Autumn Statement 2012

On 5th December 2012 the Chancellor of the Exchequer gave his Autumn Statement on the economy to the House of Commons.  Here is a summary of the key points.

If you're concerned about how any aspect could affect you and your finances, get in touch with Manning and Company and speak to one of our independent financial advisers. We'll be happy to give you informed financial advice, tailored to your situation.

Seymac’s pension scheme provides benefits without the burden

Case study: company pension scheme

posted 26 November 2012

Case study fact file:

• Marketing distribution company

• Redruth, Cornwall

• Scottish Life group personal pension scheme, with salary exchange

• 14 members of staff

• Implemented September 2012

Seymac Distribution plays a vital role in supporting Cornwall’s tourism industry. The company distributes marketing materials for over 50 tourist attractions across the county, handling millions of leaflets and information packs on behalf of its clients.

Since its formation in 1989, the company has grown strongly and now operates from its own 12,000 sq ft purpose-built premises.

Getting ahead of auto-enrolment

In April 2012 Seymac began to explore implementing a corporate pension scheme for its employees – despite the fact that the new auto-enrolment laws would not apply to Seymac until 2016. “We wanted to offer our staff the benefit of a pension sooner rather than later,” Managing Director Tina Seymour explained.

Equity Release: Will there be any money left for my children?

By Peter Harrison, Chartered Financial Planner, Manning and Company

Hot topic this – you are short of cash, but have a valuable house with little or no mortgage left. Wouldn’t it be a good idea to use the house as collateral for a loan? What could possibly go wrong...?

Should I join a company pension scheme?

by Peter Harrison, Chartered Financial Planner, Manning and Company

You may have seen the recent TV campaign about company pension schemes, and be wondering how the changes might affect you as an employee.  

Let’s start with the thought that pensions are just a long-term savings scheme. Most people, when they retire (and some people aspire to give up work as soon as possible!) would like to maintain the standard of living they had while they were working. But, with people generally living a lot longer these days, this takes a large pot of money.

State pensions help, and there is the possibility that these will be set at a standard level in the next few years (as long as sufficient National Insurance contributions have been paid).  But the state pension age is rising, for men and women: you will have to be aged 66 by October 2020 before you are eligible for anything. By 2046, you will probably have to wait until age 68. And even then, the pension you receive is unlikely to keep you in the style to which you have become accustomed! The current level, assuming a full record of National Insurance contributions, is a little over £107 per week.

"Financial Planning....what's that all about then?"

by Steve Manning, founder of Manning and Company

Well that's a very good question and it was asked of me over a glass of red between the first and second course of a very pleasant evening meal with friends from my village.

Actually it's a huge question and I think most people have a misconception or at worst experienced a defragmented, often damaging experience of it.

My own contribution to this blog is going to be on the wider holistic' life plan' and how financial planning or the lack of it will without a doubt have an impact on it.

Sometimes things just get too complicated. I built up the company on the understanding that my clients had goals, desires, needs (what ever you wish to call them), some of them were actually specific financial objectives, some where to do with how to handle family, income or health related issues.  Then of course house purchases, inheritance and tax issues and the list goes on.

To Dilnot - or not to Dilnot?

by Andy Hopper, Independent Financial Adviser and Long-Term Care specialist, Manning and Company

That is the question facing the government right now.  The findings of the 2011 Dilnot Commission report into adult social care funding in England are the subject of both political discussion and news headlines at the moment.

There are potentially serious financial implications for care home owners if it is adopted by the Government as presented. The key thing is - how much of it will the Government implement – and how will they pay for it?

The likely initial costs to the Treasury of all of Dilnot's recommendations is a minimum of £1.7 billion per annum - a conservative estimate, with over £2 billion more likely, rising annually thereafter.  So, cost is a likely barrier to implementation - and probably the main reason why the health secretary Andrew Lansley MP referred to the report’s findings, when first published, as a 'basis for engagement'.

Most of the cost to the Treasury will go on the recommended uplift in the amount people can retain as their personal wealth before they become responsible for their own care costs. Currently it's £23,250: Dilnot's recommendation is for it to rise to £100,000.

However – and this is important for care home owners – the report also suggests capping care costs to £35,000 for life for the care element, and up to £10,000 per annum for the residential element.  The balance of the costs of care will have to be met somehow… and care home owners  could find themselves in the position of having to fund the difference.

Here's an example.  A person in care with a nursing need would expect to pay a total of £36,000 per annum using the UK national average of nursing home fees. Over a 3 year period, the total costs of that person's care and nursing would total £108,000, assuming no annual rises.  Under the Dilnot scheme, the maximum payable in this scenario would be £65,000. That's a reduction in care/nursing fee income of £43,000 over 3 years, or £14,300 per year. For a nursing home with a certain number of self-funding residents, the financial consequences are potentially monumental. 

Returning to the question I asked at the start of this blog - how much of this will the Government implement?  And what exactly did the health secretary mean by “a basis for engagement”?  Well, this last week has seen the publication of the Care and Support White Paper, and the draft Care and Support Bill.  While it expressed the right sentiments, it's very much a holding action for now - a gesture that says: 'Yes we're looking at this and working hard, but the issue is devilishly difficult - so it's going to take a while yet to establish what we're actually going to do and how it will be paid for”.  We’ll have to wait for the next spending review to find out.

But importantly and significantly, the government has agreed – in principle at least – to the Dilnot principle of capped funding.  The levels proposed in the Dilnot report seem unfeasibly low, hence higher figures are now being discussed.  But whatever the final level, a cap is a cap – and thus care home owners would be well advised to keep this important issue very much on their radar.