Giving money to charity? Six mistakes to avoid
As a nation, we gave over £9 billion to charity last year. (Source: Charity Aid Foundation)
In addition, 53,000 legacies were left, totalling £1.4 billion (Source: Legacy forecasting)
That's something to be proud of.
However, we also gave more than £5 billion to the tax man in Inheritance Tax (IHT) (Source: Office for Budget Responsibility (OBR)). What if you would prefer for that money to be given to good causes instead?
Making gifts to charities achieves three things:
- It makes you feel good
- It helps animals, people and communities in need
- It puts that money immediately outside of your estate, and is exempt from IHT liability
You can give more, and make the most of your ability to help, by avoiding these six common mistakes:
1. Not using Gift Aid
Gift Aid allows UK charities to reclaim the tax they would otherwise lose on your donation. When donating, you usually need to put a mark in a box to signify that you would like to use Gift Aid on your donation.
Doing so means that the charity can keep more of the money you have given and put it to use toward causes that you believe in.
In the 2016/17 tax year, Gift Aid enabled charities to reclaim £1.27 million which would otherwise have been lost to tax. (Source: Gov.uk)
2. Donating at the wrong time
We all feel more generous at Christmas, but the causes you support need funding all year round. In addition, a regular, monthly donation is much better for both you and the charity. This is because you help them to make an income each month, and it makes your own budgeting much easier.
You may even find that you can afford to donate more overall by giving a small amount each month, rather than a yearly lump sum.
3. Not reviewing subscriptions
Monthly subscriptions and Direct Debits can be easy to forget about and you could be donating for longer than you planned to. Make sure that you are reviewing your budget regularly so that your budget makes financial sense.
You may even find that you can afford to donate more, as your circumstances change.
4. Failing to research
Charities have dominated the headlines for all the wrong reasons lately, so make sure that you know who gets your money and how it is used. Investigate the allocation of funds and make sure that a larger proportion of your donation is used to help the cause, rather than funding the lavish lifestyle of the CEO.
Consider where your donations are going. Remember that donations to local charities will have a more immediate and visible effect, but national organisations are able to reach further and hold more power.
5. Not keeping records
Charitable donations are exempt from IHT, but you may need to prove that you have donated the money. Keeping your proof of donation is the best way to do this. It is worth keeping these documents with your will, as the eventual executor of your estate may need to rely on them.
If you like to regularly review which organisations you support, it may be worth keeping a log of when your donations start and end.
6. Not leaving legacies
Remember that you can write charitable donations into your will and they will be immediately exempt from IHT, this is a great strategy for reducing your estate after your death. However, it is important to keep this updated with the right charity information, as well as the right amount.
If you find yourself in need of a will review, or maybe you still haven't written one, Will Aid Month offers the chance to have your will completed by a professional in return for a voluntary charity donation.
For further help with estate planning and giving money to good causes, get in touch.
Homeowning: The naivety of youth
Buying a house.
It's one of the biggest commitments your child will have to make when they grow up, but research from Halifax shows that many children and teens aged 11 to 21 are in the dark about how buying a house actually works.
What do they think?
Among all 11-21-year olds, there is a widespread belief that the average price of a first home in London is between £50,000 and £200,000. In fact, the average price of a first home in London is more than twice that, at £422,580.
There is a difference in beliefs among the age groups within the 11-21-year old bracket.
11-14-year olds
The youngest teens believe that:
- Mortgages are unlimited (20%)
- Their parents will pay for their house (33%)
The top three places to look for a property, according to this age group are:
- The internet (36%)
- A 'house shop' (33%)
- The bank (27%)
The priorities of 11-14-year olds upon moving into their new house are also interesting, with young teens most anxious to:
- Meet the neighbours 32%
- Get Wi-Fi 24%
- Buy a sofa 12%
- Throw a housewarming party 5%
15-17-year olds
For those in their mid-teens, expectations seem quite pessimistic; 23% of 15-17-year olds believe only rich people own their own homes, whilst 25% think that it will take 20 years of saving to gather enough for a deposit.
18-21-year olds
Among older teens and young adults, opinions seem to be more realistic, with home ownership of high importance to 59%. However, some aspects remain tinged with naivety, as:
- 27% expect to own property by the age of 25 (the average age of first time buyers is 31, rising to 32 in London)
- 10% define Stamp Duty as money used to buy stamps
- 23% of males and 5% of females think that they will need a deposit of £5,000 - £10,000 (the current average is £32,321)
- 31% of males and 18% of females are counting on inheritance to pay off their mortgage
How can you educate your children and teens?
Opening the bank of mum and dad (and grandparents) is increasingly necessary these days. But giving money away is not enough. It is also our responsibility to prepare them for the house-buying process so that they can tackle as much of it as possible on their own two feet.
These five tips should offer a good foundation for that education:
1. Work it out together
Start by communicating and finding out what your child wants in life. The type of lifestyle they aspire to have will largely dictate how they work toward it. Explain that things are unlikely to fall into place as soon as they enter the adult world and that they may have to compromise on some aspects along the way.
2. Look at the options
Using the time they have before buying a house is necessary, to look at some of the available options, there are several sources of help, for example; calculators and government schemes.
Use online calculators to determine how much mortgages cost and how much your child is likely to need to save to buy a house. Then investigate how much buying a home costs when you factor in the legal and moving costs.
Secondly, read up on Lifetime ISAs, Help to Buy schemes and Shared Ownership. These are all designed to get young adults onto the property ladder and could turn out to be the helping hand your child needs.
3. Create a plan
Now that you know where your child wants to be in the future and how much will be required to achieve that, you can work with them to create a plan. Consider how old they are and how much they will be able to afford as their income increases over time and work out a rough guide to get them homeowner ready in their 20s.
4. Check their credit and find ways to improve it
Of course, this is aimed at older teens and young adults, but it is never too early to learn about the impact of a credit score and what they can do to keep it healthy as they transition into adult life.
If your child is not old enough to have credit, you could show them your own credit profile and explain the different aspects and how they impact on the ability to access credit.
5. See a financial planner together
It may be worth taking you child along to an appointment with a financial planner so that they can see how important finances are in adult life. However, if your child is already over 18, maybe they would like to start seeing a financial planner themselves?
Either way, why not give us a call to see how we can help?
Hope for savers as Cash ISA interest rates begin to rise
The past decade has been miserable for savers.
Low interest rates, coupled with prolonged periods of relatively high inflation has meant that capital held in savings accounts is guaranteed to lose value.
However, research now shows that there might be a light at the end of the tunnel, especially if you have a Cash ISA (Individual Savings Account).
Boost for Cash ISAs
According to MoneyFacts, both the average interest rate and number of ISA products available has increased consistently during the first two months of 2018.
Both Instant Access and 18+ month fixed-rate ISAs saw an increase in rates between December 2017 and February 2018, resulting in:
- Instant Access rates jumping to 0.78% from 0.68%
- Fixed rate ISAs rising from 1.38% to 1.46%
They might seem like small increases, but they can make a big difference to your savings, especially if you are using your ISA Allowance in full each year.
Looking at the bigger picture, the upward trend in both interest rates and ISA popularity are both positive signs for those who have already put their money into an ISA account.
Should you open a Cash ISA?
Whether you have never had one, or are thinking about reviving an old account, the rate rises should be seen as a catalyst for reviewing your interest rates.
Before deciding whether a Cash ISA is the right vehicle for your savings, it is important to know how it works and what you can do with it. In brief:
- A Cash ISA holds your deposits and interest is added on a tax-free basis
- Cash ISAs are available through banks and building societies
- You must be 16 to open an Adult ISA, but parents and grandparents can open a Junior ISA before this age, and you can hold both a Junior ISA and Cash ISA from 16 to 18
- Each year, you can deposit up to £20,000 into ISAs. If you have a Lifetime or Help to Buy ISA, your allowance will be spread across the two accounts
- Instant Access Cash ISAs allow you to withdraw your savings whenever you want, while some Cash ISAs will require that capital is stored for a set amount of time
Making the most of your Cash ISA
If you're already paying into a Cash ISA and want to make sure that you are getting the best returns on your deposits, there are three things you can do:
1. Check your rate and shop around
Compare your own rate to those available elsewhere. You can do this either online or in person but be sure to check a range of comparison websites to get a balanced perspective.
Consider the unknown. There are a variety of banks that you have probably never heard of; both challenger banks and Islamic banks are on the rise and may be able to offer you something better than you will find on the high street.
Islamic banks operate without paying or charging interest but offer profit instead. These banks operate in a different way to the firms you are used to but could still be a viable option for your savings.
Before settling on a bank or building society, make sure that they are protected by the financial Services Compensation Scheme (FSCS), this guarantees that your savings (up to £85,000) are not lost, should the provider go under.
2. Move your ISA
You can only open one Cash ISA in a tax year. But if you have noticed that the rates on another bank or building society's products are better than your current ISA account, don't be afraid to transfer your existing savings over.
If you choose to do this, you will need to make sure that your new bank or building society accepts transfers and complete an ISA transfer. Remember that you do not need to close your first account or withdraw your savings, as the two providers will carry out the transfer on your behalf.
3. Make use of your allowances
The Annual ISA Allowance is currently £20,000 per year. That means that you can make deposits up to that amount, spread across your ISA accounts, each year.
The Personal Savings Allowance allows you to earn up to £1,000 each year through savings income or interest, without incurring tax. However, this allowance is not affected by ISA accounts, so you are free to use another type of savings account to hold any deposits outside of your ISA allowance in a tax-efficient manner.
Do you need financial advice?
If you find yourself feeling lost and confused when it comes to savings and investments, now is the time to seek independent financial advice.
A financial adviser will be able to give you tailored solutions to help you work toward the future you dream of, whatever that involves.
Ready to start planning your financial future? Get in touch.
Beaufort Financial charity fundraising
The Beaufort Financial team have come together for the third consecutive year to support the Ark Cancer Centre Charity's amazing work in fundraising to build a state of the art Cancer Treatment Centre.
The team will be completing a variety of demanding challenges over the year which will test everybody bothmentally and physically, so the team need your support to keep them going!
The upcoming challenges:
7th April - Abseiling down the Emirates Spinnaker Tower
19th April - Indoor Skydive
14th/15th July - 'Basingstoke to Bournemouth and Back' bike ride
Please donate what you can to our Beaufort FinancialTeam fundraisingpage tosupport this important cause so that Ark's target can be achieved.
Be sure to keep updated with the team's progress and their journey by following @BF_Reading on Twitter!
Beaufort Analysis 269 - Five Star result for Di Maio
Economic data releases had a limited impact on markets last week; the same cannot be said for politics.
In the US, J. Powell testified before the House and Senate on Tuesday and Thursday respectively, commenting that the Fed could change its interest rate forecast when they meet in March. In his first address, Powell indicated that there may be four interest rate rises, instead of three; his comments rocked both equity and bond markets which regained ground towards the end of the week. Across the pond, the EU Commission released a draft withdrawal document on how the UK will leave the EU. Unsurprisingly, the status of Northern Ireland post Brexit is the main sticking point. It is unlikely that Mrs May will agree to the current draft which will further protract Brexit negotiations.
Moving onto the main event last week; the Italian general election. Early results suggest a hung parliament but the outcome, although still provisional, delivered a surprising result that will no doubt have bruised the ego of the country's political establishment. The populist Five Star Movement emerged as the strongest single party with 32% of the vote. The next nearest contender was the Democratic Party led by Matteo Renzi with 18%.
The Five Star Movement is a relatively young party which was founded by comedian Beppe Grillo in 2009. Led by Luigi Di Maio, equally young, at 31, the success at the polls comes from channelling discontent amongst Italy's political elite and their strong base in southern Italy, especially amongst younger voters. Five Star has been the most popular political party in Italy since early 2017, but they will now face a fresh challenge, as 32% is not sufficient to form a government unless they strike an alliance with other parties. We expect further details to unravel as the week progresses.
Beaufort Securities and Beaufort Asset Clearing Services
We would like to reassure our clients, introducers and professional partners that the Beaufort Group, Beaufort Financial and Beaufort Investment Management have no association whatsoever with Beaufort Securities Limited and its subsidiary Beaufort Asset Clearing Servicing Limited.
Beaufort Securities and its subsidiary have collapsed into administration following investigations by regulators and complaints by investors.
As this news is reported, we would like to make it quite clear that the Beaufort Group and its related businesses have nothing to do with Beaufort Securities.
Beaufort Analysis 268 - Why did the chicken cross the road?
It's no joke though. Disruption for KFC restaurants across the country continued last week, as the company looked to solve a disastrous breakdown in its supply chain, that forced almost 600 outlets to temporarily close; almost two-thirds of their British eateries. The issue lies with a change in distribution partner to DHL and the logistics of supplying fresh chicken to over 900 restaurants in the UK.
We doubt the repercussions will be significant for KFC, and more importantly, the company handled itself well, apologising quickly and unreservedly. Whilst the problem was firmly with the new contractor, KFC did not try to shift the blame and took out advertising to highlight the problem, accepting all responsibility. It may seem an obvious step for companies to take, but many fail to take this first step.
Of course, the tribulations of the UK's favourite fried poultry chain could be a symptom of how companies are looking to cut costs in an increasingly tougher and competitive retail environment. On the back of what is now seen as an inarguably sanguine 2017, this year is proving to be uncertain in its outlook and expectations. This is predicated on the back of change and a shift in central bank policies. The world does not know how Jerome Powell will react as chair of the Federal Reserve and the minutes released last week were scrutinised within an inch of their lives. The conclusion was that a rate hike in March is still on the table, and that there is no deviation from the schedule laid down by Janet Yellen.
It was a reminder that we are in the midst of a monetary tightening period and the previously synchronised actions of the world's central banks are starting to loosen. The European Central Bank (ECB) is being coy about when it will start to raise rates, having already taken its foot off the quantitative easing accelerator. Instead, it is deflecting attention to the US, with a thinly disguised accusation of currency manipulation. In its recent minutes, the ECB noted that, concerns were expressed about recent statements in the international arena about exchange rates which relate directly to comments from the US Treasury Secretary that a weak dollar was good for the US economy.
To finish the week, we stay with Europe and politics, where European Commission President Jean-Claude Junker warned that the EU should be prepared for the worst scenario when Italy head to the polling booths for its election on 4th March. This prompted a fall in the Italian stock market and the last polls point to a hung parliament. It feels strangely comforting to be concerned about populist politics once again.
Beaufort Analysis 267 - "Coddiwomple..."
Coddiwomple (v.) To travel in a purposeful manner toward an as yet unknown destination.
As we look to the recent movements in the markets, 'coddiwomple' seems an excellent word to explain these movements. Following the announcement of US inflation data last week, the markets wobbled as we continue to move towards this as yet unknown destination. Closer to home, UK inflation remained at 3% in January, increasing concerns that we could expect more rate rises from the Bank of England than initially anticipated, and they could come sooner than originally thought.
In other central bank news, the Bank of Japan's Governor Kuroda has been nominated for a second term by Prime Minister Shinzo Abe. This is a rarity as the last time someone won a second term was almost 50 years ago; this indicates Abe's confidence in Kuroda to boost Japan's economy.
Whilst it was announced last week that the European Union grew at its fastest rate for a decade during 2017, the headlines around Brexit continue to be tumultuous. Foreign Secretary Boris Johnson's speech last week to appeal to Remainers has been named the start of the 'road map to Brexit', a journey we are travelling on with the last stop not yet known. Theresa May met with Angela Merkel in Berlin last week ahead of the Brexit trade negotiations beginning today, with Merkel admittedly curious on the UK's aim in the negotiations.
Last week welcomed the start of the Chinese New Year, the year of the Dog. The typical characteristics of the Dog is loyalty, and the recent volatility in the market comes at a good time to be mindful of this loyalty on this purposeful journey. It is a reminder to remain loyal to your investment objectives and ignore headline noise.
Low growth predicted for UK house prices during 2018
Experts from Nationwide have predicted that house prices will largely remain flat throughout 2018, rising by a marginal 1-1.5% during the next 12 months.
Trends of 2017
Last year, London saw house prices slow significantly, with the growth rate falling for the first time in nine years.
In other regions, averages varied from month to month. For example, in northern England, Scotland and Wales, house prices are now 5% lower than they were 10 years ago.
Robert Gardner, Chief Economist for the Nationwide Building Society, said: Annual house price growth remained in the 2-4% range throughout 2017, in line with our expectations and broadly consistent with the 3-4% annual rate of increase we expect to prevail over the long term, as this is also our estimate for earnings growth over the long run.
Predictions for 2018
For those hoping house prices will rise in 2018, the outlook for growth is not optimistic. The ever-present squeeze on household budgets is predicted to slow down housing market activity, which will, in turn, affect house price growth.
Robert Gardner, again commented: We continue to expect the UK economy to grow at modest pace, with annual growth of 1% to 1.5% in 2018 and 2019. Subdued economic activity and the ongoing squeeze on household budgets is likely to exert a modest drag on housing market activity and house price growth.
Overall, we expect house prices to be broadly flat in 2018, with perhaps a marginal gain of around 1%. Over the longer term, once the economy regains momentum, we would expect house prices to rise broadly in line with earnings (around 3%-4% per annum), though if the rate of house building fails to keep up with population growth, prices may outpace earnings once again, as they have in recent years.
Factors expected to affect house prices in 2018
There are four key areas which could challenge the growth of house prices over the next 12 months:
Politics: We don't like to bring politics into things, if it can be avoided, but there's little we can do this year to avoid the effects of Brexit. With the deadline for negotiations approaching in early 2019, it is not yet certain how the housing market will be affected by the EU/Britain divorce settlement.
New policies: The 2017 Autumn Budget brought in some big changes for prospective homeowners. With cuts in Stamp Duty for first time buyers purchasing homes under £300,000 and a reduction in the tax for homes costing up to £500,000, new buyers may be able to afford more expensive homes than they planned. However, there has been speculation surrounding whether those selling properties will view this as an opportunity to simply push the asking price up.
Rate of building: Throughout the first month in 2018, house prices saw a surprise boost due to a lack of available housing. Robert Gardner commented: The flow of properties coming on to estate agents' books has been more of a trickle than a torrent for some time now and the lack of supply is likely to be the key factor providing support to house prices. Though Nationwide do not believe that this will change their prediction of a marginal growth of 1-1.5%. (Source: The Guardian)
Interest rates: In November 2017, the Bank of England (BoE) doubled the base interest rate from 0.25% to 0.5%. This had mixed results, with savers seeing potential growth in their deposits and borrowers facing higher repayments.
The interest rate rise means that most mortgages will now be subject to higher interest rates, so homebuyers taking out a mortgage in 2018 might see higher monthly repayments than those who bought their house before the interest rate rise. That could result in lower buying rates and overall affordability.
What do other experts say?
Halifax predict that house prices will grow during 2018; but only slightly, with some external influences having major effects on the market. Russel Galley, Managing Director of the bank, says: On the flip side UK House Prices in general are likely to be supported, seeing modest growth in 2018, through the combination of a shortage of properties for sale, continued low levels of housebuilding, low unemployment levels and finally good levels of affordability due to the low interest rate environment. Despite the recent rate rise we do not expect this to have an adverse impact on transactions. A further rate rise is not seen as imminent and we may not see one until the latter part of 2018, if at all.
Fionnuala Earley, Hamptons International Residential Research Director has given her take on the 2018 housing market. She predicts house prices will rise by 1%, with rents increasing by double that. She concludes, The 2018 outlook for house prices is fairly benign given the economic conditions. (Source: Zoopla)
We won't try to guess what is going to happen to the housing market during 2018, but we can help you to plan for whatever the next 12 months has in store. So, if you're planning to buy a house soon, get in touch.
The gender pay gap: even pensions are not immune
By the age of 50, men's pension pots are double the size of women's, according to research from Aegon.
Why?
- The gender pay gap
- Differences in working hours
- Family responsibilities
What is the gender pay gap?
According to the Government Equalities Office: The gender pay gap is an equality measure that shows the difference in average earnings between women and men. (Source: gov.uk)
The past three months have seen huge progress made in terms of equal pay and the gender gap. In December, the Equality and Human Rights Commission declared that all companies must disclose the difference in pay between male and female employees, alongside limitless fines for non-compliance.
January has seen large media focus on the 500 large UK companies shown to have a significant difference between male and female staff wages.
The Government Equalities Office reports that the gender pay gap is now at its lowest level since records began; 18%.
What causes the difference in lifetime income?
The opinions on this topic are hotly debated and vary widely from group to group. However, there are three factors which may affect the average lifetime earnings of women:
1. Industry and sector:
There are less female employees in high-paying industries.
Research has shown that certain industries pay proportionately higher than others. A great example of this is STEM industries (science, technology, engineering and mathematics). In 2016, a worldwide study showed that entry level positions in this sector pay, on average 20% more than other fields. (Source: Korn Ferry)
Further research has shown that, despite 13,000 women entering the STEM sector, the overall percentage of women working in these industries has fallen from 22% to 21%. (Source: WISE Campaign)
2.Time spent in work:
Throughout life, there are events which force women to stop working, or reduce their working hours, including pregnancy, childcare and caring for relatives or loved ones. This means that, over a lifetime, men are likely to have more working hours in total, than women.
In September 2017, women made up almost three quarters (73.55%) of the part-time workforce, whilst men accounted for 63% of all full-time employees. (Source: ONS)
In addition to this, men who work full-time are likely to work longer days. According to Statista, in the year to June 2017, men worked for an average of five hours more than women each week.
3. Seniority:
Research from the Chartered Management Institute last year, showed that 66% of junior management positions are filled by women. Comparatively, senior management positions are more likely to be filled by men, with 74% of current positions held by males.
The same study found that, for women who are employed at a senior management level, pay is still disproportionate, with:
- Male directors paid an average of £175,673
- Female directors paid an average of £141,529
In addition, annual bonuses have shown a gender gap of 83%. Male CEOs receive an average annual bonus of £89,230, whilst females in similar positions receive just £14,945, on average.
How does that effect pensions?
People who earn more money can afford to put more aside for the future, it's that simple.
Given that employees are only automatically enrolled into a workplace pension, if their annual earnings reach £10,000 or above, it is likely that many part-time employees are not eligible. That means that many women, who have reduced their working hours may be left unable to save for retirement.
In 2015, government research showed that just two fifths of those who were eligible for automatic enrolment were female. (Source: Gov.uk)
The problem is further compounded by the fact that employer contributions are based on a percentage of earnings and the larger the contribution, the greater the level of tax relief.
What can you do?
There are many things you can do to improve your retirement income.
The only thing you shouldn't do, is nothing.
Of course, you can rely on the State Pension as a base income, if you have accrued enough credits to receive it. But it is unlikely that it will be enough to pay your living costs, any care needs you have and allow you to enjoy having more time to yourself.
To boost your pension savings, you can:
Ask to be included in your employer's workplace pension. Even if you fall below the earnings threshold, you can ask to be included in the scheme. The minimum contribution rates are due to rise in April, so be aware of how much you will lose in monthly income by doing so.
Start saving. Choose a vehicle which works for you, whether a savings account or pension, and start putting money away.
Seek independent advice. Research has shown that people who seek professional advice could save up to £98 each month toward their pension, giving themselves an additional £3,654 in retirement income each year.
Looking to make sure that you get an equal pension fund in later life? Contact us for more help and advice.
Please note:
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Why lattes cost far more than you think
A new outfit, a cup of coffee, pizza on a Friday night. They're small, impulsive purchases, but they soon add up.
Research from Scottish Widows shows that each month, we each spend an average of £124 on things we could do without.
By swapping these 'little luxuries' for the simpler things in life, you could treat yourself to an extra £9,853 annual retirement income in your later years.
So, what are these 'luxuries', and how much do they cost us each week?
- Hobby equipment that never gets used: £2.18
- Using public transport for journeys within walking distance: £3.78
- Unnecessary taxi rides: £4.25
- Hot drinks from coffee shops: £6.95
- Disposable fashion: £7.88
- Ready meals: £10.87
- Shop-bought lunches: £11.78
- Snacks and sweets: £14.81
- Unnecessary takeaways: £16.82
- Nights out: £19.21
- Going out for dinner: £25.74
Each year, that adds up to £1,491.28.
(Source: Scottish Widows report)
Of course, we're not suggesting that you forgo everything that makes you happy, but even cutting down on a few 'luxuries' could give you extra money to boost your retirement savings.
Most intend to save more
32% of people say that they are already saving as much as possible, but with 12% admitting that they never keep track of their incidental spending habits, it is estimated that many of us underestimate how much we spend on 'little luxuries' by approximately £74 each month.
62% of people plan to set themselves a financial goal for 2018, of those:
- 28% want to spend less
- 45% want to save more
Overall, 33% of us cut back on spending in January, with each person holding back £109.03 over the month. Just one quarter put this money into savings, whilst a third (30%) use it to pay debts.
If you are one of those who have promised to curb your spending habits over the next 12 months, why not consider some of the other ways you can use that £124, each week?
Better uses of your money
Auto-enrolment into workplace pensions has meant that over nine million people are now paying into a pension fund, with additional contributions made by their employer. (Source: DWP )
Currently, the minimum contributions made by both employees and their employers is 1% each. However, these will rise to:
- 2% employer and 3% employee contributions in April 2018
- 3% employer and 5% employee contributions in April 2019
Last September, Royal London reported fears that up to 30% of people could choose to opt out of their workplace pension once the minimum contributions rise. Updated research shows that it has fallen to 17%, which is positive. However, that still equates to around 160,000 people who will not have a pension fund.
With an ever-increasing State Pension Age that always seems to be just out of reach, workplace pension schemes are increasingly important. In addition to that, your employer is legally obliged to pay in their minimum contributions and you will also receive tax relief; so why pass up what is effectively free money toward your retirement?
Balancing luxuries and planning for the future
The biggest concern here, is that, rather than giving up the occasional takeaway or night out, people will choose to opt-out of their workplace pension to continue to enjoy those small luxuries. Of course, no-one can force you to use your money one way or the other. But, it might be worth considering just how important the coffee and ready meal you buy today, will feel in 30 or 40 years' time.
Taking advice is always recommended. Research from Unbiased has shown that, those who seek independent financial advice could benefit from additional savings of £39 each week, which could lead to an extra £3,654 in annual retirement income in later life.
To discuss how you can boost your pension funds and prepare for your future lifestyle, contact us.
Please note:
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.
Workplace pensions are regulated by The Pension Regulator