Autumn Statement 2013

by Paul Northmore, Managing Director

While George Osborne tells us “The plan is working,” the fact facing many of us is that we ourselves will be working longer than expected before we receive a state pension.

The headline implications of this year’s Autumn Statement are that those now in their 40s will need to work until 68 to get the state pension, and those currently in their 30s will have to wait until age 69. And who knows if the pension age will rise yet further in years to come?

It’s an inevitable outcome for an aging population the country can’t afford to fund.  And it’s compounded by the fact that those starting work today typically do so at about 21, six years later than the typical age when the pension model was first established – so the system is losing out on a lot of NI contributions.

What’s worth more: you or your car?

by Mike LeGassick, Independent Financial Adviser, Manning and Company

Benjamin Franklin said, “But in this world nothing can be said to be certain, except death and taxes.”

So how much life insurance would you take out to protect your family if you knew you were going to die in 6 months’ time? Would you invest in some critical illness cover if you knew you were going to have a heart attack, stroke or other critical illness, and survive it? Chances are you would get as much as you could and as quickly as you could.

So why is it then that only a fraction of the UK has any type of life or critical illness cover?

You may have a will… but is it legally valid?

In 1999 Alfred Rawlings and his wife Maureen made their wills and signed them in front of their solicitor.  But there was one small problem… they signed each others’ wills by mistake. 

Maureen passed away in 2003; but it wasn’t until Alfred died three years later that the problem came to light.  This simple clerical error had made both wills invalid.  Unfortunately, the wills were contentious, and a very public legal battle ensued!

But although this particular case hit the national headlines, this isn’t an isolated incident.  Some estimates suggest that 40% of wills are legally invalid, often due to errors in how the will was signed or witnessed.

If you’ve taken care over your financial matters in life, it’s a sobering thought that an invalid will could put all your careful financial planning in jeopardy.

So, we’ve arranged for two highly-respected Plymouth law firms to offer Manning and Company clients a will review, absolutely free of charge.

Inspiring the extraordinary

By Paul Northmore, Managing Director, Manning and Company

You might believe that managing your finances is all about reducing life’s risks – for example, taking out life insurance, or critical illness cover, or a fixed-rate mortgage.

Security is certainly a part of it; but it’s not the whole story. 

Good financial management puts you in charge of your money, not the other way around.  Your money is there to help you achieve your dreams, whatever that means for you.

But it’s not only money that can make dreams happen – it’s having the right opportunities, and being inspired. 

That’s why at Manning and Company we like to get behind those who are doing something amazing, and particularly those who are inspiring and equipping the next generation; which is why we’re supporting two local ‘inspirers’ – The Plymouth University Raiders, and Antony Jinman.

If it’s to be...

by Steve Manning, Founder, Manning and Company

A great modern business and life philosopher taught me, quite a number of years ago, that "If it’s to be…it’s up to me". I totally agree.

Of course, much that impacts us throughout life comes from external sources. While we can’t control many of those things, we can control how we react, and how we prepare.

This applies to all aspects of life – for example, relationships; health, wealth and happiness; or state of mind.

In many ways it has become so much more difficult just to cope with day-to-day life. We are conditioned to achieve so much; encouraged to own so much; and until recently, to borrow so much - and by doing so, to achieve ‘great happiness’ in the process.

Annunities: the gamble of your life

By Mike LeGassick, Independent Financial Adviser, Manning and Company

When planning your retirement, you may worry that you will outlive your income.  It’s understandable, as we’re all generally living longer and enjoying better health. 

For some, an annuity is the answer.  An annuity is an insurance product, bought on retirement with the money saved in your pension pot.  It pays you a regular sum for as long as you live.

But annunities come with a very significant risk.  You are gambling that you will live long enough to receive back as much as you paid in. 

Care: can you afford it?

Andy Hopper, Independent Financial Adviser and Long-Term Care Specialist at Manning and Company, answers questions about the cost of residential and nursing care.

Andy, there have been announcements in recent months about changes in funding for residential care. What have these been about?

The government has been looking at ways to reform the rules for residential and nursing care funding. They have been guided by the Dilnot Commission Report, published in 2011. Amongst other things, the Report proposed capping the costs which individuals would have to pay for their care. This is good for those with assets, as it limits the amount they would be expected to pay; and also means that their home would not necessarily have to be sold to fund care.

So what is the current situation?

From 2017 anyone with assets (including their home) worth more than £123,000 will have to pay for the first £72,000 of their care costs. Additionally they will pay “bed and board” of up to £12,000 annually when in a nursing home. 

Never too young for money management!

By Patrick Goddard, Independent Financial Adviser, Manning and Company

At Manning and Company we talk a lot about planning for the future.  Hopefully you have your own financial future under control (if not, come and talk to us!) - but what about the next generation? 

Of course, if you have dependents it’s important to consider how they would be taken care of, should anything happen to you. 

But what about also equipping them to take care of themselves? 

Are we teaching our children the importance of good financial management from an early age?  And an early age it needs to be; as research indicates that adult financial management habits have been formed by the age of 7!

Poor interest on savings? It’s time to consider investments.

By Paul Northmore, Managing Director

When you hear the word ‘investments’, what do you think?  The super-rich?  Bankers with red braces?  Foreign markets?  It may all seem far distant from day-to-day life in Devon! 

But the fact is that investments are not only for the very wealthy.  More and more Devon people with average incomes and savings are realising the benefits that investments can bring.

First, let’s clarify the difference between savings and investments.

Tomorrow never comes!

Tips on planning your finances, from Steve Manning, Founder of Manning and Company Independent Financial Advisers

Steve, it’s a tough economy at the moment.  Why should people still make it a priority to plan for the future?

Yes, there are lots of demands on everyone’s finances today.  But the fact is tomorrow WILL come!  A recent report by HSBC showed that the British are woefully unprepared when it comes to funding their retirement – actually, the worst of the 15 nations surveyed.  An average retirement in the UK will last 19 years – yet the average person’s pension pot will be used up in just 7 years.  State pension benefits won’t come close to funding the standard of living most people expect.  The important message is this: your future is in your hands.  If you don’t plan sufficiently today, then it won’t be the future you hoped for.

Is a traditional pension scheme the right approach?  Or are there other options?

Some people are relying on property assets to fund their retirement – or savings; perhaps an inheritance; or investments.  The point of a pension plan is that it’s a systematic and reliable way to save for the future.  It gives you choices when you reach retirement age; and there are tax benefits too.  It’s fine to build up a mixed portfolio, as long as it works together sensibly and cost-effectively.  It’s wise to take independent advice to make sure that’s the case.

What about those who are “asset rich but cash poor”?

The reality is that many people have a lovely home, yet very little money.  Equity release has received some bad press over the years, certainly; and it’s made people approach it with caution - as indeed they should, because it does have implications.  Yet with today’s equity release plans it may still be the right option for some people.  It can provide the cash they need, and still allow them to live in the home they love.  It’s not the only option though; and seeking independent advice can help find other choices.

Budget 2013 comment: is it a good time to buy a house?

By Steve Manning, Founder, Manning and Company Independent Financial Advisers

Let’s face it; George Osborne had very little room for manoeuvre.  The country is spending more than it is earning - no different from most of Europe. 

The Chancellor’s task is a pretty tough one.  He needs to stimulate growth to provide more income for the treasury, while at the same time reducing spending and limiting government borrowing.

The political parties largely disagree on how much we should be borrowing to stimulate the economy.  Get it wrong, and the consequences are not good: bankrupt because of over-borrowing; or bankrupt because of severe depression.

By and large, being a ‘neutral’ budget, it was endeavouring to make better use of the money in the system - effectively robbing Peter to pay Paul.

I want to focus on just one of these initiatives: stimulating the housing market.

Buildings & Contents Insurance - Are You Leaving Yourself Exposed?

by Sophie Pomeroy, Building & Contents Administrator, Manning and Company

Buildings & Contents insurance is like anything in life - you get what you pay for!

In these times of economic hardship, people are looking for ways to reduce the cost of living, and Buildings & Contents insurance can be one area under scrutiny.  It may be tempting to cut your level of cover, or even cancel it altogether – perhaps thinking it’s worth the risk, given how infrequently you may have made a claim in the past.

But under-insuring your property is a false economy and leaves you over-exposed to risk.  What’s more, failing to have Buildings insurance could be in breach of the terms of your mortgage. 

Pensions: have you lost out by opting in?

by Paul Northmore, Managing Director, Manning and Company Independent Financial Advisers

Once again, current news has provided an example of why it is so vital to take control of your financial future.

Anyone with a personal pension in the last 20 years will have encountered the issue of ‘Contracting Out, or In’.  Perhaps you joined a company scheme in the early 90’s which advised you to “opt out of SERPS” – allowing you to build your own pension pot, but opt for a lower state pension. 

Care home fees: why it’s vital to plan

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

Jeremy Hunt, the Health Secretary, has announced this week that from 2017, anyone with assets, including their home, worth more than £123,000 will have to pay for the first £75,000 of their care costs. They will also in addition, pay “bed and board” of up to £12,000 annually when in a nursing home.

Will the welfare state leave you short-changed?

By Steve Manning, founder of Manning and Company

Living in a country that has a welfare state, we can be lulled into a false sense of security.

Clearly there is a moral and ethical need for welfare but it is also open to abuse and this is obviously cause for concern.

What we perhaps do not realise is that the ‘middle class’ are more vulnerable than they might think. Why?