News Archive - January 2013
Happy New Year
31/1/2013
The UK stock market has made an encouraging start to 2013. This is generally a good thing for everybody, even those who think they have no exposure to share price movements. If you have any sort of company pension then it is likely to hold underlying investments in shares. Even if you have a final salary pension (where the pension paid to you at retirement is guaranteed by your employer), the scheme is likely to hold share investments, so if the stock market rises this is likely to put the scheme in a stronger financial position and lessen the chances of it having to close or wind up.
As we all know, the market can travel in both directions and we might find that at the end of 2013 the FTSE is at the same level as it is now. Nevertheless, optimism tends to be contagious so let's enjoy it while it lasts.
State pension changes
31/1/2013
There has been further clarification of the changes that are proposed to the State Pension.
From 2017, everybody reaching state retirement age with at least 35 years of qualifying activity (includng work, looking after young children or acting as a carer) will qualify for a full flat rate state pension of £144 per week.
This is considerably higher than the current basic state pension of £107.45 per week, but less than a current pensioner could potentially expect if they had additional earnings-related pension entitlement. The initial 'winners' under the new scheme therefore should be the self-employed, lower earners and those with gaps in their NI record due to child caring. The initial 'losers' will be higher earners, who would generally have qualified for a higher pension under the current system.
There will be a single cut-off date to introduce the new system, so some people may end up feeling hard done by if they get less than they could have done had their birth date fallen a little sooner.
Overall this new regime will simplify the state pension landscape and benefit the less well off so it should be applauded for that. On the downside it is going to cost more overall, so there will be an increase in NI contributions to fund it.
This is not a long-term solution to the overall problem of increased longevity and saving for retirement. The State Pension is very likely to change again over time, with further increases to the State retirement age. As a result, any forecast of State Pension income that is more than 5 years into the future should be taken with a large pinch of salt.
Contact Mulberry Financial to make some retirement plans.
The material here is for general information only and is not intended to be relied upon for individual investment decisions. Appropriate independent advice should be obtained before making any such decisions. Mulberry Financial Ltd does not accept any liability for any loss suffered by any user as a result of any such decision.
The information is based on our understanding of current HMRC rules and practices (as at the news article date) which are always subject to change. Taxation and trust advice and Cash ISAs are not regulated by the Financial Conduct Authority. This site is aimed at UK residents only.
Please remember that the prices of shares and other investments can fall sharply. You may not get back the money you originally invested. Past performance is not necessarily a guide to the future.
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