Financial Advice you can Trust

Future of the state pension

Mon, 04 Jul 2011 03:34:39 PDT

The National Association of Pension Funds (NAPF) has recently published research about introducing a simpler more generous state pension.

The report maintains that a level state pension of £140 per week would be simpler to administer, remove millions of people from claiming benefits and would not cost the taxpayer any more than the current state pension arrangement.

Under the existing state pension scheme a third of pensioners would be entitled to means tested benefits by the year 2055. The proposed revision would see only 5% of pensioners needing additional support.

A spokesperson from the NAPF concluded that: "It would particularly benefit low earners, women and the self-employed. It would also support 2012 pension auto-enrolment reforms by confirming that it 'pays to save' and that savings will not be eroded by means-testing," the NAPF said.

Interest rates will not increase soon

Thu, 23 Jun 2011 01:40:50 PDT

Interest Rates will be low for some time

The recent report from the Bank of England showed that the members voted 7-2 in favour of keeping interest rates on hold for the time being. This is now the 27th consecutive month that rates have remained at 0.5%.

The concerns over the economy and the global outlook means that we are unlikely to see a rise in interest rates for some time.

The Monetary Policy Committee also expressed concerns over it's prediction for inflation. It has estimated that inflation will top 5% at some point in the Autumn.

This does not bode well for savers that have cash based investments. Many investor are seeing their investments eroding in real terms as inflation is exceeding the returns available on cash based deposits. The question whether alternative investments should be considered is something that is probably troubling many investors.

Consilium Asset Management are investment advisers based in Bristol

FSA consult on accreditation

Tue, 21 Jun 2011 02:50:20 PDT

FSA Consultation paper on accreditation

The Financial Services Authority has proposed in its recent consultation paper concerning the bodies that will be able to accredit financial advisers from 2013.
In total the FSA received six applications and following consultation it was proposed that the following bodies are to be granted the ability to accredit its members

The Chartered Insurance Institute (CII);
The Institute of Financial Planning (IFP); and
The Institute of Financial Services (IFS).
CFA Society of the UK;
The Chartered Institute for Securities and Investment;
The Chartered Institute of Bankers in Scotland;

The requirement to obtain independent verification from an accredited body starts on 31 December 2012.

This will require advisers from December 2012 to hold an independent certificate of verification. Advisers that do not hold the certificate after this date will not be able to provide investment and savings advice.

The Financial Services Authority intends to consult later this year, with the intention of adding additional accredited bodies.

UK CPI increases to 4.5 percent

Tue, 17 May 2011 22:26:51 PDT

Rise in UK CPI

Yesterdays rise in inflation came as a shock. The rise exceeded the expectation of 4.1%

The consumers prices index(CPI) is the measure of inflation used by the Bank of England.

Although CPI was expected to rise after the drop in March the increase was more than expected. The UK Stockmarket reacted to the suprise and finished down 1% on the day

Time to review your investments?

Tue, 10 May 2011 01:15:47 PDT

Is it Time to review your Investments?

Would you like to increase your capital, improve your income or both? Your response will determine the kind of investments you choose and, furthermore, you have to be aware about the idea of ‘total return’. This is actually the way of measuring of performance - the specific rate of return of an investment or perhaps a pool of investments for a given period of time. Total return consists of interest, any capital gains made and dividend distribution realised over the given time frame.

Income and capital appreciation

Total return accounts for two categories of return: income and capital appreciation. Income consists of interest paid by fixed-income investments whilst combined with distributions or dividend payments. Capital appreciation or growth signifies the alteration in the market value of an asset. Total return looks to blend income with capital growth to get the best overall return.

Whether you choose an income or a growth fund will typically depend on your circumstances and objectives - in other words, your investment time frame, your attitude towards investment risk and what you need the investment to provide for you.

A regular stream of income

If you need a regular stream of income, focusing your portfolio on assets that will help you achieve this, such as cash and bonds, will provide a fixed income. If you have a longer investment time period or you do not need an immediate income, you could consider a larger allocation to growth-focused investments.

It is possible to buy an income fund and a growth fund to capitalise on the advantages that come with each type of investment strategy. Some investment service or fund management companies offer income and growth funds, that provide a bit of each style within the same fund; nevertheless, there's generally less choice available.

Whatever your preference, if you hold a variety of investments, both growth and income, you should be better prepared for future economic ups and downs. As your financial situation changes over time, you may need to make the necessary adjustments to your investment portfolio and switch from growth assets to income.

Investment timeline

Broadly speaking, younger people are saving for the long term and don’t necessarily need their investments to produce a current income but will be looking to guard against inflation. Under these circumstances growth funds may be more appropriate.

For middle-aged investors, funds that are biased towards growth are still usually the right option, however the amount invested will probably be greater due to higher income and savings acquired over past years. Having a secure capital base behind them, middle-aged investors might also think about placing part of their personal savings into some higher risk investments, for example more specialised pooled funds.

When investors begin to approach retirement, their priorities change. Having accumulated a capital sum, depending on their circumstances their investment adviser should start transferring towards resources that offer an income after they stop work. Although share-based investment funds have a tendency to do well in the long run, they might swing sharply in value over short term. So people close to retirement ought to think about changing into much more defensive, income funds at this stage.

PPI legal challenge ditched

Mon, 09 May 2011 07:09:12 PDT

Barclays fold on legal Challenge

The banking industry has discontinued its legal challenge over payment protection insurance (PPI) mis-selling, a move which will probably cost banks billions of pounds in compensation payments.

After a prolonged, time consuming fight involving the British Bankers’ Association as well as the Fsa over how PPI compensation claims need to be handled, the High Court last month ruled against the banks, ordering them to take care of past Payment protection insurance sales.

The BBA ended up being given until 10 May to lodge an appeal against the court’s decision. Today the BBA declared it won't appeal the judgment, a turning point in what has become one of the greatest mis-selling scandals of all time.

This news comes just days after banking giant Lloyds confirmed it had withdrawn its support for the appeal against the court’s decision.

Bob Diamond, chief exec of Barclays, meanwhile said: ‘We don’t always get things right for our customers; when we get them wrong, we apologise and put them right’.

Joining Santander and Lloyds, Barclays said it will start to process all on-hold and any new complaints from consumers about Payment protection insurance policies.

It's estimated that the PPI mis-selling problem could cost the checking industry as much as £10 billion in compensation and administration costs. Lloyds has recently announced it has set aside £3.2 billion for potential claims, and Barclays £1 billion.

PPI should cover loan repayments if ever the customer falls ill or seems to tumble their job, but providers have already been extensively criticised for the way they've gone about marketing this product.

Pensions Reform, auto enrolment, nest and employers responsibilities

Fri, 06 May 2011 01:00:35 PDT

Pension Reform and Employers

The 2008 Pensions Act will introduce Auto Enrolment, a major pension reform starting in October 2012.

Employers (starting with the largest) will be required to offer a workplace pension scheme that satisfies the new legislation. Requirements will be phased in over four years. From Oct 2016 all employers will be required to comply with the legislation.

Auto-enrolment is being introduced to tackle the issues that currently prevent employees saving for retirement and to make it easier for individuals to contribute to pension arrangements. This is required because people are living longer and therefore spend more time in retirement.

Employers will be required to contribute a minimum of 3 per cent on a band of earnings, although they can contribute more than this. The total minimum contribution for eligible employees must be 8 per cent of the band of earnings. This is made up of employer and employee payment plus tax relief.

Contributions will be phased in gradually for employers and employees, starting at 1 per cent and increasing over a number of years to the minimum level. This will help employers and workers adjust to the contribution costs.

Employers can choose the type of pension scheme they want to use. NEST (National Employers Savings Trust) is one type of pension scheme that has been designed to provide a straightforward, low-cost option. This type of scheme might be helpful for smaller firms who are not currently operating a company pension scheme.

Pension contributions must be reconciled and records must be kept. There will be strict rules regarding contributions and when the employer is obliged to make the payments to the chosen scheme. This will have an impact on the payroll. Any accountant or payroll service the employer uses. Third parties also need to ensure contributions are deducted correctly from the employee’s salary.

Businesses must ensure that auto-enrolment into a qualifying workplace pension is communicated to staff effectively and that they are not dissuaded from joining the scheme. When communicating the changes, employers need to consider factors such as staff demographics and allowing employees easy access to scheme information.

It will be a requirement to provide the scheme information to employees but employers will not be allowed to provide advice or act in an investment service role. This will create a dilemma for many businesses as employees will almost certainly ask questions about the relevant scheme.

If you would like to find out more information about the new pensions legislation please contact us.

Tax on Swiss Accounts

Tue, 03 May 2011 03:43:49 PDT

Swiss and UK come to Tax Agreement

A landmark agreement between the British and Swiss governments will force UK taxpayers to pay tax on undeclared money held in Swiss accounts. The tax levy of 50% was announced after the agreement was announced. The targeting of undeclared money held in private accounts will reportedly raise £3 billion and signifies a crackdown on tax havens used by UK taxpayers. investors caught by the new agreement will also be required to pay a retrospective levy for unpaid tax. Switzerland will legitimise the acounts and tax the accounts using a no named basis.

Life Planning Case Study

Fri, 15 Apr 2011 00:42:22 PDT

Life Planning

We now have a life planning case study that is available. If you would like a copy please email gbb@consilium-ifa.co.uk

April Newsletter

Mon, 04 Apr 2011 01:35:30 PDT

latest newsletter is available for you to download