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Money can be a Pain

Luke Adlum BSc DipPFS

It’s a pain if you have too little and it’s a pain if you have too much but that’s no excuse to simply lose money by neglecting it.

In today’s world of  low interest rates when did you last check you were getting a decent rate on your cash and even if you did check what did you actually do about it?

But worse, far worse, than not keeping all your savings and Investments up to date is neglecting your pension fund. Why is it worse? Because your pension fund is very often the money you will have invested the longest and the one that can make all the difference to your future quality of life.

A mistake therefore left to compound for maybe 30 years or more is a huge mistake. Even a modest difference in return makes a vast difference over that period of time. 1,000 p.a. at 3% would grow to 49,002 over 30 years but even at only 5% growth it would be 69,760. 20,000 or 40% more simply by ensuring your fund is correctly invested.

Many old pension contracts, in order to increase their maturity value only return your contributions (not your employers) if you die before retirement age. So on the above case instead of 69,760 the beneficiaries may only receive 30,000.

Many people are finding out that they will not receive the benefit of the new higher State Pension because they “contracted out”. They had money diverted to their own pension fund instead of staying in SERPS (State Earnings Related Pension Scheme) but where is that money now? Where is it invested? How is it doing?

We recently discovered a new client’s low risk pension fund was actually falling in value because of the charges and low returns on cash.

Neglecting your pension then can prove to be extremely costly. Is it  not worth two hours of your time  to make sure you are not losing thousands of pounds?

There has probably never been a better time to have a financial “check-up”, new rules on pensions (which many old schemes cannot operate) new rules on charges and fee based advisers all add up to getting a great deal from two hours a year spent with your Independent Financial Adviser.

This will make looking after your money less of a pain I assure you.

For further details call Luke on 01277 630873

Does your will do the job?

We all want to make sure our estate goes to our chosen beneficiaries when we die, but we can sometimes encounter competing interests for our money. 

Consider Alan.  Married to Joanne for 40 years, the couple has a son, James, who works abroad.  Joanne suffers from multiple sclerosis and, since he retired, Alan has become her main carer.
One evening whilst playing squash, Alan suffers a heart attack and sadly he dies.   Left alone, Joanne struggles to cope at home, and is advised that long term care is her best option.  Although she is the sole beneficiary of Alan’s will, Joanne receives no financial assistance with her fees and her inheritance starts to diminish.  Joanne’s life expectancy could be another 20 years, during which time her bill for care fees could wipe out any inheritance for James. 

A Trust
If Alan had used a trust in his will to benefit Joanne, his trustees could have sold the family home and invested the sale proceeds, together with any other cash assets Alan owned.  Any income produced would have been paid to Joanne to supplement her own capital.  Although such income would be included in the local authority’s financial assessment, the invested capital would not; as technically, it does not belong to Joanne.  When Joanne passes away the remaining assets, protected by the trust, would go to James.

Lasting Power of Attorney
There is another scenario to this story.  If Alan had survived his heart attack but been left incapacitated, a lasting power of attorney would have allowed James to step in and act on his father’s behalf.  James would have had access to Alan’s will and, if necessary, he could have applied to the court asking for a new will to be made, making better provision for Joanne.

Making a will is important but as your circumstances change it is vital that your will is reviewed and, if necessary, amended.  Doing this through a solicitor will ensure that the necessary paperwork is drawn up correctly. It will give you access to advice about other aspects of inheritance such as trusts and tax. 

Also, consider making a lasting power of attorney.  These straightforward documents allow someone of your choosing to make decisions about your finances and health and welfare, in the event you’re unable to do so yourself. 

To find out more call Ben Parmenter at Birkett Long LLP on 01268 244144 or email