Monthly Archives: March 2015

And the family pension fund nomination goes to……………..

It’s always been an important part of estate planning for us to discuss what’s going to happen to any remaining pension fund on a client’s death. This discussion is never just a one-off, as circumstances change over time.

Following the new rules included in the very aptly named Taxation of Pension Act 2014, the nomination of who should receive any remaining pension fund has taken on even greater significance.

From 6th April, any remaining pension fund can be used to provide a dependant’s or nominee pension, so basically it can be paid to any individual(s) nominated by the member.

A typical case study to illustrate this may be that John has a pension and Helen, his wife, would inherit enough non-pension assets, ensuring she would not need to access his pension fund. Therefore, John could nominate his son Richard, and daughter Emma, both in their forties, to receive his pension. The unused pension fund on their subsequent death can then be nominated by Richard and Emma to their children.

The diagram below illustrates the options and tax implications very adequately. penion nomination pic

It will be our aim to ensure clients update their nominations and these are reviewed regularly, so they fit in with the family’s financial plan. These nominations will be in writing and they can be updated at any time, as family circumstances change.

This is great news for the family pension fund. At last, pension funds can effectively be passed on to future generations. Let’s just hope future that governments don’t keep kicking the pensions football around, although that may be too much to ask….

If you can keep your head when all those around you are losing theirs…

It has been quite a year for stock markets. In the past 12 months, shares have soared to record highs; higher than the tech boom and the credit bubble of 2008.

But let’s not get carried away. Being disciplined with an investment strategy is as important when times are good as when times are bad – in some ways, the excitement of a rising market makes it harder to do. Here are three things that investors should remember while they are enjoying a rising market – and what we do about each one.

  • Maintain the right balance of investments.

Every investor should have a carefully considered mix of assets, with the appropriate proportions of (and within) cash, bonds, shares, property and so on. However, as the value of each asset class rises and falls at different rates, these proportions drift. Maintaining the intended balance is important, because your allocation of assets is one of the bedrocks of the strategy that will help you reach your goals. So, we rebalance our investment portfolios regularly, by trimming the things that have performed well and adding to the things that have lagged. This might seem counter-intuitive, but it helps to keep your investment portfolio in the best shape to achieve your long-term goals.

  • Avoid getting swept along with the market.


When the market is rising, it is easy to be tempted into taking more risk to increase your returns. The pain and uncertainty of a falling market can quickly be forgotten when shares are on an unbroken year-long rally, as they have been. But, sticking to your guns and remembering your original goals and strategy are essential. Chopping and changing your approach when the market shifts can detract from returns rather than enhance them. Our investment philosophy is not influenced by the cyclical nature of the market; it evolves over time as the science of investing evolves.

  • Guard your gains.


When money is tight, people tend to watch their expenses more closely than when they are feeling flush. In the same way, some investors can neglect to monitor their fees and transaction costs when markets are rising. Letting expenses slip is like trying to fill a bath with the plug out. This is why we keep portfolio expenses low in good and bad markets.

Sometimes, the key to successful investing is simply to remain disciplined; to remember to stick to your well-considered decisions; and to keep your head when all around you appear to be losing theirs. It’s as important to remember this simple philosophy when markets are rising, as it is when they are falling.

Enough is enough, is enough

What is enough?

This is a question we are often asked by both new and existing clients; we have to say, it entirely depends on what ‘enough’ means for them.

It is an incredibly personal thing as it will mean different things to different people, based upon their personal values and lifestyle.

This could be any of the following:

  • Being able to continue your lifestyle (minus the mortgage and school fees) when you stop work.
  • The freedom to stop work and do the things you dreamt of doing.
  • A lump sum to buy a boat and sail around the Mediterranean, buy a holiday home, or go travelling in style….
  • Helping children through university, or getting on the housing ladder.
  • Leaving a legacy to your family or favoured charity.

There are, of course, many more personal definitions of ‘enough’ and one person’s definition is not necessarily yours. It’s also not surprising to find that many people have never thought about it until asked.

We spend a lot of time at Carpenter Rees getting to know our clients and asking the questions that help to define what it looks like to them. As financial planners, we will tell them if they need to make compromises and take tough decisions in order to secure enough for the future. Our job is to develop a long term plan and manage it year on year, to help them ensure that they reach their idea of ‘enough’. That is what makes our job, and your interaction with us as your advisers, interesting.

In addition, we have some clients who have more than they need and that can lead to some very interesting discussions too.

So, what is your ‘enough’? Let us help you get there and if you have more, then let us plan to use the surpluses in an interesting and meaningful way.

If you, or someone you know, might benefit from a discussion about their ‘enough’ please feel free to pass on our details.




Freedom, Freedom, Pension Freedom and Dinosaurs

The first line of the classic Wham song Freedom: ‘Every day I hear a different story…’

It seems to me, and no doubt to you, that those lyrics ring true when we read about the new pension freedom legislation that comes into force on 6th April 2015.  We’ve all seen press coverage about people going out and blowing their pension funds on cars and holidays, and I’ve even read an article about someone deciding to withdraw their entire fund and invest it in dinosaurs for their museum – classic coverage from one of the heavyweights.

Where there’s a Will there’s a way

We would always advocate making a Will, regardless of your situation, as you then have complete reassurance that your wealth will be divided up as you wish, whether it be amongst relatives, friends, charities or political parties.  If you do not have a valid Will, then the laws of intestacy apply – these rules differ depending upon where in the UK you live, and the following relates specifically to England and Wales.