INHERITANCE TAX
RECEIPTS REACH £6.1BN
What if I could make my
wealth more tax-e!icient?
CASH MAY
NOT BE KING
Deciding whether to withdraw
cash from your pension pot
NAVIGATING THE
HIGHER!RATE TAX FREEZE
Minimising the impact on your
personal "inances
COST#OF#LIVING CRISIS DELAYS HOMEOWNERSHIP,
HAVING CHILDREN AND RETIREMENT
SEPTEMBER/OCTOBER 2022
PUTTING LIFE
ON HOLD
Welcome to our latest edition. Rising living costs
have been so signi!icant in recent months that most
UK households will have noticed a squeeze on their
monthly budgets. Not only does this have a direct
impact on people’s lifestyles, even though they are
making every e!fort to cut back, but it has a knock-
on e!fect on their lifelong goals such as owning
a home or retiring comfortably. On page 07 new
research highlights millions of people across the UK
fear that the long-term impact of today’s rising living
costs could see their life goals delayed or even
missed altogether.
Inheritance Tax receipts totalled £6.1 billion in the
2021/2022 tax year, up £729 million on the year prior.
This 14% increase marks the largest single-year rise in
Inheritance Tax receipts since the 2015/2016 tax year.
The increase is the result of the ongoing freeze on the
nil-rate Inheritance Tax band and residence nil-rate
Inheritance Tax band has had. On page 05 we look at
why making plans for Inheritance Tax is so important.
Choosing what to do with your pension is a big
decision. On page 08 we explain how by making the
wrong decision it could cost you heavily in the form of
an unwanted tax bill, eventually running out of money
in retirement and even a tax credits and bene!its
overpayment. So before you do anything, take a look
at what you should consider.
If you’re a higher-rate taxpayer, the freeze on the
Income Tax threshold will have meant an increase in
your tax bill. The reason for the increase stems from
the chancellor’s decision in April 2021 to freeze the
higher-rate tax threshold rather than increase it in
line with in!lation. With in!lation running at a 40-year
high, pay increases will mean more people are being
pushed into the higher-rate tax bracket. Read the
article on page 34.
A full list of the articles featured in this issue
appears opposite.
INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION
LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS
FROM, TAXATION ARE SUBJECT TO CHANGE.
THE VALUE OF INVESTMENTS MAY GO DOWN AS WELL AS UP, AND YOU MAY
GET BACK LESS THAN YOU INVESTED.
INSIDE
THIS ISSUE
SEPTEMBER /OC TOBER 2022
The content of the articles featured in this publication is for your general information and use only and is not intended to address your particular requirements. Articles should not be relied upon in their entirety
and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date
it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their
particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles. Thresholds, percentage rates and tax legislation may change in subsequent Finance
Acts. Levels and bases of, and reliefs from, taxation are subject to change and their value depends on the individual circumstances of the investor. The value of your investments can go down as well as up and you
may get back less than you invested. Past performance is not a reliable indicator of future results. The Financial Conduct Authority does not regulate tax advice, estate planning, or Will writing.
CONTENTS
04
SELF!EMPLOYED EXTREMELY
VULNERABLE TO LOSS OF INCOME
81% aren’t seeking !inancial advice
05
INHERITANCE TAX
RECEIPTS REACH £6.1BN
What if I could make my wealth
more tax-e"icient?
06
GREAT WEALTH TRANSFER
Preparing both ‘the family’ and ‘the
money’ for the transition of wealth to the
next generation
07
PUTTING LIFE ON HOLD
Cost-of-living crisis delays homeownership,
having children and retirement
08
CASH MAY NOT BE KING
Deciding whether to withdraw cash
from your pension pot
10
ARE YOU SAVING ENOUGH
FOR RETIREMENT?
One in six over-55s have no pension
savings yet
11
BRINGING PENSIONS TOGETHER
What to consider if you have multiple
pension pots
12
HOW TO PROTECT YOU AND YOUR
FAMILY’S FUTURE
What kind of protection insurance do
you need?
14
BRIDGING THE GENDER PENSIONS GAP
Women left with half the pension pot, no
matter the job
READY TO TALK ABOUT
YOUR FUTURE PLANS?
Only by recognising and meeting your distinct
requirements can we have a positive impact on
your life and business. This is why we provide
an extensive range of services, plus the ability
to tailor solutions based on your speci!ic needs.
If you would like to discuss your concerns or
requirements, please contact us. We hope you
enjoy reading this issue.
CONTENTS
16
UNRETIREMENT
More over-50s returning to work amid cost-of-
living crisis
17
COST!OF!LIVING CRISIS
Britons cutting back on food and entertainment
to keep cars on the road
18
FUNDING THE LIFESTYLE YOU WANT
Get your retirement plans in motion
20
IT’S GOOD TO TALK
More young adults are more engaged about
money with their parents than past generations
21
A HEALTHIER APPROACH
TO RETIREMENT WEALTH
Pension schemes have a critical role to play in the
transition to a net zero economy
22
HEALTH, WEALTH AND HAPPINESS OF A
NATION
Overall wellbeing still not close to being back to
levels seen pre-COVID
23
TEN TIPS FOR FIRST!TIME INVESTORS
Ready to get started on your
investment journey?
24
WHEN SHOULD I STOP WORKING?
How to tell whether you’re ready to retire
26
NEVER TOO EARLY TO PLAN AHEAD
Pension savers struggling to save enough for
their later years
27
BANK OF GRANDMA AND GRANDAD
Older generation using the wealth held in their
property to help younger generations
28
MIND THE RETIREMENT GAP
4 out of 5 workers not saving at levels which are
likely to deliver an acceptable standard of living
in old age
29
REEVALUATING THE ROLE OF WORK
Preparing your !inances for a career break
30
LATER!LIFE AND FINANCIAL WELLBEING
More than one-million over-60’s are rethinking
later life plans
32
PENSION BOOSTER
Mistakes to avoid when you’re aiming to build
your pot
34
NAVIGATING THE HIGHER!RATE
TAX FREEZE
Minimising the impact on your
personal !inances
Being self-employed also means you don’t
have the luxury of having an employer
to rely on for sickness cover or health
insurance, which can make you extremely
vulnerable to loss of income or unexpected
!inancial shocks.
WITHOUT A REGULAR INCOME
So if you’re self-employed, it’s essential you’re
prepared for anything by having the right
protection in place. According to new research, over
half (57%) of self-employed workers in the UK rely
on personal savings when they are not working, yet
a worrying 81% aren’t seeking !inancial advice[1].
Being self-employed can o#er numerous
bene!its, such as !lexible hours and the
opportunity to work with a wide range of people,
but self-employed workers can also face !inancial
vulnerability. Over two-thirds (64%) of those who
are self-employed in the UK revealed they are
without a regular income, with just one in !ive
(23%) receiving a monthly pay packet.
OWNING A BUSINESS
The research also found that almost half
(48%) of self-employed people see their
income !luctuate as a result of owning their
own business, with a similar proportion (49%)
putting this down to being a freelancer,
contractor or consultant.
As the cost of living rises and private rents in
the UK increase at the fastest rate in !ive years,
a quarter (24%) of those surveyed said they
only had enough money to cover such costs for
three months if they were unable to work.
VULNERABILITY TO FINANCIAL SHOCKS
With the research highlighting the group’s
vulnerability to !inancial shocks and the
importance of expert !inancial advice, one in
three (31%) of those surveyed don’t think they
can a#ord professional advice, while one-quarter
(24%) say they hadn’t thought about seeking
professional !inancial advice.
Not being eligible for Statutory Sick Pay
(SSP) can prove a real problem for the
self-employed and their !inancial resilience
– during the pandemic, a !ifth (21%) of all
applications to the Test and Trace Support
Payment scheme were from this group,
according to a Freedom of Information
request by The Community Union.
SECURE FINANCIAL PROTECTION
And while many have taken steps to secure
!inancial protection for themselves and their
families, 13% of self-employed workers in the UK
still don’t have critical illness cover or life insurance.
Of these respondents, just under a third (31%)
said these forms of protection aren’t a !inancial
priority, one in four (25%) said they were prepared
to risk not being covered, while a similar amount
said they didn’t require these policies (27%) or
couldn’t a#ord them (24%). „
Source data:
[1] The research was carried out online by
Opinium Research across a total of 2,002 UK
adults (Booster sample of 502 self-employed
workers and 1,015 Renters). Fieldwork was carried
out between 21!27 October 2021.
81% AREN’T SEEKING FINANCIAL ADVICE
Self-employed people are at risk of "inancial hardship if they don’t have su"icient
provision in place. Without a regular income, it can be di"icult to cover expenses
and also save for the future. In many cases, the self-employed are unable to claim for
many of the bene!its that employees are entitled to, including statutory sick pay.
HOW CAN I PROTECT MY
INCOME WHEN I’M SELF EMPLOYED?
When you’re self-employed or a contractor,
you get the perk of being your own boss, but
you wave goodbye to traditional employee
bene!its like company sick pay. Getting
income protection is one step you could
take to provide a !inancial safety net if you’re
unable to work because of illness or injury.
To !ind out more, get in touch.
SELF$EMPLOYED EXTREMELY
VULNERABLE TO LOSS OF INCOME
04 FINANCIAL PLANNING
WHAT IF I COULD MAKE MY WEALTH MORE TAX$EFFICIENT?
We all want to leave a legacy and make sure the ones we care about most are
well taken care of when we’re gone. That’s why making plans for Inheritance
Tax is so important, to have con!idence that your children, grandchildren and
those you hold dearest will be taken care of long into the future.
Inheritance Tax is a tax on the estate of
someone who has passed away. The
standard Inheritance Tax rate is 40% in the
current 2022/23 tax year. Your estate consists
of everything you own. This includes savings,
investments, property, life insurance payouts
(not written in an appropriate trust) and
personal possessions. Your debts and liabilities
are then subtracted from the total value of
your assets.
PASSING ON YOUR MAIN
RESIDENCE TO DIRECT RELATIVES
Every person in the UK currently has an
Inheritance Tax allowance of £325,000 (frozen
until April 2026). This is known as the nil-rate
band (NRB). In 2017, an extra allowance was
introduced to make it easier to pass on your
main residence to direct relatives (i.e. a child or
grandchild) without incurring Inheritance Tax.
This allowance is currently £175,000, known as
the residence nil-rate band (RNRB), and is on top
of the standard nil-rate band of £325,000.
A tapered withdrawal applies to the RNRB
when the overall value of an estate exceeds
£2 million. The withdrawal rate is £1 for every
£2 over the £2 million threshold.
ALLOWED TO USE BOTH
TAX!FREE ALLOWANCES
If you are married or in a registered civil
partnership, you are allowed to pass on your
assets to your partner Inheritance Tax-free
in most cases. The surviving partner is then
allowed to use both tax-free allowances.
Provided the !irst person to pass away leaves
all of their assets to their surviving spouse, the
surviving spouse will have an Inheritance Tax
allowance of £650,000 (£1 million if they are
eligible for the RNRB).
According to recent !igures released by HM
Revenue & Customs (HMRC), more estates in
the UK are now paying Inheritance Tax than
ever before[1].
PAYING INHERITANCE TAX UNEXPECTEDLY
Inheritance Tax receipts totalled £6.1 billion in
the 2021/2022 tax year, up £729 million on the
year prior. This 14% increase marks the largest
single-year rise in Inheritance Tax receipts
since the 2015/2016 tax year. The increase is
the result of the ongoing freeze on the nil-rate
Inheritance Tax band and residence nil-rate
Inheritance Tax band.
Many more families are !inding the total
value of their estate – driven by a rapid growth
in house prices, savings and other assets – is
likely to be above £1million at the point of
death, meaning many more estates could end
up having to pay Inheritance Tax unexpectedly.
START CONVERSATIONS
WITH YOUR LOVED ONES
In the 2019/20 tax year, there were 23,000
such deaths, up 4% on the year prior[1]. Given
this data only covers to the start of the
pandemic, this number is likely to have risen
considerably over the past couple of years as
asset prices grew.
With many more estates likely to be
subject to an Inheritance Tax bill, it remains
important that you have a conversation with
your loved ones sooner rather than later
so that you all fully understand your estate,
the value of it and the potential to pay an
Inheritance Tax bill.
SAVE YOUR FAMILY
THOUSANDS OF POUNDS
When discussing your Will and any potential
Inheritance Tax liability, there are things that
can be put into place to mitigate or reduce a
future payment.
That’s why planning for Inheritance Tax is a
fundamental part of !inancial planning. It could
potentially save your family thousands of pounds
in Inheritance Tax payments when you die and
ensure that your wealth is preserved for future
generations. „
Source data:
[1] https://www.gov.uk/government/statistics/
inheritance-tax-statistics-commentary/inheritance-
tax-statistics-commentary
THE FINANCIAL CONDUCT
AUTHORITY DOES NOT REGULATE TAXATION
AND TRUST ADVICE AND WILL WRITING.
TRUSTS ARE A HIGHLY COMPLEX
AREA OF FINANCIAL PLANNING.
INFORMATION PROVIDED AND ANY
OPINIONS EXPRESSED ARE FOR GENERAL
GUIDANCE ONLY AND NOT PERSONAL TO
YOUR CIRCUMSTANCES, NOR ARE INTENDED
TO PROVIDE SPECIFIC ADVICE.
TAX LAWS ARE SUBJECT TO CHANGE AND
TAXATION WILL VARY DEPENDING
ON INDIVIDUAL CIRCUMSTANCES.
WHAT WILL YOUR
LEGACY LOOK LIKE?
We understand every situation is unique. We’ll
help you to identify any speci!ic issues and
recommend the changes needed to help you
meet your long-term wealth protection goals in
the most tax-e"icient manner. To !ind out more,
please speak to us.
INHERITANCE TAX
RECEIPTS REACH £6.1BN
INHERITANCE TAX 05
PREPARING BOTH ‘THE FAMILY’ AND ‘THE MONEY’ FOR THE
TRANSITION OF WEALTH TO THE NEXT GENERATION
If you want to pass wealth on to your children and grandchildren, it’s wise to
contemplate when it might be best to make that gift. Should you transfer wealth
during your lifetime—or after?
Some people may !ind compelling reasons
to avoid giving away wealth during
their lives. They think that transferring
substantial portions could mean they might not
have enough to maintain their lifestyles; their
bene!iciaries might not use the wealth wisely, or
at least in a way they’d want it used; and wealth
might end up outside the family because of a
child’s divorce or other misfortune.
SENSITIVE TOPIC
Understandably, money can be a sensitive topic
even among the closest of families. But you will
have a better chance of passing on assets tax-
e"iciently in a way which is acceptable to all family
members if you discuss and plan how to do this.
There are a number of considerations to take
into account when deciding when the best time
is to transfer wealth to your family. These include
your age, the age of your bene!iciaries, the value
of your estate, the types of assets involved, tax
implications and your personal circumstances.
NEXT GENERATION
Transfers made during your lifetime may be
subject to Inheritance Tax, depending on the
value of the assets involved. Gifts made more
than seven years before your death are usually
exempt from Inheritance Tax. Also the value of
assets can change over time, so it’s important
to consider this when making a transfer. For
example, property values can go up or down, and
investments can become more or less valuable.
Your personal circumstances will also play
a role in deciding when to make a transfer.
For example, if you need access to the money
yourself, then it may not be the right time to
transfer wealth to your family. Alternatively, if
you’re looking to pass on your business to the
next generation, then you’ll need to consider
when is the best time for them to take over.
Here are four important considerations
that should be a part of any family wealth
transfer plan:
Age: One key factor to consider is your age.
If you are younger, you may have more time
to accumulate assets and grow your estate.
However, if you are older, you may want to
consider transferring wealth sooner rather than
later in order to maximise the amount that can
be passed on to your bene!iciaries.
Age of Bene"iciaries: Another key consideration
is the age of your bene!iciaries. If they are young,
they may not need the money immediately
and it can be used to help them further their
education or buy a property. However, if they
are older, they may need the money to support
themselves in retirement.
Value of Estate: The value of your estate is
another important factor to consider. If your
estate is large, you may want to consider
transferring wealth sooner rather than later
in order to minimise Inheritance Tax liabilities.
However, if your estate is small, you may not
need to worry about Inheritance Tax and can
a#ord to wait until later in life to transfer wealth.
Types of Assets: The types of assets involved
in the transfer of wealth are also important
to consider. If the assets are liquid (such as
cash or investments), they can be transferred
immediately. However, if the assets are illiquid
(such as property), it may take longer to
transfer them.
ADHERING TO THE FAMILY’S
VALUES AND VISION
Taking all of these factors into account will help
you decide when the best time is for you to
transfer wealth to your family, but it’s important
to discuss wealth transfer with them sooner
rather than later to maximise your options.
Families must overcome many hurdles to
ensure their wealth is protected and continues
to accumulate over the generations while still
adhering to the family’s values and vision. „
THE FINANCIAL CONDUCT
AUTHORITY DOES NOT REGULATE TAXATION
AND TRUST ADVICE AND WILL WRITING.
TRUSTS ARE A HIGHLY COMPLEX
AREA OF FINANCIAL PLANNING.
INFORMATION PROVIDED AND ANY
OPINIONS EXPRESSED ARE FOR GENERAL
GUIDANCE ONLY AND NOT PERSONAL TO
YOUR CIRCUMSTANCES, NOR ARE INTENDED
TO PROVIDE SPECIFIC ADVICE.
TAX LAWS ARE SUBJECT TO CHANGE AND
TAXATION WILL VARY DEPENDING
ON INDIVIDUAL CIRCUMSTANCES.
IS IT TIME WE HAD A TALK ABOUT
FAMILY WEALTH TRANSFER?
Transferring wealth to the next generation
is an ongoing process – and it is extremely
important to keep talking as a family. Making
a decision about when to transfer wealth
to your family is also a personal one. It’s
important to seek professional advice to
make sure that you’re making the best
decision for your circumstances. To discuss
your family wealth transfer plans, please
contact us.
GREAT WEALTH TRANSFER
06 INHERITANCE TAX
COST$OF$LIVING CRISIS DELAYS HOMEOWNERSHIP,
HAVING CHILDREN AND RETIREMENT
Rising living costs have been so signi"icant in recent months that most
UK households will have noticed a squeeze on their monthly budgets.
Not only does this have a direct impact on people’s lifestyles, even though
they are making every e#ort to cut back, but it has a knock-on e#ect on
their lifelong goals such as owning a home or retiring comfortably.
PUTTING LIFE ON HOLD
Millions of people across the UK fear that
the long-term impact of today’s rising
living costs could see their life goals
delayed or even missed altogether, according
to new research[1]. Almost two-thirds (64%),
the equivalent of 33 million people across the
country, are concerned about the future due to
the current state of their !inances.
TACKLING RISING EXPENSES
Households are tackling rising expenses by
turning o# the heating (48%), reducing their
grocery spend (37%) and even driving their
vehicles less (24%). However, over half of UK
adults (56%) feel they have already done
everything they can to save money, while
savings have also taken a hit. Nearly a third
(30%) no longer have a ‘savings bu#er’ to cover
unexpected costs.
More than nine million potential homeowners
– 48% of all people planning to purchase a home
– now estimate they will need to delay this goal,
with almost a !ifth (18%) of this group expecting it
will need to be delayed by !ive years or more.
WEDDING DREAMS DELAYED
An additional 12% of prospective homeowners
now don’t ever think they will own a home due
to greater !inancial pressures. Dreams of getting
married (7.2 million potential brides and grooms
– 47%) and even parenthood (50% of those who
plan to have a/another child – 6.8 million people)
have also been delayed as a result.
FUTURE FINANCIAL SUPPORT
Parents who hoped to provide future !inancial
support for their children are cutting back or
scrapping their plans. Almost two in !ive (39%)
people who planned to set a lump sum aside for
their children now think they will have to delay this.
Almost a !ifth (16%) do not see themselves ever
being able to help out their children as a result,
while 39% of people who had planned to give
their children a deposit on their home now say
they will delay this. Almost one in four of these
parents (23%) say they will never be able to fund
their children’s deposit.
LONG!TERM GOALS
Longer term, 45% of people who had dreams
for retirement anticipate that they will have to
put them on hold. This is the equivalent of over
11 million people across the UK and includes
38% of people in the crucial decade before
retirement who expect to delay retirement by
at least a year, if not more. More than one in
ten (12%) of people think they are never likely
to retire.
Despite current challenges having such a
fundamental impact on people’s long-term goals,
half of UK adults (52%) haven’t sought guidance
or support to better understand how to tackle
their money woes. Those that have looked for
help most commonly turn to price comparison
websites (19%), their family (15%) or the news
(12%). Only 7% (3.9 million people) have sought
out professional !inancial advice.
PRESSURE ON FINANCES
One way to help ease the pressure on household
budgets is to make sure that people are getting
all the bene!its and tax credits they are entitled
to. There are a number of government schemes
available which can help with things like childcare
costs, housing costs and council tax. Make sure
you are claiming everything you are entitled to
by checking the government’s website.
Another way to ease the pressure on your
!inances is to make sure you are getting the best
deal on your essential bills. This includes things
like your energy bills, your water bill and your
broadband package. There are a number of
comparison websites which can help you to !ind
the best deals. It is also worth speaking to your
current providers to see if they can o#er you a
better deal. „
Source data:
[1] Opinium survey of 4,001 UK adults
was conducted between 27!31 May 2022 for
Legal & General.
HEADING OFF DIFFICULTIES
LATER DOWN THE LINE
Life is becoming una#ordable for many people
due to the cost-of-living crisis. Obtaining
professional !inancial advice is invaluable,
especially when navigating more complicated
!inancial situations, such as retirement. Seeking
the right help now could head o# di"iculties
later down the line.
FINANCIAL PLANNING 07
DECIDING WHETHER TO WITHDRAW
CASH FROM YOUR PENSION POT
Choosing what to do with your pension is a big decision. If you’ve been
saving into a de!ined contribution pension (sometimes called ‘money
purchase’) during your working life, from age 55 (age 57 in 2028) you need
to decide what to do with the money you’ve saved towards your pension
when you eventually decide to retire.
CASH MAY
NOT BE KING
/// B E FO R E YO U TA K E
ANY C A SH OUT OF YOUR
PENSION , YOU NEED TO
CA LC U L AT E H OW M U C H
MONEY YOU AC TUALLY
NEED. DO YOU NEED A
LU M P S U M O F C A S H A L L
AT O N C E ? I F S O, W H AT A R E
THE TAX IMPLIC ATIONS?
08 RETIREMENT
However, making the wrong decision
could cost you heavily in the form of an
unwanted tax bill, eventually running out
of money in retirement and even a tax credits
and bene!its overpayment.
So before you do anything, there are things you
should consider. Note: this article doesn’t cover
pension schemes where the pension you’ll be
getting is worked out as a proportion of your pay.
HOW MUCH MONEY DO
YOU NEED TO RETIRE?
Before you take any cash out of your pension, you
need to calculate how much money you actually
need. Do you need a lump sum of cash all at once?
If so, what are the tax implications? Or would you be
better o# with a regular income stream?
Remember that retirement could be 30 to
40 years, or more. As well as what you’ll need to
cover everyday living expenses, do you have any
speci!ic plans for your retirement, such as regular
holidays or enjoying a hobby? Or are you thinking
of any big one-o# purchases or expenditure, like a
new car or home improvements? Once you know
how much money you need, you can start to look
at your options.
WHAT ARE THE TAX IMPLICATIONS?
Taking cash out of your pension can have tax
implications if you withdraw more than your tax-free
element (typically 25% of your pension). You can
leave the rest invested until you decide to make
more withdrawals or set up a regular income.
However, you need to make sure you
understand those implications before you make
any decisions. Otherwise, you could end up with
a signi!icant tax bill that you weren’t expecting.
WHAT ARE THE FEES?
When you retire and start taking money out of
your pension, you may be charged fees by your
pension provider. Some pension providers will
charge a fee for each withdrawal you make, while
others may charge a !lat rate or percentage of
your pension pot.
There may also be other charges, such as an
administration fee. Taking money out of your
pension will also reduce the amount of income
you have in retirement, so it’s important to think
carefully before you decide to take any money
out of your pension pot.
HOW LONG WILL THE MONEY LAST?
Consider how long you’ll need the money to last.
If you take a lump sum of cash, it’s likely that it
won’t last as long as if you take an income. This is
something to keep in mind when you’re making
your decision.
WHAT IF YOU NEED MORE MONEY LATER?
If you take cash out of your pension now, it may
not be there if you need it later on in life. This
is something to consider if you think you may
need more money down the line. Even if you’ve
seen the value of your pensions fall that doesn’t
necessarily mean that you’ll have to delay your
retirement altogether.
Could you take less from your pension savings
until their value recovers, and use other savings
instead to bridge the gap? And could you put o#
any big purchases you’d planned?
WHAT ARE THE RISKS?
Taking cash out of your pension comes with risks.
There’s the risk that you could outlive your money,
or that the value of your pension could go down.
You need to make sure that you understand all of
these risks before you make a decision.
OPTIONS FOR USING YOUR DEFINED
CONTRIBUTION PENSION IN RETIREMENT
„ Keep your pension savings where they are –
and take them later.
„ Use your pension pot to buy a guaranteed
income for life or for a !ixed term – also known
as a ‘lifetime’ or ‘!ixed term annuity’. The income
is taxable, but you can choose to take up to 25%
(sometimes more with certain plans) of your pot
as a one-o# tax-free lump sum at the start.
„ Use your pension pot to provide a !lexible
retirement income – also known as ‘pension
drawdown’. You can take the amount you’re
allowed to take as a tax-free lump sum
(normally up to 25% of the pot), then use the
rest to provide a regular taxable income.
„ Take a number of lump sums – usually the !irst
25% of each lump sum withdrawal from your pot
will be tax-free. The rest will be taxed as income.
„ Take your pension pot in one go – usually the
!irst 25% will be tax-free and the rest is taxable.
„ Mix your options – choose any combination of
the above, using di#erent parts of your pot or
separate pots.
UNDERSTANDING THE DIFFERENT OPTIONS
This is a very complicated topic and choosing what
to do with your pension is one of the most important
decisions you’ll ever make and will impact on your
future standard of living in retirement.
Worryingly, over a third (35%) of pension
holders do not know about the di#erent options
available to them for when the time comes to
retire, according to research[1]. „
Source data:
[1] Online omnibus conducted by Opinium
in June 2021 for LV – 4,000 representative UK
adults surveyed nationally.
A PENSION IS A LONG$TERM INVESTMENT
NOT NORMALLY ACCESSIBLE UNTIL AGE 55
(57 FROM APRIL 2028 UNLESS PLAN HAS A
PROTECTED PENSION AGE).
THE VALUE OF YOUR INVESTMENTS (AND ANY
INCOME FROM THEM) CAN GO DOWN AS WELL
AS UP WHICH WOULD HAVE AN IMPACT ON THE
LEVEL OF PENSION BENEFITS AVAILABLE.
YOUR PENSION INCOME COULD ALSO BE
AFFECTED BY THE INTEREST RATES AT THE
TIME YOU TAKE YOUR BENEFITS.
TAX TREATMENT VARIES ACCORDING TO
INDIVIDUAL CIRCUMSTANCES AND IS SUBJECT
TO CHANGE.
THINKING ABOUT ACCESSING
YOUR PENSION POT?
These are just a few things to consider
before taking cash from your pension pot.
As you approach retirement, it’s essential to
understand what your options are and obtain
professional advice, otherwise you could end
up making a decision that you regret later
on. For more information or to review your
options, please contact us.
RETIREMENT 09
ONE IN SIX OVER$55s HAVE NO PENSION SAVINGS YET
Despite the fact that the government has been trying to encourage people
to save for their retirement through initiatives such as auto-enrolment, there
are still too many Britons who have no pension savings at all. Research reveals
that a !ifth (20%) of people still have no pension savings at all, and people nearing
retirement aren’t doing much better[1].
Even prior to the cost-of-living crisis there
have been a number of reasons why this
might be the case. For some people, they
simply may not be aware of the need to save for
retirement. Others may not have enough spare
income to put into a pension pot after covering
their essential living costs.
MORE COMFORTABLE
However, the most common reason is people
believe they will have plenty of time to start saving
later on in life. But this is not the case. Even if you
are in your 20s or 30s, it is never too early to start
saving for retirement. The sooner you start, the
more time your money will have to grow.
Findings also highlight the fact that one in
six people (16%) who are within sight of their
retirement still have no private pension savings, and
consequently are missing out on the opportunity to
make their life after work more comfortable.
ALARMING NUMBER
At least 17% of people in the UK aged 55 and over
admit to having no pension savings (other than
the State Pension), which is only slightly better
than the average for Britons as a whole – 21% of
whom say they have no private pensions.
What this research shows is that an alarming
number of people are e#ectively ‘sleepwalking’
towards their retirement without adequate
preparations. But, there are signs that as people
grow older, they are becoming aware that a lack
of pension savings is a problem – though perhaps
not quickly enough.
PENSION DEFICIT
The issue is most visible among adults aged
under 35. Nearly a quarter (24%) of this group
claim to have no pension savings at all, despite
being a generation to bene!it from auto-
enrolment into workplace pensions. After 35 this
drops to one in !ive, and then to one in six for the
over-55s. Clearly, people do start to save more as
retirement draws nearer, even if they have missed
out on the opportunity to save over many years.
Lack of pension savings is a particular issue for
those not in full-time employment. Encouragingly,
just 8% of respondents who worked full time said
they had nothing in their pension. But among
part-time workers this !igure was one in four
(24%), indicating that part-timers face a potential
pension de!icit when they retire.
WORRYING STATISTIC
The people worst a#ected tend to be those not
currently working at all – whether because they
are unemployed or because they are full-time
parents. Nearly 60% of this group said they had
no pension savings. Where this is because of
full-time parenthood, the parent in question may
be relying solely on their partner’s pension in
later life. This is a risky strategy, both because that
pension may not be enough for both of them,
and because of the risk of relationship break-up.
Another worrying statistic highlights that one
in !ive people simply don’t know how much they
have in their pension savings. Curiously, this
uncertainty grows rather than shrinks as people
get older: while 14% of under-35s are unsure, this
rises to 22% between the ages of 35 and 54, and
then to 24% among the over-55s.
SUBSTANTIAL INCOME
It may be the case that many of those who think
they have no pension savings are wrong, and that
they do have pension pots from previous jobs
(or even their current job) that they don’t know
about. The !irst step for anyone who thinks they
are pension-less is to contact the government’s
Pension Tracing Service and search through their
previous employers to see if they were ever a
scheme member.
However, some people will reach the age of
55 (the earliest age that someone can access
pension pots) and !ind that they genuinely have
no pension savings. But this isn’t a reason to give
up and assume it’s too late. Although a person
close to retirement has a lower chance of saving
enough to provide a substantial income, pensions
can help your money to go a lot further. „
Source data:
[1] Survey by Unbiased and Opinium of 2,000
non-retired UK adults, conducted June-July 2020.
A PENSION IS A LONG$TERM INVESTMENT
NOT NORMALLY ACCESSIBLE UNTIL AGE 55
(57 FROM APRIL 2028 UNLESS PLAN HAS A
PROTECTED PENSION AGE).
THE VALUE OF YOUR INVESTMENTS (AND
ANY INCOME FROM THEM) CAN GO DOWN
AS WELL AS UP WHICH WOULD HAVE AN
IMPACT ON THE LEVEL OF PENSION BENEFITS
AVAILABLE.
YOUR PENSION INCOME COULD ALSO BE
AFFECTED BY THE INTEREST RATES AT THE
TIME YOU TAKE YOUR BENEFITS.
READY TO DESIGN YOUR RETIREMENT?
There are a number of ways you can save
for retirement, such as through a workplace
pension or a personal pension. So if you
haven’t started, now is the time to do so. It
may seem like a long way o#, but the sooner
you start saving, the better prepared you will
be for your future. If you would like to discuss
your situation or concerns you may have
about a pension shortfall, please contact us.
ARE YOU SAVING
ENOUGH FOR RETIREMENT?
10 RETIREMENT
WHAT TO CONSIDER IF YOU HAVE MULTIPLE PENSION POTS
The employment landscape has evolved signi"icantly over the last few
decades and changing jobs multiple times before retirement is now very much
the norm. But did you know, there is an estimated £9.7 billion of unclaimed UK
de!ined contribution pension funds?[1].
Over time, it is easy to lose touch
with pension savings providers as
we change jobs, move home and
the companies we have worked for change
ownership or close down.
All these events over time may make it very
di!!icult to !ind your valuable pension savings.
So that means potentially ending up with a
number of di!ferent pension pots. If you’re one
of the millions of people with multiple pensions,
it may be appropriate to consider consolidating
your de!ined contribution pension pots and
bring them together.
NUMBER OF DIFFERENT PENSIONS
Even if you have not had many jobs, you could
still have a number of di#erent pensions to keep
track of. If appropriate, pension consolidation can
simplify your !inances and make it easier to keep
track of your retirement savings.
Having said this, not all pension types can or
should be transferred. It’s important to obtain
professional advice so you know and can
compare the features and bene!its of the plan(s)
you are thinking of transferring.
WHAT IS PENSION CONSOLIDATION?
Pension consolidation is the process of
combining multiple pension pots into one single
pot. This can be done with a pension transfer
or by opening a new pension and transferring
your other pensions into it. You may want to
do this to make it easier to keep track of your
retirement savings, or to try and get a better
rate of return on your investment.
But there are a few things to consider before
consolidating your pensions, such as any exit
fees that may be charged, and whether or not
you will lose any valuable bene!its such as
guaranteed annuity rates.
CONSOLIDATING YOUR PENSIONS
REASONS WHY YOU MIGHT WANT TO
CONSOLIDATE YOUR PENSIONS
Simplify your "inances: If you have multiple
pension pots, it may be di"icult to keep track
of them all. Consolidating your pensions into
one pot could make it easier to manage your
retirement savings.
Save on fees: If you have multiple pensions with
di#erent providers, you may be paying multiple
annual fees. Consolidating your pensions may
help you save money on fees.
Get better investment options: Some pension
providers o#er a limited number of investment
options. By consolidating your pensions it could
give you access to a wider range of investments.
REASONS WHY YOU MAY NOT WANT TO
CONSOLIDATE YOUR PENSIONS
Loss of valuable bene"its: One key
disadvantage is that you may lose out on
valuable bene!its that are speci!ic to certain
pension schemes. For example, some schemes
may o#er better death bene!its than others, so
consolidating your pensions into one pot could
mean giving up this valuable protection.
Paying higher fees: Another potential downside
is that some schemes may have higher charges
than you are actually currently paying, which
means you would end up paying higher fees.
This is something that needs to be carefully
considered before making any decisions.
More di#icult to access: It’s important to
remember that once you consolidate your
pensions, it may be more di"icult to access them
early if you need the money for an emergency.
This is something that should be taken into
account when making any decisions about
pension consolidation.
LOCATE YOUR PENSION FUNDS
If you think you might have lost a pension
pot from a previous job, you can use the
government’s Pension Tracing Service at www.
gov.uk/!ind-pension-contact-details.This enables
people to locate money previously saved for
retirement, that is unclaimed. So, it is worth
checking if you could have pension funds that
have not been claimed.
Finally, one thing you also need to bear in
mind is that pension savings are big targets
for fraudsters. If someone contacts you
unexpectedly o#ering to help you transfer your
pot, it’s likely to be a scam. If you’re concerned,
contact the Financial Conduct Authority (FCA) to
check they’re legitimate. „
Source data:
[1] https://www.pensionspolicyinstitute.org.uk/
media/2855/201810-bn110-lost-pensions-"inal.pdf
A PENSION IS A LONG$TERM INVESTMENT
NOT NORMALLY ACCESSIBLE UNTIL AGE 55
(57 FROM APRIL 2028 UNLESS PLAN HAS A
PROTECTED PENSION AGE).
THE VALUE OF YOUR INVESTMENTS (AND ANY
INCOME FROM THEM) CAN GO DOWN AS WELL
AS UP WHICH WOULD HAVE AN IMPACT ON THE
LEVEL OF PENSION BENEFITS AVAILABLE.
YOUR PENSION INCOME COULD ALSO BE
AFFECTED BY THE INTEREST RATES AT THE
TIME YOU TAKE YOUR BENEFITS.
BRINGING PENSIONS TOGETHER
NEED PROFESSIONAL ADVICE
TO HELP MAKE YOUR DECISION?
You only have one retirement so you don’t
want to make a costly mistake with your
pensions that you could one day regret.
Before you look to bring your pensions
together, it’s essential to obtain professional
advice. For more information about how we
can assist you through this complex process,
please contact us to discuss your situation.
RETIREMENT 11
HOW TO PROTECT
YOU AND YOUR
FAMILY’S FUTURE
WHAT KIND OF PROTECTION INSURANCE DO YOU NEED?
There are various complex risks in life that we all face, such as serious illness, an accident
or death. What would happen if something were to happen to you? Would your family be able to
cope !inancially with the impact an unexpected event might have?
12 PROTECTION
These are not easy questions to ask but it is
important to consider what would happen
if an unexpected event or accident took
place, and how you could protect your family from
the !inancial e#ects of serious illness or death.
BIG PART IN OUR LIVES
Deciding what your priorities are and
understanding what options you have
are key parts of the protection planning
process. This helps you ensure that you
have the !inancial protection most suitable for
your circumstances.
Every family is di#erent, but they often play
a big part in our lives. It’s important to think
about how we can protect them against the
unexpected as best we can.
PROTECTION FOR THE UNEXPECTED
LIFE INSURANCE
Death is an unpredictable event, so it’s important
to make sure you have the right level of cover in
place. The amount of life insurance you need will
depend on your individual circumstances. There
are many good reasons to take out a policy. For
example, if you have dependents who rely on
your income, then life insurance can provide
!inancial security for them if you die.
There are di#erent types of life insurance
available, so choosing the right policy for your
needs is key. Term life insurance provides cover for
a set period of time, while whole of life insurance
covers you for your entire life. You can also choose
between level term insurance, which pays out
a !ixed amount if you die during the term of the
policy, and decreasing term insurance, which pays
out less as the policy progresses.
There is also a variation on the basic
term assurance theme that is often worth
considering as it can reduce the cost of cover.
Family Income Bene!it is a policy with a sum
assured that reduces uniformly over time but
provides regular payments of capital on the
death of the breadwinner (the life assured).
If you have any debt, such as a mortgage, then
it’s also important to take out life insurance to
make sure that this is paid o# if you die. This will
give your loved ones peace of mind and prevent
them from being burdened with debt.
INCOME PROTECTION INSURANCE
There are a number of reasons why income
protection insurance should be a part of your
protection planning. Firstly, it can help to protect
your income if you are unable to work. This
could be due to an illness, injury or disability that
means you are unable to work. It can help to
cover the costs of your everyday living, such as
your mortgage or rent, bills and food.
If you do not have su"icient protection in place
this may mean you have to rely on your savings,
or on the help of family and friends. Income
protection insurance is especially important if you
are self-employed or have a family to support. If
you are unable to work, your income protection
policy will provide you with a replacement
income so that you can continue to meet your
!inancial obligations.
There are di#erent types of income protection
insurance policies available, so you should
obtain professional !inancial advice to ensure
you can compare the di#erent options and fully
understand the terms and conditions of the policy.
CRITICAL ILLNESS COVER
If you become seriously ill or are diagnosed with
a speci!ied critical illness, even if you are still able
to work, critical illness cover could provide you
with a !inancial safety net. It can help to pay for
treatment, to make adaptations to your home or
lifestyle, provide an income for your family if you
are unable to work or other costs associated with
your illness.
In some cases, it may even pay out a lump
sum if you die as a result of your condition.
The tax-free money from the policy could be
used to help cover the cost of treatment, make
adaptations to your home or lifestyle or provide
an income for your family.
There is no guarantee that you will not
experience a critical illness during your
lifetime, so it is important to have this type
of cover in place. It will give you the peace
of mind of knowing that you and your family
are !inancially protected if the worst were to
happen. Critical illness cover is not a substitute
for health insurance. „
INCOME PROTECTION INSURANCE PLANS
HAVE NO CASH IN VALUE.
IF PREMIUMS ARE NOT MAINTAINED COVER
WILL LAPSE.
NEED A HELPING HAND FOR
YOU AND YOUR LOVED ONES?
Do your children, partner or other relatives
depend on your income? Many families
would have to cut their living costs in
order to survive !inancially in the event of
the main breadwinner falling ill or dying
prematurely. If you are unclear on your
protection requirements, we are here to
explain your options. Please contact us for
more information.
/// IF YOU BECOME
SERIOUSLY ILL AND
ARE DIAGNOSED WITH
A SPECIFIED CRITICAL
ILLNESS, EVEN IF YOU
ARE STILL ABLE TO WORK,
CRITICAL ILLNESS COVER
COULD PROVIDE YOU WITH
A FINANCIAL SAFETY NET.
PROTECTION 13
14 RETIREMENT
BRIDGING
THE GENDER
PENSIONS GAP
WOMEN LEFT WITH HALF THE
PENSION POT, NO MATTER THE JOB
We’ve all heard about the gender pay gap, but very few
discuss the gender pensions gap, despite the fact so many
women experience it. Women’s pensions at retirement are
half the size of men’s, regardless of the sector they work in, new
research has highlighted[1].
RETIREMENT 15
The gender pension gap is the percentage
di#erence in income between men’s and
women’s pensions and it begins at the
very start of a woman’s career.
LONG!TERM FINANCIAL IMPACT
The research found that every single industry
in the UK has a gender pensions gap,
even those dominated by female workers.
Considering women are likely to live four
years[2] longer than men, this issue deepens
as they need to have saved around 5% to 7%
more at retirement age.
Worryingly, more than a third (38%) of women
who have taken a career break were not aware of
the long-term !inancial impact it would have on
their pension.
THREE KEY INDUSTRIES
According to the research, the gender pensions
gap exists regardless of average pay across
di#erent sectors, and ranges from a gap of 59% in
the healthcare industry, to 13% in courier services.
The healthcare (59%), construction (51%),
real estate/property development (48%),
pharmaceutical (46%), aerospace, defence
and government services (46%), and senior
care (45%) sectors were found to have the
largest gender pensions gaps. Of these six
sectors, three are key industries for female
employment – healthcare, pharmaceuticals
and senior care[3].
LOWER PENSIONS CONTRIBUTIONS
There are many reasons for the gender
pensions gap, ranging from women holding
fewer senior positions and being paid less,
resulting in lower pensions contributions, to the
fact they are more likely to take career breaks
due to caring responsibilities.
Of those that have taken a career break, 38%
did not know the !inancial impact it had on their
pension contributions[4].
GENDER CONFIDENCE GAP
Another potential driver is a signi!icant gender
con!idence gap when it comes to managing
pension pots. More than a quarter (28%) of
women said they had con!idence in their
ability to make decisions about their pension,
compared to almost half (48%) of men[5].
This lack of con!idence extends further to
other !inancial decisions, with women less
likely than men to feel con!ident managing
their investments (22% of women versus 41% of
men), and their savings (56% of women versus
67% of men).
WHILE MANY FACTORS BEHIND THE GENDER
PENSION GAP ARE OUT OF MOST PEOPLE’S
CONTROL, THERE ARE SOME ACTIONS YOU
CAN TAKE TO HELP REDUCE IT:
„Contribute as much as you can to your
pension - and start early. Compound interest
remains hugely underrated and poorly
understood by both some men and women.
„Check the charges on your historic pension
pots. If appropriate, see if consolidating your
pots will bring them down.
„Check how much your State Pension will
be and when you’ll get it. If it’s not going to
support your ideal lifestyle, plan how you’ll
cover any shortfall.
„
Put a bit more into your pension whenever
you get a pay rise.
„
Talk through your pension planning with
your partner. Make sure you know about
each other’s saving plans, contribution limits
and that you are both on the same page.
„Keep a regular eye on your pension to make
sure you’re in full control of it and saving for
your ideal future.
Source data:
[1] The analysis is based on LGIM’s proprietary
data on c.4.5 million de"ined contribution
members as at 1 April 2022 but does not take
into account any other pension provision the
customers may have elsewhere.
[2] ONS: Life expectancy at birth in the UK: 82.9
years for women vs 79 years for men; O#ice for
National Statistics, 2018 – 2020. Average four years.
[3] According to the ratio of female members
across the Legal & General book of business.
[4] Legal & General Insight Lab survey of 2,135
workplace members was conducted between
4!26 July 2022.
[5] Opinium survey of 2,001 UK adults was
conducted between 4!8 February 2022.
A PENSION IS A LONG$TERM INVESTMENT
NOT NORMALLY ACCESSIBLE UNTIL AGE 55
(57 FROM APRIL 2028 UNLESS PLAN HAS A
PROTECTED PENSION AGE).
THE VALUE OF YOUR INVESTMENTS (AND
ANY INCOME FROM THEM) CAN GO DOWN
AS WELL AS UP WHICH WOULD HAVE AN
IMPACT ON THE LEVEL OF PENSION BENEFITS
AVAILABLE.
YOUR PENSION INCOME COULD ALSO BE
AFFECTED BY THE INTEREST RATES AT THE
TIME YOU TAKE YOUR BENEFITS.
NEED ADVICE TO CLOSE THE
GENDER PAY GAP IN YOUR PENSION?
Women often have disrupted work patterns,
career gaps and work part-time – this can
impact their ability to save consistently for
retirement without savings gaps. If you are
concerned about your retirement plans and
would like to review your pension options,
please contact us . We look forward to
hearing from you.
/// THERE ARE MANY
REASONS FOR THE GENDER
PENSIONS GAP, RANGING
FROM WOMEN HOLDING
FEWER SENIOR POSITIONS
AND BEING PAID LESS,
RESULTING IN LOWER
PENSIONS CONTRIBUTIONS,
TO THE FACT THEY ARE
MORE LIKELY TO TAKE
CAREER BREAKS DUE TO
CARING RESPONSIBILITIES.
16 RETIREMENT
But the cost-of-living crisis is now a#ecting
some pensioners drastically, with more
older people starting to return to work
amid the ongoing crisis, new research has
highlighted[1]. The !indings identi!ied economic
activity levels among the over-50s are now at
their highest since the pandemic began.
IMPACTING PENSIONS
Analysis of o"icial statistics appears to show the
!irst signs of a return to the long-term trend of
more economically active people over the age
of 50 – a decades-long trend which, it said, was
reversed by the pandemic.
Spiralling in!lation and turbulent !inancial
markets impacting pension funds are causing
some people to unretire and !ind work again.
There has been an increase in economic activity
(those in work or looking for work) of 116,000
among the over-50s in the past year. More than
half of the increase is being driven by men over
the age of 65.
RETIRING COMFORTABLY
In some ways, the pandemic forced the hands
of many and gave them an opportunity to trial
retirement. An early retirement can often seem
like a dream when you’re stuck in the thick of
the daily grind but, for many, giving up work
abruptly can also result in a loss of structure,
social connections and purpose, which can leave
people feeling lost at times.
The current economic climate means that
some people who thought they could retire
comfortably during the pandemic are now
having to unretire and !ind work again to bring
in some extra income and top up their pensions
while they still can. „
Source data:
[1] Analysis by www.restless.co.uk – Economic
activity levels amongst people over the age
of 50 hit their peak of just over 11 million
just before the pandemic in the three-month
period from December 2019 – February 2020.
Since then, we have seen a decades-long
trend reverse, with economic activity levels of
workers aged over 50 falling by as much as
223,000 during the pandemic.
UNRETIREMENT
MORE OVER$50s RETURNING TO WORK AMID COST$OF$LIVING CRISIS
Older workers have been leaving the jobs market in their droves over the
past two years, partly due to many re-evaluating what they want from their lives
and careers during the course of the COVID$19 pandemic, and also due to the
devastating impact the pandemic had on the prospects for many older jobseekers,
who felt they had no choice but to leave the workforce.
WANT TO DISCUSS HOW TO MAKE
YOUR MONEY WORK FOR YOU?
If you’re getting ready to retire, or maybe
you’ve already retired, now may be a good
time to think about professional !inancial
advice. It can take some of the worries out
of retirement planning and ensure your
money will go further. So if you have any
concerns about your retirement, we can help
make your money work for you. To talk to
us, please contact us – we look forward to
hearing from you.
FINANCIAL PLANNING 17
As the cost-of-living crisis continues to
exacerbate pressure on households
across the UK, what this research shows
are some of the measures that consumers are
having to take just to keep their cars on the road.
PURCHASING CHEAPER ITEMS
While you could make an active decision to
purchase cheaper items at the supermarket,
when it comes to fuel, options are limited,
meaning cutbacks have to be made in other
areas on households that are already stretched in
many cases.
Instead, consumers are cutting back in other
areas to continue to do essential trips like drive to
work, run errands and visit the supermarket. The
research highlights how habits at the pump have
changed in response to the cost-of-living crisis.
DEMAND FOR ENERGY
More than a third (34%) of consumers now need
to stop !illing up at an exact value and 26% rarely
!ill their tanks to the brim as they can’t a#ord
to do so. Almost a quarter (23%) are using their
savings to put fuel in their cars and 22% are using
credit cards.
Fuel prices have increased sharply because
the price for crude oil, which is used to make
petrol and diesel, has gone up. Crude oil was
cheaper at the beginning of the COVID$19
pandemic, because many businesses temporarily
closed and demand for energy collapsed.
FUEL MORE EXPENSIVE
As life returned to normal, the demand for energy
increased. But suppliers have struggled to keep
up and prices have risen. Another problem is
that the oil used to make petrol is paid for in US
dollars. The pound has been weak against the
dollar, making fuel even more expensive.
Despite fuel prices dipping slightly in recent
weeks, the !indings show the extent to which
consumers are still having to cut back to ensure
they can a#ord to get from A to B, with more
than eight in ten (83%) more concerned about
their !inances than they were a year ago.
DRIVERS FORCED TO CUT BACK IN THE
FOLLOWING WAYS:
„
46% are eating out less
„
35% are either spending less on their food
shopping or have switched supermarket to
save money
„
34% now have to stop !illing up at a speci!ic
value as they know exactly what they can
a#ord
„
31% are cutting down on the volume
and quality of food they buy from the
supermarket
„
26% now rarely !ill their fuel tanks to the brim
as they cannot a#ord it
„
25% have cut back on gym memberships
and subscription services
„
24% are reducing spend on school trips,
days out and weekends away
„
23% are using their savings to pay for fuel
„
22% need to use their credit card to cover
the cost of fuel
„
21% have stopped putting money aside in
either a savings account or pension pot
STAYING MUCH CLOSER TO HOME
The research found that 28% of consumers
also had to change their staycation plans
during the summer months and stayed much
closer to home, thanks to the high cost of
fuel. Furthermore, and with one eye on the
expectation that the cost-of-living crisis will
only get worse, 18% said they decided to go on
holiday this summer, as it could be their last one
for many years. „
Source data:
Fieldwork was undertaken between 21!22
July 2022 for Nationwide Building Society. The
survey was carried out online by Censuswide.
Censuswide abides by and employs members of
the Market Research Society, which is based on
the ESOMAR principles.
COST$OF$LIVING CRISIS
BRITONS CUTTING BACK ON FOOD AND
ENTERTAINMENT TO KEEP CARS ON THE ROAD
Soaring petrol costs pushed in"lation to its highest level for 40 years. New
research has uncovered the impact of these high fuel prices on consumers as more
than a third (35%) are spending less on food to keep their car on the road[1].
NAVIGATING THE
COST!OF!LIVING CRISIS
Whether you need retirement and pensions
advice, support with estate planning, would
like to invest for children or achieve other
goals, or have concerns about dealing with
the cost-of-living crisis, we’re here to help. To
!ind out more, please contact us.
18 RETIREMENT
FUNDING THE
LIFESTYLE
YOU WANT
GET YOUR RETIREMENT PLANS IN MOTION
One of the most common concerns among those approaching retirement is
whether they will have enough money to last them. A new study[1] shows that only
25% of retirees feel very con!ident they’ve saved enough for retirement.
RETIREMENT 19
As food prices continue to soar and petrol
costs reach an all-time high in the UK,
the rising cost of living is without doubt
having an impact on many people’s !inancial
plans, both short and long term.
If you’re approaching retirement or have already
started taking money from your pension or other
retirement savings, you wouldn’t be alone in feeling
a little anxious about the e#ect the cost-of-living
crisis might have on your lifestyle in retirement.
While it’s impossible to predict the future with
complete certainty, there are a few things you
can do to feel more con!ident about spending
your money in retirement.
ADD UP ALL YOUR SOURCES OF INCOME
Your main source of retirement income may
well be your pension plan. But when it comes
to planning your !inances in retirement, it’s
important to think beyond this. Consider other
potential sources such as Individual Savings
Accounts (ISAs) and other investments, as well
as any rental income you receive from rental
properties you let.
And don’t forget the State Pension, which is
currently £185.15 a week (£9,628 a year) for a single
person with a full entitlement. Although the State
Pension’s annual increase is currently below in!lation,
every little helps and the total of all your savings and
income might add up to more than you think.
WATCH OUT FOR UNNECESSARY TAX BILLS
Paying too much tax in retirement is a common
pitfall for some retirees, and one that could be
potentially avoided with having the right plans
in place.
If you’re already taking or plan to take income
from multiple sources, you need to consider how
that will be taxed. When and how you take your
money can make a big di#erence to how much
tax you pay and how long it will last. Taking money
little and often could make all the di#erence when
it comes to reducing your tax bill.
When it comes to your pension savings, you
can typically take 25% tax-free from age 55 (age
57 in 2028), either in one go or spread out over
a longer period. After this, any money you take
from your pension savings, as well as your State
Pension, is taxable just like any other income.
That means you’ll need to pay income tax on
anything over your tax-free cash limit and any
annual personal Income Tax allowance you get.
It’s likely that the more money you take, the
more tax you’ll have to pay, although how much will
depend on which tax band your income falls into.
So if you take all of your pension savings at once,
or in big lump sums, you could be paying more
tax than you need to. But by taking your pension
savings over a number of years and taking just
enough to stay in the lowest tax band you can, you
could keep more of your money overall.
MAKE THE MOST OF YOUR INDIVIDUAL
SAVINGS ACCOUNT (ISA)
Another way to avoid an unnecessary tax bill is
to make the most of your ISA savings. You don’t
pay tax on any investment growth or interest you
earn, or on the proceeds you take from an ISA. So
it’s a very tax-e"icient way to save.
You could consider using any ISA savings
you have !irst and delay accessing your pension
savings, giving them more time to stay invested
and potentially grow in value. Remember though,
the value of all investments can go down as well
as up, and you may get back less than you paid in.
Or, if you’ve already started taking an income
from your pension, you could use your ISA savings
to supplement that income. This could allow you
to take smaller payments from your pension and
avoid overpaying Income Tax on them.
Getting to grips with tax implications can be a
bit overwhelming as there’s a lot to consider. Tax
rules and legislation can change, and personal
circumstances and where you live in the UK also
have an impact on your tax treatment. On top of that,
tax varies for other sources of income like property,
state bene!its, or even your salary if you’re planning
on working in some capacity for a little longer.
KEEP TRACK OF YOUR INVESTMENTS
Where your money is invested could have
the biggest impact on how long it will last in
retirement. It’s important to regularly review your
investments to make sure they remain on track
and remain aligned with your plans and attitude
to investment risk.
For example, your pension savings may be
invested in fairly high-risk funds that have the
potential to grow signi!icantly in value, but also
are more likely to be impacted, particularly during
periods of market volatility. Moving to lower-risk
investments means that you’re less likely to see big
ups and downs in the value of your pension savings.
However, if you’re relying on your pension
savings to provide you with a comfortable income
for the rest of your life, you also need to make
sure that your investments will provide enough
growth potential. This is particularly important in
the current climate where your money faces the
double challenge of rising in!lation and potentially
having to last for many years. „
Source data:
[1] Class of 2022 UK retirement report
consumer research of 2,000 UK adults for abrdn
who were either planning to retire in the next 12
months, or who had retired in the 12 months prior.
Research was conducted by Censuswide in late
November / early December 2021.
A PENSION IS A LONG$TERM INVESTMENT
NOT NORMALLY ACCESSIBLE UNTIL AGE 55
(57 FROM APRIL 2028 UNLESS PLAN HAS A
PROTECTED PENSION AGE).
THE VALUE OF YOUR INVESTMENTS (AND ANY
INCOME FROM THEM) CAN GO DOWN AS WELL
AS UP WHICH WOULD HAVE AN IMPACT ON THE
LEVEL OF PENSION BENEFITS AVAILABLE.
YOUR PENSION INCOME COULD ALSO BE
AFFECTED BY THE INTEREST RATES AT THE
TIME YOU TAKE YOUR BENEFITS.
TAX TREATMENT VARIES ACCORDING TO
INDIVIDUAL CIRCUMSTANCES AND IS SUBJECT
TO CHANGE.
WANT TO REVIEW YOUR
RETIREMENT PLANS?
If you have speci!ic questions about funding
your retirement lifestyle, or if you’re feeling
anxious about spending money in retirement,
speak to us to discuss your options.
20 FINANCIAL PLANNING
The survey shows that families are
becoming more comfortable talking
about money, and that children are
becoming more interested in learning about
personal !inance.
VALUE OF MONEY
There are many reasons why families might
choose to have these conversations with
their children. For one, it can help teach them
the value of money and how to manage it
responsibly. It can also help them understand the
family’s !inancial situation and make informed
decisions about their own future.
It’s clear that more and more families are !inding
value in talking about money with their children.
And that’s a good thing for everyone involved.
UNCOMFORTABLE CONVERSATION
As a nation we have historically seen money as
an uncomfortable conversation, but times are
changing. Talking about money matters openly
when growing up can help children and young
adults prepare themselves for dealing with
!inances once they leave home or start work.
Younger adults are signi!icantly more likely
to have talked about money matters with their
parents when growing up compared to the
generations that went before them.
SAVINGS HABITS
Three in four (76%) 18$24-year-olds spoke to their
parents about money matters when they were
growing up. This compares to just 43% of those
65 or over, 52% of 55$64-year-olds and 58% of
45$54-year-olds.
Parents who talk to their children about money
could make them more likely to be aware of
considerations around day-to-day spending, as
well as the need for longer-term savings habits.
LOWER INCOMES
The research also reveals that those in lower
income households are least likely to have talked
about money with their parents when growing
up. Just over half (54%) of those in households
with an annual income of less than £20,000
talked about money with their parents as a child.
This compares to 62% of people in households
that earn between £40,000 to £59,000.
Those who now have an annual household
income of over £100,000 a year are most likely
to have spoken with their parents about money
as a child (68%). „
Source data:
[1] Royal London commissioned research
agency Cicero/amo to undertake a nationally
representative survey (by age, gender and
region) of 3,042 adults in the UK. Fieldwork was
conducted between 13!24 May 2022.
IT’S GOOD TO TALK
MORE YOUNG ADULTS ARE MORE ENGAGED ABOUT
MONEY WITH THEIR PARENTS THAN PAST GENERATIONS
When it comes to conversations about money, more and more families in
Britain are opening up, new research reveals[1]. This is a signi!icant increase
from previous years, when such conversations were considered taboo.
CREATING WEALTH FOR
FUTURE GENERATIONS
When your children have a clear picture of
what matters to them most, they become more
con!ident in what they want to achieve. With
that con!idence comes a sense of certainty
about their future plans. To discuss how we
can assist with their future goals and help them
create future wealth, please get in touch.
Striving to improve investment practices, and
robust transparency standards across the
investment chain, are an essential part of
ensuring schemes can act as responsible stewards
on behalf of millions of UK pensions savers.
NET ZERO COMMITMENTS
Choosing to go green on our pension investments
could have a far greater impact on the environment
than we may have thought. The positive news is that
almost three quarters (74%) of pension schemes
already have net zero plans in place, or will do within
the next two years, a new survey has found[1].
This latest survey shows that pension
schemes are making progress towards net zero
commitments. With new Taskforce on Climate-
related Financial Disclosures (TCFD) requirements
coming into force, the number of schemes making
such commitments is expected to grow further still.
IDENTIFYING SUITABLE PERFORMANCE
The news comes as climate change and
Environmental, Social and Governance (ESG)
stewardship continue to rise in importance and
have become a central part of pension schemes’
investment strategy, with identifying suitable
performance measures and devising frameworks
to report on them also rising in importance.
The survey found two-thirds (63%) of schemes
have started working on their TCFD report, with
over half (55%) saying they are within the scope
of the reporting deadline and so plan to publish
one this year.
CLIMATE TRANSITION PLANS
More than a quarter (28%) have gone a stage further
and said that they have already published their TCFD
report, despite it not being a mandatory requirement.
In terms of stewardship, two-thirds (68%) see
their key priority as investors as being climate
transition plans. Over half (56%) see these being net
zero targets, while around a third (37%) see board
diversity and human rights (35%) as key priorities.
MAJOR RISK TO PORTFOLIOS
In terms of non-climate related ESG factors,
diversity and inclusion (51%) and human rights
(49%) are seen to be the most important.
These are also the areas that most see their
organisations focusing on in the next 18 months.
There are a number of reasons for this increase,
including regulatory pressure and public concern
about climate change. However, the most
important factor is likely to be !inancial: more
and more investors are recognising that climate
change presents a major risk to their portfolios.
REVIEWING INVESTMENT STRATEGIES
As a result of this increase in awareness, many
pension schemes are now reviewing their
investment strategies. Some are divesting from
fossil fuel companies, while others are investing in
green infrastructure and renewable energy.
The survey shows that pension schemes are
taking climate change seriously. This is a positive
development, as it means that more and more
people will have a retirement income that is not
put at risk by the threat of climate change. „
Source data:
[1] Research was conducted by the Pensions
and Lifetime Savings Association (PLSA) among its
members between 20/04/2022 and 16/05/2022. A
total of 91 members responded to the survey.
THE VALUE OF YOUR INVESTMENTS CAN
GO DOWN AS WELL AS UP AND YOU MAY GET
BACK LESS THAN YOU INVESTED.
A HEALTHIER APPROACH
TO RETIREMENT WEALTH
PENSION SCHEMES HAVE A CRITICAL ROLE TO PLAY
IN THE TRANSITION TO A NET ZERO ECONOMY
Pension schemes have a critical role to play in the transition to a net zero
economy, with many schemes already assessing the impact of their investments in
the context of the goals of the Paris Agreement.
HOW GREEN IS YOUR PENSION?
Although we might like to think that our
pension contributions are simply locked away
for us to use once we retire, the reality is that
this money is being invested. Greening your
pension might be the single most e#ective
action you can take to reduce your carbon
footprint. For more information or to discuss
your retirement plans, please speak to us.
RETIREMENT 21
22 WELLBEING
While the UK’s personal wealth has
bounced back to its highest levels
since before the pandemic began,
our happiness and health have plummeted.
The ongoing impact of the COVID$19 pandemic,
combined with the cost-of-living crisis and the war
in Ukraine, is having a devastating e#ect on the
overall wellbeing of many people living in the UK.
NEGATIVE IMPACT
The !igures show that over half of all Britons
(51%) think the COVID pandemic had a
negative impact on their access to healthcare,
rising to 57% of women and 62% of those aged
55 and over. Added to this, almost one in two
people (45%) believe the pandemic has had a
negative impact on their mental health (10%
’very negative’), rising to 50% of women and
younger people.
But it is not just COVID that has impacted on
mental health, the rising cost-of-living crisis has
also been a major factor. 28% of adults stated it
was the number one cause of their mental health
issues. The !igures also highlight that 28% of
Britons now feel happier than last year, but 46%
of Britons said they still felt less happy.
BIGGEST CHALLENGES
Over a quarter (28%) had saved money in the
last year, averaging £276 per month. One in ten
(10%) of all people have paid o!f some debts in
the last 12 months, averaging £491 per month.
However, 11% have taken out new debts in the
form of credit cards, loans etc, averaging £403
per month.
The cost-of-living crisis is one of the biggest
challenges facing many families in the UK
today. The rising cost of everyday essentials,
such as food and housing, is putting enormous
pressure on household budgets.
SO WHAT CAN BE DONE TO HELP SOMEONE
AFFECTED BY THE COST!OF!LIVING CRISIS?
There is certainly no magic wand that will
end the cost-of-living crisis. But there are
some cost-free strategies that could make
a worthwhile di!ference to your household
budget’s bottom line.
Here are some practical suggestions:
„Check your entitlement to bene!its and tax
credits. There may be !inancial help available
that you are not aware of.
„
Try to cut back on non-essential spending.
Take a close look at your budget and see
where you can make savings.
„
Shop around for the best deals on essentials
such as food, utility bills and insurance.
„
If you are struggling to pay your bills,
speak to your creditors and try to agree a
repayment plan.
„
Seek advice from organisations such as
Citizens Advice or StepChange if you are
struggling with debt.
SEEK AVAILABLE SUPPORT
Households will barely need reminding about
the bills that have gone up in recent months.
According to a recent report from the Financial
Conduct Authority (FCA)[2], many !inancially
struggling households are failing to seek available
support due to lack of understanding or feelings
of embarrassment.
And for retired people, the impact of these
rising costs is signi!icant as most are on a !ixed
income and have little opportunity to change
their !inancial situation. „
Source data:
[1] The Health, Wealth and Happiness Index
was compiled and updated by the Centre for
Economics and Business Research (Cebr) for
LifeSearch in April 2022. The Index is based on
a modelling process taking into account a range
of data sources covering health, wealth and
happiness and monitoring changes over time.
The consumer insights research was carried out
by Opinium Research between 21!25 January
2022 among 2,000 UK adults alongside bespoke
research among 502 ethnic minorities in the UK,
weighted to be nationally representative, between
21!26 January 2022. Additional questions on
impacts on mental health over the last two
years and how worse o$ "inancially consumers
expect to be in the next year were carried out
by Opinium Research between 22!26 April 2022
among 2,000 UK adults.
[2] https://www.fca.org.uk/news/press-
releases/fca-tells-lenders-support-consumers-
struggling-cost-living
HEALTH, WEALTH AND
HAPPINESS OF A NATION
OVERALL WELLBEING STILL NOT CLOSE TO BEING
BACK TO LEVELS SEEN PRE$COVID
While there may be a sense that after two long years the worst of the
pandemic is behind us, the nation’s health, wealth and happiness are still not close
to being back to levels seen pre-COVID. In fact, our happiness is at a record low,
mental health issues remain high and the energy crisis, in!lation and the con!lict in
Ukraine point at another chapter of uncertainty, according to new !igures[1].
CONTACT THE COMPANY
IN QUESTION AND EXPLAIN
YOUR SITUATION
Struggling to make ends meet when it comes
to the everyday cost of living is nothing new for
vast swathes of the population. If you are falling
behind with household bills or repayments
on debts, it’s crucial to contact the company
in question and explain your situation. It may
agree to reduce your payments for an agreed
period of time, and/or set up a payment plan.
The power of compounding returns over
decades is potentially enormous if you
save consistently and invest in the !inancial
markets. You can start small but get started.
If you are contemplating investing and looking
to take your !irst steps, we’ve provided ten tips to
get you started.
1. HAVE A PLAN
To start o# with, it’s important to have a plan for
your investments. This means having an idea of
what you’re trying to achieve and how you’re going
to get there. Are you looking to invest for a speci!ic
goal? Are you looking to achieve investment
growth, income or both? Ultimately without a plan,
it’s easy to get o# track and make decisions that
aren’t in line with your investment goals.
2. START SMALL
You don’t need a large sum to start investing.
In fact, drip-feeding what you can a#ord each
month – or gradually whittling away a lump sum
– could be bene!icial during times of stock market
turmoil and economic uncertainty.
Your money buys more shares at a cheaper price
when the market falls, and fewer shares at a higher
price when the market rises. This averages out the
price at which you buy investments and, over time,
could help to smooth portfolio performance.
3. USE YOUR TAX ALLOWANCES
Remember your Individual Savings Account
(ISA) allowance, which renews annually on 6
April. This currently amounts to £20,000 for the
2022/23 tax year. Investments inside an ISA grow
tax-e"iciently, which means more of your money
goes towards achieving your future goals.
4. BE PATIENT
Investing is a long-term process, that’s why it’s
important to be patient. Don’t try to time the
market or make decisions based on short-term
!luctuations. Instead, focus on your overall
investment goals and stick to your plan.
5. DIVERSIFY
As the saying goes, ‘Don’t put all your eggs in one
basket.’ When you diversify, you spread your risk
across di#erent investments and sectors, which
can help you weather the ups and downs of
investment markets.
6. REVIEW YOUR PORTFOLIO
Your investment portfolio should be reviewed on
a regular basis. This will help you make sure that
your investments are still in line with your goals
and that you’re not taking on too much risk with
where your money is allocated .
7. STAY DISCIPLINED
Investing can be emotional, which is why you
need to stay disciplined. Don’t let greed or fear
in!luence your decisions. Instead, keep focused
on your goals and stick to your plan.
8. HAVE A TIME HORIZON
When you’re investing, it’s important to have
a time horizon in mind. This is the amount of
time you’re willing to wait for your investments
to grow. For example, if you’re investing for
retirement, you’ll likely have a longer time horizon
than someone who’s investing to fund a child’s
further eduction.
9. BE PREPARED FOR BUMPS IN THE ROAD
Investing isn’t always smooth sailing.
There will be times, as we’ve seen in recent
years, when the market is down or your
investments don’t perform as well as you’d
like. It’s important to be prepared for these
bumps in the road and have a plan for how
you’ll handle them.
10. SEEK PROFESSIONAL ADVICE
If you’re not sure where to start or how to
create a diversi!ied portfolio, seek professional
advice. We’re here to provide you with the
guidance you need to make smart investment
decisions and take your !irst steps. „
THE VALUE OF INVESTMENTS AND INCOME
FROM THEM MAY GO DOWN. YOU MAY NOT
GET BACK THE ORIGINAL AMOUNT INVESTED.
PAST PERFORMANCE IS NOT A RELIABLE
INDICATOR OF FUTURE PERFORMANCE.
TEN TIPS FOR
FIRST$TIME INVESTORS
READY TO GET STARTED ON YOUR INVESTMENT JOURNEY?
Investing can help you grow your money faster than simply saving, but it can
also be a little daunting knowing where to begin. You may think the volatile global
stock markets may not be the ideal starting point for new investors, but it’s always a
good time to begin investing.
PROFESSIONAL EXPERT
INVESTMENT ADVICE AT YOUR SERVICE
Investing can be complicated. It can be hard
to know where to begin if you don’t have
much experience. We are here to help you
understand how to invest, make the most of
your money and achieve your !inancial goals. If
you are ready to start your investment journey
or want discuss any existing investments goal,
please get in touch.
INVE STMENT 23
24 RETIREMENT
WHEN
SHOULD
I STOP
WORKING?
HOW TO TELL WHETHER
YOU’RE READY TO RETIRE
Do you have enough income to retire? Are you
prepared for the life changes retirement will bring? Is
this the right time to sell your business? Is your timing
right or will your savings and investments be at risk
from volatile market conditions?
The best time to retire will depend on a
variety of factors, including your health,
your !inancial situation and your personal
preferences. If you’re in good health and you
have a solid !inancial foundation, you may be
able to enjoy a long and active retirement. On the
other hand, if your health is declining or you’re
struggling to make ends meet, retiring sooner
may be the best option.
SPENDING POWER EACH YEAR
Ultimately, the decision of when to retire is a
personal one. It’s important to do some soul-
searching and research before making a !inal
decision. Once you’ve decided when the right
time for you is, be sure to plan carefully to make
the most of your retirement years.
Some people may now need to think about
the impact that in!lation could have on their
retirement income, and to consider whether they
can a#ord to retire yet. Rising in!lation can wipe
years of retirement income o# pension pots as
savers must increase the amount they withdraw
to maintain the same spending power each year.
IMPACT ON RETIREMENT PLANS
In!lation can have a signi!icant impact on
your retirement plans. If in!lation is high, the
purchasing power of your savings will decrease
over time. This means that you will need to save
more money in order to maintain your standard
of living in retirement.
To o#set the impact of in!lation, you may need
to adjust your retirement plans. For example, you
may need to save more money so that you can
maintain your standard of living in retirement.
Additionally, you may need to invest in assets
that are less vulnerable to the e#ects of in!lation.
Bonds are one type of investment that can
help protect your portfolio from in!lation risk. In
general, they can o#er relative stability, but you
need to take your age and risk tolerance into
consideration.
POTENTIAL EFFECTS OF INFLATION
While in!lation can have a signi!icant impact on
your retirement plans, there are steps you can
take to o#set its e#ects. By saving more money
and investing in assets that are less vulnerable
to in!lation, you can help ensure that your
retirement plans remain on track. Additionally, by
RETIREMENT 25
being aware of the potential e#ects of in!lation,
you can make adjustments to your plans as
needed to account for its impact.
As you get closer to retirement, it’s important
to start thinking about how in!lation could impact
your plans. While in!lation can be a good thing if
it leads to higher wages and increased economic
activity, it can also be a problem if prices start
rising faster than your income, as we’ve seen this
year with in!lation reaching a new 40-year high
amid a cost-of-living squeeze.
THERE ARE SOME GENERAL PRINCIPLES
THAT CAN HELP GUIDE YOUR THINKING ON
THIS IMPORTANT TOPIC:
The !irst principle is that it’s never too early to
start planning for retirement. The sooner you
start saving and investing for retirement, the
more time your money has to grow. This is due
to the power of compounding – which essentially
means that your money earns interest on itself
over time.
The second principle is that retirement
planning is not a one-time event. Your retirement
timeline will likely change as life circumstances
change. For example, you may need to adjust
your timeline if you have children or other family
members who depend on you !inancially.
The third principle is that retirement is not
an all-or-nothing proposition. You don’t have to
retire completely in order to enjoy a comfortable
lifestyle in retirement. Many people choose to
work part-time or pursue other interests during
retirement instead of (or in addition to) simply
sitting around and doing nothing.
TIME TO UTILISE CASH FLOW MODELLING?
Planning for retirement is a complex task, made
even more di"icult by the fact that most of us
don’t have a crystal ball to predict the future. This
is where retirement cash !low modelling can be
incredibly useful. This can help you estimate your
future income and expenses in retirement and
give you a better idea of how much money you’ll
need to have saved in order to maintain your
current lifestyle.
By creating a model of your expected income
and expenses, you can better plan for your
retirement and make sure that you have enough
money to cover your costs. This type of modelling
can also help you to identify any potential shortfall
in your retirement savings, so that you can make
adjustments to your plans accordingly.
If you are nearing retirement or are already
retired, cash !low modelling can help you:
understand how much income you will need in
retirement; work out how long your retirement
savings will last; determine the best way to use
your retirement savings to generate an income in
retirement; and !ind out how di#erent life events
(such as taking a career break or downsizing your
home) could impact your retirement cash !low.
WOULD AN ANNUITY BE BENEFICIAL?
Annuities can be a good way to combat rising
in!lation. Increasing annuities guarantee a stream
of income that can o#er protection against the
cost of living. However, it is important to choose
an annuity that has a high enough rate of return
to outpace in!lation, as otherwise you may end
up losing purchasing power over time.
Some annuities o#er built-in protection against
in!lation. For example, some annuities o#er cost-
of-living adjustments that increase payments to
keep pace with in!lation. This can help retirees
maintain their purchasing power and keep up
with the rising costs of living. While annuities
are not the only solution for combating rising
in!lation, they can be a helpful tool for retirees.
Ultimately, whether or not an annuity is a
good way to combat in!lation depends on your
individual circumstances. If you are concerned
about preserving your purchasing power in
retirement, an annuity can be a helpful tool.
However, you should obtain professional !inancial
advice to weigh the costs and risks associated
with an annuity before making a decision.
ARE YOU SITTING ON TOO MUCH CASH?
If you’re sitting on too much cash right now, with
in!lation on the rise, that cash could be losing
value, so you may want to rethink your strategy.
In!lation is a natural occurrence that happens
when the prices of goods and services start to
increase. This can erode the purchasing power of
your money, which means that you’ll need more
money to buy the same items.
There are a few ways to combat in!lation and
ensure that your money keeps its value. One
option is to invest in assets that may appreciate in
value, such as stocks and shares or property. No
matter what strategy you choose, it’s important to
be aware of the impact that in!lation can have on
your !inances. By being proactive, you can ensure
that your money keeps its value over time.
WHAT IS YOUR ATTITUDE TO RISK?
When pension planning, your attitude to risk will
play a big role in how your portfolio is structured.
If you’re willing to take on more risk, you may be
rewarded with higher returns. But if you’re not
comfortable with risk, you may want to focus on
preserving your capital.
Once you have a better idea of your risk
tolerance, you can start to allocate your assets
accordingly. For example, if you’re okay with
some volatility, you may want to put some of
your money into stocks and shares. But if you’re
not comfortable with any volatility, you may want
to keep your money in cash and bonds.
No matter how much risk you’re willing to
take on, it’s important to remember that all
investments come with some risk. There’s no
such thing as a completely risk-free investment.
But by understanding your risk tolerance, you
can make sure that your portfolio is structured in
a way that meets your needs. „
A PENSION IS A LONG$TERM INVESTMENT
NOT NORMALLY ACCESSIBLE UNTIL AGE 55
(57 FROM APRIL 2028 UNLESS PLAN HAS A
PROTECTED PENSION AGE).
THE VALUE OF YOUR INVESTMENTS (AND
ANY INCOME FROM THEM) CAN GO DOWN
AS WELL AS UP WHICH WOULD HAVE AN
IMPACT ON THE LEVEL OF PENSION BENEFITS
AVAILABLE.
YOUR PENSION INCOME COULD ALSO BE
AFFECTED BY THE INTEREST RATES AT THE
TIME YOU TAKE YOUR BENEFITS.
ARE YOU READY FOR RETIREMENT?
Retirement is inevitable, but knowing exactly
when to do so is often unclear. No matter
when you actually begin your retirement,
you’ll bene!it from planning your post-work
life as early as possible. If you would like to
review your retirement plans, we’re here to
listen. We look forward to hearing from you.
26 FINANCIAL PLANNING
This is particularly true for those on lower
incomes, who are often unable to access
employer-sponsored pension schemes.
The situation is made worse by the fact that the
State Pension is not enough to live on, and many
people may not be eligible for it.
ADDRESSING THE
RETIREMENT INCOME CRISIS
The government has introduced a number
of measures to try to address the retirement
income crisis, but these have so far failed
to make a signi!icant impact. The situation
is only likely to worsen in the future, unless
action is taken.
The average earner in their thirties is
on track to see their pension pot reduce
by £15,000 by the time they retire due to
wage stagnation. The !indings from a recent
Retirement Report[1] has revealed that the
average earners in their 30s who were auto-
enrolled in a company pension scheme in
2012 will have potentially contributed £7,000
less by 2024.
COPING WITH THE FINANCIAL PRESSURES
These ‘lost contributions’ result in an
overall £15,000 reduction to the individual’s
total pension pot at retirement due to lost
compound interest. The survey found that
four out of !ive adults (81%) are concerned
about making ends meet in the current cost
of living climate, with three-quarters (76%)
saying they need to take action to cope with
the !inancial pressures.
The study revealed that over a third (35%) plan
to cut back on non-essential leisure and holiday
spending, while others are being forced to
make harder decisions, such as cutting back on
essentials like food and utilities (16%).
SUSTAINING A DECENT
LIVING IN RETIREMENT
UK pension contribution rates over the past few
decades have been chronically low compared to
European countries and, for the average saver,
a joint employee-employer contribution rate of
8% will not be enough to sustain a decent living
in retirement, leaving people with less retirement
income over and above the basic safety net of
the State Pensions and retirement bene!its.
Over half (57%) of those surveyed said
they were concerned about their !inances
in retirement, while a similar number (50%)
revealed they don’t feel they are preparing
adequately for retirement.
INVESTMENT RETURNS ARE IMPORTANT
Almost a !ifth (18%) said their pension savings
are invested in cash or cash-like assets, or low-
risk assets such as UK Government bonds; or
that they are planning to invest their pension in
such assets.
This means, according to the report, the
average person between 35 and 54 years old –
an age when investment returns are important
– who holds half of their £36,200 pension savings
fully in cash could be exposed to a reduction of
over £1,300 in a single year in real terms, and
over £2,100 in two years. „
Source data:
[1] The survey for Scottish Widows included
general questions on pensions and retirement
planning and was carried out online by YouGov
Plc: across a total of 5,025 adults aged 18+,
weighted to be representative of the GB
population, and separately for 1,002 adults aged
18+ to better understand the retirement prospects
of minority ethnic groups. Fieldwork was carried
out between 8!15 March 2022 for the nationally
representative survey, and between 8!30 March
2022 for the survey focused on minority ethnic
groups, through a 15-minute online survey.
A PENSION IS A LONG$TERM INVESTMENT
NOT NORMALLY ACCESSIBLE UNTIL AGE 55
(57 FROM APRIL 2028 UNLESS PLAN HAS A
PROTECTED PENSION AGE).
THE VALUE OF YOUR INVESTMENTS (AND ANY
INCOME FROM THEM) CAN GO DOWN AS WELL
AS UP WHICH WOULD HAVE AN IMPACT ON THE
LEVEL OF PENSION BENEFITS AVAILABLE.
YOUR PENSION INCOME COULD ALSO BE
AFFECTED BY THE INTEREST RATES AT THE
TIME YOU TAKE YOUR BENEFITS.
TAX TREATMENT VARIES ACCORDING TO
INDIVIDUAL CIRCUMSTANCES AND IS SUBJECT
TO CHANGE.
NEVER TOO EARLY
TO PLAN AHEAD
PENSION SAVERS STRUGGLING TO SAVE ENOUGH
FOR THEIR LATER YEARS
There is no doubt that the UK is facing a retirement income crisis. With wage
stagnation and rising living costs, many people are struggling to save enough for
their later years.
CURRENT RETIREMENT
PLANS ON TRACK?
There’s a whole lot to think about when you’re
planning for retirement. From thinking about
when to retire to what to do with di#erent
pension pots, planning for retirement can be
both exciting and daunting. If you would like to
review your current retirement plans to make
sure you are on track, please contact us.
New research suggests there is a growing
tendency among the older generation to
use the wealth held in their property to help
younger generations become !irst-time buyers[1].
The research looked at spending and saving levels,
as well as attitudes towards funding retirement.
MORTGAGE!FREE
Homeowners, particularly those who are mortgage-
free, are planning to use investments, as well as
their property, to help other family members move
onto the property ladder. The !indings show that the
average age at which people pay their mortgage o#
is 51. After this, property and other wealth tends to
start being spread through the generations.
Of respondents, 14% say they have already
helped their children to become !irst-time buyers,
with a further 19% saying they will ‘de!initely or
probably’ do this. Previously when surveyed in
2016[2], more respondents (19%) said they had
already helped their children to become !irst-
time buyers, yet fewer (13%) were ‘de!initely or
probably intending to’ compared to now.
FIRST!TIME BUYERS
The research also shows an increase in the
number of people ready to help other family
members, not just their own children. In 2022, 5%
say they have already helped their grandchildren
become !irst-time buyers, with a further 20%
saying they are de!initely or probably going to.
This proportion has shifted upwards in the last
six years. In 2016, 3% had already helped their
grandchildren to get onto the property ladder
and 14% intended to.
YOUNGER GENERATIONS
The same pattern emerges when it comes to
helping members of the wider family to buy a
home. In 2022, 3% say they have already helped
with this, and a further 9% intend to, compared
with 2% and 3% respectively in 2016.
The amount of money older relatives are
giving to younger generations has also increased,
with the typical total amount given now standing
at £31,398.63, 25% higher than in 2016.
RELEASING CAPITAL
There is also a noticeable shift towards using
property wealth over other sources of income
to provide help to other family members hoping
to buy a home. In the latest research, the use of
!inancial help sourced through property wealth
has more than doubled compared with six years
ago, with 40% using property assets in a number
of ways, led by downsizing and equity release.
In 2016, most !inancial help was sourced
through using savings and investments to provide
money for a deposit (71%), or to buy a property
outright (10%). A further 3% cashed in pensions
or used pension savings to enable this. Property
wealth was used to help other family members in
17% of cases, mostly by releasing capital through
downsizing or equity release. „
Source data:
[1] Aviva research conducted for Aviva by
Censuswide April 2022. 1,507 general consumers
aged 45+.
[2] Aviva Real Retirement Report conducted for
Aviva by ICM Unlimited April 2016. 1,506 general
consumers aged 45+.
EQUITY RELEASE WILL REDUCE THE VALUE
OF YOUR ESTATE AND CAN AFFECT YOUR
ELIGIBILITY FOR MEANS TESTED BENEFITS.
BANK OF GRANDMA
AND GRANDAD
OLDER GENERATION USING THE WEALTH HELD IN THEIR
PROPERTY TO HELP YOUNGER GENERATIONS
It’s no secret that many younger people tend to encounter di#iculties when
seeking to enter the housing market for the "irst time. The degree to which
existing homeowners are now prepared to use their own wealth to help their other
family members onto the property ladder has increased notably over the last six years.
HELPING YOUNGER FAMILY
MEMBERS BUY A HOME
It is becoming increasingly accepted that
wealth held in property should be considered
part of someone’s total assets, and can be
used for a variety of purposes – including to
help younger family members buy a home
like their parents and grandparents did.
Understanding the features and risks of equity
release is complicated and you should always
obtain professional advice.
FINANCIAL PLANNING 27
28 RETIREMENT
The key reason behind this low con!idence
is the inability to a#ord savings on an
ongoing basis, followed by worry about
paying o# existing debts.
FUTURE CRISIS
Low-paid workers are least likely to be
saving at these levels, with fewer than 5%
saving at a rate which would provide an
adequate standard of living in retirement.
Low savings levels are a long-standing
issue; however, the cost-of-living crisis is
exacerbating the problem.
The UK’s lowest-paid workers have been
hardest impacted during the crisis, often
struggling to make ends meet. As a result,
many are unable to prioritise saving for
retirement, and today’s cost-of-living crisis risks
storing up a future crisis where millions are
unable to a!ford even the basics in retirement.
SAVING BEHAVIOUR
Just as low pay has impacted female workers
most, the gender pensions gap remains an
issue. The report found that 23% of male
workers met the ‘whole career’ Living Pension
cash benchmark, compared to 15% of female
workers, and that this is driven principally by
di!fering levels of pay rather than di!fering
saving behaviour.
The Living Pension benchmarks are
based on a previous feasibility study by the
Resolution Foundation, which proposed a
‘whole career’ benchmark of 11.2% of pay, or
£2,100 per year for someone working full-time
at the living wage.
HUGE VARIATIONS
The report also highlighted that there are
huge variations in whether workers are
meeting the Living Pension benchmarks by
sector. 55% of workers in the !inance industry
save at or above the ‘whole career’ cash LP
benchmark, compared to only 2% of workers
in hospitality.
These di!ferences persist even if they
account for variations between sectors in
workers’ pay levels, occupation and whether
they are full-time. This suggests that sector
di!ferences in pension saving are driven either
by employers’ behaviour or their approach to
the overall renumeration package. „
Source data:
[1] https://www.livingwage.org.uk/sites/default/
"iles/Living%20Pensions%20Report.pdf
A PENSION IS A LONG$TERM INVESTMENT
NOT NORMALLY ACCESSIBLE UNTIL AGE 55
(57 FROM APRIL 2028 UNLESS PLAN HAS A
PROTECTED PENSION AGE).
THE VALUE OF YOUR INVESTMENTS
(AND ANY INCOME FROM THEM) CAN GO
DOWN AS WELL AS UP WHICH WOULD HAVE
AN IMPACT ON THE LEVEL OF PENSION
BENEFITS AVAILABLE.
YOUR PENSION INCOME COULD ALSO BE
AFFECTED BY THE INTEREST RATES AT THE
TIME YOU TAKE YOUR BENEFITS.
MIND THE
RETIREMENT GAP
FOUR OUT OF FIVE WORKERS NOT SAVING AT LEVELS WHICH ARE
LIKELY TO DELIVER AN ACCEPTABLE STANDARD OF LIVING IN OLD AGE
Four in "ive workers (16 million people) are not saving at levels which are likely
to deliver an acceptable standard of living in retirement, according to new
research[1] – these numbers exclude De!ined Bene!it pension savings.
WHAT IF I COULD HAVE THE
RETIREMENT I REALLY WANT?
Planning so that you can enjoy today, whilst
making sure there is plenty saved for the
future, can be a tricky balance to get right.
If you would like advice and support with
retirement planning, please get in touch.