A raft of concessions unveiled in the 2014 Budget mean that pension savers will have far more flexibility about how they enjoy the fruits of their saving.

From next April it will no longer be compulsory to use the bulk of a private pension fund to pay a regular income. This has typically been achieved through the purchase of an annuity.

Instead, savers will have the option to draw some, or all, of the fund as a lump sum— or to dip into their pension pot as and when they choose from age 55.

While there is no requirement to buy an annuity, some savers may still want to use some of their savings to secure this guaranteed income. But they will be doing so on their terms, not because tax rules say they must.

Other measures already in force help those with small pension pots take the entire fund in one go and raise the maximum income for those in pension drawdown.

The pension changes put the spotlight firmly on the importance of advice. With more choices at retirement, it will be essential to discuss all these options with an experienced and highly qualified financial planner.

For business owners, where pension contributions can be made by the company from gross pay, it becomes extremely compelling to fund pensions and enjoy tax relief. One quarter of the pension is available tax free, with the rest taxed at the saver’s marginal tax rate.

We can envisage scenarios where a director or senior executive’s pension receives big contributions in the run up to retirement or a business sale, with funds then drawn back out shortly afterwards.

Take the case of a director who pays tax at 40%; for each £1000 of payroll cost to the business only £510 flows through into their hands after income tax and NI costs. Channelling this £1000 via a pension and drawing it as a lump sum would see the director get more than £680 net of all tax and costs. This is also a lower overall tax rate than drawing dividends.

There are limits to this new flexibility.  It only applies to those with defined contribution pensions, where savings from employer and employee are invested for growth. Those with defined benefit pensions, linked to your salary and length of service, will still receive the bulk of their pension as an annual income.

To discuss the wide range of new savings opportunities around your pension and other Budget developments, contact David Williams IFA today on 01604 621302.

But there is a vital reason to concentrate on the bad things in life. Protecting against the impact of accident or illness is the foundation of good financial planning.

If an earned income stops suddenly – and there is protection in place –  then the other plans you make for yourself, your business and your family can easily crumble.

For business owners and senior managers, the risks are doubled.  As well as looking after the family, there is often also a need to ensure the business can continue smoothly. This may mean providing resources for a business to hire in temporary executives while a senior person recovers from an illness.

It could also mean providing a substantial lump sum to allow partners or directors to buy out the share of someone who cannot return to work, or to purchase this from their family if there has been a bereavement.

David Williams IFA Chartered Financial Planners has huge experience in helping businesses and their senior figures safeguard against the worst.

Personal protection can include plans that provide a short or long term income after an illness, or a lump sum should you be stricken with a serious or terminal condition. This cover can be structured so that your firm pays the premiums.

And the safety net can be extended to the whole workforce via group death in service and group critical illness schemes. By widening the net to all, it is often possible for older workers and those with health issues to still benefit from some protection.

Business protection covers can include key person insurance, where a company pays to insure itself against the cost of replacing essential staff. It is also wise to insure long term business loans, especially where these are backed by personal guarantees.

Meanwhile, shareholder and partnership insurance provides vital funds should business owners need to buy out a co-director or partner, or that person’s beneficiaries. These plans normally run alongside appropriate trusts and option agreements that give both sides security in any transaction.

To discuss any of these options contact Stephen Womack at David Williams IFA on 01604 621302 or email to info@dwifa.co.uk

The Government is reducing the lifetime cap on the maximum value of a pension fund from £1.5 million to £1.25 million.  Those whose funds grow above the limit face a 55% tax on the excess at retirement. In the worst case, this reduction in allowance could trigger an extra tax bill of £137,500.

The reduced limit is a signal for higher earners, business owners and those with long service in a final salary pension scheme to review their savings. David Williams IFA, Northampton’s leading firm of Chartered Financial Planners, has been working with clients over the past few months to prepare for the rule change.

Fortunately, those whose accumulated pensions are already above the new £1.25 million threshold can choose to protect their funds. By registering with HMRC you are able to retain the existing £1.5 million limit, in return for accepting some restrictions on what you do with the pension.

Protecting the fund now will also help if the lifetime limit is cut further in future. Some politicians have called for a reduction to £1 million.

It is not only those whose pensions are already worth £1.25 million or above who need to consider protection. Younger executives or business owners with smaller funds could find that ten or 15 years of good investment growth puts them above the limit.

Take the example of a successful investor aged 45 who has used their pension to buy two commercial properties, each worth £400,000. Although worth £800,000 today, if these properties grow in value at 2% a year and each produces rent of £25,000 a year, the fund will be worth more than £1.475 million by the age of 55 – the earliest date they can start drawing an income.

This is an area where experienced and skilled financial advice is essential. An independent adviser can help in valuing existing funds and any accumulated final salary pensions. And an adviser will also be able to help you choose the best form of protection.

In some cases, once funds are protected it is not possible for any further money to be paid into a pension, either by the saver or their employer. Higher earners may need to negotiate with employers to replace pension contributions with extra pay or other benefits.

For more information, or to arrange an appointment to review your pensions, contact Nick Beal on 01604 621302.

Stephen Womack (right) receives his exam prize from Leicester CII Treasurer Mal Fairhurst

ONE of David Williams IFA’s financial planners has scored top marks in a key exam.

Stephen Womack was the top performer in Leicestershire in the Chartered Insurance Institute’s Regulated Diploma, the essential qualification to become a financial adviser.

His combined score from the six different exams which make up the Diploma was the best of the 47 candidates who qualified in Leicestershire in 2013. Although working in Northampton, Stephen is attached to the Leicestershire Insurance Institute because he lives in the county.

Stephen worked as a financial journalist for the Mail on Sunday for almost 15 years before switching to advising clients and joining David Williams IFA last year.

Stephen is not the only adviser at the firm celebrating. He and his colleague Alison Davies have also taken an important step towards becoming Chartered Financial Planners. Both passed advanced examinations on taxation and trusts in December, moving them nearer to the elite Chartered status.

David Sparrow, managing director of David Williams IFA, says: ‘We are delighted to see Alison and Stephen succeeding in their studies. Our clients can only benefit from working with financial planners who are qualified to advise at the highest level.

‘We are committed to continuing the professional development of all employees across the business.’

Companies have to offer and pay into a pension for all qualifying staff under the auto-enrolment provisions that are gradually being introduced over the next few years.

Employers with between 350 and 499 staff are bound by the rules from January 2014, followed in February by those firms with 250-349 on payroll. By April, any organisation employing more than 160 staff should have introduced pensions for their workers.

David Williams IFA Chartered Financial Planners has been working with businesses across Northamptonshire to tackle this looming pension challenge. But as the process moves from the largest employers to smaller and medium-sized businesses, traditional pension providers are becoming more selective about which firms they want to deal with.

• They are setting thresholds for a minimum number of ‘so-called’ eligible staff in a new pension, turning away companies with a high proportion of lower paid workers
• They may demand minimum average premiums that are far higher than an employer can afford to pay
• Companies with high rates of staff turnover, or with a significant proportion of the workforce on zero hours contracts, may also be rejected by pension firms
• Where companies already offer a pension to some workers, they may find their existing pension provider wants to change terms

Pension providers are also expecting employers to shoulder an increasing share of the administration supporting auto-enrolment. This may mean employers need to overhaul their payroll systems.

A second issue is a looming squeeze on capacity. More than 30,000 companies reach their start date for auto-enrolment between April and July 2014. Pension providers are going to be pressed for time to assist all these employers. Those firms who are talking to advisers and providers at least six months ahead of their start date are far more likely to have a smooth journey, and will ensure that qualified help is booked in the diary.

The right advice can help you steer a safe path through the auto-enrolment jungle, and David Williams IFA is experienced in finding the best ways to match a firms with a willing pension provider. We are familiar with new providers coming to the market who are offering more accommodating terms, for example.

Employers who start planning early and who have taken steps to update their payroll should also find more pension companies willing to help.

David Williams IFA  starts by helping employers with an auto-enrolment audit, allowing firms to assess their options. Contact Stephen Womack on 01604 621302 or email info@dwifa.co.uk for more information.

Share prices grew by almost a quarter in the two years to the start of October, for example. House prices in some sectors of the market have started to march forward again, benefiting homeowners and investment landlords alike. Commercial property too is showing signs of growth.

But one unwelcome side-effect of this recovery is that the nation’s rising wealth triggers a growing liability to inheritance tax.

This tax is levied at 40% on death, applying to the bulk of your private wealth above a £325,000 threshold. And recent market growth means that the bill for an untimely death is likely to be rising.

Inheritance tax is a tax of choice: you can do nothing and your family will pay the price later, or you can plan now to reduce that eventual bill.

It is an area where good advice can pay for itself many times over, and where David Williams IFA has deep experience in working with clients to cut their exposures.

There are valuable IHT exemptions around business assets for owner-managers. With sound planning, directors and partners can pass on their stake in a business to others without this transfer being taxed.

However, success in business will inevitably increase the value of your personal wealth and create a growing inheritance tax shadow there too.

Working in partnership with your solicitor or accountant, where David Williams IFA uses established planning techniques –that are recognised by HMRC – to assess and then mitigate these future tax bills.

Areas where we typically assist clients include:

• Pensions – use of trusts to ring-fence any pension funds if you die before claiming them. This means these often substantial funds are available to benefit your family, without becoming part of their estates and hence subject to future IHT.
• Tailored investment schemes – using business property exemptions to put investments beyond reach of the taxman after two years.
• Gifting – devising a strategy of one-off and regular gifts to capitalise on IHT exemptions.
• Multi-generational planning – if you are already facing an IHT bill, receiving a legacy from the generation above will simply compound the problem. Can this money perhaps skip a generation and be diverted from you to help your children or even grandchildren? Trusts can ensure that gifts or diverted bequests remain under your control.

To find out how we can help tame your potential inheritance tax bills contact David Williams IFA on 01604-621302 or by email at info@dwifa.co.uk.

The company’s annual golf day on September 11 raised funds to support KidsAid and the OurSpace Appeal.

The event, held at the Northampton County Golf Club in Church Brampton, saw 44 golfers play in a 18-hole Stableford competition.

Margaret Beal, one of six ladies playing, showed the rest of the field the way home, with a Stableford score of 37 as the best individual player. She was presented with the winning trophy by David Williams, founder of the company and our special guest on the day.

Donations from players were matched pound-for-pound by David Williams IFA. Then a well-supported raffle and auction boosted the charity total further.  In all, the two nominated charities share equally £4,300.

David Sparrow, managing director at David Williams IFA, says: ‘It was wonderful to enjoy the day in the company of long-standing clients and friends, knowing that we are also helping two such deserving causes.’

KidsAid is a Northampton-based charity which works with children and young people who have suffered from traumatic events, such as family breakdown, bereavement, domestic violence and abuse. Early intervention to support these children and young people brings real benefits to their lives and will help to ensure these traumas do not manifest in later years.

The OurSpace Appeal is an exciting project to create a world-class child cancer unit. It has helped establish a specialist ward for children and young adults diagnosed with cancer across Leicestershire, Rutland and Northamptonshire.  The money raised is being used to support outstanding care in a child-friendly environment.

David Williams IFA would like to thank the generosity of guests, the companies who donated money or raffle prizes and the staff of Northampton County for ensuring an excellent day.

L to R: Ashley Smith, Sue King, Lynette Douglas, Stephen Womack and Annabel Smith

ONE OF the most respected names from Fleet Street has joined David Williams Independent Financial Advisers, as Northamptonshire’s largest IFA firm continues to thrive.

Former financial journalist and Mail on Sunday columnist Stephen Womack has joined the team as a financial planner.

An award-winning writer and a qualified financial adviser, Stephen will be working with clients to help them achieve their financial goals. He will also have a role in marketing and developing new business opportunities for David Williams IFA.

Stephen has lived close to the Northamptonshire/ Leicestershire border since 2000, and has strong personal connections in both counties.

David Sparrow, managing director of David Williams IFA, says: “I am delighted that Stephen has joined us and that someone with his wide experience of financial services can appreciate the value we are adding for clients.”

Stephen says: “It is exciting to be part of David Williams and to be advising clients face-to-face instead of helping them through the pages of the newspaper.

“As a firm of Chartered Financial Planners, David Williams IFA is already operating at the highest level of advisers. Since joining I have been impressed by the commitment to professionalism throughout the firm and by the strong client relationships I have seen.”

Stephen is one of five recent recruits as David Williams IFA continues to deliver a high-quality service to a growing client base of personal and corporate clients.

Ashley Smith joined as a trainee adviser in July having graduated this year with a degree in accountancy and business. Ashley will be supporting director Nick Beal in his client work.

Lynette Douglas, an experienced financial services technician, has come on board as a personal assistant to financial planner Daniel Slack.

And the latest new recruits are Sue King and Annabel Smith, who both joined in August.

Sue has 24 years of experience in financial services and will be supporting director Phillip Cox, while Annabel is personal assistant to mortgage director Tim O’Neill. She will assist him in growing the company’s successful mortgage practice DWIFA Mortgage Services.

To contact David Williams IFA call 01604 621302, email info@dwifa.co.uk or visit www.dwifa.co.uk

Annabel Smith – Personal Assistant

Annabel joined David Williams IFA in August 2013 to become personal assistant to Tim O’Neill. Annabel has five years of experience in the sector, having previously worked for both an adviser and a mortgage provider.

Your Duties

Employers face complex new duties. These include:

• Assessing your workforce to check which employees you must pay in for
• Reviewing any existing pension scheme to make sure it meets requirements
• Communicating with workers in a prescribed way – giving them the right information, at the right time
• Automatically signing-up workers to an appropriate pension
• Paying and administering contributions on their behalf

Your choice

Either, to provide the bare minimum required by law.
Or, to set up a quality pension scheme that will be regarded as a valuable addition to your employees’ benefits package and help your business stand out from the crowd.

Most employers would naturally prefer to offer the latter – subject of course to the cost implications – and this is where we come in.

Our Offer
We are able to undertake an “Auto-enrolment Audit” for your business, free of charge, and

1. Confirm how much it will cost to install a quality scheme, and

2. Explain how this cost can be phased in over time to minimise the financial impact on your business.

Your Next Move

If you would like to take up our offer of a free “Auto-enrolment Audit” please contact David Sparrow on 01604 621302.