Pensions as food?

Today I've had my eye on pensions and food after @GHLumsden posted a piece suggesting ISAs were like fish 'n' chips. He's now comparing pensions to kebabs (?! - you can view here : http://citywire.co.uk/money/how-pensions-work-and-why-theyre-like-kebabs)

Later today whilst reading the professional press I noted Andy Zanelli of Axa saying "Advising on pensions is like peeling an onion. As you peel off the skin it starts to get painful and by the time you have chopped, sliced and diced, the eyes are really stinging and full of tears"
As an IFA, I know the feeling Andy.

Axa Andy's quote reminded me of seventy-year-old Eletharias of Greece. I saw him on the news last month collecting onions from some wheelie bins.


Since the euro crisis he says he cannot afford to go the supermarket any more, so for the past few months he has started rummaging for food in dustbins. He goes out in Athens at night so that no one sees him.
"Since my pension was cut, I can't buy food so I look through the garbage," he said.
http://news.sky.com/story/20186/families-crumble-in-greeces-economic-crisis
 
Just a few days ago NEST, the new goverment designed compulsory pension thingy showed the results of a survey : Food, fun and football? ... why ‘Tomorrow is worth saving for’
The survey suggests that low confidence, rather than unwillingness, may be one of the main reasons for people not saving enough for their later lives.
http://www.nestpensions.org.uk/schemeweb/NestWeb/includes/public/news/Food-fun-and-football-NEST-asks-consumers-why-Tomorrow-is-worth-saving-for.html
The majority (71 per cent) agree they may not have put enough aside because they don't want to make the wrong decision about saving for retirement, whereas nearly half (47 per cent) agree it’s because they don’t know enough about what would be their best option.

Here's a final sobering statistic that I calculated myself. If you retired at age 60 and ate a Happy Meal 3x a day (say £3 for the McMeal) and you lived for 25 years, even without inflation, that would be over £80,000 you'd spend on food. From a taxable pension income that means a fund of £100,000!
http://www.mcdonalds.co.uk/ukhome/more-food/happy-meal.html

So if you have aspirations to live happily ever after, but eat more than just happy meals, do visit your retirement planning. Perhaps even consider allowing Green Financial to assist ...




 

Utmost Good Faith, The Marine Act 1906

Life Insurance (and indeed many other forms of consumer insurance) has long been covered by the principle of uberrimae fidei (utmost good faith)

In summary this required applicants, or as we call ourselves now, consumers, to disclose all necessary information relevant to the risk to be insured, even if the insurance company asked no specific question about it.

The original thinking was simple: only the insured knows all about the risk, so they should have a duty to disclose anything which would ‘influence a prudent insurer’. The underwriter could then make a reasonable judgement based on all the facts.

Once upon a gentlemanly time this sufficed, but in the modern age, with ever more litigation and loss of trust between insurer and insured this has become unworkable. It just isn't what consumers believe and expect to happen when taking out insurance. The general feeling is that the insurance company should ask the questions and we should do our best to answer truthfully. If they don't ask or we forget to mention something, we expect the insurance to be OK. You no doubt have your own view on how the application process should work.

Up until now, the most recent law governing this was in fact The Marine Insurance Act 1906. This has now been repealed. Despite its title, the Act governed every life policy and every other consumer insurance policy too (but not group insurance, fact fans). In its place, the Consumer Insurance (Disclosure and Representations) Act 2012 is now law and should come into effect next year (2013).

In future, if insurers want to know something they must ask. In return, consumers must still tell the truth, but a minor infringement will no longer invalidate the contract. The end result makes sense for all parties and should help engender greater trust in insurers.

ref: http://lawcommission.justice.gov.uk/areas/consumer-insurance.htm

Financial Planning in the Middle Ages

Welcome to my Middle Age blogpost. No serfs here and hopefully with sensible financial planning in the early years there are no peasants. Maybe we are not all Lords of the Manor but we may be landowners (or a freeholder in any event). And the only plague like viruses are being killed by our software.

Following their previous informative video on the early years, Morningstar have followed up with the middle years [yes, my title is much better, isn’t it?!]

In this episode they discuss the fact that you're in a stage where you're perhaps coming senior in your job, you have children, you have a house, other responsibilities. You're starting to think a little bit more about coming into retirement and what the future might start to look like.

http://www.morningstar.co.uk/uk/news/articles/106999/Financial-Planning-in-Your-Middle-Years.aspx

Nick Cann, from the Institute of Financial Planning continues “… it's really important to get a handle on where you are in your personal balance sheet. If you’ve been successful, you've looked at your income and expenditure, you started saving monies, you had a variety of strategies I imagine in different areas to invest, and to save in pensions. You have various life insurances and everything there, but it's now starting to get really important to focus that down to a financial plan to understand fully where you are, how likely you are to be able to retire when you'd like to retire or to do other challenges in your life, where there's things around other important aspects of your family, and other areas are also taken care of.

So, middle years is really important to start making sure you really are on track to have the later years in good order. Because you don't all of a sudden want to panic around 55, 60, and think I really haven't got enough. I wish I had done more in earlier years.”

If this sounds like you, have a look at our ‘How much is Enough? page on the website http://www.iangreen.com/timeline.php

Some readers may be thinking surely I could just do this myself, why do I need a financial planner? Well, a few folks can do this themselves. But many of our clients engage us for a financial plan not through lack of capability, but through a lack of capacity (they just don’t have the time to learn how to do it all properly themselves) or through desire (they’d rather not spend their spare time pouring over numbers and graphs).

That said, if you love DIY finances, Go For It!

But in the same way that professional athletes have coaches and many people report greater results at the gym with a personal trainer, why not consider engaging a financial planner to power up your financial plan and make sure your money isn’t going to run out before you do.

Did you know?
The largest Mint in the middle ages was located in the Tower of London

There is an American website with interesting material on it called ‘Get Rich Slowly’ ( http://www.getrichslowly.org/guide-to-money/ ). The middle ages are covered by the middle three of the following list within the early and later years (see previous blog post http://greenfinancial.blogspot.co.uk/2012/06/are-you-aged-25-to-50.html )

The stages are:

Plan


Protect


Save


Spend


Invest


Live


Retire

If you need any financial help with any of those stages,
for you or your family,
please get in touch, we’d love to hear from you.

Are you aged 25 to 50?

Different times in life require different financial strategies. This blog post covers earlier on and later on in life.

Earlier On

Morningstar recently started a serious of video interviews looking at different financial topics. This 5 minute clip is about ‘the early years’ and covers a few basics, such as making sure in your late teens and early twenties, when you start work and earning, that you pay down previously accrued debts (such as student loans and credit cards or loans) when you can. Then think about a disciplined saving approach. The alternative to this is spending what you earn without thinking about it but if you save on a regular basis THEN spend what is left it builds over time. The interview finishes with the ‘pensions v ISA’ product question and despite the favourable tax breaks for pensions the flexibility of ISAs gets the nod for ‘the early years’

http://www.morningstar.co.uk/uk/news/articles/106998/Financial-Planning-in-Your-Early-Years.aspx

Later On

Moving on a generation or two, the product provider company MetLife is focusing on the financial needs of what they call ‘the Uncertain Generation’ – UGen for short. Their research shows that those born between 1961 and 1981 are facing unprecedented levels of uncertainty with competing financial needs, making it difficult for them to plan for their retirement.

MetLife have developed an online calculator which should be helpful for all those aged between 30 and 51. http://www.financialfitnessatfifty.co.uk/

As well as showing you how your pension savings compare to the national average, the calculator will also give an estimate for the age that you will be able to retire, based on the retirement income you expect to receive.

The calculator only take a few moments to complete and you don’t need any paperwork to hand, just an idea of what you have in pensions, savings and any debt as well as the age and income you’d like to retire on.

If having completed the calculator you find your pension income at 50 is short of what you hoped it would be, then you’re not alone – MetLife UGen research shows that the average 50 year old has only saved 44% of what is required to guarantee a minimum standard of income when they stop work.

By the time you are 50 you are on the home-straight to retirement – yet just 11% of 50 year olds have seen a financial adviser. That’s despite 51% saying they’d like to see one in order to regain control of their retirement.

If you are one of the uncertain majority and you’d like get some certainty on your financial plans then please have a look at the pension (http://www.iangreen.com/pensionperformance.php) and retirement (http://www.iangreen.com/retirementincome.php) section of the Green Financial website or contact us to find out what the best options are for you.

Or if you are just starting out and would like help with saving for the future so that you are part of a certain generation (!) please get in touch.