News & Events

Reading Time | < 1 min 29 Mar 2016

Demand for cashing in pensions “settling down”

A year on from the introduction of pension freedoms in 2015, the demand for cashing in pensions pots has begun “settling down” according to data from the Association of British Insurers (ABI).

Annuities have seen a rise in popularity while the number of outstripped income drawdown products rose in the last quarter to 21,200 - worth £1.1 billion.

The ABI’s latest data shows that since April 2015:

£3 billion was paid out in 213,000 cash lump sum payments, with an average payment of £14,800
£2.9 billion was paid out in 835,900 income drawdown payments, with an average of £3,500
£4.2 billion was invested in 63,600 income drawdown products, with an average fund of £66,000
£3.3 billion was invested in 61,700 annuities, with the average fund of £53,000.

Dr Yvonne Braun, director of policy for long term savings and protection at ABI, said:

"Following some initial pent up demand, the number of people accessing their pension pot as cash in one go has settled down. People are taking a sensible approach and considering how they will pay for their whole retirement.

"Our key challenge remains ensuring people save enough for their retirement. With increasing life expectancy and declining final salary pension provision, we must turn our attention to helping customers grow bigger pots."

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Reading Time | < 1 min 24 Mar 2016

Lack of policies supporting gender pay gap

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The gender pay gap represents a significant loss to productivity, according to research by the Women and Equalities Committee (WEC).

The gender pay gap is the difference in hourly pay rates between the average man and woman in both full and part-time employment. Currently the gap stands at 19.2%. The gender pay gap does not measure the difference paid to men and women in the same or broadly equivalent roles. The WEC has highlighted a number of key causes of the current gap:

the part-time pay penalty (41% of female workers are part-time compared to 21% of men)
women’s inconsistent responsibility for childcare
unpaid caring
concentration of women in industries associated with low pay and low progression.

The pay gap has remained at roughly the same level for the past 4 years, falling from 27.5% in 1997. Women aged over 40 have been the most effected by the gender pay gap, while women aged 50-59 are facing a 27% disparity in pay.

The WEC also found:

men and women sharing childcare is an effective policy lever in reducing the gender pay gap
women trapped in low paid part-time work below their skill level resulted to pay disparities, contributing to skill costs up to 2% GDP (around £36 billion).

Chair of the committee, Maria Miller, MP, said:

"The gender pay gap is holding back women and that isn’t going to change unless the government changes its policies now.

“If the government is serious about long-term, sustainable growth it must invest in tackling the root causes of the gender pay gap. Adopting our recommendations would be a significant step towards achieving the goal of eliminating the gender pay gap within a generation."

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Reading Time | < 1 min 23 Mar 2016

Many grandparents planning on passing inheritance to grandchildren

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70% of grandparents are planning on leaving an inheritance to their grandchildren, while 55% will ring fence the money to ensure it is passed on, according to research by SunLife (SL).

Half of the grandparents surveyed enjoyed spending time with their grandchildren more than they do with their own children.
This has led to the decision for grandparents to pass on their will directly to their grandchildren.

SL also found:

• 80% of grandparents provide some form of childcare to their grandchildren, ranging from babysitting, school runs and day care
• grandparents spend an average of £62 a month on their grandchildren
• the most popular things bought for grandchildren are days out, toys and books.

Overall grandparents do to not discourage spending money on their grandkids, however a third dislike the idea of having to cover for school and travel expenses.

Ian Atkinson, spokesman at SunLife, said:

"It's not news that grandparents love their grandchildren and are more than willing to help out with childcare - but it is interesting to see that actually, almost half feel put upon at least some of the time. And the fact that over two thirds plan to leave an inheritance direct to their grandchildren shows how much they're in their thoughts.

"Of course, if you are planning to leave your grandchildren an inheritance, it's important to have an up-to-date will. Without one, the law will decide what happens to your estate so your wishes might not be met."

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Reading Time | 2 mins 22 Mar 2016

Lifetime ISA may be unsuitable product for many

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Chancellor George Osborne announced in his Budget statement of a new lifetime ISA for people under the age of 40.

The scheme will allow people to save up to £4,000 a year and receive a 25% government bonus from April 2017.

Research by Royal London (RL) has found that the lifetime ISA could be an unsuitable retirement saving vehicle for those who opt for it over a workplace pension.

For those who may consider opting for a lifetime ISA as part of their savings strategy, here are some things to consider:

the average age of a first time buyer is 31 and likely to rise, meaning that those using a lifetime ISA to save for a house purchase and then retirement will not be saving for retirement until their thirties (whereas auto-enrolment ensures they will receive a workplace pension from 22)
government bonus contributions stop at the age of 50, while funds can’t be accessed without a 5% penalty until the age of 60
beyond the age of 50, the tax break on the lifetime ISA is only equal to a standard tax rate relief which could affect higher earners
the government bonus from a lifetime ISA is unlikely to match the employer contributions to a workplace pension
lifetime ISA offers no effective tax break for those over 50 who are paying no income tax, compared to a workplace pension which offers up-front tax relief.

RL director of policy, and former pensions minister, Steve Webb, said:

“There is a real danger that the new product will mean that many young people will not start pension saving for their retirement until their thirties or beyond and will struggle to make up for lost time.

“The price of helping young people to buy a house should not be that they have to work until they drop because of inadequate retirement saving.”

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Reading Time | < 1 min 21 Mar 2016

Millions of self-employed to miss out on National Living Wage

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1.73 million self-employed workers will continue to be paid below the national living wage (NLW) when it comes into effect from April 2016, according to research by the Social Market Foundation (SMF).

49% of self-employed workers are in low pay on an hourly basis, compared to 22% of full-time employees. On a monthly basis, this rises to 55% of self-employed workers and 29% of employees.

Self-employment has grown by a quarter since 2000, now accounting for over 1 in 7 workers in the UK.

SMF also found:

64% of low paid self-employed workers have no income from savings, investments or pensions, compared to 36% of low paid employees
77% of low paid self-employed workers in London have no other sources of income aside from employment earnings
28% of low paid workers are likely to live in low income households, compared to 19% of low paid employees.

The NLW will come into force from April 2016, setting a wage of £7.20 an hour for paid workers aged 25 and over.

SMF chief economist Nida Broughton, said:

“The government has focussed its efforts on tackling low pay among employees. But in doing so, it is further sharpening the divide between employee and self-employed.”

Mubin Haq, director of policy & grants at Trust for London, added:

“Stronger measures are needed to tackle this including specific sector support and examining the role of contractors in increasing the wage floor.”

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Reading Time | < 1 min 18 Mar 2016

Low earning self-employed need more support

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Changes are needed to the level of financial support for low earning self-employed workers, according to The Low Incomes Tax Reform (LITRG).

The chancellor announced a number of measures relating to self-employed workers in his Budget 2016 statement, including:

from 2018, class 2 national insurance contributions for the self-employed will be abolished
providing people with working tax credit claimants with access to business and mentoring support
the new enterprise allowance scheme will be extended to self-employed universal credit applicants.

Plans have also been set for face to face trial support and providing jobcentre advisors in the Department for Work and Pensions for self-employed working tax credit applicants.

A new HMRC helpline will be introduced for new business start-ups with phone lines operating 7 days a week.

LITRG Chairman, Anthony Thomas said:

“We particularly welcome the announcement of a dedicated helpline for new businesses as we recommended this to the Office for Tax Simplification. We wait to see if the investment in HMRC call centres results in shorter waiting times for businesses trying to understand their tax position and responsibilities.

“Nevertheless, low income self-employed workers will face difficulties with the introduction of universal credit, especially as the minimum income floor will result in many being treated as earning the national living wage for a 35 hour working week, even if their business is still building up or they have hit a bad period.”

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Reading Time | 2 mins 18 Mar 2016

GPs – Succession planning

Reading Time • 2 minsOne of the key issues affecting GPs is succession planning. A lack of planning in this area can result in...

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Reading Time | < 1 min 17 Mar 2016

Changes in commercial stamp duty rates

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New stamp duty rates on commercial property are set to be introduced from 17 March 2016.

Announced by the Chancellor George Osborne at his Budget 2016, the way stamp duty is applied on commercial properties and leasehold rent transactions will change.

The new rates include a 0 rate band on property purchases up to £150,000. This will rise to 2% between £150,001 and £250,000, and 5% above £250,000.

Commercial property purchases worth up to £1.5 million will pay less in stamp duty, while leasehold rent transactions will be charged with a 2% stamp duty rate on new leases with a net value over £5 million.

In his speech George Osborne, said:

“These reforms raise £500 million a year. And while 9% will pay more; over 90% will see their tax bills cut or stay the same.

“So, if you buy a pub in the Midlands worth, say, £270,000, you would today pay over £8,000 in stamp duty. From tomorrow you will pay just £3,000.”

Rob Mayo, commercial property insurance specialist at NFU Mutual, said:

“Business owners will benefit from a reduction in or the removal of stamp duty on commercial property purchases however landlords will actually pay an extra 3 per cent.

“Coupled with the fact that neither will they qualify for a reduction in capital gains tax, landlords are being penalised for their choice of business enterprise and this could deter new landlords entering the market.”

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