It’s that time of year again. Putting together the annual Wealth Creation Guide tends to act as a personal call to action for a spot of financial spring-cleaning, and this year is no exception.
HMRC has flagged up to pension schemes that some employees may unwittingly be failing to report all their pension contributions on their tax return. The oversight could result in large tax bills in due course when the taxman catches up with them, warns Steve Webb, director of policy at Royal London.
In an effort to provide greater clarity and consistency in the highly subjective area of ethical/responsible investment, the Investment Association (IA) has today published an industry-wide framework of terms and categories.
The aim is to make it easier for investors to navigate this rapidly growing part of the retail fund market by introducing a common language and clear product categorisation.
We have charted the sorry progress of Neil Woodford and his stable of funds since the suspension of the flagship Woodford Equity Income fund back in June; it’s a train of events with far-reaching implications for the fund industry.
We have all seen the clichéed shots of well-preserved couples on beaches, smiling euphorically into the middle distance. It’s a clear message: retirement is a wonderful experience, a tonic after the exhaustion of the workplace. But in reality it’s a much less polished experience for many people, according to the findings from the Great British Retirement Survey (GBRS) released this month.
Most investors are familiar with the idea that diversification can help reduce the risk attached to their portfolio and smooth total returns over the longer term. It’s a simple principle: not having all your eggs in one basket means the risks of out-and-out failure – though also the chance of stratospheric success – are diluted. Moreover, even if holdings in a portfolio all do equally well over time, it’s likely that their fortunes will ebb and flow, so you should get a smoother ride.
Platforms are not doing nearly as much as they could to ensure investors know what they are paying for their investments – and as a consequence only 30% of Isa investors have ever moved to a new platform, according to new research from platform consultancy the lang cat.
The research found that only 54% of respondents across all age groups even know what they are paying to hold their investments on their chosen platform, though those aged 55 plus are almost twice as likely to be aware of charges as those aged 18 to 24.
Pensioners are set to see a 4% increase in the state pension in October, more than double the current inflation rate of 1.7%.
Under the “triple lock” rules for state pension increases, the state payout will rise by whichever is the highest of consumer price inflation (year to September), earnings growth (year to July), or 2.5%.
How times change. It’s hard to believe that 40 years ago, when Money Observer was first published, Margaret Thatcher had come to power months previously, Franco’s era in Spain had ended only four years earlier and the UK had just three television channels. On average, men at state pension age lived for just five years (now it’s more than 14) the average price of a home was just under £14,000 and a pint of milk cost 15p.
The latest retirement income market data published by the FCA reveals that 645,000 pension plans were accessed in 2018/19, of which 55% – 355,000 – were fully withdrawn. Just 11% of plans were used to buy an annuity.
Of those pots that were fully withdrawn, 90% were valued at less than £30,000. Meanwhile, among retirees taking a regular income from their pension, 40% were taking out cash at unsustainably high withdrawal rates of 8%-plus.