Wednesday 16 December 2015

Merry Christmas and Best Wishes for a happy and prosperous New Year to our clients and friends from all of us at PPS.
 
We close early on Christmas Eve and re-open on Monday 4th January 2016. We look forward to seeing you again throughout 2016!

Monday 6 April 2015

Pension consolidation

Mitigating lost investment opportunities, exposure to undue risk and higher costs

Most people, during their career, accumulate a number of different pension plans. Keeping your pension savings in a number of different plans may result in lost investment opportunities and unnecessary exposure to risk.

However, not all consolidation of pensions will be in your best interests. You should always look carefully into the possible benefits and drawbacks and, if unsure, seek professional financial advice.

Keeping track of your pension portfolio
It’s important to ensure that you get the best out of the contributions you’ve made and keep track of your pension portfolio to make sure it remains appropriate to your personal circumstances. Consolidating your existing pensions is one way of doing this.

Pension consolidation involves moving, where appropriate, a number of pension plans – potentially from many different pensions’ providers – into one single plan. It is sometimes referred to as ‘pension switching’.

Pension consolidation can be a very valuable exercise, as it can enable you to:

•    Bring all your pension investments into one easy-to manage wrapper
•    Identify any underperforming and expensive investments, with a view to switching these to more appropriate investments
•    Accurately review your pension provision in order to identify whether you are on track

Why consolidate your pensions?

Traditionally, personal pensions have favoured with-profits funds – low-risk investment funds that pool the policyholders’ premiums. But many of these are now heavily invested in bonds to even out the stock market’s ups and downs and, unfortunately, this can lead to diluted returns for investors.

It’s vital that you review your existing pensions to assess whether they are still meeting your needs – some with profits funds may not penalise all investors for withdrawal, so a cost-free exit could be possible.

Focusing on fund performance
Many older plans from pension providers that have been absorbed into other companies may have pension funds which are no longer open to new investment – so-called ‘closed funds’. As a result, focusing on fund performance may not be a priority for the fund managers.

These old-style pensions often impose higher charges that eat into your money, so it may be advisable to consolidate any investments in these funds into a potentially better performing and cheaper alternative.

Economic and market movements

It’s also worth taking a close look at any investments you may have in managed funds. Most unit-linked pensions are invested in a single managed fund offered by the pension provider and may not be quite as diverse as their name often implies. These funds are mainly equity-based and do not take economic and market movements into account.

Lack of the latest investment techniques

The lack of alternative or more innovative investment funds, especially within with-profits pensions – and often also a lack of the latest investment techniques – mean that your pension fund and your resulting retirement income could be disadvantaged.

Significant equity exposure

Lifestyling is a concept whereby investment risk within a pension is managed according to the length of time to retirement. ‘Lifestyled’ pensions aim to ensure that, in its early years, the pension benefits from significant equity exposure.

Then, as you get closer to retirement, risk is gradually reduced to prevent stock market fluctuations reducing the value of your pension. Most old plans do not offer lifestyling – so fund volatility will continue right up to the point you retire. This can be a risky strategy and inappropriate for those approaching retirement.

Conversely, more people are now opting for pension income drawdown, rather than conventional annuities. For such people, a lifestyled policy may be inappropriate.

Consolidating your pensions won’t apply to everyone

The potential benefits of consolidating your pensions won’t apply to everyone, and there may be drawbacks to moving your pension plans – particularly so for certain types of pension. It is therefore vitally important to carefully consider all aspects of your existing pensions before making a decision as to whether or not to consolidate.

As well as whether the total size of your pension funds make consolidation viable, issues to take into account include whether your existing pensions have:

•    Loyalty bonuses
•    Early termination penalties
•    Guaranteed annuity rates
•    Integrated life cover or other additional benefits
•    Final salary pension benefits

The value of the investments in your pension fund can go down as well as up. Early investment losses can be particularly difficult or even impossible to recover. If your investments fall in value, you may need to reduce the amount of income you withdraw from your fund. If your investments fall in value, or fail to grow sufficiently, you may not be able to withdraw as much income in future. This information does not constitute advice and should not be used as the basis of any financial decision, nor should it be treated as a recommendation for any product. Although endeavours have been made to provide  accurate and timely information, Professional Practice Services cannot guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough review of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions.

Professional financial advice you can trust

Many people during their career may accumulate a number of different pension plans, and maintaining these separate plans can be laborious and complicated, leading to lost investment opportunities, exposure to undue risk and higher costs. To find out how we could help you, please contact us for further information.

Call our friendly, knowledgeable team for a confidential, no obligation discussion:
01527 880345
 

Visit our Website at:
www.pps-vet.co.uk

 

Professional Practice Services is a Veterinary Business Consultancy and Independent Financial Advisory Firm. Professional Practice Services is authorised and regulated by the Financial Conduct Authority 
 The Financial Conduct Authority does not regulate finance, will writing, commercial lending, taxation or trust advice.
Article Reference: PPS062014.GM26
Article Author: David Hodgetts
VIP Publication Date: 23/02/2015
 

Wednesday 1 April 2015

BSAVA Congress 2015



Professional Practice Services are pleased to confirm we will be exhibiting again this year at the BSAVA Annual Congress held at The ICC and NIA, Birmingham from 9th -12th April 2015.

Please do come and visit us at Stand 602 for an informal chat about your Practice needs.
 
Alternatively do let us know if you would like a more in depth conversation as we are offering 1-2-1 meetings throughout Congress.
 
 
 

Your Success is Our Business
The PPS Group provide personal expert financial advice and consultancy services exclusively to the veterinary profession.  We've been providing successful financial solutions since 1997. Our team of experienced and knowledgeable staff can guide you through a sometimes unexpected financial minefield.

With personal visits to your practice, no call centres or push button phones, you can speak directly to the people who matter.
Financial Services through Professional Practice Services
  • Independent Financial Advice for Practice Owners and Staff
  • Retirement/Succession Planning
  • Practice Finance
  • Business Protection
  • Partnership/Share Protection
  • Investment/Pension and Wealth Management
  • Family Protection
  • Income Protection
  • Mortgages
  • Employee Benefits
  • Workplace Pensions
  • Business Consultancy
 

Call our friendly, knowedgeable team from a confidential, no obligation discussion:

01527 880345
 
Visit our Website at:

Professional Practice Services is authorised and regulated by the Financial Conduct Authority. 

The Financial Conduct Authority does not regulate finance, will writing, commercial lending, taxation or trust advice.

Monday 23 March 2015

Maximising the value of your pension pot

Probably the single most important decision to realise your long-term goals

Retirement planning involves thinking about your plans for the future now – that means investing your money with the aim of maximising its value ready for when you retire. Careful retirement planning, the right mix of assets and starting sooner rather than later will help lead to the retirement you are looking for.

Historically, for many people, the traditional view of saving for retirement was to simply put your money into a pension, with few decisions to make in the run-up to your retirement date and no choice over how the pension was taken.

Reviewing your retirement planning

Having a pension today is recognised as just one important step along the path to achieving your dreams once you have stopped working. Now, not only must you carefully consider where you actually invest your pension money and how you are going to use your pension, but if appropriate you should also review other forms of retirement savings. Reviewing your retirement planning is critical and probably the single most important decision you can make to help you realise your long-term goals.

Different investment choices produce different results. It’s essential that you contact us to review all your retirement investments to make sure they are heading in the right direction. If your circumstances change, some investments may no longer be appropriate. It’s important to get these things right, as you will be relying on the provisions you make now to generate income after you retire.

Factors that will determine your strategy

When building or reviewing your pension portfolio, there are a number of factors that will determine your strategy, including the level of risk you are willing to take. This is likely to change throughout your life, which means your investment strategy will also need to change. Receiving professional financial advice plays a vital role in helping to make sure that your pension holdings match your risk profile and your investment goals.

Typically, people in the early years of the term of their pension may feel they have time to take more risks with their investments, to increase the potential for higher returns. As they approach retirement and the duration of the investment is shorter, they may prefer, more predictably, to start to plan for their future after work. Alternatively, if they have reached their pension age and are still investing part of their fund while drawing benefits, they may prefer to keep an element of greater risk in return for higher potential growth.

When it comes to retirement planning
Your 40s is ‘the golden decade’ when it comes to retirement planning. This is when you should be putting as much as possible into your pension to give your contributions time to grow.

In your 50s, you may want to start making decisions about your retirement. If you are going to convert all of your retirement funds into income the moment you retire, you may wish to start reducing risk now. If you expect to keep it mainly invested, you may wish to keep a good weighting in investments based on shares. After all, with the growing trend towards taking work in retirement, many people may feel they can afford to keep their pension invested for longer while drawing an income.

Delaying the start of your retirement provision will have an obvious impact on the potential growth of your pension. Not only will the time period for growth potential be reduced, but you could also be passing up the opportunity for valuable tax relief.

Streamlined pension regime
Pensions have always provided a highly tax-efficient environment for long-term retirement investments. However, in April 2006, a streamlined pension regime introduced a number of extra benefits, including the potential to contribute larger sums into your pension fund when the timing is right for you.

Lifetime Allowance

Since the rules were simplified, pensions have become easier to navigate. Whether you have occupational pensions, personal pensions or both, you now have one overall annual and one Lifetime Allowance for pension savings. You can save as much as you like towards your pension, but there is a limit on the amount of tax relief you can get. The Lifetime Allowance is the maximum amount of pension saving you can build up over your life that will benefit from tax relief. If you build up pension savings worth more than the Lifetime Allowance, you’ll pay a tax charge on the excess.

If you’re in a defined benefit scheme and you take your pension after 6 April 2014, your pension benefits will be tested against the Lifetime Allowance of £1.25 million. This level of pension saving is broadly equivalent to an annual pension of £62,500 if you don’t take a lump sum, or £46,875 if you take the 25% maximum tax free lump sum (Source: HM Revenue & Customs).

For a money purchase scheme, it‘s the value of your pension pot that is used to pay your pension benefits (such as an annuity and a tax-free lump sum) that is tested against the Lifetime Allowance at the time you take your benefits. The charge is paid on any excess over the Lifetime Allowance limit. The rate depends on how this excess is paid to you. If the amount over the Lifetime Allowance is paid as a lump sum, the rate is 55%, and if it is paid as pension, the rate is 25%.

Consolidating funds
Another feature of pensions is that you can consolidate payments from one UK registered pension scheme to another. This could be either to access different benefit options or simply to consolidate your funds in one place. It is important to note that there are costs involved, and obtaining professional financial advice is essential to ensure that you take the appropriate course of action for your specific situation.

If you have more than one pension plan in your name, there could be a number of advantages to consolidating all your plans into one. Having one pension can make it much easier for you to keep track of funds, monitor performance and change strategy if necessary. Consolidation may also cut down on paperwork and could make estate planning simpler.

Again, it’s possible that consolidating pension funds may not be beneficial for your particular circumstances. You should always receive professional financial advice before deciding if it is the right course of action for you.

Post-retirement
The array of post-retirement options is vast and will need to be considered carefully, especially in the light of the proposed changes announced in Budget 2014 to fundamentally redesign the UK private pensions system. The best option for you will depend on factors such as the size of your fund, your ongoing involvement, the risk you are willing to take and the level of benefit flexibility you want.

Annuities have long been the mainstay of turning your retirement pot into income. When it comes to buying a pension annuity, you can choose from any provider in the market, with the option of inflation-proofing it or buying a guarantee so that it continues to pay out for a set period of time. You might also want an income to continue for your spouse after your death. All these options will reduce the amount you initially receive.

Currently you have other options besides buying an annuity, such as using a drawdown facility and leaving your pension invested but receiving an income from the fund. If you do this, you can still take your 25% tax-free lump sum out of your pension.

There are many choices to make during the pre and post-retirement years. However, these choices are some of the most important you will ever make, so careful consideration is essential in order to safeguard your financial future and give you the retirement you are dreaming of.

Professional financial advice you can trust

When it comes to planning for your retirement, time is your friend. The earlier you start, the longer your money has the potential to grow. But retirement planning isn’t just paying money into your pension each month and forgetting about it – you need to be proactive. To review your current situation or requirements, please contact us for more information.

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of and reliefs from taxation are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future. This information does not constitute advice and should not be used as the basis of any financial decision, nor should it be treated as a recommendation for any product. Although endeavours have been made to provide accurate and timely information, Professional Practice Services cannot guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough review of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions.


Call our friendly, knowledgeable team for a confidential, no obligation discussion:
01527 880345
 
Visit our Website at:
www.pps-vet.co.uk

 
Professional Practice Services is a Veterinary Business Consultancy and Independent Financial Advisory Firm. Professional Practice Services is authorised and regulated by the Financial Conduct Authority
The Financial Conduct Authority does not regulate finance, will writing, commercial lending, taxation or trust advice.
Article Reference: PPS062014.GM25

Monday 9 March 2015

Workplace Pensions

You could soon have a pension without asking for one!

Millions of workers are being automatically enrolled into a workplace pension by their employer. A workplace pension is a way of saving for your retirement that’s arranged by your employer.

A percentage of your pay is put into the pension scheme automatically every payday.
In most cases, your employer and the Government also contribute money into the pension scheme for you. The money is used to pay you an income for the rest of your life when you start getting the pension.
You can opt out if you want to, but that means losing out on employer and government contributions – and if you stay in, you’ll have your own pension that you get when you retire.

‘Auto-enrolment’
New legal duties, from October 2012, now require employers to automatically enrol their eligible employees into a qualifying pension scheme. The reform will be ‘staged’ over a six-year period, depending on the size of the employer.

The new law means that every employer must automatically enrol workers into a workplace pension scheme who:

•    Are not already in one
•    Are aged between 22 and State Pension age
•    Earn more than £9,440 a year
•    Work in the UK

This is called ‘automatic enrolment’. You may not see any changes if you’re already in a workplace pension scheme. Your workplace pension scheme will usually carry on as normal.
But if your employer doesn’t make a contribution to your pension now, they will have to by law when they ‘automatically enrol’ every worker.
If you are an employer, you need to make sure that your business is prepared as workplace pension reform becomes applicable to you.
When it comes to making contributions, there are two main things to consider, namely:

•    The level of contributions you wish to make
•    The definition of pay you wish to use

Both you and your employees will be required to pay money into the pension, subject to certain minimums, as shown in the information below.

Oct 2012 to Sept 2017 – EMPLOYER: 1% EMPLOYEE 1 %
Oct 2017 to Sept 2018 – EMPLOYER: 2% EMPLOYEE 3%
Oct 2018 onwards – EMPLOYER: 3% EMPLOYEE 5%

These are only minimum amounts and you can choose to pay more than this.
You can even pay some or all of your employee’s contribution, if you wish to do so.

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of and reliefs from taxation are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future. Although endeavours have been made to provide accurate and timely information, Professional Practice Services cannot guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough review of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions.


Professional financial advice you can trust
Auto-enrolment affects all employers in the UK. With auto-enrolment underway, employers must now automatically enrol eligible employees into a qualifying pension scheme. Whether you are an employee or employer, we can help guide you through your pension options. To find out more, please contact us.

Call our friendly, knowledgeable team for a confidential, no obligation discussion:
01527 880345
 

Visit our Website at:
www.pps-vet.co.uk

 

Professional Practice Services is a Veterinary Business Consultancy and Independent Financial Advisory Firm. Professional Practice Services is authorised and regulated by the Financial Conduct Authority
The Financial Conduct Authority does not regulate finance, will writing, commercial lending, taxation or trust advice.
Article Reference: PPS062014.GM24