The ceremony took place at the Chartered Insurance Institute in the City of London. Guests of honour included Garry Hale, President of the Personal Finance Society, Dr Alexander Scott, CEO of the Chartered Insurance Institute and Hayley Tink, 2012 Chartered Financial Planner of the Year. John & Becky graduated with other recently Chartered Financial Planners at the ceremony and you can see John in his cap and gown attire in the picture on the left.

PFS qualifications are recognised throughout the world as evidence of commitment, knowledge and understanding. They underpin professional integrity and support the delivery of service to the customer.  Kevin Ferriby – IFP’s Managing Director – a Fellow of the PFS and also a Chartered Financial Planner stated “IFP remain committed to obtaining the highest level of professional qualifications – for both advisers and our technical support team – as it provides us with the knowledge and expertise to ensure our clients receive accurate and ethical financial planning advice of the highest quality“

John and Becky travelled down to London for the ceremony with their partners and enjoyed the day with a meal down Brick Lane to continue the celebrations later. The only spoilers to the day were the loss of a false nail for Becky and an untimely spot on John’s chin for the photographs!

Becky is pictured below receiving her certificate from the President of the PFS and the CEO of the CII.

Last month, new buyer enquiries rose to their highest level in over three years, with 25% more chartered surveyors reporting demand for property rising rather than falling. The latest jump in enquiries (from 13% more in March) strongly suggests that along with the existing Funding for Lending scheme, Help to Buy is attracting interest even if the mortgage guarantee element of the product is not due to come into effect until next year.

As demand increased, so did supply, with new instructions to sell rising in April, albeit more modestly (to a net balance of 8%). With not enough housing to meet increased demand, prices are finally beginning to improve, and the survey recorded its first positive reading for house prices since June 2010.

Newly agreed sales improved too, with 19% more surveyors reporting sales rising rather than falling during April (from 11% more in March). Meanwhile, average sales per surveyor over the past three months were at 17.1. The past two months readings on sales are at their highest levels for three years.

Despite the improving picture for mortgage lending, many are still relying on the private rented sector, with evidence that the demand for rented property is continuing to outstrip supply. The result is that 18% more surveyors expect rental prices to rise rather than fall. That said, respondents to the survey anticipate rents rising by less than 2% over the next year. This plateau may be in part due to a healthier housing market and increased access to mortgage lending.

The rise in property sales from a historically low level is welcomed by the RICS, however there is also concern expressed that this could lead to higher prices, unless developers speed up the delivery of new housing stock to satisfy the demand.

There is a concern that price increases within the housing market, much greater than UK inflation and earnings growth rates, will stimulate housing prices beyond a recovery from nil growth or negative equity levels. Returning profit driven hyper-inflation in the housing market could counteract any initiative to increase the number of house owners in the UK, as house moves up the house ownership ladder become less affordable. Would we all welcome a return to high profits on investments through house ownership and sales? 

Sources: www.rics.org.uk

What was the old compliance wording? Markets can fall as well as rise? May was certainly the month when that was born out, with many of the major stock marching steadily upwards – only to suddenly have a day where the wheels fell off and previous gains were wiped out.

The FTSE-100 and the Japanese Nikkei Dow indices were good examples. The FTSE recorded a 13 year high, at one point coming within 90 points of its 1999 all time high. The Japanese Nikkei Dow burst through 15,000, with global markets being boosted by the actions central banks around the world had taken to boost the global economy – and by indications that those measures were having some effect.

But then came a survey showing that Chinese factory output had slowed for the first time in seven months. When this was added to worries that the US Federal Reserve might end its bond-buying programme earlier than anticipated the markets moved rapidly downwards. The FTSE fell by 2.1% in one day (the worst daily performance for 12 months) and the Japanese market – always sensitive to Chinese economic activity – fell by 7%.

As China continues its inexorable rise towards the largest economy in the world, it is interesting to note that news from that country is now driving world stock markets every bit as much as news from the USA. Signals from the States were mixed in May – but they didn’t have to day to day impact on stock markets that the news of a slowdown in Chinese factory output did.

UK

May was the month when attention turned to the UK housing market again. Figures released for March showed that mortgage approvals had risen in that month, and Nationwide’s house price index confirmed that house prices had risen in May, albeit only by 0.4%. Overall, though, it was felt that the market was regaining some momentum.

The one negative was a report from the BBC suggesting that 50% of people currently with interest only mortgages will struggle to repay them: the average shortfall was estimated at £71,000.

Is this renewed focus on the housing market necessarily a good thing for the UK economy? The ‘Help to Buy’ Scheme was a central part of George Osborne’s Budget but it has recently come under fire from commentators who feel the Chancellor should be concentrating on manufacturing industry and exports – not once again turning to the housing market as the main driver of the UK economy. Expect the debate to rumble on.

Away from housing it wasn’t a good month for the Co-Operative Bank, which saw its debt downgraded to junk bond status following heavy losses on loans to property companies. Losses of £600m were announced and the proposed deal to buy 632 branches from Lloyds TSB collapsed. Not surprisingly Chief Executive Barry Tootell wrote a short letter containing the words “I” and “resign.”

Neither was it a good month for lending to UK businesses. The same set of figures which confirmed a rise in UK mortgage approvals showed that lending to businesses had fallen by 3.6% in March – a worrying trend if it is repeated next month.

The month ended on a further downbeat note, with the OECD cutting its forecast for UK growth in 2014 to 1.5% from the previous 1.6%. The reason – as if you couldn’t guess – was the continuing problems in the Eurozone.

As noted above, the FTSE briefly came within 90 points of its all time high in May. In the event it finally finished the month at 6,583 to give a relatively modest rise of 2% for the month. If the rest of the summer is as volatile as May was for stock markets, expect to hear the old adage ‘Sell in May and go away’ trotted out a few times over the coming months.

Europe

The month in Europe opened with a fine spat between Germany and France – a leaked German memo referring to France as “Europe’s biggest problem child.” The memo criticised French industry for being uncompetitive and the French social security system for being too generous. Needless to say Francois Hollande didn’t escape, as he was dismissed as being ineffective and “meandering.”

Certainly France has serious problems, as another 39,800 people were added to the unemployment register. The jobless total has now increased in France for 53 out of the last 61 months as the country starts to reflect patterns already seen in Spain and Greece, with youth unemployment continuing to be a particular problem.

Figures released early in the month showed that the European recession was set to continue, with the private sector shrinking for the 15th consecutive month.

Despite this lack of good news, European stock markets performed well in May, largely thanks to the perceived willingness of the central banks to intervene. The German market rose by 5% to finish May at 8,349 and France rose by a more modest 2% to 3,949. All the more traditional ‘problem children’ – Spain, Italy and Greece – also saw their stock markets move ahead in May.

USA

The economic signals from the USA were mixed in May. On the negative side, GDP growth for the first quarter was revised downwards to 2.4% and the Purchase Managers’ Index in the manufacturing sector fell to a seven month low of 51.9. Whilst any figure above 50 continues to indicate optimism, this was significantly down on previous months.

More optimistically, figures for April confirmed a fall in inflation to 1.1% and 165,000 new jobs were added in the economy. The trade deficit also narrowed to $38.8bn for the month, as imports of crude oil dropped to their lowest level for 17 months.

Consumer confidence in the US also seems to be improving: how much that will reflect in increased sales for Apple is open to doubt though, as the authorities on both sides of the Atlantic continued to probe the company’s seeming reluctance to pay tax. This didn’t stop Apple approaching the market with a $17bn bond issue (the biggest ever seen outside the banking sector) as it looked to raise money to fund bigger payouts to shareholders.

The Dow Jones index rose by 2% during May, breaking through the 15,000 barrier to finish the month at 15,116.

Far East

As noted above, China is becoming the dominant country for determining stock market sentiment, and the news that factory output had slowed sent markets tumbling around the world. It’s important to remember though, that some slowdown in Chinese economic activity is almost inevitable given the rapid rate of expansion seen over the last five to ten years.

Despite talk of a ‘slowdown’, Chinese exports were up 14.7% year on year in April, with imports up by 16.8%. The country recorded a trade surplus in the month of $18.6bn, and the stock market reacted favourably, finishing May 6% higher at 2,301.

The stock market success of the year – at least among the major economies – has been Japan, with a 33% rise since the end of 2012. However May saw the market finish down very slightly at 13,774 amid concerns that the recovery may be running out of steam despite the best efforts of the Bank of Japan. Exports have not risen as much as had been expected, industrial production is falling and domestic demand is reported to be patchy at best.

However all was rosy in South Korea, where the trade surplus reached a three year high of $6bn as demand for smart phones continued to rise inexorably.

Emerging Markets

Worries are starting to emerge that the economic boom that was supposed to come about thanks to the 2014 World Cup and the 2016 Olympics is simply not going to happen. Anyone who watched the chaotic scenes as work on the Maracana stadium continued almost up to kick off in England’s friendly with Brazil will be hard put to keep faith with the Brazilian ‘economic miracle.’Two of the ‘big three’ emerging markets – India and Russia – saw their stock markets barely move in May, but the third – Brazil – recorded a worrying loss of 4%, meaning that the market there is down by more than 10% since the start of the year.

May’s star performers in the emerging markets sector were clustered among the Asian markets, with Bangladesh, Sri Lanka and Pakistan all rising by over 12%. In a normal month those would have been stellar performances – but May was not a normal month and the New Zealand stock market rose by the small matter of 76%.

The two main laggards were in South America, with markets taking their lead from Brazil, as the Argentinean stock market fell by 9% and Peru was down by 8%.

And finally…

How important is the boss? “Very” seemed to be the answer, as several analysts reported pressure on Manchester United shares following Sir Alex Ferguson’s retirement. So plenty for the incoming manager David Moyes to think about as he wrestled with the twin problems of the expectations of the world’s stock markets and a star player looking for a transfer. That was May: the month when world stock markets were influenced by Chinese factory output and Wayne Rooney…

We were recently delighted when Alan Kirkman (pictured to the left) agreed to present at our Professional Partners’ Seminar on Tax Efficient Property Investments. Alan is an extremely well respected tax consultant and was previously an Equity Partner in Ernst & Young responsible for running the tax department in their Hull office. He has now set up his own practise “Two Cats Tax” advising individuals and corporate entities on their taxation issues.

Alan presented at IFP’s Hessle office on 22nd May 2013 regarding tax schemes which can be run via property as an investment or through businesses. The theme of the seminar was very much based on local knowledge of the area and helping investment in the local area via government tax schemes – like Business Premises Renovation Allowance (BPRA), Enterprise Investment Schemes (EIS) and Seed EIS (SEIS). 

If you would like to learn more about any of the schemes discussed or Alan Kirkman’s practice please do not hesitate to contact one of us at IFP to discuss.

However, for most people, promises of early cash are false and are likely to result in serious tax consequences. Transferring your pension early can result in tax charges and penalties of more than half the value of your pension savings, and those being targeted are usually not told about these potential tax implications.

You need to understand the risks of releasing or ‘cashing in’ your pension before 55, when it’s fraud, how you might be targeted with illegal pension transfer or pension loan offers and who to contact if you suspect it.

Some pension transfer schemes that offer to release your pension before the age 55 can be illegal if you are misled about the consequences of entering into one of these arrangements. This could be because you’re not informed of the tax consequences, fees involved or how the remainder of your pension savings are invested.

An increasing number of companies are targeting individuals claiming that they can help them release their pension cash early. You may be targeted through websites, mass texting or through cold calls offering pension loans or opportunities to cash in your pension.

You should be very wary about giving out information in response to a text or cold call. You should always make sure that you know who you’re dealing with. You should always take appropriate financial advice before using pension release websites and be aware of the potential for charges being imposed by HMRC.

Converting your pension into cash before the age of 55 might sound very attractive if you urgently need money. However, if something sounds too good to be true, it often is. The risks of cashing in your pension early include:

• You may be poorer in retirement. You can only use your pension fund once. If you release your pension, there will be much less (or no) income from it when you retire.
• You may be hit by unexpectedly high fees. As part of the release transaction, you will probably have to pay the organisers a ‘commission’ or ‘arrangement fee’ and these can typically range from 10–30%.
• You may be misled as to the consequences of the transfer. You may not be informed or misled as to the huge tax consequences of making such a transfer.
• You may be hit with significant charges by HM Revenue and Customs (HMRC). If you release your pension, you need to tell HMRC and will have to pay tax. If you fail to tell HMRC and HMRC contacts you first, you may be charged penalties and interest in addition to the tax.

It is important to also watch out for the alternative names given for forms of pension release, including pension loans, pension transfers and pension liberation.

Pension release should not, however, be confused with ‘Pension Unlocking’. With pension unlocking, a person aged 55 or over can release up to 25% of their total pension as a tax free lump sum. Unlocking your pension will almost certainly mean you will have less income in retirement and, as a result, unlocking is only suitable for a very limited number of people and circumstances.

In the event of any early pension release approaches, you should consider taking advice from an independent financial adviser (IFA) and make sure that you take unbiased advice from someone who isn’t associated with the offer you’ve received.

Sources: www.thepensionsregulator.gov.uk

The population of some countries is stagnant or already shrinking and that could reduce potential savings and economic growth. The workers who remain are getting older and are therefore less productive, which will hold back living standards. The numbers of retirees are increasing and that will threaten the financing of pensions and health care.

In the 27 countries of the European Union, each pensioner is today supported on average by four people of working age. By 2050, this old-age support ratio will have fallen to just 2:1, according to United Nations and EU projections. Latvia, which has applied to join the euro in 2014, provides an extreme example of the trend. By 2060 there will be four Latvians of working age for every three aged 65. Because of emigration and low fertility, the Baltic state’s population shrank by 14 per cent, or 340,000 people, between 2000 and 2011, prompting warnings of an existential threat to the nation.

Many European countries are raising the retirement age, including the UK, which is seeking to maintain a comparatively favourable population profile.

Apart from putting pension systems on a more sustainable footing, investing in education and training so that workers are more productive should be a policy priority, economists say. As should expanding childcare, to allow more women to join or stay in the work force.

How to share out the cost of ageing spells potential political trouble, pitting pensioners, perceived to be increasingly favoured, against younger generations who feel overtaxed and overworked. This has been described as a structural issue, which is really about the social model and the rights and obligations of citizens and the duties of the state. The sovereign debt crisis gripping the developed world is fundamentally about how to meet implicit liabilities for ever older populations. Current and future expectations of levels of health care and pension provision may prove to be over-optimistic and unaffordable.

Sources: www.uk.reuters.com

This is confirmed by the entry ‘net interest’ on your bank or building society statement. Your bank or building society should send you a ‘Certificate of Tax Deducted’ or a statement containing this information after the end of each tax year (5 April). If you need one but haven’t received one, just ask. You can also often get the figures you need from your passbook or from your statements of account.

If you have a joint account with a husband, wife or civil partner you should declare half of the income as yours. The second half should count towards their income. If the entry shows only ‘gross interest’ and not ‘net interest’, then no tax has been deducted. To be in this position you normally have to be a non-tax payer on low income and registered to receive interest gross.

If you’re a higher rate taxpayer at 40% or an additional rate taxpayer at 45%, you’ll owe tax on the difference after the 20%. However, if you have a low income you may be able to claim tax back. Your savings income is added to your other income and taxed after your tax-free allowances – for example your Personal Allowance, have been taken into account. The rates applicable for the 2013/2014 tax year are as follows:

• taxable savings income that falls within the £2,790 starting rate for savings Income Tax band is taxed at 10 per cent – but only if the rate band has not been used up by other income, as savings income is taxed last.
• taxable savings income (included with any other income) that rises above the £2,790 starting rate for savings Income Tax band, but falls within the £32,010 basic rate band, is taxed at 20 per cent.
• taxable savings income (included with any other income) that rises above the £32,010 Income Tax band, but falls within the £150,000 higher rate band, is taxed at 40 per cent.
• taxable savings income (included with any other income) that rises above the £150,000 Income Tax band is taxed at 45 per cent
• if your taxable savings income falls on both sides of a tax band, the relevant amounts are taxed at the rates for each tax band

If there is a significant change to your savings or income, whatever your current Income Tax band, and you don’t normally complete a tax return, you must contact HMRC right away so that they can work out whether you need to pay extra or less tax. By contacting HMRC early on you can:

• prevent a build up of tax owed if your income takes you into a higher band
• avoid paying too much tax if your income has fallen below certain limits.

HMRC will either ask you to complete a return, or, if you’re employed or receiving a pension, may arrange to collect any extra tax due through PAYE.

If you complete a Self-Assessment tax return you’ll need to show, for your combined bank/building society savings:

• the amount of interest you received after tax was deducted – the ‘net amount’
• the amount of tax deducted ‘at source’ – before you received the payment
• the sum of the two above – the ‘gross amount’ (before tax).
• There’s also a separate box to complete for any interest you received without tax deducted.

Sources: www.hmrc.gov.uk

Women appeared to be less attentive than men when keeping track of their pension, with 43% admitting to never having checked, compared to a third of men (33%). Even more concerning was that 49% of people aged over 55 claim never to have checked their pension pot.

According to figures published in April 2013, men will need 29 per cent more savings to reap the retirement income that they could have gained in 2009.

In 2009, a 65 year old man with a £118,000 pension pot at retirement would be able to secure an annual income of £5,000. This year however, the same person would have to have a pot of £152,800.

The cost of securing an income has grown more slowly for women, who would have had to have a pot of £133,500 in 2009 in order to secure a £5,000 yearly income.

The figures repr

esent a dramatic fall in annuity rates in the last four years. If people’s expectations and financial plans are set by their historical experiences, without recognition of economic changes, then they are going to find shortfalls in their anticipated retirement funding.

In addition, it is suggested that too many people have sacrificed long-term retirement provision, choosing instead or by necessity, to provide for themselves higher income today.

Inflation proofing or organising pension pot savings has fallen by the wayside, contributing to the growing problem of inadequate retirement income provision and the realisation for many that they will need to work much longer to retirement than they had anticipated.

In the present world economic and increasing life expectancy situation, it is totally unrealistic for us to expect any government to step in and save more for our futures, beyond the provision of any low level safety net. The only way people can fix the problem is for them individually to save more money through adequate pension pot building.

Sources: www.ons.gov.uk

Basically, critical illness cover offers protection to the policy holder (and many policies extend this to other family members) in the event of the diagnosis of a critical illness during the term of the policy. The policies on offer differ in a number of common ways:

• In terms of the number of the identified critical illness conditions that the individual policy provides cover for – varying in number from 2 or 3, up to 160 named conditions! The number covered by the majority of policies range between 40 and 50 and commonly include childhood illnesses, cancer, heart attacks and strokes.

• Critical illness policies usually have a qualifying upper age limit – most commonly between 59 and 64 – although two policies found on price comparison sites provided cover up to the ages of 59 and 74 respectively.

• The maximum amount of cover available through specific policies in t
  buy zithromax online

  he event of a claim is also identified. This varies considerably between the smallest of £25k and the maximum extending up to £3m, although the internet research found that the majority of policies offered cover closer to the upper figure.

Critical Illness Cover can be purchased as a stand alone policy or in a combination with Life Insurance Cover, with some providers offering joint policies.

Because the conditions covered vary from provider to provider it is important that people looking for CIC cover discuss this with an advisor. Additional cover may be desirable if there is a family history of an association with a particular illness.

While most policies will generally cover seven conditions – cancer, coronary artery bypass, heart attack, kidney failure, major organ transplant, multiple sclerosis and stroke – in the small print, certain cancer forms may be excluded.

CIC policies are not savings or investment products and have no cash value unless a valid claim is made. This kind of life insurance pays out the sum insured only if the insured person is diagnosed with one of a range of specified critical illnesses.

Looking at the value in having CIC cover, the good news that we are living longer could be balanced by the potential for bad news; that within the extra lifespan there is a greater likelihood of any of us suffering a critical illness at some point in our lives.

Sources: www.moneysupermarket.com; www.legalandgeneral.co.uk