Building financial resilience

One notable theme evident throughout the coronavirus lockdown has been ‘back to basics’ with people displaying an increased appetite for the simpler things in life. While not everyone has fully embraced Tom and Barbara’s ‘Good Life’ philosophy, home baking, gardening and knitting have all enjoyed a notable renaissance.

Lockdown lessons

Back to basics has also become a key personal finance theme. The economic impact of the pandemic has clearly resulted in many people’s finances becoming severely stretched. As a result, a significant proportion of consumers have sought to change their financial habits by reducing expenses and becoming more mindful spenders.

Dealing with debt

While good budgeting skills have become a necessity, it’s also important not to ignore debt. Many have benefited from mortgage and other debt payment breaks, but these will not last forever. Going forward it’s vital to keep up with repayments or, if you are struggling, consult a debt adviser. When it comes to lingering debt, the worst thing anyone can do is nothing.

Financial fragility

Sadly, for some people, the pandemic has highlighted the fragile nature of their financial safety net. The last few decades have seen the burden of responsibility increasingly shift from state to individual, which has increased the importance of protection products in order to maintain both your and your family’s financial security in uncertain times.

Rainy day funds

The pandemic has also highlighted the need for emergency savings. If you don’t have any, regular savings schemes can be a particularly good way to accumulate rainy day funds. If you do have savings, make sure you shop around for the best available rates rather than leaving funds stagnating in poorly paying accounts.

Long-term goals

Although it’s extremely easy to focus solely on short term financial needs, it’s also important not to lose sight of other financial goals. While finding money to fund longer-term plans such as retirement savings can be difficult, the cost of delay can ultimately prove even more expensive.

Help at hand

The last few months have shown we never really know what’s around the corner and also demonstrated the importance of being financially prepared for what may lie ahead. If you need assistance strengthening your financial resilience, please get in touch with a member of our financial planning and wealth management team.

Business Loan Protection – What are the risks?

There is no doubt that we are living in unprecedented times. Over six months ago the country was put into lockdown and to this day the thought of returning to what once seemed like ‘a normal life’ still seems some way off. We now find ourselves dealing with local lockdowns, track and trace, wearing of masks in public places and other measures introduced by the government in an attempt to deal with and contain this virus.

From a business point of view many sectors find themselves having to navigate through unchartered territory and immersed in long term uncertainty.

The government announced various measures to support businesses facing difficulties, two of which are the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS). The schemes aim to support long-term viable businesses who may need to respond to cashflow pressures by seeking additional finance.

There is no doubt that these schemes will have provided a crucial financial safety net for many firms, but they do also raise questions about how business owners should protect their debt.  

This pandemic will have forced many business owners to think even more carefully about how to protect their biggest assets, which is themselves and their key people. But for many business owners they do not realise that their debt does not die with them and that any loans will have to be repaid if they do pass-away. Furthermore, how would this debt be serviced in the event of long-term sickness or incapacity?

Remember, the borrower always remains 100% liable for the debt. You’ll be responsible for repayment of 100% of the CBILS facility, not just the 20% outside the coverage of the government’s guarantee and while no personal guarantees are required with the BBLS, the responsibility for paying back the loan rests with the business. Where defaults occur, lenders will follow their standard commercial recovery procedures, including the realisation of security (where appropriate), before making a claim against the government’s guarantee for any shortfall.

Furthermore, these coronavirus-related loans could well compound the existing issue of corporate debt, some of which may well be subject to personal guarantees, namely, your biggest asset, your home. Now is an ideal time to sit down with your financial planner and look at ways to insure and protect your business and family should the worst happen.

At MHA Moore and Smalley, we specialise in formulating and implementing comprehensive protection solutions that will help mitigate the risks a business is faced with. Whilst cost is often an objection, in reality, a robust solution can be put in place for a fraction of most business’ turnover or profit. What business owners should be asking themselves is what is the cost of not having something in place – not just on their business but also their families.

For an initial, no obligation meeting to undertake a review of your business protection arrangements please contact Nathan Douse, Financial Planning Consultant at MHA Moore and Smalley.

E-mail: nathan.douse@mooreandsmalley.co.uk or call the office on 01772 821 021.

Keep your retirement plans on track

The COVID-19 pandemic is having a widespread impact on all aspects of our finances, including retirement planning. However, while recent stock market volatility undoubtedly poses a challenge, particularly for those close to retirement, it is important not to allow the outbreak to derail your plans.

A resilient retirement plan

One thing the pandemic has vividly highlighted is the importance of developing a resilient retirement plan. Although market turbulence will impact all pension holders, those with a clearly defined, carefully considered plan will inevitably be in much better shape to weather market volatility. For instance, as they approach retirement, an increasing proportion of their pension fund will be ‘lifestyled’, meaning it shifts to ‘safer’ havens such as cash, gilts or bonds, thereby limiting their overall level of investment risk.

Stay the course

At times like these, it is also vitally important to remember pension savings are designed for the long term. This means that, particularly in the case of younger investors, there should be plenty of time for markets to recover and pension pots to achieve growth aspirations before retirement income is required. In addition, making decisions based on short-term economic upheaval can be extremely risky, with the potential to lock in losses following declines in investment values. Historically the best strategy is therefore generally to be patient, resist the urge to sell and stick to a long-term investing philosophy. For those closer to retirement, now is a good time to take stock of your full complement of retirement resources before making any decisions. This will involve reviewing your pensions, and any other savings and investments.

We can review your level of income and whether this has been adversely impacted by, for example, reduced savings rates or cut dividends.

Making your pension last

Another factor that could impact pension holders’ response to the pandemic relates to staggered retirement. As a result of increased longevity, a greater proportion of the population now withdraw more gradually from work, as retirees find an optimum worklife balance that accommodates their specific needs. This trend clearly provides for greater flexibility with part-time work enabling many pensioners to preserve retirement funds into later life – an increasingly popular choice for many.

Advice increasingly essential

Perhaps unsurprisingly given the heightened economic uncertainty, the past few months have seen a sharp rise in demand for professional financial advice. It has never been more important for people to obtain sound advice in order to ensure their retirement plans remain firmly on track.

We’re here to help

So, if you are concerned about the impact of coronavirus on your plans, talk to us. We will help you see the bigger picture, weigh up all your options and make a balanced assessment of risks tailored specifically to your individual needs.

If you would like further information on any of the topics covered in this article please contact Dave Gleeson, MHA Moore and Smalley Senior Financial Planning Consultant – Head of Technical. E-mail: dave.gleeson@mooreandsmalley.co.uk or call the office on 01772 821 021.

Click on the link below for more helpful information regarding retirement.

MHA Moore and Smalley are authorised and regulated by the Financial Conduct Authority.

Employee Benefits Brochure

As the pace of life moves faster and faster the demands on our time continue to increase. Many employees are now turning to their employer to help them manage their work-life balance.

This is why we have designed and created a brochure that sums up Employee Benefits, what they are and why you should implement them into your work culture.

A well thought through, relevant employee benefits programme can make your organisation stand out from the rest and help you recruit the best employees and retain them for the long term.

If you already have benefits in place, it is important to review these to take advantage of new products and solutions that are on the market as well as making sure that they remain relevant to your employees.

We can help you to become an employer of choice.


Contact us

If you would like to discuss any information discussed in this article, please make sure to get in touch with our Financial Planning Consultant, Dave Gleeson on dave.gleeson@mooreandsmalley.co.uk or ring 01772 821 021.

Is your group pension scheme fit for purpose?

Since the automatic enrolment regulations were introduced in 2012 more than 10.2 million workers have been enrolled into workplace pension schemes. 

Employers are aware of their administrative duties, but The Pension Regulator’s six key principles mean employers’ duties go beyond simply having a scheme and completing the day to day administration.

In brief, The Pension Regulators six principles are: – 

  1. Essential Characteristics – schemes are designed to be durable, fair and deliver good outcomes for members.
  2. Establishing Governance – a comprehensive governance framework is established at set up, with clear accountabilities and responsibilities are agreed and made transparent.
  3. People – those who are accountable for scheme decisions and activity understand their duties and are fit and proper to carry them out.
  4. Ongoing Governance and Monitoring – schemes benefit from effective governance and monitoring through their lifecycle.
  5. Administration – schemes are well administered with timely, accurate and comprehensive processes and records.
  6. Communication to Members – communications to members are designed and delivered to ensure members are able to make informed decisions about their retirement savings.

Arguably, the key to these principles is to deliver ‘good outcomes’ for employees. With more than 90% of those enrolled in the UK staying in their workplace scheme it does mean that there will be an improvement for many in their quality of life when they draw on their pension pots in retirement.

Despite the significant increase in long term retirement saving in the UK, however, the principle of ‘ongoing governance and monitoring’ highlights the need for constant review. 

Although ‘ongoing governance’ is not a legal requirement failure to maintain an automatic enrolment scheme that suitably benefits its members could potentially result in action being taken against an employer – either by the employees or The Pension Regulator. 

If asked by one of your employees, or even The Pension Regulator’s compliance team, for details on when, how and who has last reviewed your workplace pension scheme, are you able to answer this question and provide suitable evidence?

Depending on when you originally had to comply with the automatic enrolment rules, which were rolled out from October 2012 onwards, you need to decide when you should be reviewing your pension scheme and who would be ‘fit and proper’ to carry out the review.

If you would like to discuss reviewing your pension scheme then please contact me.

Dave Gleeson

Senior Financial Planning Consultant

dave.gleeson@moorandsmalley.co.uk

Business Succession: On Death

What do you have in place should the worst happen? Many of you reading this article will have considered at some point establishing a personal will and your likely motives for putting this in place will be one or more of the following; you want to limit the amount of tax you pay; if you have children you want to appoint a guardian and ensure they are provided for financially; you want to head off any potential family disputes; and critically you want to have control over how your estate will be distributed after your death.

Individuals generally want to have peace of mind that on their death their wishes are carried out as they would want them to be and it is the same from a business point of view. Individuals who have business interests via Limited Companies, Partnerships, or LLPs should ensure there is clear instruction as to who and how their business interests are left to…Worryingly, over fifty percent of UK businesses have not left instructions in a will or any special arrangements regarding shares on their death.

Let us consider an example; a limited company, with 2 shareholders, each owning an equal share of the business. The shareholders are both married, and both have dependents. If we asked either of these shareholders what they wanted to happen to their share of the business on death, they’d likely say they would want their respective families to inherit the cash value of their share of the business and rightly so. However, with no formal agreements in place the reality is often quite different.

The shares would generally pass to the spouse under the terms of the will (and if there was no will in place, the rules of intestacy would apply). The spouse may wish to ‘sell’ these back to the business, but there is nothing binding to make this happen. The business may not be able to buy the shares from the spouse (even if they wanted to) as they may not have any readily available cash. Perhaps borrowing is an option. This will take time. Would it even be possible against the likely backdrop of a potentially traumatic period for the company?

They could sell the shares on the open market but, would they get a fair value? How long would this take? The business would almost certainly not welcome this course of action.

What else? The spouse may decide to keep the shares and become actively involved in the business. This could be an unwelcome event for the remaining business owner.

Having a business will in place can provide businesses with a solution. It will allow the funds to be in place to facilitate the purchase of shares and it will ensure that the business can continue, and the family are compensated as per the client’s wishes. Peace of mind for all involved and minimal disruption to the business.

Have a think about your own business, whether that be a Partnership, an LLP, or a Limited Company. Have you considered what you would like to happen should the worst happen? What have you got in place to ensure your wishes are carried out?

Importantly, if you believe you have something in place, when was it last reviewed?

Does it still meet your needs?

Contact us

For an initial free no obligation conversation about your own individual circumstances, please contact our Financial Planning Consultant Nathan Douse who specialises in this area on 01772 821021 or email nathan.douse@mooreandsmalley.co.uk

Business protection series

Savings and pensions for Gen X

The changing financial pressures facing members of different intergenerational groups has been a recurring theme in recent years, with the narrative usually proclaiming how younger generations have lower income, assets and prospects than their older counterparts.

However, there has been relatively little consideration of the potential retirement woes facing people born between 1966 and 1980 – Generation X.

Limited time to plan

Members of Generation X have between 12 and 28 years left to work and build up a sufficient pension pot to fund their post-working years. A recent report suggests this group is at greater risk of reaching retirement with insufficient income.

This partly reflects an array of changes in the labour market and pension landscape, as well as a challenging economic climate, which have combined to increase the complexity of preparing for later life.

Challenges facing Gen X

A number of specific issues have also placed Generation X at risk of reaching retirement with inadequate funds. The decline in private sector defined benefit provision means a large proportion of this group will rely on defined contribution schemes, while they are also likely to receive a lower State Pension income than their predecessors. Additionally, automatic enrolment came too late for this group to benefit fully as most were in their late thirties or over when it was introduced.

Next steps

If you’re concerned about your retirement prospects, then get in touch with us. It’s never too late to understand what you have relative to what you might need in retirement.

The information given in this article should not be construed as financial advice.

For an initial, free, no obligation meeting, please get in touch with our experienced Financial Planning Consultants on 01772 821021 or email info@mooreandsmalley.co.uk

This article was originally written by our colleagues at MHA Tait Walker.

First Time Buyers – Look no further

The Lifetime ISA (LISA) was originally introduced by the government in April 2017 and was aimed at the younger generation of savers to help purchase their first home or fund retirement.

Since the launch, the take up has been disappointing and there has already been calls to abolish it from MPs on the Treasury select committee. Although this could be down to the LISAs’ complexity, there are few providers offering it on the open market, so advertisement has been limited.

To be eligible to save using a LISA, you must be aged between 18 and 39. Individuals can contribute up to £4,000 per tax year into the product and the government will add £1 for every £4 saved. The maximum government top up is £1,000 per tax year, which should be credited on a monthly basis.

Like a normal ISA all growth is tax free and you can hold the underling monies in cash or in stocks and shares. The LISA can be held alongside a normal ISA, but total contributions in the relevant tax year into ISAs should not exceed £20,000.

Where they differ are the withdrawal restrictions. If the underlying monies held in the LISA are not used to purchase a first home, or to fund retirement,  then any withdrawal prior to age 60 incurs a 25% penalty. For example, if £4,000 is saved and the government boosted it to £5,000, you would end up with £3,750 once the penalty is factored in and you would end up with less than what you would have originally saved.

Other considerations include the maximum purchase price of the new property (must be less than £450,000) and the product must be held for a minimum of 12 months before it can be used to fund the new house purchase.

This article should not be construed as advice. Whether or not a LISA is suitable will depend upon your personal circumstances. Should you wish to speak to any member of our financial planning team about tax efficient savings vehicles, please contact our office on 01772 840421.

Since the launch, the take up has been disappointing and there has already been calls to abolish it from MPs on the Treasury select committee. Although this could be down to the LISAs’ complexity, there are few providers offering it on the open market, so advertisement has been limited.

To be eligible to save using a LISA, you must be aged between 18 and 39. Individuals can contribute up to £4,000 per tax year into the product and the government will add £1 for every £4 saved. The maximum government top up is £1,000 per tax year, which should be credited on a monthly basis.

Like a normal ISA all growth is tax free and you can hold the underling monies in cash or in stocks and shares. The LISA can be held alongside a normal ISA, but total contributions in the relevant tax year into ISAs should not exceed £20,000.

Where they differ are the withdrawal restrictions. If the underlying monies held in the LISA is not used to purchase a first home, or to fund retirement,  then any withdrawal prior to age 60 incurs a 25% penalty. For example, if £4,000 is saved and the government boosted it to £5,000, you would end up with £3,750 once the penalty is factored in and you would end up with less than what you would have originally saved.

Other considerations include the maximum purchase price of the new property (must be less than £450,000) and the product must be held for a minimum of 12 months before it can be used to fund the new house purchase.

This article should not be construed as advice. I’d encourage first time buyers to seriously consider a LISA as a tax planning vehicle however, whether it is suitable will depend upon your personal circumstances. Should you wish to speak to any member of our financial planning team about our tax efficient savings vehicles, please contact our office on 01772 840421.