New Year’s Resolutions 2011, Some Financial Planning ideas

With the memory of Christmas still fresh in our minds, the New Year is nearly upon us and many of us are making plans as to what new challenges we would like to achieve in 2011. From a financial perspective, 2010 was a tricky year for many businesses and individuals and there are likely to be a few more challenges in 2011 as the year unfolds.

I have penned a few notes in this blog to allow you to consider some of financial issues you may want to consider when looking at your financial planning over the next 12 months. This is not an exhaustive list because each of us will have different circumstances. You will already know that VAT is going to rise from 17.5% to 20.0% from the 04^th January and this seems certain, bar any last minute change in Government policy. What is not certain is what will happen to Bank of England base rates over the coming period. With the base rate having reached a historic low of 0.5% some 21 months ago (March 2009) many are predicting that this will rise in the spring of 2011 and this may have an affect on savers and those with mortgages, loans and credit card debts.

Some financial planning ideas for your 2011 Resolutions:

1. VAT increase: If you are planning a purchase of a large capital item, such as a car or caravan and are ready to buy, you might want to try and beat the VAT increase of 2.5% from 04^th January. This is not a large increase, but on larger sums, it may make a significant difference.

2. Review your borrowing costs and conditions: With the possibility of borrowing costs increasing in 2011, check you borrowing costs and charges to see if they offer value and if they need to be changed. Look out for redemption charges and set up fees if you are thinking of switching providers.

If you are in a position to pay down debt, then have a look at this to keep your costs down.

3. Check your deposit savings rates: Some reasonable savings rates are still available from many institutions, although you do have to hunt around. With the deposit protection/compensation limit increasing to £85,000 from £50,000 from 31/12/2010 (announced by the FSA in December 2010) those with larger savings amounts should find it easier to protect their savings. One of the most impartial comparison sites is from the FSA at www.fsa.gov.uk/tables.

It is still prudent for individuals to hold 3-6 months income in readily accessible savings to protect against unforeseen events as an emergency deposit fund.

4. Make a Will: Always has to be on this list, however, make a Will if you have not already done so. You may not think that you have much to leave, but making it easy for your loved ones with a simple Will is always worthwhile. I would recommend that you use a professional solicitor to achieve this. If your budget does not allow this, then think about a Will Kit from any good stationers, cost about £15-£20.00.

5. Pension changes: Every year we talk about this year’s proposed changes to the way you can save for your retirement, and this year is no different. The amount you can save into a pension is changing in the next tax year to try and simplify the rules for many investors. This may mean that for some who prefer to save a lot into their pensions, they will be restricted to £50,000 in the tax year. Also, the age to which you have to buy an annuity has already increased to 77 from 75 and for those with pension incomes above £20,000 per annum, you may not have to buy an annuity at all. With these and other changes in mind, review your retirement savings strategy both now and regularly in the future.

6. Use your tax allowances: You have tax allowances available each tax year that are lost if not used within 06 April-05^th April (The tax year). A simplified example list is noted below.

ISA (Individual Savings Account):

• Cash ISA maximum £5,100
• Stocks and Shares ISA £10,200

Capital Gains Tax(CGT)

• £10,100 tax free gain allowed in this tax year

Annual Gift Allowance

• £3,000 can be gifted away by an individual in a tax year and the gift falls outside their estate for inheritance tax (IHT) purposes.
• If they did not use last year’s allowance of £3,000, they can go back 1 year, making a total possible gift of £6,000 for both years.

7. Protecting the family: When is the last time you checked your life assurance protection and your protection in the event of ill health and inability to work because of this? For many, these subjects may come low on the priority list, but they can be vital in protecting the wellbeing of the family if something goes seriously wrong.

8. Monthly budgeting: Many of us budget every month to ensure that our income covers the costs of our outgoings, hopefully with some left over to enjoy. If you have not looked at this recently, then now is a good time to look at your bank statements and payslips to make sure that everything is in order and is balancing. If not, make sure that you make changes to balance the books.

As noted before, this is not an exhaustive list because we are all different and therefore, this article should not be seen or used as individual advice. Seek Independent Financial Advice (IFA) for your circumstances.

Churchouse Financial Planning Limited wishes you a happy and prosperous New Year!

Further details of our service are available at our website, www.churchouse.com

Keith Churchouse, Chartered Financial Planner

ISO22222 Certified Financial Planner

Director of Churchouse Financial Planning Limited, Guildford, Surrey. 01483 578800

Churchouse Financial Planning Limited is Authorised and Regulated by the Financial Services Authority

Some good news for savers at the end of 2010? Well, possibly!

2010 and the end of 2009 has not been a vintage season for savers with the Bank of England’s base rate remaining at 0.5% for all this year and part of last year. An unprecedented period of around 20 months (05 March 2009 to 0.5%) has elapsed since the based rate sank to this low level. With inflation on the rise (the Consumer Prices Index (CPI) rose to 3.30% in November 2010 from 3.20% in October 2010) the real capital value of savers deposits in most cases is falling in real purchasing value.

For those with higher levels of deposit, there is also the problem of maintaining levels of deposit that enjoy the current deposit compensation/protection limit of holdings below £50,000 in the UK. Those deposit taking institutions that use the European protection system see those limits increase to €100,000, which is about £70,000 in sterling, although this fluctuates all the time with currency movements.

From 31 December 2010, The Financial Services Authority (FSA) has announced this month (December 2010) that the current UK deposit guarantee/compensation limit is to increased to £85,000, from £50,000. This will at least have the beneficial effect of reducing the need to open various accounts and spread deposit funds around for those investors with significant funds to invest wishing to stay below this limit.

Further details of this announcement can be found at the Financial Services Authority website here: http://www.fsa.gov.uk/pages/Library/Communication/PR/2010/181.shtml

The way you deal with your deposit funds is a key point to financial planning and this planning needs to be considered carefully, especially with this new deposit protection limit change in mind. A regular review of savings strategy is always worthwhile to ensure that the best is being made of your capital with historically low bank base rates and rising inflation. The beginning of a New Year might be a good opportunity based on your circumstances and needs?

At the same time, you may wish to check your position with regards to the use of this year’s Cash ISA allowance of £5,100, if you have not used this in full.

With this in mind, it should be noted that we are all different and your savings strategy will be individual to your needs, such as access and your overall tax position. Therefore, this article should not be seen or used as individual advice.

Seek Independent Financial Advice (IFA) for your circumstances. Have a great New Year.

Churchouse Financial Planning Limited can be contacted in Guildford, Surrey on (01483) 578800.

Keith Churchouse

Director of Churchouse Financial Planning Limited

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. The Financial Services Authority does not regulate taxation advice.

All I want for Christmas is…….?/2010

All I want for Christmas is…….?/2010

First of all, I would like to thank our clients and enquiries for their business over the course of 2010 and the team at Churchouse Financial Planning Limited look forward to serving you further in 2011 and beyond.

The year of 2010 and beyond…

In reflecting on the year, it seems a long time ago since a night’s sleep was lost for the General Election and the hazy summer days of the World Cup. Snow seems to be a rather too regular feature of the year at both ends and of course, ‘Austerity’ was another buzz word that we have all endured and are likely to endure for some months to come. With the VAT rise from 17.5% to 20.0% due to appear on the 04^th January and Bank of England base rates seemingly frozen (excuse the topical pun) at 0.5% savers and borrowers will feel the effects of these issues in 2011.

Inflation has also to figure in these thoughts and the Consumer Proces Index (CPI) rose to 3.3% in November 2010 (from 3.2% in October), with a continued target of 2.0%.

Christmas spending and debt

Before we get to the New Year, Christmas is nearly upon us and many will feel the financial stress of funding what can be an expensive period. Clearly, this year will see the availability of credit potentially reduced and this may well be a good thing in keeping debts under control. As most are aware, the bills for credit cards usually arrive around the 20^th January in the following year and this needs to be borne in mind when you are queuing at the till this month. Remember, many employers pay staff early in December to meet the demands of the extra Christmas costs, which means that you then have around 6 weeks before you are paid again.

Protecting the family

This leads me to think further about other issues for financial planning. I am not referring to buying a pension policy for your spouse for Christmas , as noted in my book, Sign Here, Here and Here!…Journey of a Financial Adviser. I am referring to other issues to protect your family, such as making sure your life assurance planning covers your liabilities, such as mortgage and loans, leaving some excess to ensure that your family has some cash in the event of your death. If your employment offers benefits, such as death in service cover, then make sure that your nomination in the event of your death is correct and documented accordingly.

Protecting income and capital

Also, you should think about protection of your income in the event of a critical illness or inability to work due to ill health. This can be covered by plans such as Income Protection plans (sometimes known as PHI cover) or, as a compliment to this type of cover, a Critical Illness type cover. Again, you employer may protect your income if you are unable to work, but you should check this with your HR department. You don’t want to find out too late that you are not covered. The premiums for both types of plan vary and will be affected by your medical circumstances, age, sex and other things, such as smoker status or occupation. These types of cover are subject to medical underwriting and this can take a little while to arrange. If you are planning to start cover in the New Year, you might want to start the application process early to make sure you have time to ensure cover is ready for you.

Take advice

Talk to an Independent Financial Adviser (IFA) to help you understand your existing cover and, as the title of this blog suggest, what you want (maybe not just for Christmas!)

We are all different and therefore, this article should not be seen or used as individual advice. Seek Independent Financial Advice for your circumstances.

Further details of the book and our service are available at our websites, www.signherehereandhere.co.uk or www.churchouse.com

Keith Churchouse, Chartered Financial Planner

ISO22222 Certified Financial Planner

Director of Churchouse Financial Planning Limited

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. The Financial Services Authority does not regulate taxation advice.

University Education and School Fees…..Only for those who planned financially?

This week’s vote in the House of Commons on the issue of further tertiary education costs will be critical to the future of many of our young people and their ability to attend university in the future. The cost of tuition has always been controversial and the proposals to increase student fees from around £3,000 per annum to £6,000 and even £9,000 per annum at some top education institutions.

At Churchouse Financial Planning Limited, we receive many enquiries each year from Clients, usually parents and grandparents, about the issues of planning both for school education costs and then for university costs thereafter for children and grandchildren. I am sure the number of these enquiries will increase, possibly based on the vote on Thursday, 09^th December 2010. Whichever way the result goes, I am sure that the issue will increase fears that education will rise in the future. Sadly, I believe that this is an issue in England that it not going to go away.

In addition to this potential rise, there is also the concern that the rate of inflation in School/education fees may be higher than the standard rate applied in the Consumer Price Index (CPI).

This raises the question about what can be done to ease this situation if you are thinking about helping your children or grandchildren. Clearly, some good financial planning may well go a long way to help the future of your loved ones education.

In financial planning, there are many ways that an investor can approach this topic and, as ever, early planning is part of the key in building sufficient funds to meet the future liability. There are a few steps to this process, and these are detailed below:

1. First of all, we maintain an education cost modeller to predict the total liability into the future, applying an assumed inflation rate into the future to predict the real cost, based on the anticipated education path in the future.
2. With this knowledge, it is then possible to project the anticipated capital to meet these fees and then roll these back to your current financial planning to look at the amounts that need to be invested to meet these education costs into the future.
3. This then leads to the way that these funds are invested, using any available tax wrappers where available, such as the ISA allowances of parents and grandparents. It should also be noted that the young people involved also have their own tax allowances, such as nil rate income tax allowance (currently £6,475 pa, tax year 2010/2011) and their own Capital Gains Tax (CGT) allowance (currently £10,100 in this tax year 2010/2011). Based on your needs and the circumstances, investments can be made in their name, whilst keeping control of the funds for their purpose. Clearly important!
4. Finally, some Clients like to insurance their liability to future education fees with Life Insurance to make sure that no education opportunities are lost, even in the event of death. Some chose to write this type of cover in Trust to place the proceeds outside their estate for inheritance tax.

There is a lot involved in this planning and we can go into detail with you when you enquire. We are all different and the needs of education costs will vary, dependent on where the student wants to go and when in the future. Therefore, this article should not be seen or used as individual advice.

Seek Independent Financial Advice (IFA) for your circumstances.

Churchouse Financial Planning Limited can be contacted in Guildford, Surrey on (01483) 578800.

Keith Churchouse, Chartered Financial Planner

Director of Churchouse Financial Planning Limited

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. The Financial Services Authority does not regulate taxation advice.

December 2010, a time for giving….and snowing!

Finally December 2010 has arrived. The shops have been anticipating Christmas for some weeks now, but few expected the snow falls that most have seen at the end of November and the very early days of December.

November is a busy month for the team at Churchouse Financial Planning and 2010 has been no exception. With many seeing December as a deadline, they have focussed on finalising many aspects of their financial planning, from pension contributions, ISA investments, Capital Gains Tax, IHT (Inheritance tax planning) and, in line with this, the use of their annual allowances in time for Christmas.

It is this last point that I wanted to focus on in this blog. For many, the next month will be a time for family and for giving. Some like to sprinkle in some tax efficiency into this mix by gifting away their annual gift allowance of £3,000 in the tax year. This limit is per donor and if you did not use last year’s allowance, you can go back on year and gift this away at the same time, making your total gift £6,000 (for that first gifting year). If you are married/in a partnership, and in a position to gift away significant fund, both spouses/partners can undertake this process and gift away a total of £12,000 between the two of them (providing it was not used last year). Some find that the end of December is a focal point for them achieving this planning. This places the gifted proceeds outside your estate for inheritance tax purposes from the date the gift is made. You should check this with your independent financial adviser or accountant before proceeding.

I would normally recommend that if you were to consider this type of gifting, you might want to ensure the recipient has some documentation to confirm why this gift is being made and we can help you with this.

Taking this a stage further, after making these gifts, some still have surplus to gift away and another allowance that can be employed is the use of the ‘Surplus Income’ allowance. This is a more complicated process than the normal gift allowance and may need a regular gifting pattern to make it viable. You should take advice from an independent financial adviser (IFA) on this issue to see if this is achievable, if you want it to be.

As the snow thaws over the coming few days, you may want to have look at these allowances to see if they could be useful to you and your family in the coming weeks.

We hope that you have a great festive season and look forward to helping you with your financial planning in 2011.

This article should not be treated as individual advice. Individual advice is only available based on your individual circumstances. Further information, advice and contact details are available at our websites, www.churchouse.com or www.planmypension.co.uk

Keith Churchouse, Director of Churchouse Financial Planning Limited, Chartered Financial Planner.

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority.

www.planmypension.co.uk is a trading name/style of Churchouse Financial Planning Limited. CHURCHOUSE is a trademark of Churchouse Financial Planning Limited.

The end of the Euro, but not Europe?

As we draw towards the end of 2010 many are turning to the prospect of all manner of festive things and as I write this, the prospect and forecast of snow is on the horizon. Sadly, for those in the Emerald Isle of Ireland, the realisation of an economy in significant trouble is at the forefront of many minds.

Amongst other economic measures, a Bi-Lateral loan of around £7.0-£8.0 Billion has been offered by the UK to Ireland to help with its problems and with the International Monetary Fund (IMF) busy in its halls of power, the political power of the existing administration looks weaker by the day, with the election polls beckoning in January. Their austerity plan due to be released in Dublin later today will make interesting reading.

Ireland is far from being alone in this situation, and many other nations such as Greece and Portugal have suffered similar fiscal situations and other nations, such as Spain, are not looking as healthy as many would want. Other nations in the Euro-Zone, such as Germany, are not seeing the same economic problems and, in a contrary fashion, are seeing sustainable growth going forward, although time will tell if this remains constant. As with all of these things, past performance is not a guarantee of future performance. This imbalance is creating some economic friction. With some nations fiscally falling behind others, the pockets of the wealthier countries that have been dipped into to help out are, as the saying goes, beginning to get deeper with shorter arms, causing concern that this may undermine their own economies. Remember, this has been a painful time for all countries financially and attitudes are changing to the protection of their own countries rather than that of the Euro-Zone.

This has led to some speculation on the future of the Euro as a currency for the Euro-Zone. Some now suggest that the Euro in its present format will not survive. That some of the northern countries will form their own Euro currency, introducing a two tier Euro-Zone or simply revert back to their old currency from whence they came. However, there seems little speculation on the Euro-Zone as a whole, just the currency it uses.

Where does this trouble, concern, comment and speculation leave us as investors?

In my opinion, the answer lies in one word, which is ‘diversification’. The future for Europe as an investment area remains reasonable, although it is likely to go through some change going forward. By diversifying your investments (Pensions, ISA’s, OEICs, Portfolios) to ensure that you are not overly exposed to one investment area and taking regular advice from your Independent Financial Adviser (IFA) you should maintain the potential of reducing exposure to investment risk.

When looking at an individual investment area, you should also do this in conjunction with your overall attitude to investment risk. This should provide a more encompassing approach and Churchouse Financial Planning Limited has prepared an Investment Risk Scale to help with your considerations and this can be found here.

Past performance is not a guarantee of future performance. Values can fall as well as rise and are not guaranteed.

This article should not be treated as individual advice. Individual advice is only available based on your individual circumstances. Further information, advice and contact details are available at our websites, www.churchouse.com or www.planmypension.co.uk

Keith Churchouse

Director of Churchouse Financial Planning Limited

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. www.planmypension.co.uk is a trading name/style of Churchouse Financial Planning Limited.

CHURCHOUSE is a trademark of Churchouse Financial Planning Limited.

National Employers Savings Trust (NEST)

The last administration proposed a wide-ranging review of pension saving in the UK and introduced the concept of the National Employers Savings Trust or NEST for short. Much work was done on this subject prior to the election in May 2010 and some felt that NEST would not survive the new Coalition Government. After some consideration NEST seems now to be proceeding at pace with a trial pilot (through Volunteer employers) starting next year (2011) and full implementation with the full scheme being launched in 2012 and most employers being tied into the arrangement in 2014.

It is clear that the public in the UK is not saving enough for its retirement income because many individuals will fall short of their target income at retirement. With the pressures on the State Pension increasing, many people will know of the proposed levelling off of State Pension benefits for all at a level of £140.00 per week from 2015. We are also aware that the State Pension age is increasing from 65 to higher ages, such as 66 for both men and women from 2020 with further changes to follow.

To help with this situation, NEST is being introduced. It is proposed from the start date the contribution level to the scheme of a minimum of 2.0% pa, with 1.0% pa being paid by employers and 1.0% pa by employees (0.8% pa net contribution and tax relief of 0.2% ).

I have listed a link below for the phased start dates based on the number of staff that you have within your organisation.

http://www.thepensionsregulator.gov.uk/pensions-reform/duty-dates-timeline.aspx

There will then be a phasing of increased contributions with a minimum total level of 5.0% pa being introduced between October 2016 and October 2017 and then from 2017 a contribution level of 8.0% pa, with 3.0% pa coming from the employer, 4.0% pa coming from the employee and the balance as tax relief (subject to any changes). It should be noted that the percentage is of all income including basic salary, commission, bonus and overtime. Therefore if an employer is looking at the cost to their company of NEST then it should be looking at the total salary cost including all of these items rather than base salary.

Employee Opting in and out

All employers will be required to automatically enrol (on their Automatic Enrolment Date/ AED) their eligible workers into a qualifying pension scheme and to make the relevant contributions to the qualifying scheme selected. NEST is one option available to all employers. Employees will have the facility to opt-out of their employer's qualifying scheme after being automatically enrolled within a prescribed time period if they do not want to join in. They have one month from the date that they have been given prescribed information to opt out and they may do this by contacting the scheme. They will then be put back in the position they would have been in if they had not joined the scheme. This may involve a refund of any contributions taken following automatic enrolment into the scheme. They can opt out after the a enrolment period, but this may mean they are given a preserved pension. Some trust based schemes may provide a refund less tax under short service refund rules applicable to some occupational pension schemes within two years of joining. If an employee opts out the employer will not have to make their required contribution but the employer cannot induce the employee into doing so.

They can opt back in later at the employer/qualifying scheme’s discretion and will be automatically re-enrolled every three years. The employer will then have to contribute again in accordance with the phasing above.

Administration & Existing Schemes

An employer can decide to run a scheme within its own arrangements or use the NEST arrangements put in place by the Government to collect contributions and to administer them accordingly. Some employers already have pensions schemes in place and an employer will need to designate these schemes with The Pension Regulator to join them into the NEST programme. If an employer wants to do this they will need to look at the cost to them and the scheme in doing this.

Dates and Contribution Phasing

The employer will be notified by The Pensions Regulator 12 months prior to the date they have to implement their phase of the NEST funding. The contribution level will be phased from the outset with larger employers starting in October 2012. The initial contributions will be as follows (Contributions to be made on a band of earnings between £5,715 pa and £33,540 pa (the lower limit to be linked to the National Insurance LEL and the higher limit in 06/07 terms and up-rated in line with National Average Earnings)

• Employer: 1.0% pa of earnings
• Employee: 0.8% pa of earnings
• Tax relief: 0.2% pa of earnings

Second Phase - October 2016 to October 2017
From October 2016 the second phase starts and will see an increase in funding/contributions to 5% of earnings (salary/bonus/overtime, etc within band earnings) divided as follows:

• Employer: 2.0% pa of earnings
• Employee; 2.4% pa of earnings
• Tax relief: 0.6% pa of earnings

Third Phase -October 2017 onwards
From October 2016 the second phase starts and will see an increase in funding/contributions to 8% of earnings (salary/bonus/overtime, etc within band earnings) divided as follows:

• Employer: 3.0% pa of earnings
• Employee: 4.0% pa of earnings
• Tax relief: 1.0% pa of earnings

You can see that there are some significant consequences to this legislation and therefore many employers need to start planning now to ensure that they are ready for the changes in their cost projections, and also the requirement to ensure that they are ready to meet their responsibilities.

It should be noted that the level of tax relief, the way contributions are calculated based on income levels or ‘Band Earnings’ and some other issues may vary and are open to consolation at this time.

Churchouse Financial Planning Limited is well placed to help employers with this and we would be pleased to speak with directors of your company to ensure that you meet the requirements needed. This should not be seen or used as individual advice and you should seek independent financial advice for your own circumstances.

Contact Keith Churchouse on 01483 578800 or via churchouse.com

Churchouse Financial Planning Limited is Authorised and Regulated by the Financial Services Authority.

2010 and The FTSE 100 Index

2010 has proved to be a very different year for many of us. With snow disruption causing havoc in January, a late Spring election, Quantative Easing, the football World Cup and finally and more recently, the Comprehensive Spending Review which has bought into sharp focus the economic position of the UK and the cuts required to achieve balance going forward. We have not seen the true effects of these cuts yet, although we now understand how tricky they may be. We are all different and each change may vary the outcome for each of us.

With all of these issues occurring, I thought it might be worth noting what has happened to the FTSE 100 index (the UKs top 100 shares) over the same time. Opening at the start of January (open 04/01), the index stood at 5412.9 points. By 01 June, we had fallen to 5188.4 points this year and at the time of writing this blog on the morning of November 10th 2010, (opening), the index stood at 5875.1 points. Past performance is not a guarantee of future performance, however, is interesting to see what has happened to an index that affects many clients’ investments.

If you would like an independent (IFA) review your pension, retirement planning or investments in light of these changes then please let us know.

As noted in this text, we are all different and this information should not be used or relied on as individual financial advice. The Financial Services Authority does not regulate Taxation advice.

Further details of this are available at our website, www.churchouse.com

Keith Churchouse

Chartered Financial Planner & ISO22222 Certified Financial Planner

Director of Churchouse Financial Planning Limited

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority

November Notions…..Your financial planning month?

With the sky alight at the weekend with the beautiful colours of fireworks and the air thick with the smells of bonfire, I know that it is going to by a busy month in financial planning. For those of you who know that I complete 25 years in the profession in 2010, I would note that this experience has always taught me that November is a key (if not the key) business month in the annual calendar to seal off the years production. Can I add that this is not me suggesting this, but our clients usually requiring it.

I don’t know if this is because it is the last month on normality in the year before all things Christmas descend upon us, with the corresponding time and monetary commitments, or whether the first month of truly dark nights, providing more time to focus on financial planning, independent advice (IFA) and getting all things money in order. Whatever the reason, we always ensure that we are ready to help.

Like all financial planning, each client’s requirements, needs and aspirations are different and this variety is inspirational in making our work so enjoyable. I have given some examples below.

Pension Planning:

With many changes in the way the limits on pension tax relief have been applied or restricted and more changes proposed for lifetime allowances (LTA) , this is an area that is regularly changing and many find needs regular attention for contributions to Personal pensions (PPPs), Stakeholder Pensions and Executive / Employer schemes.

For employers, the effects of NEST (the National Employers Savings Trust) on the immediate horizon, this is taking up significant thinking time on the approach to the overall outcome of these plans.

Retirement Planning

I always recommend that a client starts to plan their retirement income planning around 6-12 months out from the date they plan to retire. This is because many want to know what they are likely to get in terms of tax free cash and the final income they can draw, either via an annuity purchase (Open Market Option/ OMO/ Impaired Life Annuity) or, for those prepared to take some additional risk, an income drawdown plan. As with most pension issues, the rules applicable are regularly changing and the increase in the age to which annuities have to be bought from 75 to age 77 is a good example. More changes are proposed for the future.

Early advice and guidance will provide retirees time to think about how the retirement options available and what will suit their needs both at retirement and into the future. Time is a key point here because there is usually a lot of information to take on and digest.

To help with this, we do offer a simple Retirement Options guide free of charge and this can be found here.

Investment Planning:

As we pass the half way stage in the fiscal year (April-April) many chose to invest in ISA’s rather than wait for the deadline of April 05^th. This seems to be another popular deadline that clients focus on. With the full ISA allowance at £10,200 each (2010/2011), this is a valuable tax efficient allowance that many use each year to shelter their investments. In addition, most have a full capital gains tax allowance (CGT) of £10,100 in a tax year (2010/2011) and again many find this of significant advantage in their overall planning. With the highest tax charge above this allowance at 28% as a flat tax rate, this can work well for high rate taxpayers.

Many also start to plan to use their gift allowances in the next month or so, such as the annual gift allowance of £3,000 each or gifts from surplus income.

Summary

You can see that there is usually a lot to think about in financial planning for many around this time of year, whether that be one individual topic or a combination of these, along with other areas of planning, such as inheritance tax.

As an amusing aside, I was horrified when I found out that ‘Santa Claus’ was following me on Twitter the other day (follow me as ‘Onlinefinancial’). At least he had waited until November to start. Either I have been a very good boy in the year or it is just a marketing gimmick. Sadly, I fear it is the later and not because I have not been good.

As we lead up to the festive season, please remember that it is not too late to get your finances in order and ready to face Christmas, 2011 and beyond.

As noted in this text, we are all different and this information should not be used or relied on as individual financial advice. The Financial Services Authority does not regulate Taxation advice.

Further details of this are available at our website, www.churchouse.com

Keith Churchouse

Chartered Financial Planner & ISO22222 Certified Financial Planner

Director of Churchouse Financial Planning Limited

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority

Anniversary/ 25 years or a quarter of a century in Financial Services?

It all comes to pass in December 2010

It is hard to believe that in the winter of 1985, a spotty teenager (namely me!) joined a bank in a small branch in Surrey and began his career in Financial Services. As we draw towards the winter of 2010, I can look back over a quarter of a century of unbroken service in UK retail financial services.

25 years later, the world has changed since that cold December morning when I rolled up for my first day, having experienced my first dose of redundancy the week before. We have moved from the Margaret Thatcher era with the promotion of financial services, Big Bang and Black Monday, through the Blair/Brown ‘New Labour’ years of ‘no more boom and bust’ to what appears to be a time of austerity under the Coalition Government of Messer’s Cameron and Clegg.

In financial services, we have seen everything from the PIA to the FSA to MIRAS to LAPR and QE to the banking crisis, recession and now, as already noted, austerity. We seem to love our acronyms, don’t we! I have gone into more detail about my personal journey through these changes in my first book, Sign Here, Here and Here!…Journey of a financial adviser (Available from Waterstones/Amazon)

It has been a pleasure to serve the public in such a diverse and dynamic role and I am looking forward to the next 25 years. I will be aged 68 by the end of this time and based on the way the minimum State Pension age is increasing, I should be just in time to sign off after 50 years and collect my State Pension at that stage, if it still exists. With careful planning, most should be able to enjoy a comfortable retirement.

The best part of the journey for me has been the customers and clients that I have looked after in that time. They make the whole profession worthwhile and I thank them for the trust that they have placed in me and my company, Churchouse Financial Planning Limited, over the 6 years that we have been offering our financial solutions. A big thank you to you all, both past, present and future and I look forward to the next few decades and the challenges that these will bring.

We are all different and therefore, this article should not be seen or used as individual advice. Seek Independent Financial Advice (IFA) for your circumstances.

Further details of the book and our service are available at our websites, www.signherehereandhere.co.uk or www.churchouse.com

Keith Churchouse, Chartered Financial Planner

ISO22222 Certified Financial Planner

Director of Churchouse Financial Planning Limited

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. The Financial Services Authority does not regulate taxation advice.

Don’t forget your State Pension Benefits when getting divorced

When you are going through a divorce and considering your financial settlement then you should not forget the benefits available under the State pension scheme.

This might seem to be the least of your worries, but with a current value of £97.65 per week (2010/2011) without any additions (that’s just over £5,000 per annum gross to you and me!), it could have high value in your dotage.

Considering that most of us will make to around our mid eighties, this means that we could get this benefit for around twenty years. We also have to take into account the news from the Comprehensive Spending Review that all State Pension benefits from 2020 will only be available from age 66, rather than 65.

This is the same if you have not been working during the course of the marriage, as you will see.

Let’s look at the issues.

1. Basic State Pension…..and possible additions?

You may not know that there are usually two types of state pension that may be accrued, namely the Basic State Pension and the State Earnings Related Pension) (SERPS) or Second State Pension) (S2P) as it is now called.

This may be particularly relevant if the divorce happens close to the end of a working life, as many over 50’s are finding.

Most people are entitled to some form of state pension at any age from 60 for women and from 65 for men. This age is rising to age 66 from 2016 for men. The minimum age for the state pension is equalising for all to age 65, and then this is likely to increase further to 67 or 68 in future years.

Have you ever found out what your benefit is worth? The benefits available can be checked by completing a BR19 State Pension Forecast form, which will tell you what you are entitled to, both now and in the future.

Your spouse should also be entitled to individual pension benefits.

On divorce, there is the potential to transfer some of the State Pension Benefits to your ex-spouse dependent on your circumstances and this may be required as part of a divorce settlement.

To find out the transfer value of any benefit you can request this information from The Pension Service in Newcastle using an original BR20 form, one for each party. They don’t like photocopies and the valuation is valid for twelve months.

2. Forms and independent advice

Both are easy to check and the BR19 Pension Forecast Form and the BR20 Form are available on The Pension Service website, www.thepensionservice.gov.uk.

Whether or not you are divorcing, it’s always worth checking your State Pension to make sure you are maximising the pension benefit that could be available to you.

For married couples, I would usually recommend that both parties check to ensure that the household will benefit from this income.

Your Independent Financial Adviser (IFA) can also look at this information for you to see if there are any shortfalls in the value and if this can be added to with extra contributions.

This information should be explained in the detail. It’s just a question if it offers good value and this is where advice is vital.

3. Tax on the income

You knew that income tax will come up somewhere.

Currently the income from the State Pension is paid gross to the recipient, but is taxable. This may mean that any other earned or pension income you receive above the State Pension has a greater tax charge to take account of the State Pension already in payment.

4. Contribution records and State Pension Benefits after divorce

I hope that your financial negotiations have gone as well as you planned. Remember, you pay to argue.

When the divorce is finalised and completed, you can re-check the State Pension benefits available to you, to see whether they have changed.

As a point of interest, you may see an increase in your benefits if your spouse’s National Insurance contribution record was higher than yours as they may use this record as a substitute.

Again, you can use a BR19 form for this, updated with the concluded changes, such as the fact that your marital status is now ‘divorced’ and the date of the divorce. The detail comes back in around a month’s time, however the time taken can vary.

5. Further details

Divorce can be a difficult and emotive time, but with some focus and quality advice, I hope that you reach your objectives. Thsi article should not be seen or used as individual advice.

To expand on all things divorce and the fundamentals, I have been able to outline the full process in my new book, Addicted to Wedding Cake, The Journey of Divorce.

Further details of this are available at our websites, www.addictedtoweddingcake.co.uk or www.churchouse.com.

Keith Churchouse is Director of Churchouse Financial Planning, a firm of Chartered Financial Planners in Guildford, Surrey. Keith is a Chartered Financial Planner and Certified Financial Planner (CFP) professional. Churchouse Financial Planning Limited is Authorised and Regulated by the Financial Services Authority.

Probably not such an Equitable Life ‘Henry’!/ Compensation finally looms

It is nearly 10 years since the demise of what was declared the ‘oldest mutual organisation in the world’, first formed in 1762. And in a variation to many of the ‘Henry’ clients portrayed in the television adverts, it turned out not to be such an Equitable Life after all. Sadly, it is estimated that some 50,000 policyholders have died waiting for any form of compensation to be paid since 2000(Source/Report: Daily Mail, July 2010).

Finally, this week, it is reported that the details of a £1.5 billion compensation package will be announced and finalised by the Coalition Government after nearly a decade of delays, enquiries, arguments and disagreements, including investigations by the Parliamentary Ombudsman. This is way short of the £6.0 billion package that many felt was required. Although this announcement will be a momentous occasion in itself, I am not sure it will make the top headlines it deserves because it will come in the Comprehensive Spending Review that will have many other (mainly negative) headlines of its own. Wednesday the 20^th October 2010 will be a day of history whatever happens.

And what now for the policyholders? Bearing in mind that the with-profits fund at the end of 2000 had an estimated value of around £26 billion (source: Wikipedia), you might see that the proposed £1.5 billion in the big picture may not spread very far, although admittedly something is better than nothing! I understand that they may start to provide compensation to those who have or are suffering ‘hardship’ and this might, as an example, include those that took out a with profits annuity which has seen the income first projected fall away over the years. Others who have not suffered any ‘hardship’ but seen their investment bond, pension (executive pensions/ Section 32/retirement annuity) or income drawdown go down in value may find themselves lower down the pecking order of compensation payments. I have no doubt that the devil will be in the detail on this one, but I believe that the principal of priority list is correct.

We are likely to know after Wednesday. I am only sad that it has taken so long to get this far.

Whatever the outcome of the Equitable Life compensation scheme and its subsequent effects, it is always worth seeking independent financial advice (IFA) to ensure that you are getting the best from your financial planning.

This article should not be treated as individual advice. Individual advice is only available based on your individual circumstances. Further information, advice and contact details are available at our websites, www.churchouse.com or www.planmypension.co.uk

Keith Churchouse, Chartered Financial Planner

Director of Churchouse Financial Planning Limited

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. www.planmypension.co.uk is a trading name/style of Churchouse Financial Planning Limited.

CHURCHOUSE is a trademark of Churchouse Financial Planning Limited.

H M Treasury reveals new pension restrictions

Just when you thought is was safe to save for your retirement , HM Treasury has today revealed its plans to change the restrictions on pension accumulation to lower levels.

The Coalition Government confirmed in June that it wanted to reform pensions tax releif and these new changes will come into force.The HM Treasury website quotes the following points: ‘On the 14th October the Government announced that, from April 2011, the annual allowance (AA) for tax privileged pension saving will be £50,000 and that from April 2012 the lifetime allowance (LTA) will be £1.5million.’

The basic changes are as follows:

Lifetime allowance

Was Reducing to (April 2012)

£1,800,000 £1,500,000

Annual Allowance

Was Reducing to (April 2011)

£255,000 £50,000

It has been noted that there may be transitional arrangements for those close to or above £1,500,000.

If you have the benefit of a final salary scheme and see a significant jump in your salary you could see yourself facing a tax charge. This may be the same if you want to make a large contribution to a personal pension plan or money purchase pension plan.

Fuller details can be found at www.hm-treasury.gov.uk/press

If you are or are potentailly effected by these arrangements then early planning is recommended to ensure that you are not adverserly affected by these changes.

Speak to Churchouse Financial Planning Limted on 01483 578800

This should not be seen as individual advice and you should speak to your independent financial adviser (IFA) about your individual circumstances and needs.

Keith Churchouse
Chartered Financial Planner
ISO22222 Certified Financial Planner

Churchouse Financial Planning Limited is Authorised and Regulated by the Financial Services Authority.

CHURCHOUSE is a trading name of Churchouse Financial Planning Limited

Comprehensive Spending Review…It might be personal!

Is it me, or is the whole of the UK waiting for the sword of the Governments Comprehensive Spending Review to fall and make the proposed cuts that so many print pages have been exhausted over in the last few months. Whichever way the cuts are made, I am sure that it is not going to be a pretty sight on the 20th October 2010. Let’s see what George Osborne has to say.

In a simplistic way, any business manager or owner will tell you that there are only two real ways of managing a business. One is to keep costs low and income high. Sprinkle some cash flow in between and away you go. Balancing the budget of the UK is likely to be very much more complicated, throwing in things such as additional bouts of quantitative easing and keeping our sterling currency sound, however, the principals are the still similar.

This is all very interesting to economists, but what does it mean to the person on the Omnibus? Clearly cuts are likely to lead to reduced spending and this may lead to cost cutting with the reduction of manpower. Redundancy, unemployment, severance packages and employment are likely to be key words in the winter and not for the right reasons. I am sure the employment solicitors/lawyers will be busy! All gloomy reading, but what can the person on the Omnibus do to help ensure that he or she is financially ready if this is to be last trip on the bus for a while?

Returning to the analogy of how a business works, they can entertain the same logic of looking at reducing or cutting outgoings and increasing income. I have expanded on this below with a few examples, although this list is not exhaustive:

Budgeting

Irrespective of your circumstances, it is always worthwhile looking at your household budget to ensure that you are extracting value from your outgoings. It’s worth doing this regularly and don’t wait for a redundancy to arrive to find out that you can’t afford to make ends meet.

Your household will need to ‘buy in’ to the process, and keep your debts under control and make sure you maintain an emergency deposit fund of 3-6 months income available to meet any short term liabilities as they arise. You might want to use a Cash ISA (ISA) arrangement to achieve this, or, as an alternative, Premium Bonds, which offer tax free winnings. If your spouse has a lower income tax band than you then you might want to consider having any taxable savings in their name.

Income

If you are fortunate enough to have a few investments behind you then check if these can provide you with income if needed. You might want to leave any pension benefits untouched until you retire, but seek independent financial advice (IFA) if you have this potential fallback position. Approximately half way through the tax year 2010/2011, as October is, might be a good time to review your ISA’s and Capital Gains Tax position (CGT) if you have one and make any necessary changes to meet you current circumstances and any future situations.

Summary

Whatever happens, as we move into these times of austerity, make sure that you keep your financial planning up to date and ready to meet your needs.

This should not be seen as individual advice and you should speak to your independent financial adviser about your individual circumstances and needs.

To expand on the issues of business planning for SME’s and the fundamentals, I have been able to outline the full process in my new book, Sign Here, Here and Here!…Journey of a Financial Adviser.

Further details of this are available at our websites, www.signherehereandhere.co.uk or www.churchouse.com

Keith Churchouse, Chartered Financial Planner

Director of Churchouse Financial Planning Limited, High Street, Guildford, Surrey

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority

Redundancy, a life junction?

Having been made redundant twice myself in the past, I know that this situation can be emotional, stressful and daunting. Sadly, with the current austerity cuts proposals of the coalition Government in their comprehensive spending review, we may see an increase in this situation occurring.

If you find yourself in this position, then it might be worth taking some financial planning measures early to ensure that you try and get the best from the situation.

First of all, you may receive a redundancy payment. The first £30,000 of this should be paid tax free, as long as it is a true redundancy situation. If your departure from work is not deemed to be a redundancy, such as a severance agreement, then the tax situation may be different. Please check this point before agreeing to leave an employer. Any balance above £30,000 will be taxed at your highest marginal income tax rate. As tax year starts in April, and if we think that it is now October, then we are seven months into a tax year. Therefore, if you add the payment above £30,000 to your earned income so far, you may well find that you will be taxed at 40%, however check this with an accountant or tax adviser because all of our circumstances will be different.

Dependent on your situation, you may want to offset part of the tax on any excess redundancy payment by contributing to a pension. If you have an employer’s scheme, such as an AVC, money purchase or Executive Pension scheme, then you may need to arrange this before you leave service. Therefore, some early planning in the negotiation phase may well be worthwhile. For this financial planning, you should seek Independent Financial Advice (IFA).Although this may be tax efficient, take account of your cash flow situation. Planning for your immediate future is vital.

With the potential of no income coming in for the short term, you are still need to meet the cost of your liabilities and this has to come first. You may want to check any policies that may pay out in the event of redundancy. Some of these plans require you to apply for Benefits and you may plan to arrange this anyway. Also remember that you may be losing other benefits by leaving your employer, such as death in service and ill health/ medical insurance cover. You should check this to ensure that the protection levels you require are maintained.

Others may have reached an age where drawing pension benefits may be an option. Seeking good financial advice at an early stage is important to make sure that this planning is arranged correctly. You may want to use tax free cash and income to replace the income lost from employment. If you are looking at this, then it may well be worth your while checking your state pension benefits, and that of your partner/spouse if you have one, to ensure that you know what these can offer. You can do this by using a BR19 State Pension Forecast form and this can be found here.

Redundancy can be seen as a life junction and possibly an opportunity to reinvent your future employment situation. You may choose to start your own business and, as an aside, Surrey Chambers of Commerce can help you with this. I have detailed my own personal experiences in my book, Sign Here, Here and Here!...Journey of a Financial Adviser.

We are all different and therefore, this article should not be seen or used as individual advice. Seek Independent Financial Advice for your circumstances.
Further details of the book and our service are available at our websites, www.signherehereandhere.co.uk or www.churchouse.com

Keith Churchouse
Director of Churchouse Financial Planning Limited
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. The Financial Services Authority does not regulate taxation advice.

SME’s and all things marketing

In my opinion, marketing is one of the vital components of your business strategy, especially if you are a small to medium size enterprise (SME). Never be embarrassed about the scope and scale of your marketing. Remember that in a new business, no one else is going to do it for you! This is also the case when you enter a partnership with business colleagues.

As we move into an autumn of possible austerity measures being implemented by our coalition Government and the potential of redundancy looming over some employees, planning your strategy for a new start up business is going to be important in the balance of 2010 and into 2011.

Someone within the new business specifically has to own the marketing project and be enthusiastic to promote the ethos of the business. Never assume that someone else is dealing with marketing: get it agreed at the outset who is leading the role and get them (or you) to put together the marketing plan for the next three years. Create a specific 12-month plan as well. I suggest limiting the length of the second plan to 12 months at the outset because your marketing will need to be agile in its approach, taking advantage of opportunities as and when they arrive. Using financial planning and independent financial advice as examples, there could be a change in legislation or an upturn in a particular investment market.

What’s the difference between economies of scale and economies of scope, and why is this important to your marketing strategy?

This was an important learning point for me, especially with regard to marketing. When applying economies of scale to marketing you are sending out a single message in bulk, such as a newsletter. This does work. Because of the volume being used, production of your marketing can be cheap and timely.

But what about taking the same message and rearranging it to re-use parts of your message elsewhere to amplify your message? This is an economy of scope. The same newsletter you wrote to take advantage of economies of scale may feature various newsworthy topics in your profession. You will have spent time checking these topics to ensure that they are relevant, compliant and above all, interesting.

Example of an Economy of Scope

* Create a ‘blogspot’ on your website and segment the topics from your existing newsletter. Then turn them into blogs on your website. You will know that Internet listing sites crave new content.
* Record a five-minute discussion about an interesting and topical subject with a colleague, friend or family member. Then podcast this on your website, or if you are more sophisticated, video it and ‘vodcast’ it. Watch your Internet rankings soar.
* Use social networking sites to discuss the same issue, such as Twitter. However, make sure that it is both relevant and compliant for your regulatory authority, if you have one. (my name on Twitter is ‘onlinefinancial’)
* Convert your regular newsletter into an article, and write to the press about the issues you are considering. Choose an issue that you are well qualified to talk about and are able to answer questions about. This may also have the advantage of demonstrating your commitment to the FSA’s Treating Customers Fairly (TCF) initiative which we endorse.

By doing this, you have taken one newsletter and reinvented it in four other formats, giving the same informed message in very different distribution styles, increasing the potential for audience variation and penetration. With a little extra application, it is possible to diversify your message and distribute it into other areas, creating greater scope for your message to be heard by new prospects.

Once you are recognised as an expert in the topic selected, update your thoughts and understanding and repeat the process.

As an example, many television channels have used the same philosophy, broadcasting their standard channel, then a ‘plus 1’ model, as a new separate channel, just one hour forward. They then add a website distributing the same information. This creates three distribution models for the same message. It’s both innovative and cost effective.

Marketing techniques have changed significantly in recent years and I have found that subtlety over ‘in your face’ promotion works best. Many financial services organisations (other than the banks) lack a shop window and many would not want one. When you have got your marketing right, these prospects will find you easily and sales, either fee based or commission driven will be achieved.

Also, the timing of your marketing is vital. Referring back to your year’s sales target, you have correctly divided your sales target up into months to ensure that you maximise peak performance. Your marketing campaign must coordinate with this sales strategy. If you were running a Christmas shop, you probably would not start your company’s peak marketing campaign in July. The same applies to financial services. You might build your campaign up to March/April/May and then regenerate it again to October/November.

We wish you every success with your new business venture.

Extracts from the new book, Sign Here, Here and Here!…Journey of a Financial Adviser ISBN: 978-0-9564325-0-6

Further details on this topic can be found in the new book available at our website, www.signherehereandhere.co.uk or on Amazon here.

Speak to Churchouse Financial Planning Limited (or your independent financial adviser/ IFA). This statement is not individual advice and should not be relied on because each clients circumstances are different.

Keith Churchouse

Director of Churchouse Financial Planning Limited
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority

When to transfer money or assets on divorce?

A capital payment to a spouse may have been agreed in your financial settlement and this will need to be paid at the specified time after the divorce is finalised. This may have been detailed in your Consent Order. This may involve releasing funds from deposit accounts or selling/transferring shares and other assets in order to meet the payment.

It is important that you don’t forget to take a look at the tax implications of this payment requirement as it can have a significant effect on the value that you (or your ex-spouse) finally achieve. For example, you may be required to transfer shares to your ex-spouse upon divorce. Transfers of assets between current spouses do not normally create tax charges — but a transfer to or from a person who is no longer your spouse because you are now divorced may do.

In normal circumstances, assets transferred between civil partners or spouses in the tax year during which they have lived together, including the year of separation, are exempt from Capital Gains Tax (CGT). However, from the end of the tax year of separation the situation changes and if you have large financial assets to be redistributed then you may want to take this into account. You should seek advice on this subject if it affects you, you don’t want to get this wrong, I am sure!

Careful financial planning and timing are important here. Tax positions and legislation can change regularly and the comments above may already have become out of date by the time you might go through a divorce of your own. Check with your accountant or financial adviser before making any changes to make sure that the legislation has not changed.

The tax year runs from the 06th April each year to the 05th April the following year, with most individual annual tax allowances being renewed each year. Each individual is taxed separately, so ensure that you take this into account with your negotiations. Your accountant or independent financial adviser (IFA) should be well placed to make sure you minimise the effects of tax.

Further details of this new book are available at our websites, www.addictedtoweddingcake.co.uk or on Amazon here.

Speak to Churchouse Financial Planning Limited (or your independent financial adviser/ IFA) to help with advice on this issue. This statement is not individual advice and should not be relied on because each clients circumstances are different.

Keith Churchouse

Director of Churchouse Financial Planning Limited
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority

All things pensions in divorce

Pensions can be a complicated subject at the best of times. You probably know that already! When it comes to pensions in divorce, then the situation can get very complicated. Getting good advice at the outset from an individual who is qualified in the subject is usually worthwhile, as you will see.

It may be possible in your case that a pension share may be involved. This may involve both parties getting some property equity, but this equity is effectively traded for a part share of a pension value. If agreement is reached, then a pension share order (or Pension Annex) will be granted by the court and the percentage of the pension that is to be split away is usually transferred out to another pension arrangement of the recipient’s choice, dependent on the scheme. Also note that any agreed transfer out of a pension may incur administration fees by the original provider concerned and I have considered the issue of pensions and their benefits in detail in my book, Addicted to Wedding Cake, The Journey of Divorce.

There was another alternative for pension benefit division introduced in 1995 Pensions Act called Earmarking. This has not been widely used because it may not achieve a ‘clean break’ in pension terms and does not allow the ex-spouse to receive a pension income until the originating spouse with the pension fund actually draws benefits and retires. Death and remarriage will also effect this option. Some pension providers, usually final salary schemes, allow the share to stay within the scheme, although this is not always the case. If this is achievable then it should be considered carefully along with any other options. Remember that some pensions can give benefits in different ways and you may come across Personal Pensions (PPP), Section 32’s, Retirement Annuities (RA’s), Guaranteed Annuities and Executive Pension Plans. Quite a maze and don’t forget your State Pension Benefits. You should speak to a qualified Independent Financial Adviser (IFA) about the options available, but I recommend that you search hard for an adviser who knows the subject well as it is a specialist area.

Whatever you do, get independent financial advice on the real monetary values of what you and your partner hold in pensions, as an example. This is partly because you do not want to give away too much by transferring a Cash Equivalent Transfer Value (or CETV for short) to an ex-spouse.

The independent financial adviser (IFA) can be instructed by you individually or, with agreement, both parties to get an overall view of the financial situation to demonstrate true values of pensions and there benefits. Some IFAs are affiliated and accredited by the organisation Resolution and it might be worth your while enquiring about this accreditation from your financial adviser as their numbers have been growing across the UK. They have received training and testing as a ‘Financial Neutral’ in helping a separating couple with the pensions and financial affairs in divorce situations.

Further details of this new book are available at our websites, www.addictedtoweddingcake.co.uk or on Amazon here.

Speak to Churchouse Financial Planning Limited (or your independent financial adviser/ IFA) to help with advice on this issue. This statement is not individual advice and should not be relied on because each clients circumstances are different.

Keith Churchouse

Director of Churchouse Financial Planning Limited

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority

Protecting Divorce Maintenance Payments

Even if you are divorced (or going through the process), protecting the family in the event of your death should still be a priority. If you think about it, if you were still married you would want to know that your family was protected if you died. Just because you no longer love your ex-spouse does not mean that you would still want to protect your children. At least they still love you!

One possible way of thinking about this is the amount of maintenance you pay and capitalising this amount to give the total amount needed to ensure that they still get their money if you die.

And talking of the maintenance you pay, if you think about what you have agreed to in your financial settlement and you are paying both spousal maintenance and also child maintenance, this might be agreed as separate amounts. This might be specified in your Consent Order. You may want to set up two payments from your bank account so that each payment can be evidenced, rather than merging both payments into one (even if they are being paid to the same bank account) such as your ex-spouse’s. Although this might be a bit of extra hassle, it may make things clearer if there is a dispute at a later date and payments records are required or if maintenance payments are to be adjusted.

Protecting your payments

Maintenance is usually paid by standing order from the payer’s bank account, but in certain circumstances it can be capitalised as a single payment to the recipient in advance so that he or she is not reliant on the payment each month. This may give the holder of the maintenance some additional security and, from another point of view, some maintenance payers prefer it this way because it keeps contact to a minimum.

For those who have agreed to pay a regular maintenance payment, they may also be required to take out life assurance cover to protect the maintenance payments if they should die in the early years, leaving a family without income. In certain circumstances one ex-spouse takes out life cover on the other. The insured ex-spouse will have to co-operate as medical underwriting may be required and he or she will need to sign the life assurance application forms and fill in the medical questions required. If the spouse is taking the policy out on the life of the ex-spouse then he or she is insuring ‘The life of another’. If the cover levels you require are high, then the medical underwriting may take a little time so make sure that you start the process with time to spare. Most Life Assurance applications can be resolved and completed in around six to eight weeks.

The maintenance receiver pays the premiums for the life cover. This gives the person who receives the maintenance the protection of knowing that the life cover will remain in place and that the premiums required will not stop when no one is looking (or placed in Trust to someone else) because the proceeds will always be paid to the policy owner.

Speak to your financial adviser about the cost of this protection before requesting this as part of your settlement in case the premiums required for the cover are prohibitive. They may also be able to use an existing protection policy, if available and appropriate.

To expand on all things divorce and the fundamentals, I have been able to outline the full process in my new book, Addicted to Wedding Cake, The Journey of Divorce.

Further details of this new book are available at our websites, www.addictedtoweddingcake.co.uk or on Amazon here.

Speak to Churchouse Financial Planning Limited (or your independent financial adviser/ IFA) to help with advice on this issue. This statement is not individual advice and should not be relied on because each clients circumstances are different.

Keith Churchouse

Director, Churchouse Financial Planning Limited
Churchouse Financial Planning Limited is Authorised and Regulated by the Financial Services Authority