Month: August 2018

ISA rules and Inheritance Tax

Families set to pay millions in unnecessary tax

There’s a fundamental lack of awareness and understanding around Inheritance Tax, especially when it comes to how Individual Savings Accounts (ISAs) are treated after death. Given that some people have been able to amass over a million pounds in their ISAs, it’s an area where lack of knowledge could prove costly.

Over half (51%) of over-45s do not know that ISAs are liable for Inheritance Tax, leaving families across the UK set to pay millions in unnecessary taxes according to findings from an annual Inheritance Tax monitor survey[1].

Gifted to a partner
On death, as ISAs can only be gifted to a spouse or civil partner and not children without incurring tax, the Government will ultimately be a major beneficiary of money currently residing in Cash ISAs and Stocks & Shares ISAs. In the last Budget, HM Treasury predicted it would raise £5.3 billion in the 2017/18 tax year in Inheritance Tax, which will eventually increase to £6.5 billion by 2022 to 2023.

The research also revealed over three quarters (77%) think the UK’s Inheritance Tax rules are too complicated. Yet despite this, only a third (33%) have sought professional financial advice on Inheritance Tax planning. Of those who did seek advice, over two fifths (42%) spoke to a professional financial adviser.

Rules regarding inheritance
Some people could inherit less than they expected because they aren’t aware or make assumptions about the rules regarding inheritance. In particular, the rules governing the gifting of ISAs and valuable estates mean that many may be faced with a higher than expected Inheritance Tax bill.

ISAs remain the ‘go to’ financial product for many people as they look to build up a nest egg in a tax-efficient way during their lifetime. But with such a large number of older people investing into them, there is a worrying lack of awareness that ISAs are subject to a 40% Inheritance Tax charge. ISAs are a great tax-efficient investment in your lifetime, but more people need to be thinking about how to pass on their hard-earned money to their loved ones when they die.

Source data:
[1] Survey of 1,001 UK consumers aged 45 or over with total assets exceeding the individual Inheritance Tax threshold (nil-rate band) of £325,000. Carried out in October 2017.

Countdown has commenced

Are you on track to a financially secure retirement future?

When you are at the point of retiring, the new pension freedoms have opened up all sorts of alternative strategies to taking your pension benefits. The very concept of retirement is changing.

‘Phased retirement’ is becoming more common. The way we access our pension is now a lot more flexible, and it’s no secret that in the UK we’re living longer than ever before. A longer retirement and more choice over how you take your pension make for an exciting time. And planning ahead will help ensure you’re on track to a financially secure future. Our timeline will help you get started.

Although retirement can still seem a while away, begin to consider what you want your life to be like when you get there.

Ten years before you plan to retire
Here are some things to think about as you start to build your plan:

The age you’d like to retire
How much you’ll likely have in your pension fund/s, and the income you’ll need when you retire
Any savings, investments or other assets that you could add to your retirement income
How your living expenses could change in the future
How you’ll pay for any travel, hobbies or further education once you’ve retired
An emergency savings fund, to help with any unexpected costs like car or home repairs
Paying off any debts before you retire
How you’ll support your dependants once you’ve retired
Putting money aside to pay for long-term care for you, your partner or other dependants

Don’t forget that your spending habits are likely to change in retirement. For example, your commute costs are likely to be lower, but more time at home may mean your utility bills go up.

Five years before you plan to retire
Now is the time to make sure your goals are on track:

Decide the age you’re likely to retire
Consider phasing your retirement and continuing to work part-time for your current or a new employer
Boost your pension by increasing your contributions and/or adding lump sum payments (take advantage of any unused pension tax allowance)
Trace any lost pensions through the Pension Tracing Service
Ask for up-to-date statements for all your pensions. You can also get a forecast of your State Pension at www.gov.uk
Look over your investments and savings to see if they still meet your attitude to risk as you get closer to retirement
Think about whether you’d like to take an income from your pension or whether you want a pot of cash, including any tax-free allowance, to do something different in retirement
Discuss your options with a professional financial adviser
Write a Will or review your existing Will – and plan what will happen to your pension and estate if you die, plus any tax implications.

Six months to go
It’s time to give yourself a retirement readiness check-up:

Review your pension statements to get an accurate picture of what your funds are worth
Make an appointment with your professional financial adviser for advice on the best retirement options for you
Determine the best option/s for taking your pension savings to meet your financial and lifestyle needs
Tell your pension providers you’re planning to retire, so that they can send you any and all information you need in plenty of time
Update your beneficiary information
Set a date for a pre-retirement meeting with your employer
Let the HM Revenue & Customs (HMRC) know you’re retiring because your change of status will affect your tax code
Budget for changes in your day-to-day spending after you retire

Twelve to eight weeks before
It’s down to business now – you’re just outside of your selected retirement date:

Speak with a professional financial adviser to consider your options and retirement plans
Ask your provider about the ways you can access your pension based on the options available
You should receive a letter four months before you reach State Pension Age, telling you how to claim your State Pension. If you haven’t received this by three months before, here’s how to claim this
Look into any entitlements from the Government over and above any State Pension you may get, as these could make a real difference to your living costs

Eight to two weeks before
The final countdown! It’s time to make sure you have all the information you need to help make a decision:

Consider any retirement quotes that your provider may have sent you
Remember, if you want to use your pension to provide an income, you should shop around the different providers to get the best income you can. If you and/or your partner have a health and/or lifestyle condition, then you could get an even higher income as different providers also cover different conditions
You’ll also need to apply to your provider/s if you’re moving pensions from different sources
There you have it – happy retiring!

PENSIONS ARE A LONG-TERM INVESTMENT.

THE RETIREMENT BENEFITS YOU RECEIVE FROM YOUR PENSION PLAN WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE VALUE OF YOUR PLAN WHEN YOU DECIDE TO TAKE YOUR BENEFITS WHICH ISN’T GUARANTEED, AND CAN GO DOWN AS WELL AS UP.

THE VALUE OF YOUR PLAN COULD FALL BELOW THE AMOUNT(S) PAID IN.

Maximising retirement income

Time to start looking at accessing your pension?

Income drawdown is a way of using your pension pot to provide you with a regular retirement income by reinvesting it in funds specifically designed and managed for this purpose. The income you receive will vary depending on the fund’s performance.

However, worryingly a third of people using income drawdown (32%) to fund their retirement have no investment experience, yet two in five (41%) of these have not received either financial advice or guidance, according to new research[1].

Taking advantage of new pension freedoms
Almost half a million (431,581)[2] people are taking advantage of new pension freedoms to draw down their retirement savings, yet the highest proportion have never actively invested in the stock market. Despite being first-time investors, tens of thousands have not sought regulated financial advice or guidance, even though they have an average drawdown pot of £153,000.

You can normally choose to withdraw up to 25% of your pension pot as a tax-free lump sum. The rest is moved into one or more funds that allow you to take an income at times to suit you.

Some people use it to take a regular income. The income you receive might be adjusted periodically depending on the performance of your investments.

Flexi-access drawdown – introduced from April 2015, where there is no limit on how much income you can choose to take from your drawdown funds.
Capped drawdown – only available before 6 April 2015 and has limits on the income you can take out; if you are already in capped drawdown, there are new rules about tax relief on future pension savings if you exceed your income cap.

Lack of professional financial advice
The study warns that a lack of professional financial advice and guidance could leave retirees at risk of running out of money in retirement. Poor decisions in drawdown can lead to consumers taking on too much risk, missing investment growth or making unsustainably high withdrawals. Women in particular were more likely to be first-time investors, potentially putting them at greater financial risk (41% vs 29%).

Findings highlight a ‘first-time investor gap’ is being driven by a lack of consumer understanding of drawdown, with almost half of novice investors who had not received advice saying they thought drawdown would be simple (47%). A further third (29%) claimed they were confident in their investment decisions, despite having no previous experience of actively investing.

Navigating the complexities of drawdown
The research also reveals that one in ten (10%) UK adults not getting advice rely on search engines to help them navigate the complexities of drawdown, while one in five (20%) look at newspapers and magazines. Pension firms were the leading source of guidance for a third (35%) of consumers. Worryingly, though, 44% of all those in drawdown confessed there is nothing that would prompt them to get professional financial advice or guidance.

Some drawdown providers might offer retirement income products that combine income drawdown with other features that might offer guarantees about income and/or growth.
Income drawdown products are complex. Remember that you don’t have to take income drawdown from your current pension provider. You should shop around. τ

Source data:
[1] Study carried out for Zurich UK
based on a YouGov survey of a UK sample of 742 people who have moved into drawdown since the pension freedoms were introduced in April 2015.  The survey was carried out between 14 December 2017 and 24 January 2018.
[2] FCA Data Bulletin (issue 12) shows 345,265 pots moved into income drawdown between October 2015 and October 2017. Assuming the number of people moving into drawdown continued at a similar rate from November 2017 to April 2018, this would equate to a further 86,316 people in drawdown. 345,265 + 86,316 = 431,581

PENSIONS ARE A LONG-TERM INVESTMENT.

THE RETIREMENT BENEFITS YOU RECEIVE FROM YOUR PENSION PLAN WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE VALUE OF YOUR PLAN WHEN YOU DECIDE TO TAKE YOUR BENEFITS, WHICH ISN’T GUARANTEED, AND CAN GO DOWN AS WELL AS UP.

THE VALUE OF YOUR PLAN COULD FALL BELOW THE AMOUNT(S) PAID IN.

Investment choices

Which is the right approach for you?

The world of investing can seem daunting. Whatever stage of life you’re at, we’ll guide you through the appropriate investment opportunities available to you. Every investor needs to ask themselves the same basic questions before getting started.

You’ll need to know what your goals are, how long you expect to invest, how much money you are able to invest and how comfortable you are taking risks. You’ll invest differently for a goal that’s five years away than for one that’s 20 years into the future, as a longer time-horizon should allow you to take on more risk – provided you are comfortable doing so.

Take into account inflation
The cost of living will rise over the years so, if you’re investing for the long term, you need to also take into account a realistic rate of inflation for every year you invest. There’s no point in getting to retirement age to discover your spending power has been reduced due to this oversight, so make sure you factor in inflation when working out your investment returns strategy.

If you’re investing for a shorter-term goal, you may well want to take a cautious approach, because losses can be harder to recover. Thinking about how much financial risk you are comfortable exposing yourself to is vital.

Different types of investments
Asset allocation is all about deciding how much of your money you choose to put into different types of investments. The main types of assets people rely on for investing are shares, bonds, cash and commercial property – many investors prefer to invest in these via funds too, as their cash is then spread across a basket of each. By investing across a broad range of assets, it helps you to diversify your risk, as you are not relying on the success of one single investment.

How you allocate across these assets will be largely down to not only what you want to achieve, but also how long your investment time horizon is. If you’re comfortable with more risk and you want a greater chance of stronger growth, you might allocate more money into shares. But if you are looking for more consistent returns, then government and corporate bonds could be the way to go.

Spreading your risk even further
Always remember the golden rule of investing though, which is the greater the potential returns, the bigger the risk. But by combining both investment types, you’ll be spreading your risk even further. Many investors keep a proportion of their portfolio in cash. This provides the necessary ‘liquidity’ to minimise risk as much as possible and can be used to buy assets if a good opportunity arises.

In order to decide which investments to focus on, you need to decide whether you are primarily looking for capital growth from your investments, an income, or a combination of the two.

Investment options and strategies
How involved you want to be in choosing your investments depends on how much experience you have and the kinds of decisions you’re comfortable making. Some people like to choose the investments that make up their portfolio themselves. Others prefer to invest through funds. Funds offer an easy way to build a diversified portfolio and, depending on how they’re managed, they can be cost-effective, too.

Or you might prefer to explore your investment options and strategies. You could opt for a multi-asset fund, which is run by a portfolio manager who invests across a variety of investment assets, including shares, bonds and property as well as cash. But whichever route you take always ensure you understand what you are investing in and the associated risks.

Remember to keep to your plan
One of the key things to remember is to keep to your plan. This goes back to working out what you need and want from your investments. You’ll want to keep an eye on things over time, adjusting your asset allocation to make sure the portfolio stays on track to meet your goals and within your risk parameters. It’s also important to remember that movement in the markets is normal and it can be harmful to switch your investments too much, as well as costly.

Any investment carries risk and there’s always the chance that you could get back less than the sum you invest. But leaving your money to grow in the long term means there’s more chance of recovering any losses along the way.

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.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.

PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.

Eyes wide shut

Do you know the value of your pension savings?

With people living longer than ever before, we all need to save more. But because there’s always something more urgent to pay or save for, it’s something that many of us rarely think about.

Almost three quarters (73%) of people aged 45 or over are longing for the day when their life is no longer confined by their working routine, according to new research[1]. Yet despite an eagerness to retire, the research shows that almost half (46%) of over-45s with a pension have no idea how much it is currently worth and that more women (52%) than men (41%) don’t know the value of their own pension savings. A fifth (19%) of those aged 45-plus don’t have a pension in place yet.

Hoping for a shift in lifestyle
Two thirds of those aged 45-plus (67%) are hoping for a shift in lifestyle, keen to retire early before the State Pension age kicks in. But only one in ten of them (12%) has proactively increased how much they are investing in their pension when they’ve been able to in order to help make this happen.

Once people reach the age of 55 (age 57 from 2028), they can benefit from pension freedoms which allow them to start withdrawing money from their pension savings if they need to. It’s a point at which some key decisions can be made, and the importance of knowing the value of their pension should come sharply into focus. But even among this group of people aged 55–64, some 45% still have their eyes shut and don’t know what their pension savings are worth.

Life after work in the future
Retirement is changing, and life after work in the future will not look the same as it did for our parents or their parents. But while many of us might dream of what we’re going to do when we retire and when that might be, without a plan in place, these dreams are likely to stay just that.

Once you stop working, it’s more difficult to boost your savings than it is when you’re still working. So I would urge everyone to really understand how they are progressing and make plans for building up their life savings while they are best placed to make a real difference. Almost all employers now have workplace pensions which include an employer contribution, so that may well be a good place to start.

Source data:
[1] The research was carried out online for Standard Life by Opinuium. Sample size was 2001 adults. The figures have been weighted and are representative of all GB adults (aged 18+). Fieldwork was undertaken in November 2017.

Do you have protection if the worst should happen?

Nine in ten Britons are in danger of financial hardship – so what cover do you need?

Britons are woefully under-protected should serious illness strike, according to new research[1]. Despite more than a fifth (21%) of people admitting their household wouldn’t survive financially if they lost their income due to long-term illness, fewer than one in ten (9%) have a critical illness policy. People are, in fact, more likely to insure their mobile phones (12%) than to protect their own health.

Taking out life insurance also appears to be falling down the population’s priority list, with just 27% having a life policy, equivalent to 14 million people. Worryingly, this has dropped by 7 percentage points compared with 2017, a year-on-year decrease of 3.6 million individuals.[2]

Precarious position
This is an especially precarious position for the two fifths (42%) of UK households that are reliant on just one income, and it’s clear that many are in lack of a ‘Plan B’. Despite 43% of people saying they’d rely on their savings if they or their partner were ill and unable to work, a third (35%) admit their savings would last no more than three months if unable to work, and more than half (54%) say they’d last no longer than a year. Three in ten (30%) – or 15.5 million people [3] – say they aren’t saving anything at all.
One in five (19%) say they’d rely on state benefits if they or their partner were unable to work for six months, but at a time when welfare reform is resulting in significant changes to benefits such as child and working tax credits, income-based job seeker’s allowance, income support, housing benefits, and bereavement benefits.

Families unprepared
On top of this, some people are leaving themselves and their families unprepared for other aspects of illness or bereavement. One in five (20%) people aren’t sure who would take care of them if they fell ill, and nearly half (48%) don’t have the protection of a Will, power of attorney, guardianship or trust arrangement in place for their families.
When asked why they haven’t taken out life or critical illness insurance, almost a third (30%) of the UK’s primary breadwinners say they don’t see the need for cover, raising concerns over their financial resilience should the unexpected happen.

UK’s protection gap
The research also reveals that a lack of trust and understanding could be contributing to the UK’s protection gap. On average, people think that just a third (34%) of individual protection claims are paid out by insurance providers each year, based on the misconception that insurers will do anything not to pay. In reality, however, virtually all protection insurance claims (97.8%) were paid in 2017.[4] In addition, almost four-fifths (78%) of people are unaware that cover often comes with practical advice and emotional care, as well as financial support, without having to make a claim.

It’s a worrying truth that people are more likely to insure their mobile phones than their own health. On a societal level, we increasingly think in the short-term, caring more about tangible things in our day-to-day lives. On a more fundamental level, we’re programmed not to think about the worst happening. Together, these are dangerous inclinations, as people aren’t thinking about insuring their health or life until it’s too late.

Source data:
[1] 2017 ONS data shows there are 51,767,000 adults in the UK. 27% of people have a life insurance policy in 2018, amounting to 13,977,090 people. 34% of people had life insurance in 2017, totalling 17,600,780 people.
[2] This amounts for a difference of 3,623,690.
[3] 2017 ONS data shows there are 51,767,000 adults in the UK. 30% of people say they aren’t saving at all – amounting to 15,530,100 people.
[4] Association of British Insurers (ABI) and Group Risk Development (GRiD), April 2018
All figures, unless otherwise stated, are from Opinium Research. The survey was conducted online between 5th and 12th April, 2018, with a sample of 5,022 nationally representative UK adults.

Generation game

Long-term saving could yield a £1m retirement pot for some millennials

The millennial generation don’t just spend their hard earned savings on smashed avocado and flat whites, but they do have a different attitude to money than older generations. In fact, some young people today or in future generations could accumulate a pension pot as high as £1 million[1] when they come to retire through a combination of higher earnings, a generous workplace pension and several decades of saving, according to new research.

The study was carried out in conjunction with the Pensions Policy Institute to look at what level of retirement pots younger and future generations could expect, based upon the current and proposed model for automatic enrolment. A 22-year-old median earner (peak earnings of circa £30,000 at age 40) in 2017 may be able to build up a pension pot of £108,000 with minimum scheme contributions levels. Those with higher earnings and in a more generous workplace scheme could build up a substantially bigger sum.

Reducing the age limit
The study also found that changes proposed in the Department for Work & Pensions’ Automatic Enrolment Review, including reducing the age limit and removing the lower limit of eligible salary, could lead to a 32% increase in fund size for a median earner who starts saving at age 18.

The impact of the introduction of automatic enrolment on future generations focused on young people who were aged 22–35 by the end of 2017 – i.e. those who entered the workforce during the initial implementation of auto enrolment in October 2012 and the first generation likely to spend their entire working life in pension schemes into which they were auto enrolled.

Automatic enrolment has almost doubled the participation of 22-29-year-olds saving into pensions, according to the research.

Using four hypothetical individuals in the younger age group with different salary circumstances, the research shows how:

Stopping saving – even close to retirement – can significantly damage retirement outcomes
A wide range of possible pension pot values can result, depending on the quality of the workplace scheme and the level of contributions made by employer and employee
The triple lock has a proportionally larger impact on lower-earning millennials than higher earners

Improving financial futures
The research demonstrates that bringing people into savings at a younger age and increasing the contributions made can significantly improve their financial futures. Now that nearly 10 million people have been auto enrolled into a workplace pension, we’ve moved to a stage where it’s time for savers to think about what they’ll get back at retirement and consider any additional steps they may want to take along the way to build up their life savings.

Millennials are likely to be the first generation to benefit fully from the introduction of automatic enrolment, with the opportunity to have an employer contribution and government contribution paid into a workplace pension scheme throughout their working life. This means that automatic enrolment has the potential to make a significant difference to later life for millennials, providing more options and a more secure foundation for funding retirement.

Source data:
[1] Based upon an example of a female saving from 18 to State Pension Age into a workplace pension contributing 16% of total earnings, deemed to be a 90th percentile earner (peak earnings of circa £49,000 at age 40). All figures in the research are in 2017 earnings terms.

PENSIONS ARE A LONG-TERM INVESTMENT.

THE RETIREMENT BENEFITS YOU RECEIVE FROM YOUR PENSION PLAN WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE VALUE OF YOUR PLAN WHEN YOU DECIDE TO TAKE YOUR BENEFITS, WHICH ISN’T GUARANTEED, AND CAN GO DOWN AS WELL AS UP.

THE VALUE OF YOUR PLAN COULD FALL BELOW THE AMOUNT(S) PAID IN.

Retirement savings leap

But one in five young people still saving nothing

The number of under-30s saving enough for retirement has risen sharply by 9%[1]. As the success of auto enrolment continues, two in five UK workers (39%) aged 22–29 years old are now saving adequately for retirement, up from 30% last year. Despite this, more than one in five young people (21%) are still saving nothing for later life, with a further 20% saving seriously less than 12% of their income.

The research also shows that nearly two million ‘multi-jobbers’ – people with more than one job – are missing out on over £90 million a year in employer contributions because of the policy on auto enrolment thresholds. Multi-jobbers, who are often working full-time hours, are unfairly missing out on pension contributions for their overall earnings due to their income being split across different employers, thus falling foul of minimum earnings threshold for enrolment.

Auto enrolment playing a really important part
Projections using the latest ONS figures show that 1,831,127 multi-jobbers have at least one job that earns under £10,000 and is not enrolled in the company’s pension scheme. Based on the average salary from these jobs, collectively over £90 million of employer contributions a year could be claimed if the auto enrolment threshold was scrapped.

It’s encouraging that more young people are saving enough for a decent retirement, and auto enrolment has played a really important part. However, auto enrolment was designed as a safety net for a country facing a pensions crisis. This year’s study shows some of the hardest working and most financially vulnerable members of society are slipping through the auto enrolment net because of minimum earnings thresholds. This unfairly impacts multi-jobbers, who could be working the equivalent of full-time hours, yet without the financial benefit of having a single employer.

Renewed effort to improve the readiness for retirement
Meanwhile, savings levels have stagnated across the rest of the working population. At 55%, the proportion of UK workers saving adequately for retirement has dropped slightly for the first time since 2013, falling from 56%, the prevailing rate for the last few years.

Despite adequate savings rates having risen by 10% since auto enrolment was introduced in 2012, the stall in recent years demonstrates that a renewed effort is needed to improve the nation’s readiness for retirement.

Source data:
[1] 14th annual Scottish Widows Retirement Report – research looked at this age range because 22 is the age at which workers become auto-enrolled – Scottish Widows deems adequate retirement savings as a minimum of 12% of an individual’s income. ‘Seriously under-saving’ refers to saving 0–6% of income.

PENSIONS ARE A LONG-TERM INVESTMENT.

THE RETIREMENT BENEFITS YOU RECEIVE FROM YOUR PENSION PLAN WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE VALUE OF YOUR PLAN WHEN YOU DECIDE TO TAKE YOUR BENEFITS, WHICH ISN’T GUARANTEED, AND CAN GO DOWN AS WELL AS UP.

THE VALUE OF YOUR PLAN COULD FALL BELOW THE AMOUNT(S) PAID IN.

Protecting yourself from scams

Fraudsters are using sophisticated ways to part savers from their money

Pension and investment scams are on the increase in the UK. Everyday fraudsters are using sophisticated ways to part savers from their money, and the Internet and advances in digital communications mean these kinds of scams are getting more common and harder to identify. A lifetime’s savings can be lost in moments.

Nearly one in ten over-55s fear they have been targeted by suspected scammers since the launch of Pension Freedoms, new research[1] shows.

Tactics commonly used to defraud 
The study found 9% of over-55s say they have been approached about their pension funds by people they now believe to be scammers since the rules came into effect from April 2015. Offers to unlock or transfer funds are tactics commonly used to defraud people of their retirement savings.

One in three (33%) of over-55s say the risk of being defrauded of their savings is a major concern following pension freedoms. However, nearly half (49%) of those approached say they did not report their concerns because they did not know how to or were unaware of who they could report the scammers to.

Reporting suspected scammers to authorities 
Most recent pension fraud data[2] from Action Fraud, the national fraud and cybercrime reporting service, shows 991 cases have been reported since the launch of pension freedoms involving losses of more than £22.687 million.

Alternative investments such as wine offered
The research found fewer than one in five (18%) of those approached by suspected scammers had reported their fears to authorities. Nearly half (47%) said the approaches involved offers to unlock pension funds or access money early, and 44% said they involved transferring pensions.
About 28% of those targeted by suspected fraudsters were offered alternative investments such as wine, and 20% say they were offered overseas investments, while 13% say scammers had suggested investing in crypto-currencies. Around 6% believe they have been victims of frauds.

Safeguarding hard-earned retirement savings 
Pension freedoms, though enormously popular with consumers, have created a potentially lucrative opportunity for fraudsters, and people need to be vigilant to safeguard their hard-earned retirement savings.

If it sounds too good to be true, then it usually is, and people should be sceptical of investments that are offering unusually high rates of return or which invest in unorthodox products which may be difficult to understand. If in any doubt, seeking professional financial advice from a regulated adviser will help ensure you don’t get caught out.
Some scammers have very convincing websites and other online presence, which make them look like a legitimate company. Always check with the FCA to make sure they’re registered.

Source data:
[1] Consumer Intelligence conducted an independent online survey for Prudential between 23 and 25 February 2018 among 1,000 UK adults aged 55+ including those who are working and retired
[2] https://www.actionfraud.police.uk/fraud-az-pension-liberation-scam

Pension paralysis

Saving not found to be a financial priority for UK workers

Worryingly, pension inertia is rife across the UK with many Britons failing to make saving for their old age a priority as they fall into a short-term saving trap. Saving for retirement is not looked upon as a priority until workers reach their 40s and 50s, according to new research involving a survey of 2,824 employees at medium and large private sector companies in the UK conducted by LifeSight, Willis Towers Watson’s UK DC master trust.

Instead, leisure and general household costs come up on top, with retirement saving ranked to be the seventh most important financial concern for employees in the UK. Additionally, the number of workers with financial concerns has jumped to 52% from the lower percentage of 46% in 2015, while retirement confidence 15 years after finishing work has fallen from 61% to 55% during that time.

Importance of retirement savings
As the younger generations are set to be in work longer than their predecessors, starting to save from an early age is extremely beneficial. For millennials especially, short-term goals are much more important than long-term savings, and so employers have the added difficulty of communicating the importance of retirement savings to them.
However, even with the ranking falling low on list of priorities, it was found that 67% of British workers consider retirement security important, a percentage found to be greater than that of the last two or three years.

Increased pressure on employers
It was also found that 69% save for retirement primarily through workplace pensions. The UK Government expects one million people to opt-out of workplace pension auto-enrolment in 2019. This means 27.5% of members opting out of auto enrolment by 2019, which would be a rise from 21.7% in 2018 and an estimated 10% today – totalling to 13 million people expected to be outside pension saving by then.

The research clearly indicates that employees are looking for their employers to take the lead with their retirement savings, using their workplace pension as their main means of saving. Even though this adds increased pressure on employers, making sure they are communicating effectively with their employees about the options available to them and the importance of long-term savings is a must.

PENSIONS ARE A LONG-TERM INVESTMENT.

THE RETIREMENT BENEFITS YOU RECEIVE FROM YOUR PENSION PLAN WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE VALUE OF YOUR PLAN WHEN YOU DECIDE TO TAKE YOUR BENEFITS, WHICH ISN’T GUARANTEED, AND CAN GO DOWN AS WELL AS UP.

THE VALUE OF YOUR PLAN COULD FALL BELOW THE AMOUNT(S) PAID IN.