Thursday 15 November 2012

Yardstick Marketing & Pensions Matter – Caution

This is a blog of my recent experience with these companies:
I was working from home this morning to get a bit of focus time, and was cold called. Now, my numbers are registered with the telephone preference service (TPS), so I shouldn’t get many cold calls at all. I was intrigued with this one because of the offer of a £1000 cash bonus if I had a pension and was under age 60. Sounds like a freebie to me! And I’m well under 60. It’s also a financial promotion, but I’ll leave that for another day.
So I pressed 5 on my keypad, as I have a pension and I’m under the age of 60.
I then got through to a young lady, we’ll call her Doris, who asked me a few questions about my pension which I was happy to supply. If Doris had asked ‘are you a regulated pensions specialist’ I imagine the call wouldn’t have gone on for very long! She did read out a disclaimer, quickly, which indicated that her firm (I forget the name) didn’t provide financial advice, and Doris then said she would get a case handler to call me back in 10 minutes to discuss my pension further.
10 minutes later another phone call interrupted my well-earned peanut butter sandwich.
This young chap, let’s call him Ben, explained he was from Pension Matters, which wasn’t strictly accurate. Pension Matters is a regulated FSA firm. Pension Matters Associates Ltd, who Ben was calling from, is not.  At all.
Ben wanted to get hold of my pension fund details so they could tell me if it had been under-performing or not. Their Independent Financial adviser would advise me on this. Which is strange because they don’t have an IFA working for them and they’re not authorised to deal with pensions. But Ben assured me that I’d get my £1000 cash bonus that Doris had already told me, and with Christmas approaching I’d be foolish not to say no!!!!
The conversation then went a little bit, or very much, like this:
Me: Who pays the £1000 cash bonus”, because there is no such thing as a free lunch, right?
Ben: Yardstick Marketing pay you the £1000.
Me: just for telling me if my pension is underperforming?
Ben: No, you’d have to transfer it
Me: how much would that cost?
Ben: It’s free without obligation.
Me: I get £1000 free and without obligation?
Ben:…………………erm
Me: So Pension Matters are going to pay you enough that you’ll pay me £1000?
Ben: Yes
Me: Which means that they will have to earn enough money from moving my pension to be able to pay you guys at Yardstick Marketing and Doris?
Ben: ………..Yes
Me: So who pays Pension Matters Associates? I think I must do. Does this mean that the £1000 cash bonus was mine in the first place? You’re giving me back money I’ve just given to you??
Ben: No, it would come from your pension.
Me: So that £1000 was in my pension?
Ben: Yes
Me: Ben, I think you’ll find in pension legislation that’s called an unauthorised payment Ben….Ben……….are you there?

So, if you get called by Yardstick Marketing, or Pension Matter Associates, or Doris, then my best advice for you is to avoid them. Unless you’re like me and you enjoy a jolly bit of sport.

Saturday 28 July 2012

1 Minute Guide to University Tuition fees and Tuition loans

The academic year beginning this autumn will see a new regime for student finance introduced in England.
Tuition fees
The biggest change, which only affects students starting their courses this autumn, is the increase in the tuition fee cap. For 2011/12 the ceiling was £3,375, but for 2012/13 it will rise to £9,000. When the proposed increase was first announced, the expectation was that few universities would charge the full £9,000. In practice, it now looks as if most courses will carry the maximum fee. 
As is the case today, the fee does not have to be paid up front, but can instead be covered by a tuition fee loan. Theoretically, a wealthy parent or student could pay the fee rather than take the loan and some universities are even offering discounts for a year’s fees paid in advance but; in practice, taking the loan will often be the best option – even if the cash is available. 
Maintenance
The financial screws are also being tightened in the area of maintenance provision. As last year, if the student’s family income is not more than £25,000, a full grant (up to £3,250 in 2012/13) is payable. However, above that level the grant is scaled back and by £42,600 of income it will have disappeared. The corresponding figure for 2011/12 was £50,000.
Maintenance loans (reduced by 50% of any maintenance grant) are also available. 65% such a loan is available regardless and the remaining 35% (28% in 2011/12) is means-tested. The 2012/13 means test assumes a ‘parental contribution’ of 20% of all ‘residual income’ above £42,875 in 2011/12. Residual income is, broadly speaking, gross income less pension contributions and allowances for other dependent children. In 2011/12 the same parental contribution percentage applied, but the starting point was £50,778 of residual income. 
Loan repayment
The existing scheme generally charges no interest on student loans, but simply revalues them in line with inflation. Loans have to be repaid at the rate of 9% of gross income over £15,000 in 2011/12 (for a student graduating in 2011/12) and over £15,795 in 2012/13 for such a student.
For 2012/13 students, repayments (again at a rate of 9%) apply to income above £21,000. The rate of interest charged is inflation plus 3% during the period of study and once income exceeds £41,000 a year. If income is £21,000 or less, then only the inflation rate is charged, while between £21,000 and £41,000 a sliding scale applies.
Loans are written off after 30 years from the date repayment was due to start, on death or on permanent disablement. 
What next?
A student starting university this autumn could well graduate with a debt of £50,000 in summer 2015. The maths suggest that many will eventually see part of their debt written off, which is the reason why paying up-front fees looks unwise. 
The world is changing if you want to plan for your children’s (or grandchildren’s) university costs. The loans are potentially much larger and the “interest” is no longer as low. Curiously, the result is that there is now a greater incentive to cover the repayments as they fall due rather than clear the debt, or avoid creating it in the first place.

Friday 27 July 2012

Looking for Aggressive tax avoidance schemes?

June saw the media launch a full frontal attack on aggressive tax avoidance schemes in the wake of a series of ‘revelations’ in The Times. 
Even David Cameron joined in, describing the comedian Jimmy Carr’s involvement in a complex Jersey-based scheme as ‘morally wrong’. 
Tax avoidance and tax evasion
Although politicians (and sometimes HMRC) tend to speak of tax avoidance and tax evasion in the same breath, there is a significant distinction between the two:
Tax avoidance involves arranging your financial matters within the terms of existing legislation to reduce or eliminate tax liabilities. The law now requires details of nearly all complex tax avoidance schemes to be reported to HMRC. Similarly, anyone who uses such a scheme must give details on their tax return (usually just an eight digit reference number given to the scheme by HMRC). Designing and using tax avoidance schemes is not illegal.
Tax evasion will normally involve hiding wealth and/or information from HMRC. The classic example used to be putting money into an offshore bank account and not declaring the interest earned. Tax evasion is illegal and, as Lester Piggott the famous jockey showed, can result in time spent behind bars.
The thickness of that prison wall
 40748173 healey203 Looking for Aggressive tax avoidance schemes?, Finance Advice, Wiltshire
To quote Denis Healey, a Labour Chancellor of the 1970s, ‘The difference between tax avoidance and tax evasion is the thickness of a prison wall’. That wall can sometimes appear surprisingly thin.
The schemes which grabbed the headlines this summer were at the ‘aggressive’ end of the tax avoidance spectrum, often pushing the interpretation of the law to its limits. However, the Courts and Tax Tribunals are themselves increasingly adopting a more robust approach to the aggressors. A tax avoidance scheme can be legal, but still fail, leaving the would-be avoider with no tax-saving, interest on overdue tax and legal/advisory costs. 
Past, present and future
A fair slice of the press coverage tended to concentrate on celebrity more than fact, which meant some valuable detail was missing:
jimmy carr 2252620b Looking for Aggressive tax avoidance schemes?, Finance Advice, Wiltshire

The K2 scheme used by Jimmy Carr relied in part on interest–free loans and an employer-financed retirement benefits scheme (EFRBS). 
The latter were the subject of anti-avoidance legislation announced in December 2010 and legislated for in last year’s Finance Act. 
As far as the loans are concerned, HMRC will always want to be satisfied that they are genuine, repayable loans. 
The Eclipse 35 film scheme, which had several high profile football managers among its users, was found not to qualify for tax relief by the First-tier Tribunal in April 2012. However, the investments were made six years earlier, shortly before revised legislation was introduced to restrict tax relief for film investment, other than by film production companies.
At much the same time as all the tax avoidance publicity, the government launched a formal consultation on a General Anti-Abuse Rule (GAAR), targeted at closing down aggressive avoidance schemes. The legislation for this will be in next year’s Finance Act.
What is acceptable?
The attention given these low-profile, highly complex schemes, has once again raised the issue of when acceptable tax planning becomes aggressive tax avoidance. 
The boundary between the two has undoubtedly moved, with the current round of austerity reducing the acceptable area. 
It is hard to imagine today any judge echoing the 1929 comment of Lord Clyde that ‘No man in this country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores.’ 
Summary
There is no suggestion that normal tax planning, such as arranging ISAs or contributing to a pension, has suddenly become unacceptable avoidance. 
If you think you are paying too much tax, do not let all the recent publicity prevent you from seeing what can be done to reduce your payments to the Exchequer. In many instances there is scope to reduce the Chancellor’s slice by tried and tested (and non-contentious) means.

Tuesday 17 July 2012

Changes to Employer Staging Dates

Employer’s staging dates have been extended to February 2018. 
The staging dates from March 2014 to May 2015 will only apply to employers with 50 to 249 people in their PAYE scheme as at 1 April 2012.
Where an employer has less than 50 employees in his PAYE scheme as at 1 April 2012 the revised staging dates are set out below:
40 to 49 employees – 1 August 2015
30 to 39 employees – 1 October 2015
Less than 30 (First PAYE income paid before 1 April 2012) Between 1 June 2015 and 1 April 2017 
Where an employer sets up a new PAYE scheme between 1 April 2012 and 30 September 2017 the employer will be assigned a staging date between 1 March 2017 and 1 February 2018.
Where an employer sets up a new PAYE scheme on or after 1 October 2017 the employer will have an immediate staging date where the employer is paying PAYE income in respect of any worker.
Where an employer did not have a PAYE scheme, their staging date will be 1 April 2017, while new employers set up after 1 April 2017 without a PAYE scheme, will have an immediate staging date where they pay qualifying earnings to a worker.
Transitional phasing in period for money purchase contributions 
The regulations also now confirm the one year delay in the phasing in of the minimum employer and minimum aggregate contributions for automatic enrolment, where the qualifying scheme is a money purchase scheme. The revised phasing in periods will be as follows:
Minimum Employer Contribution
First transitional period (years 1 – 5 from 1/10/12) 1%
Second transitional period (year 6 from 1/10/2017) 2%
Fully in force (year 7 onwards from 1/10/2018) 3%
Minimum Total Contribution
First transitional period (years 1 – 5 from 1/10/12) 2%
Second transitional period (year 6 from 1/10/2017) 5%
Fully in force (year 7 onwards from 1/10/2018) 8%
The transitional period for defined benefit and hybrid schemes will also be extended to finish on 30 September 2017.

Thursday 5 July 2012

Which payroll software is the best?

If you’ve been trying to decide which payroll software is best for your company payroll, you’ll already know that there are many payroll providers in the marketplace.
I wouldn’t be surprised if your accountant had recommended Sage Payroll to you. 
Accountants can earn commission from selling you the software and by providing training for it, even if they don’t happen to like Sage’s software themselves!  I know, because I used to work in the Accountant’s Division at Sage!
I’d like to share with you the software we use, and have been using for some time now.
We wanted software that had no training required. It had to be online. It had to be intuitive software. And it had to be useful. Oh, and relatively cheap as well!
The Payroll Site delivers pretty all of that experience, so if you’re in the market for a simple, online, cost effective payroll solution, this could be it.

Tuesday 3 July 2012

How to get free Company & Director information

Historically you’ve probably used a combination of internet research and Companies House to obtain information on companies and directors. Companies House charges you a relatively small amount for annual accounts and other statutory forms.
You may like to have a look at a this website which provides company and director information, currently free of charge, called Duedil (which I presume is short for Due Diligence).
Duedil has some great features, including allowing you to compare companies side-by-side as well as being able to save them under ‘competitors’, ‘suppliers’ or your own category.

Monday 2 July 2012

Small Pension Funds

In pensions, this is known as a ‘trivial’ pension. Trivial commutation simply means taking the pension fund as a lump sum. Triviality rules are the rules which apply to these small sums.
As long as you’re over 60, and the total benefit values of all your pensions is less than £18,000 (2011/12), you may be able to take the whole £18,000 in one go.
Sort of.
The first 25% is tax free. The balance of 75% will be taxed as if it were income.
And you don’t get a choice in the matter as HMRC have instructed pension scheme providers to deduct the tax before sending it to you!
If you happen to be a high or higher rate tax payer at the time, you’ll also be paying the additional tax rate over and above the 20% that’s being deducted by the pension provider.
An extra rule for non-occupational schemes is that if you have a one or two small pension pots of £2000 or less in each, you can take these under triviality rules as well.
If you’re considering taking your pension benefits under triviality rules, be very careful and take advice from an appropriately qualified adviser.
Getting it wrong could leave you liable to an unauthorised payment charge of 40% on the amount of the unauthorised payment – something possibly worth trying to avoid!

Sunday 1 July 2012

Email productivity tips

I don’t know about you, but I have historically struggled with my email inbox. It seems that there is a constant stream of emails to action or respond to. And not just when you’re in the office, but when you’re out and about and there they are, on your iPhone or Blackberry.
As a subscriber to Andy Bounds (link at the end of this post), one of his ‘Tuesday Tips’ I found to be extremely useful when dealing with emails, and here is his 4 step guide to email productivity:
When you receive an email either:
  • Deal with it there and then
  • Delete it
  • Delegate it to someone else
  • Diarise it till a specific day or time
By following these simple rules, and trying to just check my emails once or twice a day, this saved loads of time.
The biggest time saver for me though was by delegating my email to a trusted colleague. Anything they can’t deal with they ‘star’ (we use Google Apps for business) for me to look at later. This means that email is being monitored and dealt with by the right person.
Andy’s tips are very useful – have a look here.

Saturday 30 June 2012

Insurers may have to insure you, even if you’re uninsurable.

Price Comparison websites have received a fair bit of bad press over the years, and they’re a good starting point for getting some initial ideas on pricing and types of insurance.
Car insurance is more straightforward and websites like GoCompare are pretty good for comparing common features and benefits.
What Price Comparison Websites don’t do as well is compare the different benefits provided by different insurers and their contracts for life and critical illness insurance policies.
Here’s a ‘for instance’: Guaranteed Insurability (GI)
Some contracts include GI, but many don’t. GI means that, in certain circumstances, the insurer must offer you insurance at your own rates, even if you’ve become uninsurable due to ill health.
You can imagine the situation where someone moves home, only to find that due to their ill health they are declined further insurance by their insurer and cannot protect their family against the increased mortgage balance. Whereas, if the policy had GI written in to it, the insurer would have little choice in the matter.
GI has of course certain limitations, but can often be included in your plan from the outset at little or no extra cost.
Not all providers include GI, so speak to your adviser to find out more about Guaranteed Insurability and make sure your life or critical illness insurance has some.

Thursday 28 June 2012

Aviva Annuity Advert – did you see it?

I noticed an interesting advert in the Daily Mail this week, by Aviva selling their lifetime annuity (see below).
Aviva are one of many lifetime annuity providers, and sometimes provide some pretty competitive rates.

Now, if lifetime annuities were the only type of annuity, then I would tend to agree that you only get one chance, because that’s how a lifetime annuity works:
You send part or all of your pension fund to a provider like Aviva and in return they provide you with an income designed to last for your lifetime. They are often selected by people who do not want to revisit things at a later date – think of it as ‘fire and forget’.
For those who don’t want to make an irrevocable choice, a temporary annuity might be worth considering.
In the case of a temporary (also known as a term annuity), your annuity lasts for a specified term, for example, 6 years. At the end of that term, you get to make another choice.
Of course there are risks with both lifetime and term annuities which you should discuss with your adviser, and annuities are not the only way of taking an income from your pension fund.
However, my main point is that if you take the Aviva advert at face value, you might think that there is only once choice of annuity, when both you and I now know, there is more than one choice.

Annuity Planner from the Pensions Advisory Service

The Pensions Advisory Service (TPAS) has provided an excellent Annuity Planner. If nothing else, it gives you an idea about many of the options which are available to you. Remember though, it’s not a calculator nor does it provide any form of advice for you.
Click on the this link to access the Annuity Planner.

Wednesday 27 June 2012

NEST 8 Golden Rules for Autoenrolment

One of the key aspects of an employer’s pension scheme for autoenrolment is ensuring that you communicate effectively with your workforce.
The National Employment Savings Trust (NEST) has revealed their 8 Golden Rules:
1. Keep it real: Use examples people can relate to and avoid abstract concepts.
2. Rights not responsibility: Tell people what they’re entitled to not what they should be doing.
3. Out with the old: Make pensions relevant to their lives now and don’t focus on the details of retirement.
4. One for all: Make it clear automatic enrolment is happening to most workers, not just them.
5. Tell it like it is: Present the facts and avoid ‘spin’- people want to make up their own minds.
6. Give people control (even if they don’t use it): Tell people about their choices and not that everything’s done for them.
7. Take people as you find them: Give people access to information that matches their knowledge and interest.
8. Be constructive: Tell people about solutions, not problems or scare-stories.
Our opinion is that there’s no better time to start simplifying the pensions regime than right now. However, the 8 rules seem to be more about marketing and less about actually sorting out pensions legislation, of which the Pensions Act 2008 simply added to.
Simplification was previously attempted in 2006 – there were even exams for advisers on ‘pension simplification’ an terms such as ‘tax free cash’ were changed to become ‘pension commencement lump sum’ even though you didn’t have to ‘commence your pension’ to take the it.
Here’s the link to their research it you’re that interested. NEST cost £120million to set up, so hopefully you’ll think there is value to money in this research.
Please note that the earnings trigger for autoenrolment is now £8,105.

Thursday 21 June 2012

Autoenrolment Seminar

Brian was an invited speaker to a seminar on autoenrolment for local businesses today, hosted by White Horse employment, also based in Trowbridge.
Autoenrolment (AE) into employer’s workplace pension schemes starts its roll out in a matter of months. Adding a whole new level of regulations to pensions, virtually every employer will be effected. The process starts with larger organisations so HR departments and finance departments will need to work closely together to ensure their organisation isn’t penalised by the Pensions Regulator.
Sharing the platform with Phil McCabe (employment solicitor at Sylvester Mackett), Brian shared details of some of the challenges ahead for business owners and managers, and some of the less know facts about autoenrolment.
Feedback from 100% of the 48 participating firms who completed our feedback form was rated good – excellent.

Wednesday 13 June 2012

EU Gender Directive – women’s life insurance costs to increase

Do you recall something in the back of your mind about the new EU Gender Directive?
This is where the EU has decided that insurers who charge different prices to females than to males, and vice versa, are discriminating against females………….or males.
Ladies live longer than men, apparently. Thus, actuaries used to give ladies better pricing on their life insurance, as well as car insurance, but not on annuities (because they’ll live longer of course!).
What does this mean for you?
If you are a lady then, from 21st December 2012, the cost of buying new life insurance will increase, possibly by around 15% according to HM Treasury (December 2011). 
In real money, this means that if you were paying £50 per month on a 20 year level term plan, it may go up to £57.50 per month. Over the 20 year term, you’ll pay £1,800 more.
It may also effect those of you ladies who have reviewable premiums and you may find that your premiums increase by more than you thought they would.
So, does this mean that the cost of men’s life insurance is going to reduce then? Unlikely, simply because ladies cannot be priced below men’s prices, doesn’t mean that men should be priced less than they are already.

Sunday 12 February 2012

Clarke Willmott

I was delighted to be invited to watch Bristol Rugby team play (sorry, thrash) Moseley at the Memorial Stadium in Bristol today.   Thanks to Clarke Willmott Financial Services Litigation Team for their generous hospitality, and we look forward to working with them closely in the futuref

Friday 10 February 2012

Birds flying the NEST

NEST is the National Employment Savings Trust which has been set up by the government, specifically for auto enrolling employees after October 2012 (although a few employers have already signed up to NEST).
According to a recent survey by Punter Southall, only 5% of surveyed employers intend to use NEST.  With all of the radio advertising that the government is throwing money at, it doesn’t seem to be reaping dividends.  This could of course be down to the restrictions that NEST members have, such as not being able to transfer in or out of the scheme.  Or it could be the excessively high charges on pension contributions of 1.80% (a small scheme we set up this week had only 0.40% on pension contributions!).
Employers we speak with don’t seem to have a huge amount of trust in ploughing more money into a government scheme – they do that already through National Insurance contributions!
We’ll be running a seminar on auto enrollment in April, so if you want to find out more about auto enrollment and get some information you can use, come along.  Further details to be posted here soon.

How to source a graphic artist

If you’ve dealt with Jones Hill over the last couple of years you may have noticed our new logo a few months ago.
We sourced a designer through DesignCrowd - freelance designers bid on your project, and also put up examples of how they would design your logo. We then shared the designs with our clients, colleagues, friends and family using Facebook, email and twitter. The design you see now was chosen by everyone else through voting on DesignCrowd, not us, so we’re not to blame!
The successful designer was Chris Aldridge. Chris’s 3 designs were all in the top 8 chosen by our voters. Chris has gone on to design other items such as business cards and posters for Jones Hill.

Thursday 9 February 2012

Don’t lose out in retirement

You may be heading towards retirement, and if so you’ll probably be spending a bit of time wondering what you’re going to be spending your time doing.
A recent report from the National Association of Pension Funds (NAPF) found that not many people give much thought to their retirement income, to the tune of £1billion in income.
If you have been saving into a pension, perhaps your own pension or your employer’s scheme, you should get an ‘offer’ in the post just before you hit your nominated retirement date.  They strongly encourage you to take your pension, with Zurich, for one example, putting in bold: Claim Now!
It looks pretty easy – just complete a few details, sign and return.  Unfortunately, according to NAPF’s report and our experience, taking the pension company’s offer could cost you dearly in settling for an income which could have been significantly improved by a different provider.
There are hundreds of different permutations of annuity and several different types.  Many of our clients choose temporary annuities, rather than being locked in to an irrevocable lifetime annuity.
The vast majority of providers will only offer what they can sell you, and won’t clearly provide all options available to you.  Get expert, independent advice on choosing your retirement vehicle – you may otherwise be paying toward some of those nice fat-cat bonuses in the city for the rest of your life!
None of the information contained within this website, or the form in which it is presented is intended to be, or should be, taken as a recommendation, either implied or expressed, to make any particular financial decision.

Wednesday 8 February 2012

Auto Enrollment for Employers – Seminar

News hot off the press is that we will be speaking at a seminar on auto enrollment (date to be advised) alongside Philip McCabe of Sylvester Mackett  (also based in Trowbridge), probably to be held at Cumberwell Golf Cub in Bradford on Avon.  Designed to give employers plenty of tools and information to make sure they are ready in plenty of time.
As soon as we have confirmed the date, we will post it here.

Thursday 12 January 2012

When is life cover, not really life cover?

In my post pile today I received a very nice, glossy brochure from Engage Assurance based in Yorkshire.
Guaranteed 50 Plus Life Cover
Engage’s life cover seems to have some really good ‘reasons to buy’:
  • No underwriting required
  • Guaranteed acceptance
  • Pre-existing health conditions included
  • Up to £40,000 of life cover
  • Available to all UK residents aged 50 – 80 years old (young?)
  • £250 contribution to funeral service costs

The first salient point is when is life cover not really life cover?  The answer:  when you die from natural causes within 2 years.

Using Engage as an example, if a policyholder dies from natural causes, you wouldn’t receive the sum you’ve insured yourself for.  In actual fact, you might only receive up to 150% of the premiums you’ve paid.  So, based on a premium of £25 per month, you (or rather, your estate) might only get £25 x number of months x 1.50
Whereas, if you die from accidental causes, you’ll be fine.  In fact, you could receive 3x the sum assured!  After 2 years, the sum you’ve insured yourself for is then payable on a successful claim, whether death is from natural or accidental causes.  You can find out more details from Engage’s own documentation.
This type of plan is potentially useful for people who are unable to obtain ‘normal’ life insurance, perhaps due to a poor medical history. There are a number of other providers of this type of cover, including the Post Office, Axa, L&G and LV.

None of the information contained within this website, or the form in which it is presented is intended to be, or should be, taken as a recommendation, either implied or expressed, to make any particular financial decision.

 

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