Morfitt's Mailshot Issue 18...          Can't see this email properly? View in browser

Morfitt & Turnbull

Issue 18   

Show me the money – that's it, I'm emigrating!
There have been so many changes to the pension rules over recent months, a lot of which 'kick-in' next April, so I decided to see what happens in other countries around the world. In other words are we any different or worse/better off.

In particular I have looked at how flexible pensions are in terms of accessing the funds, considering from next April it will be the first time in UK history that anyone (above the age of 55) can access the full fund (subject to Income Tax).
So here are a few examples...
There are very low levels of annuitisation with around half of pension assets paid as lump sums. The other pension pots are used to provide an income stream mainly through "pension accounts" similar to the current flexible drawdown we have here, with only an estimated 2%-10% purchasing a lifetime annuity. Australians also have access to means-tested benefits such as a pension, healthcare and medicine, therefore there is an incentive for some to deplete their private pension savings to qualify for these benefits.
Chileans who wish to access their pension pots must opt for a lifetime annuity, index-linked annuity or for phased withdrawal. The cost for the phased withdrawal product is relatively high and the majority (70%) select an annuity.
The majority of Danish employees must contribute to a pension scheme, either the collective earnings-related ATP or an individual "special pension". It is mandatory for those who have saved into an ATP pension to purchase a lifetime annuity. Other savers have several different options which include life annuities, fixed-term annuities and lump sums. Only 15% of Danes take a lump sum with the rest purchasing an annuity.
Irish savers who meet the Minimum Income Requirement of €12,700 can either purchase an "Approved Retirement Fund", which is similar to income drawdown, or withdraw their entire savings as a lump sum. About 30% with private pension savings purchase an annuity though this figure includes individuals with an occupational pension who are still effectively obliged to purchase an annuity.
Annuitisation levels in Switzerland are high with around 80% of pension assets used for lifetime annuities despite savers having unlimited access to their private pension savings. Annuity rates are regulated by the Government and are considered to be very generous considering the low interest rates and low mortality rates amongst annuitants.
Savers in the USA are permitted to access their pension savings from retirement age without restriction. The purchase of lifetime annuities is minimal and accounted for less than 2% of pensioner income in 2009.

Food for thought if you fancied emigrating!


Adam's Technical...  
Those little things we never seem to get around to sorting out...
There are more and more conversations with clients that bring up the most obvious of considerations once they are discussed but some tend to be overlooked and yet they hold such importance.

We have collated these for you to look through and have a think about whether any are pertinent to you or perhaps someone that you know. It will surprise you how many strike a chord!!!
1.   How much money do you have set aside for emergencies? If something were to happen could the bills be met and would your lifestyle have to change?
2.   Have you checked the interest rate you receive on your cash deposits? A higher rate may be available elsewhere and this includes cash ISAs too!
3.   How much income will you require in retirement? Is it enough? Could you stop working sooner than you realise?
4.   Do you have policies that will payout a regular income or lump sum if the unexpected were to happen? Are they actually fit for purpose? We never know what is round the corner!
5.   Do you make use of your tax-free allowances where possible? Do you know what they are? Work within the rules to your benefit such as using Income and Capital Gains Tax allowances
6. Have you made a will? A very common one that goes unaddressed. You can take control now over what happens when you die.
7. Have you written down where your investments/policies are held and placed it somewhere safe? Someone else will need to deal with your estate.
8. Have you looked at your Inheritance Tax liability? Individuals are currently allowed to pass on £325,000 Inheritance Tax free, the balance is taxed at 40%.
9. Have the policies you hold that pay a lump sum on your death been placed under trust? Direct the monies away from your estate on death.
10. Have you set-up a power of attorney? If anything were to happen who would look after your finances and/or welfare.
Of course Morfitt & Turnbull are here to help with any of the above, even if it's just a short discussion. Contact your usual Adviser for more information. 

Gareth Says... 
Catch me if you can!

A short football-related comment from Gareth...
"Many thanks to those who have joined our annual Fantasy Football League and it will be good to see new challengers throughout the season. I was pipped last year but that just means I am more determined this year to win back my crown!!!

Good luck everyone!"

Staff Matters... A warm welcome to Zara!

We would all like to welcome our newest member of staff, Zara Wilson, who joined us a few weeks ago and has settled into the team with ease.

She has immediately become accustomed to Adam's daily tales and the fight to devour any chocolates or biscuits before they are demolished by the others (there is one particular culprit but I cannot think who that would be......).


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Tel: 01565 624 370   Email: 

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