A new coronavirus called COVID-19 is currently causing great disruption and uncertainty in our lives. Many people who contract COVID-19 will only experience mild symptoms of a persistent cough and a high temperature, and will not require specialist treatment. Those who are older, or who have underlying health conditions such as diabetes, heart disease, asthma and cancer are more likely to suffer from complications as a result of contracting COVID-19. COVID-19 is a serious illness and has caused thousands of deaths worldwide due to its high contamination rate.

If you have an underlying health condition or are an older person who is considered more vulnerable in terms of contracting COVID-19, it may be worth investing in life insurance to protect your loved ones, dependants and the financial future of your family. If you were to pass away from COVID-19, do your dependants such as children, a spouse or other loved ones have enough money to cover bills, rent/a mortgage and other expenses such as the cost of your funeral? Life insurance could be a valuable option to give you and your family complete peace of mind.

Are you thinking about taking out life insurance because of the COVID-19 pandemic? Financial Advisor UK has a national network of fully FCA-registered and approved financial professionals that you can be matched with to ensure you get the right professional advice on your life insurance requirements, along with the best deals available from insurance providers.

What is a life insurance policy?

With a life insurance policy, you pay monthly premiums to your insurer, safe in the knowledge that if anything happens to you and you pass away, your dependents will receive a cash payout that will enable them to cover payments such as bills, groceries, your funeral costs and mortgage payments/rent. The amount that an insurance provider pays out will depend on the amount of cover you have taken out, and your policy.

If your death is because of a terminal illness or a virus such as COVID-19, some life insurance policies offer specific cover for this. All life insurance policies are different, so you need to check the policy you have purchased carefully to ensure it covers you for what you need.

All life insurance policies have exclusions that are imposed by the insurer. Typical and more standard exclusions include death as a result of drugs or alcohol, taking part in risky and dangerous sports, and suicide.

If you have an underlying or serious health condition when you first apply for life insurance, you must declare this to the insurer when you take out the policy. In some cases, an insurer might not cover you in case you have to claim because of that condition. It is however possible to obtain critical illness cover, long-term illness cover or total and permanent disability cover, which you’ll need to discuss with the insurer. Premiums for this type of cover will generally be higher than standard cover. If you have been diagnosed with COVID-19, declare this to the insurer when taking out your policy.

Life insurance and COVID-19

COVID-19 is still a virus that human beings are trying to understand and research. There is currently no specific cure, treatment or vaccination available for COVID-19. Because there is still much we do not know about health complications associated with the virus, life insurance has never been more important.

You can protect yourself and people around you from infection by washing your hands regularly and by not touching your face unless your hands are clean. There have been thousands of deaths worldwide as a result of COVID-19, especially in the case of people with underlying health conditions and the elderly.

COVID-19 is spread through saliva droplets or discharge from the nose in the air when an infected person sneezes or coughs. Respiratory etiquette is essential in order to limit the spread of the virus – i.e. coughing and sneezing into a tissue.

In order to keep yourself and others safe from the spread of COVID-19, you should adhere to the following practices:

• Maintain social distancing. Keep at least 2m away from other people (expect those from your own household), and especially anyone who is coughing or sneezing.
• Wash or sanitise your hands regularly with soap and water or a hand sanitiser.
• Follow good respiratory hygiene by covering your nose and mouth when you sneeze or cough.
• Stay home if you feel unwell, have a new cough and a high temperature (self-isolate).
• If you have a fever, cough and have trouble breathing, seek medical attention.

How much does COVID-19 life insurance cost?

If you have suffered or you have a family member who has been diagnosed with symptoms of COVID-19 and you need life insurance, critical illness cover or income protection, you’ll need to get in touch with our team of financial advisors at Financial Advisor UK. We can put you in touch with insurance experts who can help and offer you cover based on your circumstances. The insurer is likely to ask you questions about your COVID-19 diagnosis, including:

• When you or your family member was diagnosed with COVID-19
• Last time you experienced symptoms
• Medical complications that resulted (such as liver damage, etc.)
• Medications being taken
• Any other health complications/underlying conditions that you have

Your premiums for life insurance will depend on factors such as the type of policy you take out and the amount of cover you need, as well as the term of the policy (the number of years you are covered for). Premiums will also depend on your general health, lifestyle and smoker status. The younger you are when you initially take out a life insurance policy, the cheaper your premiums will be.

Is life insurance right for me?

Life insurance is a worthwhile investment if you have dependents who rely on your income, such as a spouse or children. If you are single and self-sufficient, life insurance might not be necessary. The best way to check whether you need life insurance is to calculate a rough budget and see how much income your household would receive if you passed away. If you’d struggle to make ends meet without your income, life insurance could be the right decision. If you’re still wondering whether or not to take out life insurance, speak to an independent financial advisor through Financial Advisor UK. All of our professional experts are regulated by the Financial Conduct Authority (FCA). Financial Advisor UK can match you with the best advisor for your circumstances from a national network of fully FCA-registered and approved professionals, ensuring that you get the best professional advice along with the most affordable deals on the market.

How much money you’ll need to retire and live comfortably largely depends on your plans for retirement and how you like to live your life. Generally though, as a rule of thumb, the more you can save up for retirement, the better. The more money you can put aside when you are younger, the more you’ll have in later life. You should have a target number for your retirement savings in mind.

Do you need retirement advice? Are you wondering how far your pension fund will go during retirement? Financial Advisor UK has a national network of fully FCA-registered and approved pension advice professionals who can help you make the most of your pension pot. Simply enter your details and you will be matched to a professional advisor, ensuring that you get the right know-how and best deals available on the market for your situation.

According to research conducted by Fidelity International, people in the UK who managed to save seven times their annual household income by the age of 68, were able to live a comfortable retirement that reflected the standard of living they had experienced when they were at work. This figure is clearly a high number, which is why it is so important to save as much as possible early on in life. You should save at least one year’s worth of income (based on your current salary), by the time you turn 30. The longer it takes you to begin saving, the more you will have to contribute to your pension as you head towards retirement. If you leave this too late, it may not be possible to generate the income before you need to retire.

Your pension pot: how long should it last?

This is a big question that many people ask when planning their retirement. If you were to retire at the age of 68, and you are in retirement for 25 years, you’d need to take no more than 5% of your pension pot every year in order to make your money go as far as possible. Taking 4% is ideal. That said, this isn’t an easy calculation, as there as many factors that could affect how long your pension pot will last. You may end up living far longer, the rate of inflation may change, the market and schemes your pension is invested in could underperform, and the national retirement age could increase again. Always consider when you plan to retire. If you can hold on and work for a few more years, this means you will have more money to dip into when you do retire, as you will have made more contributions to your pension scheme.

That said, don’t overestimate how much you’ll need

Many retirees overestimate how much they will actually need when they retire. It is commonly believed that you’ll need around two-thirds of your final salary, as many people will spend the equivalent of their last wage per year. In many cases, this isn’t true. This is because many retirees don’t consider factors like not having to pay a mortgage (if they have paid theirs off by the time they retire), no children to look after and pay for, no commuting fees, and no additional costs with going to work, such as clothing, lunch and miscellaneous items to make working life more comfortable. A survey conducted by the consumer group Which? found that most retirees spend around £2,220 per month. This equates to around £27,000 per year, covering holidays, luxury items, food, clothing, utilities, hobbies, leisure activities and so on. As you age, you may find that you spend less in some areas, but more on others.

You also shouldn’t forget that you will receive the State Pension provided by the government from the age of 65. Depending on your National Insurance contributions, the amount you can receive through the state pension is up to £175.20 per week, which makes a fair amount of your overall pension income. If you have defined benefit (DB) or defined contribution (DC) pension schemes, you’ll also have income that comes from these that you will have access to. So, while £27,000 per year may seem like a very steep figure, if you invest and save your money well while working, this figure shouldn’t be that difficult to reach in retirement.

What is a pension?

A pension is essentially a retirement fund that gives you an income to live off when you have retired and no longer work. When you are of working age and earn your salary, a small chunk is taken out of your pay cheque every month and added to your pension pot for later life. Your employer also matches your contribution, too, and you receive a 20% tax break from the government. In later life, when you retire, you can then begin to draw your pension and use the funds you have saved (while you were working). There are many choices you have in terms of how you use your pension, these include:

• Drawing money from your pension fund (in one lump sum)
• Arranging a drawdown (in which you receive the income in instalments)
• Purchasing an annuity (exchanging the fund with an insurance company)

If you are working and an employee of an organisation, your employer by law has to enrol in a pension scheme. If this hasn’t happened, speak to your employer immediately. Employers must enrol all employees over the age of 22 earning at least £10,000 per year into a pension scheme by law. The minimum amount an employer can contribute to a pension scheme is 3%.

If you are self-employed, it is a good idea to set up your own private pension scheme with a pension provider. The sooner you set up a pension, the sooner you will be saving income for your future. With a personal pension, you have more control over how your money is invested, and you can also take payment holidays if you wish. A negative of a personal pension if you are self-employed is that you don’t get additional contributions from an employer.

Do you require financial advice on how to make the most of your pension pot? Financial Advisor UK offers a national network of fully FCA-registered and approved pension advice professionals. We can match you in less than a minute to a professional and highly qualified advisor, ensuring that you receive the right guidance and best deals available on the market.

What types of pension are there?

There are three types of pension – a State pension, a defined benefit (DB) pension and a defined contribution (DC) pension.

State pension

Most UK citizens receive a State pension from the government. The amount you can receive is set by the government, and rises with inflation. The National Insurance contributions you make during employment help to pay for your State pension, and you must have at least 35 years of records of paying National Insurance to be eligible. The State pension is £168.60 per week.

Defined benefit (DB) pension

If you work for a large well-known company or organisation, it is likely that you will be enrolled into your employer’s pension scheme as receiving a defined benefit (DB) pension. Your pension and the type of plan you receive will depend on the number of years of service you have contributed towards your employer. In some cases, you may be on a ‘final salary’ pension with lots of benefits, which is a pension based on your final salary with that company before you retire.

Defined contribution (DC) pension

A defined contribution pension is a pension pot/cash sum that you can drawdown from once you have retired or scaled back your working hours. You must be 55 or over to receive a DC pension. You can withdraw (in one go) 25% of your pension pot, without paying any tax. If you withdraw more than this in one go, you’ll have to pay tax on it. The amount in your pension pot will depend on how much you and your employer have both contributed, and how your pension is invested/the scheme you are enrolled in.

For more details on types of pensions, how much you can invest, pension tax and other pension pros and cons, read our more detailed guide to pension need-to-knows here.

The introduction of what is commonly referred to as ‘Pension Freedom’ on 6th April 2015 not only changed the way you can access your pension pot if you have built up a retirement fund in a Private (defined contribution) Pension Plan but also how it can pass to your beneficiaries.

Who can inherit my pension fund?

Collectively referred to as beneficiaries, those who can benefit from your pension after your death are as follows:

If you do not know who your beneficiary is, you should contact your pension provider to check. If you don’t have a named beneficiary or you would like to change who would currently receive your pension death benefits when you die; you can get in touch with your provider to request a nomination form or expression of wish form.

What options will my beneficiary have when I die?

Pension death benefits can be passed to your beneficiary in a number of ways:

• Lump sum payment:This is a single payment which will fully extinguish the pension fund
• Lifetime annuity:Your beneficiary can choose to buy an annuity which provides a guaranteed income for life
• Dependant’s or Nominee’s drawdown (Beneficiary Drawdown): Your beneficiary can opt to draw an income directly from your pension fund. This differs from the Lifetime Annuity option as it allows them to vary the amount of income they receive and the frequency of the payments. The trade-off is that the income is not guaranteed as the pension fund remains invested.

More about beneficiary drawdown

There is no limit to how many times a beneficiary drawdown plan can be passed on to a subsequent beneficiary following your death.

The cycle of passing on to a subsequent beneficiary can continue until the pension funds are exhausted. This makes such arrangements very useful as a means of passing wealth to the next generation in a very tax efficient manner.

How is my pension fund taxed when I die?

The age at which you die determines how your pension fund will be taxed when it passes to your dependants or nominated beneficiary.

Generally, if you die before your 75th birthday your pension fund will pass to your nominated beneficiary free of income tax and they will be able to take a withdrawal (either as a lump sum or a regular income) without paying tax.

If you die on or after your 75th birthday your beneficiary can still choose to take the pension fund as a lump sum or enter a beneficiary’s drawdown arrangement but they will pay income tax on any money they withdraw.

Most pension plans are free from inheritance tax (on death at any age). For the fund to be free of inheritance tax any nomination you have made needs to be revocable – this means that it cannot be a binding instruction.

Some of your pension fund may also be subject to inheritance tax if you have moved money between pension plans in the two years before your death at a time when you knew you were in poor health and may have a reduced life expectancy.

If you would like to know more about this particular issue feel free to get in touch and speak to one our experts.

Death benefits and the lifetime allowance

If you have built up substantial funds in your pensions during your working life and have not taken any benefits from them and subsequently die before your 75th birthday your defined contribution pension funds and any defined benefit lump sums will be tested against your Lifetime Allowance.

This is the amount of savings that can be built up in a tax-advantaged environment and the current allowance is £1,073,100.

Any pension funds which exceed the Lifetime Allowance will be subject to a Lifetime Allowance tax charge of either 25% or 55% on the excess value; the amount payable depends on how the excess funds are accessed by your beneficiaries:

• If they take the excess funds as a lump sum they will pay a 55% tax charge on the excess amount only
• If they have chosen beneficiary drawdown the excess fund will be taxed at 25%.

A Word of Caution

The options that will be available to your beneficiary are very much dependent on:

• The type of pension plan you have: Retirement Annuity Contracts and Section 32 Buyout plans typically have less flexibility when compared to a Personal Pension or a Self-Invested Personal Pension (SIPP)
• Your pension provider: Different pension products have different rules and some contracts, such as Stakeholder Pensions, may not provide the full range of freedom options for your beneficiary
• The age of your pension: Older pensions will not necessarily be able to provide the same freedom options that a more modern contract allows.

If flexible pension death benefit options are important to you then you need to know what your pension plan can provide for your beneficiary as they may not be able to make use of your pension in the most suitable or tax efficient manner for them if their options are limited.

At The Private Office we have many decades of experience helping people manage their pension wealth and putting into place effective strategies for passing wealth on to future generations.

The Financial Conduct Authority does not regulate Tax Advice or Estate Planning.

If you would like to ensure that your pension plans provide the maximum flexibility for your family when you die or would just like to know a little more get in touch with us or you can arrange call with one of our financial advisers here.

We’re currently offering those with £100,000 in pensions, savings or investments the opportunity for a free initial consultation, up to the value of £500, to map out your financial future. Using cash flow forecasting we can show you if you’ll have enough for a comfortable retirement and the small steps you can take that may make a big difference to your outcome.

Important: If you are a member of a defined benefit (final salary) scheme the pension freedom rules will not apply to you. This article only relates to defined contribution. If you would like to understand more about what benefits your scheme will provide when you die please get in touch.

Coronavirus is the global topic of conversation and has taken the world by surprise. While Brexit worries had a big impact on the UK stock market, COVID-19 is making waves in stock markets all around the world.

Before the pandemic emerged, the world was storming away, and we saw the stock markets reach record highs. The fundamentals were strong, and we saw unemployment levels at record lows. Since the start of the market falls on 20 February, the global stock market has tumbled more than 25%, bringing the longest bull-market in history to a screeching halt.

How have stock markets been affected?

This pandemic has caused chaos around the globe, and now governments have had to step in and act which has created problems for most businesses based on their quarantine measures.

Travel and leisure companies are the first to be impacted, but the knock-on effect could see businesses across many industries obstructed.

On the contrary, some companies are also benefitting from the pandemic, such as delivery companies, cleaning product manufacturers and technology companies, however these are in the minority.

The majority of markets capitalise on consumption. In the UK, our GDP function is constituted by approximately 60% consumption, and with the lockdown, this is anticipated to drop sharply.

It’s not all about Coronavirus though. Oil is also playing a part in the recent volatility. Saudi Arabia has sparked an oil price war with Russia, causing oil prices to plunge last week.

We are here to guide you through the storm.

The Private Office (TPO)

The Private Office – a multi award-winning team of independent, Chartered Financial Planning experts to protect and grow your wealth. Based in Leeds, London and Bath, we look after clients across the UK with their financial planning needs. We act for more than 2,900 individuals, businesses, charities and trusts offering tailored advice across a breadth of sectors

The firm was established in 2008 in response to the increasingly impersonal nature of ‘mass-market’ advice, and was founded on the principles of providing bespoke, tailored and thorough financial counsel to all clients.

TPO – The Achievements

Being named as one of UK’s Top 25 Financial Planning Companies and one of the best investment advice firms on the market, we’ve received several wealth management, tax, and financial adviser awards, certifications, and recognitions from publications and organisations acknowledging our financial expertise, service excellence, fair value, and trust.

Combining the skFinancial Advisor UKs and experience of over 20 years with a diverse team of financial experts, TPO offers to create a comfortable and prosperous future.

FREE consultation worth up to £500

We all want to be sure we’ve saved enough for a comfortable retirement, but when do you know if you’ve saved enough so you can start to enjoy the fruits of your labour?

Using our Cash Flow forecasting, we will show you your financial future and based on your own personal set of circumstances, what you can realistically achieve. In some cases, this can mean retiring earlier than you thought.

If you have pensions, investments or savings totalling £100,000 or more, we’re currently offering a free personalised Cash Flow forecasting review with one of our expert consultants, with a value of up to £500.

What is an annuity?

An annuity is designed to guarantee a strong financial income throughout retirement. Retirees can purchase an annuity by using the funds they have built up over the years in their pension to provide a regular income every month for the rest of their lives. This type of arrangement is ideal for those who want to enjoy the nicer things in life when they retire. It is important to bear in mind that an annuity arrangement is for life. This means that you will get your payouts no matter when you pass away, but should consider that if you die early, the pension provider will get to keep the rest of the funds you have saved away. If you live a long life, you’ll end up receiving more from the annuity provider than they had expected to pay out. Staying healthy and doing your best to ensure a long life expectancy can help guarantee a good income from an annuity.

What is an income drawdown?

Income drawdown is another way to ensure regular income from your pension pot, and gives increased flexibility. New legislation means that you can keep your pension invested and only withdraw a certain amount every year, rather than choose to have an annuity. Your income will be taxed in the same way as it is when you work. A benefit of income drawdown is that when you pass away, your estate benefits from any remaining funds left over, and can be passed on to relatives. This is unlike an annuity, which stops when you die and cannot be passed on. You can be taxed on an income drawdown, depending on the age at which you pass away.

Are you wondering whether to set up an annuity or drawdown for your retirement? Don’t sign up for anything until you’ve spoken to one of our advisors at Financial Advisor UK. We offer a national network of professional FCA-registered and approved experts who can offer you the best advice and search the market for the right deals for your financial situation. Together we can help you make the right choices for your financial future.

Advantages of annuities

Some annuities are linked to investments. A big advantage of this is that the money used to purchase the annuity is tax-free. When you take out 25% of your pension to buy an annuity, you can potentially make money on your income without being taxed. This type of product is known as a ‘with-profit annuity’, as it is linked to an investment. Investment-linked annuities also have no yearly contribution limit, so you are able to accumulate capital tax-free. This is especially helpful if you are looking to increase your overall pension pot.

Disadvantages of annuities are that, being investment-linked, there is a potential risk that you could lose capital. Some annuity providers do state in their contracts that a minimum income will be paid, but it is worth bearing in mind that your income could be greatly reduced if your annuity wasn’t invested wisely or became affected by market activity. There may also be a limit on how many times you can withdraw money from your annuity. Fees may be applied if you go over the maximum number of times in which you can withdraw funds. In order to decide whether an annuity is right for you, always speak to a financial advisor such as those offered through Financial Advisor UK.

Is an annuity right for me?

Many annuity providers will have pros and cons depending on the type of arrangement you have with them. Different types of annuity include:

• Lifetime annuities (providing a fixed income until you pass away)
• Enhanced annuities (that pay out a higher, fixed income – eligibility applies)
• With-profit annuities (annuities linked to investments)
• Deferred annuities (investment-linked annuities that are left to accumulate for a set period of time before funds can be accessed)

Annuities vs. pension drawdowns

Having a pension drawdown enables you to move your capital into one or multiple funds as you wish. You can also withdraw as much or as little as you like, while controlling the frequency of your withdrawals. Bear in mind that drawdowns do not guarantee a fixed level of income like annuities, so unless you plan very carefully, you might end up spending too much of your money too early into retirement. Some retired people like the flexibility offered by a drawdown plan, while others prefer to have a guaranteed income from an annuity.

How do pension drawdowns work?

With a pension drawdown you can take 25% of your pension pot as a tax-free sum, and then move the rest of the capital into a flexible income plan that allows you to take a drawdown of income whenever it suits. Some people set up regular payments for a frequent income, while others decide to only use the drawdown when they need it. There are two main types of drawdown product – pension drawdown and capped drawdown (though the latter has since been phased out since April 2015).

Pension drawdowns were introduced as of April 2015. With this type of drawdown plan, there is no limit on the amount you can take from the drawdown at any time. With a capped drawdown, there is a cap on the amount of money you can take out of the drawdown. If you already have a capped drawdown plan, new rules have come into force that apply when you exceed your capped income. If you already have some or all of your pension savings in a capped drawdown plan, you’ll need to review the government’s new guidelines on pensions to see how the new rules will affect you.

A self-invested personal pension (SIPP) is a way of holding any investments you have until you retire and have to draw an income for your retirement. SIPPs are personal pensions, and are therefore different to other standard pensions. With an SIPP, you have more flexibility and control over your investments.

Do you need advice on SIPPs for your future? Financial Advisor UK offers a national network of fully FCA-registered and approved pension advice professionals that you can be matched with to receive the right advice and best deals for your circumstances.

If you have a standard pension plan, you don’t have to worry about how your investments are managed, as this is done for you through a pooled fund. With an SIPP however, you have more control over where to place your investments, or you can hire someone to manage your SIPP for you. You can switch your investments whenever and wherever you want to with an SIPP, which is why SIPPs often have higher charges, and are more suitable for those with investment experience. An SIPP is available to anyone in the UK who is under 75, and you can start to draw your funds once you reach the age of 55.

There are four different types of SIPP available, these are:

• Full SIPP – this type of SIPP gives you a full range of products to invest in, including share trading and property. This type of SIPP can incur high fees.
• Lite SIPP – this type of SIPP only invests in one type of product or asset. If you want to, you can turn a lite SIPP into a full SIPP when it suits.
• Deferred SIPP – this type of SIPP is designed for people who may want access to an SIPP in future. It is held in trust, and offers access to a range of investments at a later stage.
• Hybrid SIPP – like a deferred SIPP, you can have access to a range of investments through this plan and your own personal pension investment fund.

SIPPs and investments

You can make several types of investments with an SIPP. These include:

• Investment trusts
• Unit trusts
• Government-backed trusts
• Funds from insurance companies
• Traded endowment policies
• NS&I products
• Deposit accounts
• Commercial property
• Stocks and shares

There are many other types of investments available through an SIPP – the above is not an extensive list. You should get yourself matched with a professional from Financial Advisor UK, who can discuss your options with you.

As of April 2015, you can access your pension pot from the age of 55, and have the flexibility to choose how you invest it. Always speak with a financial advisor before deciding how to access your pension.

Pros and cons of SIPPs

The advantages of a SIPP include:

• A lump sum worth 25% of your pension pot, tax free, plus tax relief on contributions
• Flexibility and control over your investments
• A choice of different investments
• Employer contributions
• Ability to switch investments, should you wish
• The option to grow finance to purchase commercial property, if desired

The cons of a SIPP include:

• Higher charges than a standard pension plan (including set-up and management fees)
• Greater level of risk

SIPP rules for contributions

Just as with standard pensions, there are contribution rules for SIPPs. For every £100 a basic rate taxpayer puts into their SIPP, the UK government puts in an extra 25% (£25). For higher rate taxpayers, the government puts in 40% (£40), and for the top band of taxpayer, the government puts in 45% (£45). The maximum amount you can save in total per year into an SIPP is 100% of your total yearly wage, or an annual allowance of £40,000 (depending on whichever of these is the lower sum). There is also a lifetime allowance you can save into an SIPP, which is £1,055,000.

It is common for many people to have different jobs in their lifetime, which means that they will have made contributions to different workplace pension schemes with various employers. Keeping track of how much is in those multiple pots and physically locating them can be very difficult, especially if you have worked in a number of jobs throughout your career, a previous employer has gone out of business, or you’ve moved house and no longer receive statements on your pension savings.

In order to get the most out of your retirement, you need to find and figure out how much money you will receive from all of your pensions combined – both workplace and personal.

Need help or advice on finding and combining all of your pensions? Financial Advisor UK offers a national network of fully FCA-registered and approved professionals who you can be matched with to receive the right financial advice for your circumstances.

Finding a personal or workplace pension

Any pension schemes that you have been a part of should send you a letter with a statement indicating how much each scheme is worth, and an estimation of how much your fund(s) may be when you reach retirement. If you haven’t been receiving these statements, you’ll need to contact either the pension provider, The Pension Tracing Service or your former employer (if you are trying to find a workplace pension).

If you can, contact your previous employer(s) for details of your workplace pensions. You can do this by contacting the human resources department. You’ll need the dates you worked for your former employer to hand, as well as your National Insurance number. If you are trying to locate a pension from a previous job you had in the public sector, you should contact the Department for Work and Pensions (DWP).

If you have details of the provider your pension was with, you should contact them directly with your National Insurance number, plan number (if possible), date of birth and dates you worked for your employer.

By speaking to either your former employer or the pension provider, you should be able to determine the current value of your pension pot, how much your employer has contributed into that pot, charges you may be paying, how much income you will finally receive when you retire, how the pension is managed and invested, options you have to make changes, death benefits and so on.

Have your pension contributions been refunded?

If you have only been in a pension scheme for a very short amount of time (because you left a job shortly after starting one), it is possible that your pension contributions may have already been refunded. If you left an employer before 1975, is is highly likely that you will have had your pension contributions refunded. If you didn’t pay into a pension scheme at all, it is likely that you won’t receive anything or be entitled to anything (except for if you worked for an employer for over 15 years).

If you terminated your contract with your employer between the dates of April 1975 and April 1988, it is possible that you’d have a pension if you were over 26 when you left, and had worked over 5 years of service with that employer. If not, it is likely that your contributions would have been refunded.

If your contract of employment ended after 1988, it is possible that you may be entitled to a pension if you worked for your employer for over two years. If you left your position before this, your pension contributions will have been refunded.

Always check with your employer to confirm whether or not your contributions have been refunded.

Pension Tracing Service

Another option for tracking down a lost pension is to contact the Pension Tracing Service, a free platform that enables you to search a database of over 200,000 pension schemes. You can do this online through the GOV UK website, or call 0800 731 0193.

What to do next

• Search through that pile of paperwork at home and try to find details of any pensions you may have lost track of. Look out for pay slips, pension statements and misplaced letters regarding your pension. Check payslips for any pension deductions. If you have got pension contributions on your payslips and you haven’t received a refund, you have a pension that you’ve lost track of.
• Get back in touch with previous employers and their HR departments. Ask them for the pension provider’s details.
• Use the Pension Tracing service (details above) if you still cannot find details of missed pensions.

Why not gather all of your pension savings into a single pot?

It is highly likely that many of us will have multiple pension pots that we will inevitably lose track of in our lifetime. Why not consider transferring your pensions into a single pot? This makes your pension fund easier to manage and keep track of. Should you be interested in doing this for your future, Financial Advisor UK can match you with an FCA-approved financial advisor who can offer help, support and pointers on the right companies that can consolidate your pension savings for your future.

Have you ever wondered how your premiums for life insurance are determined by an insurer? Or why your existing policy might have changed and the price increased? Insurance providers take many factors into account when determining how much to charge customers in premium costs. This guide will go through each in turn, so you know how to keep costs down for the future and are aware of how insurance companies calculate your fees.  

Are you considering taking out life insurance to protect your assets and family should you pass away? With Financial Advisor UK, you can be instantly matched with an advisor from a national network of fully FCA-registered and approved professionals, ensuring that you receive the best advice along with information on the most affordable life insurance deals available.

Factors affecting your life insurance premiums

Age, lifestyle and health

Your age, lifestyle and current health greatly affect the quotes given to you by insurers. These factors help an insurer determine the level of risk in insuring you. If you have any underlying health conditions that are hereditary, or have experienced a previous serious illness, an insurer will take the view that are you are more likely to make a claim on your policy than a person without any health conditions. An insurer will also ask questions about your current lifestyle, including how much you drink and whether you smoke (or have smoked previously). Some insurers will also ask whether you take part in dangerous hobbies or sports, such as skydiving or BASE jumping. This will affect your premiums, as an accident resulting from such hobbies could result in a death and subsequent claim.

The older you get, the closer you are to the day of your death (or at least, that’s the somewhat grim way that insurance companies like to see it). Life insurance policies generally cost less if you start them when you are younger. Bear in mind though that as you age, your premiums will go up due to the risk of you having health issues and complications with older age. The longer you take out a policy for, the more you’ll also have to pay in the long run.

It is important to declare your family’s medical history when making an application for life insurance cover. Inform the insurer of any illnesses and conditions that have occurred, including cancer, stroke, diabetes, heart disease and hypertension. Different insurers will take different views on such conditions. Make sure you read your policy wording carefully so that your cover does exactly what you need it to do. If you have lots of medical conditions or a rare condition in your family history, you can take out specialist insurance with an insurer that specialises in covering a range of more complex illnesses and high-risk cases.

Never withhold any information from an insurer regarding your health, family medical history or lifestyle, as this could invalidate your policy and make it impossible for you to make a claim. While insurers will do all they can to find out as much as possible about you, your health and circumstances, it is your responsibility to declare anything you feel they should know and to be transparent about your medical history.

Policy term

The length of cover you choose for a policy will also have an impact on your premiums. If you decide upon a fixed term life insurance policy for around 20 years, your premiums will be much cheaper than a whole of life assurance policy, which runs for the rest of your life until the day you die (and then pays out upon your death). Some whole of life policies have reviewable premiums, so the costs you pay may go up or down depending on the insurers’ valuations and your health.

Lump sum value

The larger the lump sum you’d like to receive from your life insurance upon your death, the higher your premiums are likely to be. When you take out a life insurance policy, you can choose either increasing or decreasing pay-outs. If you’ve taken out a policy to cover a loan or mortgage (that you’d be unable to pay off if you suddenly died), but which gradually decreases over time as you pay the debt back, you may want to choose a decreasing pay-out insurance policy.

Additional extras

If you have any optional extras on top of standard life cover with an insurer, this can also raise the premiums you pay. Insurers offer extras such as income protection for when you cannot work due to sickness, accident or injury, and critical illness cover should you develop any of the critical illnesses stated in your policy wording. Some couples also opt for joint life insurance policies that pay out when the first person passes away. Such options can raise the cost of premiums, as insurers are having to cover you for more.

Income protection is a type of insurance policy that is designed to pay out and supplement your income if you cannot work due to sickness, accident or injury. Income protection gives you the peace of mind that you will still continue to receive an income until you can work again. Income protection shouldn’t be confused with critical illness cover, which pays out a one-off lump sum if you are diagnosed with one of the ‘critical illnesses’ stated in an critical illness policy.

Are you thinking of taking out income protection to guarantee an income should you become Financial Advisor UK or injured? Speak to a financial advisor from Financial Advisor UK. We offer a national network of fully FCA-approved experts and can match you with the ideal person who can advise on your circumstances. Not only will you receive the best advice, you’ll also get the best deals on income protection.

Income protection replaces part or all of your monthly wage if you cannot work because of illness or injury, and covers most conditions. You can also take out income protection to protect yourself if you become disabled as a result of a medical condition or accident. Your policy pays out until you are able to work again, or until you retire, die, or the term of the policy expires. Income protection usually kicks in when you can no longer receive a form of support and company sick pay from your employer. The longer you wait until the policy starts paying out, the cheaper your monthly premiums will be. It is standard for you to be able to claim on your policy as many times as you like, although it is likely that the more you claim, the higher your premiums will be.

Do I need income protection?

When considering income protection, it is important to think about whether you and any dependents you have (such as a partner or children) would be able to pay the bills, afford the mortgage/rent or other living expenses if you couldn’t work. Income protection is especially popular with people who are self-employed and do not have sick pay as a back-up if they become Financial Advisor UK. Always double-check what your employer could offer you if you were off sick in the long-term.

You may not need income protection if your company or employer offers a generous sick pay scheme. If you also qualify for government benefits if you were unable to work, you may not need income protection. If you have enough money saved up to support yourself and your family if you couldn’t work, or your partner works and brings in enough income, these are other reasons not to take out a plan for income protection.

How much would income protection cost me?

Premiums that you pay every month for income protection will depend on the type of policy you take out. Income protection covers a wide range of illnesses, injuries and situations in which you cannot work. Always check the small print to ensure that you are properly covered for what you need. Costs for income protection will generally be based on your age, occupation, whether you are or have been a smoker in the past, your lifestyle, health, family medical history, the waiting period you’d like to wait for until your policy starts to pay out, and how much money you’d like to receive. Your premiums will also depend on the type of cover you take out – remember that any additional extras you take out with the policy provider will come at a cost.

Calculating the amounts of cover you need

To figure out how much income protection cover you require, calculate how much you need every month to pay your mortgage/rent, utilities, bills, debts, credit card payments and any loans. You’ll also need to consider other expenses such as food, petrol, childcare and other large costs such as car maintenance, etc. Get an overall figure for the amount you will need per month to cover these expenses.

Check what types of sick pay and benefits you are entitled to through your employer, as you may have a contract that offers a certain amount of company sick pay. You can do this by approaching your company’s HR director. If you are self-employed, this won’t apply. When you have a rough figure for how much you might receive per month in sick pay, deduct this from the figure you calculated in terms of your monthly expenses. If there is any shortfall, consider where this extra income will come from. If you don’t have the savings, it may be worth considering income protection.

The world of investing can be a little overwhelming when you first start out, but understanding the behaviours that are needed to be successful are all it takes to reap the rewards. Here’s how to manage your investment portfolio so that you can make the most out of your financial assets and achieve financial independence.

Do you require advice on your investment portfolio? Financial Advisor UK offers a unique matching service that can instantly put you in touch with a financial professional from a national network of fully FCA-registered and approved advisors, ensuring you receive the best professional advice for your investments.

Do your homework

With so many investing methods to choose from (some of them being highly complex), it can be difficult to know what makes a successful investor. You don’t need to make things very complicated. As a starting point, read lots of guides on how to invest, and good stocks to start out with. Try low-key index investment strategies that require you to only purchase a few index funds. Then assess your portfolio every year to see what works. Essentially, the more information you have to hand, the easier it will be to take bigger steps as you go and learn by experience.

Get a brokerage account

It is worth taking out a brokerage account, which is where you will hold some of your funds and trade them, too. Your brokerage account will take some of the hassle out of trading for you, enabling you to buy and sell stocks from companies without you having to contact them yourself. Some of the most popular brokerages are Vanguard, Fidelity and Schwab. You’ll need to open an account, transfer any funds you’d like to invest from your bank account to your brokerage account and you’re ready to start trading.

Protect your portfolio with a ‘margin of safety’

It is important to construct a ‘margin of safety’ around any assets you own, as this will protect your portfolio. Do this by being conservative when you estimate what will happen with your assets – don’t overestimate their successes because the market is in a positive state, and never over-pay for mediocre stocks that could be a drain on your portfolio. When you’re making a valuation on how your investments could perform, be cautious. You should only purchase assets that are either close to or way below your estimate of their fundamental value, as this will ensure you get a good deal. Some companies may offer stocks that have great returns on capital, but most will require you to exercise caution when looking at the return on investment, especially because stocks can drop by up to 33% of their market value typically every few years. You don’t want to purchase stocks if they only have small safety margins.

Only invest in assets you understand

Many investors choose to invest in companies that are in industries they have little knowledge of. In order to invest well in a business, you need to understand how it makes money. You need to be able to forecast and estimate how a business will grow and develop in five to ten years time. If you cannot do this, don’t purchase stock. Keep in mind that there are lots of companies coming into business that may be exciting now, but will end up going bust in the long-run. Don’t let an exciting new business sway your careful judgement. Time will tell if a business is truly worth your investment.

Be rational when buying and selling

The higher the price you pay for an asset (in relation to what it could make you), the lower your return. Likewise, you wouldn’t accept an offer of £350,000 on a house that you had originally purchased for £500,000, so don’t do this on the stock market. Some people trading on the stock market panic and quickly sell when stock is believed to be worth less that what was originally paid for it. As long as you have calculated your levels of risk carefully and estimate growth within a business over a long-term, you can take a more rational, long-term approach.

Keep costs, fees and expenses to a minimum

If you take part in frequent trading, bear in mind that this can impact on your long-term results due to additional taxes, fees and commission. Although frequent trading seems like the right thing to do to keep on top of things, sometimes letting your investments ride it out for a while can be a better option in the long-term.

Don’t rush

Selecting and implementing an investment portfolio takes time and consideration. When you have found a portfolio you like, wait a few months before exchanging it, as the market could change and acting too quickly could present you with a higher tax bFinancial Advisor UK. If you’re just beginning to get to grips with investments, don’t be too concerned with achieving the perfect portfolio from day one. A good way to begin any portfolio is to buy a total stock market or large cap index fund and go from there. Over time, you will learn from experience and find the best ways to make money, and will also discover which assets are not best serving you. Don’t be afraid to take a step back and ignore your portfolio, as markets go up and down all the time. Have an annual rebalance and check whether any of your assets haven’t achieved your target percentages. If they haven’t, rebalance your portfolio by purchasing new shares of the funds that have decreased below your target percentage. You can also sell any stocks and shares that did very well.

Trying to find the right financial advisor might seem like a challenging task, but can actually be rather straightforward if you know where to look and which kind of advice you’re looking for. Finding a financial advisor can help you make the right decisions about your financial future.

With Financial Advisor UK, you can be matched with a financial advisor from a national network of fully FCA-registered and approved experts, ensuring you receive the best professional advice for your situation. Whether you’re looking for advice on your buying your first home, taking out a mortgage, investing into your pension or considering a stocks and shares ISA, a financial advisor can offer you valuable guidance on these and a whole range of other financial-related issues, helping you to save time and money in the long run.

How do I find the right financial advisor?

It can sometimes be hard to find a financial advisor via word of mouth, and sometimes you won’t know that a financial advisor has done a good job until they’ve advised you. Check that your union or workplace pension scheme doesn’t have an advisor already associated with them, especially if pensions are what you’re looking for guidance on. The Money Advice Service is also a good point of call, as are comparison websites such as Financial Advisor UK. Read other online reviews when making decisions about whether or not to hire a financial advisor.

If you’re looking for advice on mortgages, investments and financial planning, the Chartered Institute for Securities and Investments (CISI), may also have associated financial advisors who can help. For insurance enquiries, the British Insurance Brokers’ Association (BIBA), is worth consulting.

Financial advisors’ specialisms

Financial advisors are not always referred to as general ‘advisors’, as they often have an area they specialise in, such as mortgages, investments, pensions or tax/inheritance. Another term for an advisor is a ‘broker’. Brokers deal with topics including mortgages, car and home insurance, life insurance and investments such as stocks and shares. Regardless of their specialism, the financial advisor you choose should always be regulated by the Financial Conduct Authority (FCA). The FCA is a body that establishes rules that financial advisors must adhere to. In particular, advisors who advise on pensions, pension transfers, retirement income plans, financial planning and inheritance/trusts and investments must have certain qualifications in order to do so.

There are also advisors who can give you their knowledge on the above topics, but also guide you on other subjects such as life insurance, mortgages and financial planning. These advisors are called ‘restricted’ advisors. This means that such advisors must be limited in the types of products they offer to their clients, and limit the number of providers they work with.

An ‘independent’ financial advisor is just that – independent – and so wouldn’t sell you products from a provider that they were working with. An independent financial advisor will be able to recommend all types of products and look at the whole of the market for you to get the best deals available. It may be worth considering an independent financial advisor, as they can give you more choice and a wider range of products rather than just one or two that may be linked to a company they are working for. That said, you may find that a more suitable advisor will be one who is linked to a few more restricted products. Always discover the types of products the advisor is recommending and ask if there are any providers they are working for. Understand what type of advice they can give you.

Financial advisor fees

The fees for a financial advisor will vary depending on what they are charging you for and how you’d like to pay for their advice. Always be open to negotiate the right terms for your circumstances. Some advisors may charge by the hour for their time, while others might charge a fee for an agreed project or piece of work. Some people hire advisors on an ongoing monthly basis, and set up a regular payment system with their clients.

How much you pay for a financial advisor depends on the following factors:

• Where the advisor is based. If they are located far away from you, travel expenses may be incurred.
• How you receive the advice. Online and remote advice will be cheaper than face-to-face meetings.
• Who does the administration. Some advisors will have support staff to do the background work for them (which is then signed off by them), which will cost less.
• The advisor’s qualifications. If the advisor if very highly experienced and they have good qualifications that make them a leader in their field, their time is likely to come at a higher cost. (Remember that paying a cheap price for an advisor might not necessarily be the right approach).
• What you need advice on. If you need advising on several aspects of your finances, and your situation is complicated, this can take the advisor more time – time which you will have to pay for. Try to sort out as much as you can in your free time before contacting an advisor, as costs can mount up if they have lots of sorting out to do.

Getting started

There are several routes you can take to get started in finding a financial advisor. These include:

Asking around (word of mouth)

Ask family and friends if they know of anyone who has recently dealt with a financial advisor and was impressed with their work. If you know someone who can highly recommend a good financial advisor, this can save you lots of time in trying to find one yourself, although you should speak to two or three advisors before committing, as they may not be right for your situation or be able to offer the advice you need.

Online search

Comparing the market online using search engines and comparison websites such as Financial Advisor UK can take the hard work out of trying to find the right advisor for your circumstances. After answering a few questions about the type of advice you require and your circumstances, you can be instantly matched with a professional that suits your needs. Financial Advisor UK has only FCA-approved and accredited financial advisors. Always make sure that any comparison website you use features properly qualified and regulated advisors.

FCA register

Any regulated and FCA-approved financial advisor will be found on the FCA register. If you decide to use an advisor who is not regulated by the FCA, you will not have protection from the Financial Ombudsman Service and Financial Services Compensation Scheme if something went wrong.

The world of insurance can be confusing, especially if you are trying to take out cover and find terms that you don’t understand. Here, we’ve debunked some of the most common terms you’ll come across when trying to purchase life insurance cover.

Need help finding the right life insurance cover for your needs? At Financial Advisor UK, we offer a national network of fully FCA-registered and approved financial experts who you can be instantly matched with. Not only will you receive the best professional advice, you’ll also get the best deals available.

Life insurance

An insurance policy that is used to cover you and your family’s living expenses, bills, mortgage and funeral costs in the event that you should die and leave dependants who rely on you financially. The insurance policy is taken out for a specific term.

Life assurance/whole of life assurance

Life assurance is the same as life insurance, expect the policy lasts you for your entire life rather than a set term. Both terms are used interchangeably by life insurance providers.

Premiums

The amount(s) you pay every month to receive your cover for life insurance. Your premiums will be paid annually or monthly, usually by direct debit, depending on the policy you have with your life insurance provider.

Term

The length of time (in years) that you choose for your policy to remain valid.

Terminal illness cover

This type of cover means that your life insurance policy will pay out a lump sum in the event that you are diagnosed with a terminal condition and the insurer has evidence that your life expectancy is less than a year. Terminal illness cover is usually invalid during the last 18 months of a life insurance policy.

Decreasing term assurance

This means that the overall sum assured goes down every year in accordance with a repayment mortgage or loan.

Increasing term assurance

The sum assured increases each year, and your monthly premiums will also increase in accordance with the Retail Price Index.

Level term assurance

For the duration of the policy, the sum assured remains the same.

Joint life second death

This describes a ‘joint life’ policy, which means that the life policy is in two names, e.g. you and a spouse. The policy will pay out when the second person dies. It is also possible to set up a joint policy so that it pays out when the first person dies.

Critical illness cover

This type of policy pays out and covers you if you are diagnosed with one of the illnesses stated in your terms and conditions.

Income protection

Cover that pays out and protects your monthly wage if you can’t work because of an injury, accident or illness.

Renewable term assurance

After a certain amount of time, you can choose to renew your term assurance.

Convertible term assurance

You can covert your term policy (for a set period) to whole of life cover.

Mortgage life insurance

This type of cover pays off your outstanding mortgage in the event that you should pass away. You can also opt for ‘mortgage payment protection’, in which your insurance covers your mortgage if you can’t work for any reason.

Many DC (defined contribution) pension schemes send correspondence to people that are signed up with them five years before they are due to retire, with options as to what they can do with their pension and retirement planning. If you’re signed up to a DC pension scheme, you will need to decide when you want to retire, your retirement options, what to do if you have a small pension pot, whether or not to consolidate more than one pension pot, and whether or not you want to transfer your pension.

If you’re signed up to a DC pension, you can either keep the scheme you’re signed up to or transfer to a different scheme. Out of these two options, you can then decide whether or not to keep your pension pot where it is, get an annuity, flexi-access drawdown, take your pension pot in one lump sum, or whether to take your pension pot in a number of lump sums.

If you have a DC pension, you save up a pot of cash to provide an income for yourself during retirement. Unlike defined benefit (DB) pension schemes which promise a specific amount of income for your retirement, the income you receive through a DC scheme is based on the amount you pay in yourself, how much your employer pays in, how you choose to retire, how the fund is invested and any tax relief you are due to receive. If you have a DC scheme through your employer, your employer will deduct your DC contributions from your monthly pay cheque. If you have a DC scheme that you’ve set up for yourself, you’ll need to remember to make regular contributions.

Do you require financial advice about your DC pension? Are you thinking of a DC pension transfer? Financial Advisor UK offers a national network of fully FCA-registered and approved professionals and an easy matching service to put you in touch with the right professional advice for your circumstances. Our advisors can also search the market to help you find the best deals and pension providers available.

When you retire – options for DC pension pots

When you turn 55 you can use your DC pension pot however you wish. Options include:

• Taking the whole pension pot in one go. 75% of this will be subject to income tax at the normal rates. Depending on the size of the sum, a large lump sum could place you into a different tax bracket for the year.
• Take the pension pot in a few lump sums. These lump sums will also be subject to income tax, with 75% of funds being taxed.
• Take 25% of your pension fund and then use the rest to provide you with a taxable income (annuity) or drawdown.

The final value of your DC pension pot depends on:

• How long you’ve saved for and the contributions you’ve made
• How much you take as a lump sum
• How well invested your pension is
• How much your employer pays in
• Annuity rates
• Pension provider charges

Should I stay in my DC pension scheme?

You should carefully consider whether or not to transfer out of a DC pension scheme. If your employer pays into it, it is essentially a pay rise that you will receive later on when you retire. Unless you cannot afford to make contributions to the fund because you are financially struggling, it is advisable to stay in the scheme. In the long-term, contributions your employer makes may increase. If you change jobs while working, you stop paying into the fund and your fund remains where it is (known as a preserved pension).

If you have decided that you don’t want to remain in a DC pension scheme, you have the option to transfer it to a new employer, a stakeholder or a personal pension fund. You need to figure out the costs associated with this transfer, and whether it will provide you with as much capital in the long run.

Since pension reforms were announced back in 2015, the number of people cashing in defined benefit (DB) pensions has greatly risen. The Office for National Statistics claims that the value of transfers between all kinds of pensions rose to £34.2 bFinancial Advisor UKion in 2017, compared to £12.8 bFinancial Advisor UKion the previous year.

Large transfer values are available through DB pensions, which is all part of their appeal. DB pensions pay out a specific sum each year to the recipient based on their number of years of service with a company and their final salary figure. The transfer value of a DB pension can be up to 40 times the annual income received from them, which makes transferring out a very tempting proposition. Here are some pros and cons you should consider that will help you to determine whether a DB pension transfer is right for you. Need extra help? Financial Advisor UK has a national network of fully FCA registered and approved professionals that you can be matched with to ensure you get the best professional advice for your circumstances.

Reasons to transfer

Flexibility

A DB pension scheme offers income linked to inflation, but transferring out of it does enable you to access your savings more easily, while giving more flexibility. Some DB pension providers may want greater control of how you spend your savings, such as spending larger amounts in the early years of retirement, while scaling things back in the later years so that you have a certain amount still remaining. Transferring out of a DB pension gives you greater control and the will to decide how you spend your savings and when.

‘Pooled mortality’

With a DB pension scheme, you will receive an annual payout until you die. If you suffer from health issues however, you may benefit from transferring your pension. DB pension schemes approach health and life expectancy from the view of ‘pooled mortality’, which means that they expect pension holders to life to a certain (average) age depending on their age, lifestyle, health etc. If you do not live until this average age, you can lose your assets, meaning that other people in the scheme who make that age can benefit from your losses. If you have retired because of health issues, it may be worth using savings to purchase an annuity instead, so that you have a higher income during retirement.

Financial and personal situation

If you are married or have a number of pension plans, this could influence your decision on whether to transfer out. Consider whether or not you already need the extra income of a DB pension. Many people with DB pension plans already have sufficient income. DB pension plans assume that many retirees are married or in a couple, or have other investments, so they adjust payments based on these assumptions. Some of your capital could therefore be withheld to provide additional funds for your partner. If you are single, a DB pension plan may not be right for you.

Passing on funds as inheritance

A DB pension plan will pay an income to a surviving spouse when the main pension holder dies. However, when this spouse dies, the funds stops, making it difficult to leave additional income to family members as an inheritance fund. Transferring out to a personal pension plan may be the right option if you want to leave money to family members upon your death. If you die before turning 75, any unused pension wealth you have can be passed on to family members tax-free. Withdrawals will however be subject to tax.

Reasons to stay in a DB pension

Taxation

If you transfer out of a DB pension and had a large salary when you worked, your DB pension will have a very high transfer value equal to the total sum received over the course of the pension. The lifetime allowance for pension income is £1 mFinancial Advisor UKion. If your transfer value is over this figure, you’ll have to pay tax on the rest at 55%.

Managing your own money

A DB pension is managed by your former employer and is income you are guaranteed to receive. Transferring into a personal pension means that you will then have to manage your own finances and take on any investment risks that come with this. If you lose capital and do not invest money wisely, you may find it hard to get that money back.

Inflation-related risk

A DB pension income is directly linked to inflation, therefore your income will compensate for any rises that lay ahead. If you transfer out to a pension that doesn’t compensate for inflation, the spending power of your capital could be affected and decrease as inflation goes up.

Security for a spouse or partner

If you want to make sure that your husband, wife or partner will be financially sound after you die, this is a main reason to stay in a DB pension scheme. Transferring out could cost you more in the long run, as joint life annuities are expensive.

Buying a new-build property that no-one has ever lived in before is an attractive option for many homebuyers. As with an older property however, there is lots to consider when buying a new-build home. Deciding to go ahead with the purchase will depend on your circumstances.

Are you thinking of buying a new-build home? Do you require advise from a financial advisor in terms of securing a mortgage? Buying your first home? Or buying a new-build through Help-To-Buy? Financial Advisor UK offers a national network of fully FCA-registered and approved professionals who have helped thousands of homebuyers with their advice. They can search for the best mortgage deals available, while answering any questions you may have about the house-purchasing process.

Why buy a new build?

There are plenty of positives when it comes to buying a new build property. The main benefit is that the property is completely brand new. This means that you can move straight in, and won’t have to do too much to the property. Many property developers will throw in extra benefits as part of the sale, such as fitting carpets for you, covering stamp duty, and letting you choose tiling, flooring, fixtures and fittings as part of the purchase (e.g. kitchen fittings). These will be fitted as part of the building process, removing the hard work for you. When moving day comes, all you have to do is unpack and enjoy your new home. Many of the fittings in new-builds are often modern, with the latest energy-efficient, smart technology.

Another positive of new-build homes is that they offer many first-time buyers a great opportunity to get onto the property ladder through shared ownership and Help-To-Buy – schemes which are only available if you purchase a new-build property. The process of buying a new-build home is also chain-free, which means that you are not stuck in a chain with buyers above you (one of the main stresses of purchasing a home).

New-build homes also have to legally comply with building regulations, which means that they are often far more energy-efficient than older properties. Over 80% of new-builds have an energy efficiency of either A or B, making utility bills far more affordable. New-builds should also come with a warranty that covers you for certain things.

Cons of new-build homes

There can unfortunately be a few negatives to buying a new-build home. These include:

Small room sizes

Many developers squeeze a lot of properties into their developments to maximise their profits. As a consequence, the amount of space on offer in some new-builds can be compromised, meaning smaller rooms. When you go to view a new-build, check that all of your belongings and furniture will fit into the space available.

Property value

Just like buying a brand new car, a property can depreciate in value shortly after you have purchased it, and it can take several years for its value to go up again. If another new housing development is constructed near your new-build, this can affect the value of your home. If you are planning to buy a new-build, aim to stay in it for the long-term.

Leasehold contracts

Many property developers are selling homes as leasehold rather than freehold. If your contract with the developer is freehold, you own the property and the land outright. If it is leasehold, this means that you will normally have to pay ‘ground rent’ to the freeholder, and ask their permission for any works you do to the property (like renting). This can cause issues, as leasehold contracts can last for a long length of time and prevent homeowners from making changes to their property.

Quality of workmanship

You’ve seen and read about new-build issues in the newspapers – and unfortunately it’s likely that there will be some problems with the quality of the workmanship on your new-build home, as developers use cheap trades who get paid by the number of homes they can quickly complete in an hour/day etc. It’s always worth having a snagging survey taken when you purchase a new-build to determine structural problems and other snags that can be sorted out before you move in. As a result of snagging issues, the building of a new-build development doesn’t always go to plan, and you may also experience delays in terms of construction and moving in. This is something worth bearing in mind before buying a new-build. Would you have to pay extra rent to stay somewhere else while your home was being completed? What about storage costs? will this affect your mortgage offer?

Top tips before committing to a new-build

As a starting point, look for developers in the area where you are looking to buy and do your research. Check out their reviews from previous customers. Don’t be afraid to speak to other people on the development (if it is being built), on how they found the buying process with the developer. Also visit other developments by the housebuilder and see how they compare. Don’t take the developer’s promotional materials at face value – they will have been compiled by a marketing team. Visit the local area near where your new-build is being constructed. Check out transport links, local facilities, green spaces etc.

Don’t forget to look at older properties in the area – look at whether an older property would be better in terms of space on offer and value for money. Find out how much other properties in the local area are worth and use this as a negotiating tactic with the developer. This is especially useful when there are only a few properties left that the developer wants to sell. Also ask the developer about the incentives they offer. will they install carpets? Offer to pay your stamp duty? Or lay turf in your garden?

Leasehold versus freehold

Leasehold

If you are in a leasehold contract, this means that you do not own the land that your property is on. You therefore have a lease from the freeholder to use the home on that property for a set number of years. Leasehold contracts are often very restricting, and leases on new-builds are often for many years – some can be as high as 999 years. If you’re on a leasehold contract, you’ll have to speak to the freeholder about pets you own, sub-letting, building extensions and decorations/amendments you make to the property (as if you were renting). You may also have to pay an annual ground-rent charge to the freeholder. Ground rent can rise very quickly over the course of several years, and can sometimes double in a decade, causing financial complications.

Freehold

Most houses are freehold. If you have a freehold contract, you own the property and the land outright, meaning that you are responsible for its upkeep.