speak to Jasmine Birtles, founder of Moneymagpie.com.

Jasmine is an internationally recognised finance expert, financial and business commentator, journalist, TV and radio presenter, author and humourist.

Her consumer website Moneymagpie.com is the UK’s leading self-help money site for those seeking a richer life.

It is packed with fun and easy to understand articles, eBooks and videos on how to make money, save money and manage your money wisely.

Jasmine is a familiar voice on radio and television, making regular appearances on Good Morning Britain, BBC Breakfast, BBC News, This Morning, The Wright Stuff, Channel 4 News, Sky News and many others.

In this episode of Informed Choice Radio, I speak to Jasmine about combining humour with finance, making money more attractive to women, and why making money is often a smarter move than saving money.

Welcome to Putting Funny Into Money with Jasmine Birtles, in episode 113 of Informed Choice Radio.

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Some questions I ask

-How do you combine humour and finance?

-What’s more fun; being on television or writing books?

-What’s the main driver behind your website, Moneymagpie.com?

-Are there financial topics your audience ask you about the most?

-What do you think is going to happen now to people’s finances and just generally the economy in Britain now we’ve voted to leave the EU?

-Are low interest rates the biggest financial challenge we face today?

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Useful links mentioned in this episode

Moneymagpie.com

Jasmine on Twitter

Money Magpie on Facebook

Help us spread the word!

Thank you for listening to this episode of Informed Choice Radio. Please use the comments section below to share any feedback you have.

If you enjoyed this episode, please share it by using the social media buttons on this page or by sending a tweet:

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Autumn Statement 2016 date announced

Autumn Statement 2016 date announcedA date has been announced for the 2016 Autumn Statement!

The Chancellor of the Exchequer, Philip Hammond, will deliver his first Autumn Statement to Parliament on Wednesday 23rd November 2016 at 12.30pm.

The Autumn Statement is an important annual event, on par with the Budget, as it sets out the government’s taxation and spending plans.

It will also be the first opportunity to assess the state of the UK economy following the EU referendum in June.

We have already heard Philip Hammond say he will consider using the Autumn Statement to ‘reset’ economic policy following the referendum result.

Announcing the date for the Autumn Statement, Hammond said:

“The Autumn Statement will set out the government’s economic and fiscal plans based on the latest forecasts from the Office for Budget Responsibility.

“In the run-up to the Autumn Statement I will be engaging with Britain’s business leaders and employee representatives through a series of industry round tables, meetings and visits.”

It will be interesting to see what surprises Philip Hammond has in store during his first Autumn Statement on 23rd November.

Here at Informed Choice, we will be following the buildup to the Autumn Statement and covering the event live on the day, both here on our website and on Twitter @InformedChoice.

Our analysis will cover the main personal finance and investment implications of the Autumn Statement, which we will summarise in a quickly delivered briefing note for our clients and professional contacts.

Make sure you are signed up to receive our emails so you don’t miss out.

What do you expect to see in the Autumn Statement this year?

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Paying more to live near a top school

Paying more to live near a top schoolThe debate about selective education is hotting up, with prime minister Teresa May proposing to lift the ban on grammar schools.

Last week she said, “The truth is that we already have selection in our school system – and it’s selection by house price, selection by wealth. That is simply unfair.”

New research by Lloyds Bank has found that parents are willing to pay a significant premium to live in an area close to a top performing school.

Average property prices have reached £366,744 in the areas closest to the top performing state schools in England.

This places average property prices at 17% above the average for those counties, which is £313,318.

It’s an increase of 31% from last year, showing that parents are willing to pay more to live near to the best schools.

Lloyds Bank found that homes near Beaconsfield High School in Buckinghamshire pay the highest premium, at £629,021, which is 171% compared to the average house price in neighbouring areas.

The research looked at the top 30 state schools in England, those which achieved the strongest GCSE results last year, with homes typically trading at a premium of £53,426 – or 17% – compared to the county average of £313,318.

In six of the top state schools, nearby properties command a price premium of more than £150,000 compared to their surrounding area.

House prices in the postal district of The Henrietta Barnett School trade at a premium of £429,506 (74%) compared to the whole of Barnet – the second highest premium.

This was followed by Sir William Borlase’s Grammar School in Buckinghamshire (premium of £220,082) and The Tiffin Girls School in Kingston upon Thames (£192,011 premium).

In addition to securing a place for their children at one of England’s current Top 30 state schools, buying a home nearby is also proving to be a shrewd investment.

Parents who bought a home near one of the top 30 schools just before their child first entered secondary school in 2011 have seen an average house price rise of £76,000, from £290,683 to £366,744, in 2016 – an increase of 26%.

This is a significantly faster rise than in England as a whole, where the average house price has grown over the same period from £240,208 to £282,353 – an increase of £42,145 or 18%.

Of course this is no guarantee that house prices will continue to behave like this in the future.

Andrew Mason, Lloyds Bank Mortgage Products Director, said:

“Schools with the best exam performance are proving to be an increasingly strong draw for home movers, as we’ve seen house prices rise sharply in locations close to such schools.

“Our analysis shows that since 2011 average house prices in areas with the best state schools have increased by £76,000, compared to a national increase of £42,145. And seven of the areas covered in this survey have seen house prices rise by over £100,000 in the last five years.

“The popularity of areas close to high performing schools may mean that homes remain unaffordable for buyers on average earnings.”

Relaxing the current restrictions which stop selective schools from expanding and giving parents more choice could reduce the pressure on houses closest to the top performing state schools.

Whatever your views on selective education and grammar schools, it is important to factor all of the costs of educating your children or grandchildren into your long-term financial plans.

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Weekly Round-Up – Friday 9th September 2016

Informed Choice Weekly Round-upHappy Friday, readers! It’s time to catch up.

Here are some of the things that we covered at Informed Choice this week.

On the blog this week

The latest rental price data from ONS has shown that the property dream continues to be a nightmare for today’s millennials.

New HM Revenue & Customs figures have highlighted our collective love of cash when it comes to Individual Savings Account (ISA) savings.

The new retirement freedoms introduced last April could have resulted in many people ignoring their future care costs when making pension withdrawals.

Since introducing pension freedoms last April, access to professional advice for those approaching retirement has been a hot topic. Now HM Treasury plan to introduce a £500 Pensions Advice Allowance.

The latest podcast episodes

In episode 111 of Informed Choice Radio, Martin interviewed the one and only Joe Saul-Sehy, host of the popular Stacking Benjamins podcast.

In the main episode this week, we talk about the 7 personal finance and investing quotes that can change you relationship with money.

Informed Choice in the press

What’s the best way to take an income from your investment portfolio? Martin commented for Investors Chronicle in this article.

Before you go

Informed Choice is pleased to be supporting the Cranleigh Food & Music Festival again this year. Join us at Sundial House at midday on Saturday 24th September for a live music performance by local singer songwriter Charlotte Maggs.

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Informed Choice Radio 112: 7 quotes to change your relationship with money

Informed Choice Radio 112_ 7 quotes to change your relationship with money

In this episode of Informed Choice Radio, Martin talks about 7 quotes to change your relationship with money.

There is also a roundup of the latest personal finance news and an update from the world of Informed Choice.

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7 quotes to change your relationship with money7 quotes to change your relationship with money

This week on the show, Martin talks about 7 quotes to change your relationship with money.

Six of these quotes were contributions from people Martin follows on Twitter. He finishes with a favourite of his own.

Martin shared each quote before talking about what it means for your personal finances and how it has the power to change your relationship with money.

Here are the seven quotes Martin talks about this episode, along with the Twitter name of the personal who suggested it.

Benjamin Franklin – “An investment in knowledge pays the best interest”(@UKCF_Tweets)

Seneca – “It is not the man who has too little, but the man who craves more, that is poor.” (@brettdavidson)

William Bernstein – “This time it’s different.”(@fryer_nathan)

Warren Buffett – “It’s only when the tide goes out that you discover who’s been swimming naked.” (@AronGunningham)

Warren Buffett – “Be fearful when others are greedy and greedy when others are fearful.” (@npton_adviser)

Benjamin Franklin – “a penny saved is a penny earned.” (@Plannergrrrl)

Dave Ramsey – “Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this.” (@martinbamford)

We would love to hear what you think. What is your favourite personal finance or investing? If we get enough of these, Martin will produce another episode rounding them up.

Right click here and save as to download this episode to your computer

Personal finance news update

-Women are as pushy as men when it comes to pay, dispelling a myth that this factor is the reason they get paid less.

-Illness is forcing one in eight people to quit work before they reach state pension age.

-The government is pushing ahead with its plans to introduce the Lifetime ISA next April, despite some criticism over timing and product features.

-New standards for Pension Wise staff giving guidance about the proposed secondary annuity market have been proposed by the Financial Conduct Authority.

-The Bank of England was responsible for the UK avoiding a new recession, according to its governor Mark Carney.

-Clueless young Brits have been dubbed the YOLO generation, with almost two-thirds of under-30s admitting they are ignorant of their money and financial options.

Useful links mentioned in this episode

The Confidence Game: The Psychology of the Con and Why We Fall for It Every Time by Maria Konnikova

Bye Bye Banks?: How Retail Banks are Being Displaced, Diminished and Disintermediated by Tech Startups – and What They Can Do to Survive by James Haycock & Shane Richmond

How To Make Great Radio: Techniques and tips for today’s broadcasters and producers by David Lloyd

Out on the Wire: The Storytelling Secrets of the New Masters of Radio by Jessica Abel

Double Double: How to Double Your Revenue and Profit in 3 Years or Less by Cameron Herold

Get answers to your personal finance questions

Do you have a personal finance or investing question for Martin?

Email martin@icfp.co.uk or ask on Twitter @martinbamford.

You can call our dedicated podcast voicemail line on 020 8144 2745 with your question or visit www.speakpipe.com/InformedChoicePodcast to leave an online voicemail.

Help us spread the word!

Thank you for listening to this episode of Informed Choice Radio. Please use the comments section below to share any feedback you have.

If you enjoyed this episode, please share it by using the social media buttons on this page.

If you enjoy the show, please subscribe in iTunes and write us a review! Reviews really help us stand out from the crowd and reach more listeners.

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Pension Advice Allowance will help plan for retirement

Pension Advice Allowance will help plan for retirementSince introducing pension freedoms last April, access to professional advice for those approaching retirement has been a hot topic.

Seeking professional independent financial advice is arguably the best way to navigate the maze of retirement income options.

Without advice, those approaching retirement are left to decipher a wide range of different options, with only information or guidance for help.

In the Budget earlier this year, the government announced it would consult on introducing a Pensions Advice Allowance.

The Pensions Advice Allowance was one of the recommendations contained within the Financial Advice Market Review.

It would allow people to take £500 tax free from their defined contribution (money purchase) pension pots to redeem against the cost of financial advice.

This tax-free £500 withdrawal would be in addition to the tax-free cash ultimately available from the pension pot when retirement benefits were taken in the future.

It would be possible to access the £500 Pensions Advice Allowance before age 55, when retirement benefits otherwise become available.

By introducing this Pensions Advice Allowance, it is hoped that advice more affordable.

It would also mean people would not have to pay large fees out of their current income and might even act as a nudge for people to consider taking financial advice.

The Pensions Advice Allowance is expected to come into force in April 2017, at which time it could be combined with the existing existing £150 income tax and National Insurance exemption (due to be increased to £500) for employer-arranged advice on pensions.

Commenting on the new pension advice allowance, Fiona Tait, Pensions Specialist at Royal London, said:

“Royal London believes that offering pension savers an advice allowance is a very positive step.

“Research shows that people who take financial advice tend to save more towards their retirement and recent research by Royal London showed that 45% of those who had spoken to a financial adviser about their retirement saving, then continue to regularly review their finances with an adviser at least once a year.

“While it would be a challenge to offer a comprehensive face to face advice service within the £500 limit, this amount should be an adequate level to assist people to identify realistic goals and show them how to start planning for themselves.

“It is important that the allowance should be available to people well before they reach retirement as this could be too late.

“We also support allowing this option more than once, for example at key birthdays or life changes.”

A consultation for the new Pensions Advice Allowance is now open here, with responses invited by HM Treasury until 25th October 2016.

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Informed Choice Radio 111: Joe Saul-Sehy, Stacking Benjamins

Informed Choice Radio 111_ Joe Saul-Sehy, Stacking Benjamins

 

ICR111 Joe Saul-Sehy Stacking BenjaminsIn this episode of Informed Choice Radio, I speak to Joe Saul-Sehy.

Joe is a former financial advisor, spending 16 years advising families, and representing a Fortune 500 company in the media.

He was the “Money Man” at Detroit television WXYZ-TV, appearing twice weekly.

He’s appeared in the Los Angeles Times, Chicago Sun-Times, Detroit News and Baltimore Sun newspapers. He’s also appeared online in more than 200 different places, including CNBC.com and WSJ.com.

Now Joe is host of Stacking Benjamins, the Plutus award-winning podcast broadcasting live from his mom’s basement. Stacking Benjamins is a magazine-style podcast featuring fewer gurus and more discussions, with a focus on entertainment rather than hardcore financial tips.

In this episode of Informed Choice Radio, I speak to Joe about his inspiration for Stacking Benjamins, the creed which guides his approach to personal finance, the main financial issues people are struggling with today, and much more.

Welcome to Stacking Benjamins with Joe Saul-Sehy, in episode 111 of Informed Choice Radio.

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Some questions I ask

-What inspired you to start Stacking Benjamins?

-Can you take us through your creed for personal finance?

-Who was your favourite guest interview and who else is on your dream guest list?

-Should we expect a sharp fall in bond values or a gentle unwinding of monetary easing?

-Do you have advice for people in the sandwich generation, financially supporting adult children and elderly parents?

-How do you go about finding the right financial adviser to work with?

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Useful links mentioned in this episode

Stacking Benjamins

Joe on Twitter

Stacking Benjamins on Facebook

Steal Like An Artist by Austin Kleon

Help us spread the word!

Thank you for listening to this episode of Informed Choice Radio. Please use the comments section below to share any feedback you have.

If you enjoyed this episode, please share it by using the social media buttons on this page or by sending a tweet:

If you enjoy the show, please subscribe in iTunes and write us a review! Reviews really help us stand out from the crowd and reach more listeners.

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Pension withdrawals ignoring future care costs

Pension withdrawals ignoring future care costsThe new retirement freedoms introduced last April could have resulted in many people ignoring their future care costs when making pension withdrawals.

According to a report from Citizens Advice, around three in five people who have made withdrawals from their pension pots under the new retirement fees have ignored future care costs.

Only 16% of the 500 people surveyed by Citizens Advice had made provision for future care costs when withdrawing money from their pension pots under the new rules.

A further 23% gave some thought to their future care costs and had in place a suitable backup plan, such as using equity release or selling their home to access the capital needed to pay for long-term care.

Citizens Advice discovered that many of those who did not have a plan in place for future care costs would rely on others, such as family members or the government.

In fact, one in ten people surveyed considered this to be their ‘plan’ for funding care in the future.

Almost one in three of those surveyed by Citizens Advice said they had considered future care costs but had no plan for meeting the often substantial cost of care.

The Citizens Advice study found that those in work were least likely to have a plan for meeting future care costs.

Two thirds of people who were employed full-time lacked a plan, with just over half of those who had already retired missing a plan to meet future care costs.

According to Citizens Advice, around four million older people (over the age of 65) in England have care needs, which represents nearly half of this age group.

Gillian Guy, Chief Executive of Citizens Advice, said:

“Care costs can be a heavy financial burden that many people are unprepared for.

“It is unsurprising that many people in their fifties are not thinking about how they will pay for care costs when the need for this could be 10, 20 or even 30 years away.

“But this issue does need some attention, otherwise people risk dipping into their pension now only to find they need some of the money later.

“Getting the right guidance is key in helping people think about and plan how they will fund their retirement – including costs which are more tricky to consider, such as care fees.

“There is also an opportunity for local authorities to help people plan ahead for future care costs, by providing clear information about how funding for care works and how much it costs.”

Here at Informed Choice, one of the specialist advice areas we cover is planning for the cost of residential care or care delivered in the home.

Since last December, I have been an Accredited Later Life Adviser, which is the recognised benchmark for advice skills of those advisers who specialise in the older client market.

Obtaining this specialist accreditation and becoming a full member of the Society of Later Life Advisers (SOLLA) was a real endorsement of my skills and experience in working with, and understanding the needs of, older people and their families and carers.

If you are considering withdrawing money from your pension pot, utilising the new pension freedoms, but you want to consider the future cost of care at the same time, please do get in touch.

I offer an initial meeting which is at my expense and without any obligation. You can schedule this by emailing me at martin@icfp.co.uk or calling me on 01483 274566.

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Cash is still king for ISA savers

Cash is still king for ISA saversNew HM Revenue & Customs figures have highlighted our collective love of cash when it comes to Individual Savings Account (ISA) savings.

This is despite Bank of England base rates running at historically low levels.

During the past six years, ISA savers have consistently put more than two thirds of their money in cash within ISAs, instead of stocks and shares.

The latest HMRC figures show the split 73% in cash and 27% in stocks and shares.

Confirming that cash is still king for ISA savers comes around the same time Citizens Advice revealed retirees also have a preference for cash.

They reported recently that three in ten retirees who are making use of pension freedoms are placing the money withdrawn from their pension pots in a bank account.

Looking over the ISA data from HMRC, it shows that a preference for cash is strongest amongst low earners, women and the young.

Those earning less than £30,000 are reported to place 83% of their ISA money in cash.

This is compared to those earning over £100,000 who place just 32% of their money in cash.

Women place 80% of their ISA money in cash, compared to men who place 72%.

Those aged under 35 place 92% of their ISA money in cash, compared to those aged 55+ placing just 72%.

Commenting on the data, Alistair McQueen, Savings and Retirement Manager at Aviva, said:

“ISA savers appear to disregard the old adage that ‘you have to speculate to accumulate’.

“While the Bank of England base rate has hit a historic low, ISA savers continue to demonstrate a love of low-risk cash. They have continued to place more than two-thirds of their money in cash.

“This is particularly the case amongst low earners, women and the young.

“At times of economic uncertainty, an aversion to risk may be understandable, but could savers be losing out?

“We will watch with interest to see how saving habits develop as the health of the economy and the level of the base rate evolves.”

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