Did Quantative Easing work for your financial Planning?

It is good to see that the stock markets of the world have shown signs of recovery from the falls that they suffered, reaching their overall lows in early March 2009.

The Bank of England, along with many central banks of the globe have continued with their Quantative Easing Programmes over the course of 2009 to help the flow of money around the markets and to try and curtail the effects of the recession. One significant point of interest is that the funds available to the Bank of England for their Quantative Easing programme are coming to an end and this initiative may cease before the autumn period. This raises the question of whether the overall process has worked in moving the economy forward and hopefully over the worst period.

Many are also predicting that the continued level of low bank base rates is unlikely to continue and that these are likely to rise in 2010. It is also muted by many pundits that inflation may also rise at the same time. Any rise in base rates may well be a welcome relief to deposit savers and correspondingly disappointing news for those with variable interest rate borrowings. I have commented on this below. With these changes ahead, financial planning continues to be a vital commodity for household economies.

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

Forestalling Update/Special Pensions Allowance

Following my last Blog on the Special Allowance, there has been an update following various lobby of the Government about the £20,000 limit.

Lobbying is continuing over the definition of what should be allowed as an ‘average’ contributions in the past 2/3 years, as an example, taking into account quarterly contributions. I will endeavor to keep you posted, although it appears that the £20,000 ceiling will stay in place.

It is interesting how pensions legislation and the pressures on employers to save for their employees are seeing other effects in the pensions industry, such as the closing of many final salary pension schemes (Defined Benefit Schemes), with the favouring of Money Purchase/Group Personal Pension options as alternatives.

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

Investing for Charitable Trusts in the current economic climate

The legal responsibilities of Trustees (whether they be for a Charitable Trust or for other entities, such as occupational pensions) have increased significantly over recent years. For Trustees to Charities this is evidenced by the Trustee Act 2000 that came into force on 01 February 2001. This legislation was introduced to keep pace with the evolving investment market, following the previous legislation in 1961, referred to as the Trustee Investment Act (1961). The new act, amongst other points, introduced new powers of delegation, new powers for the appointment of agents and introduced appropriate safeguards for the operation of the new powers including a duty to take proper advice in relation to investments and a statutory duty of care. This is detailed further on the Charities Commission page CC14, section E, 61.

This guidance has become all the more relevant in the current economic climate and taking independent financial advice is vital to protect the interests of the Trust and provide protection to the Trustees. This can include advice on where assets are invested, including cash, Government stock and equities, if this is right for the Trust.

It is also important that any existing investment decisions are reviewed on a regular basis to ensure that they remain prudent in the current volatility.

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

Look out for Special Annual Allowance in your proposed pension contributions

This is an interesting one and follows on nicely from our my last blog.

Some clients have started to enquire if it is possible to offset the proposed income tax increase to 50%. I have detailed the points for this in the previous blog.

However, there is a new special annual allowance of £20,000. This will be applied to any savings made that exceed the normal pattern of your contributions. Savings over and above the £20,000 level will be taxed at 20% for 2009/2010 and 2010/2011. Although not yet finalised, on the introduction of the 50% higher rate tax level, this special tax charge may increase to 30%.

More details can be found in the HMRC document entitled: PENSION SCHEMES: LIMITING TAX RELIEF FOR HIGH INCOME INDIVIDUALS
SPECIAL ANNUAL ALLOWANCE.

This can be found here: http://www.hmrc.gov.uk/budget2009/pensions-technical-1550.pdf

Planning for pensions is key to ensure that the contributions that you make are as effect as possible.

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