News
Simply click on the list below to get the full story:
Exam success for Paul Morton - January 2010
George Scrini retires - January 2010
Various pension changes - December 2009
The pre-budget report - December 2009
Passive investment funds and portfolio rebalancing - November 2009
Contracting out of the State Second Pension - November 2009
Russell Ulyatt "Wear it Pink" to raise money for Breast Cancer Campaign - November 2009
Raising professional standards for Financial Advisers - July 2009
Regional collaborative family law group launch - May 2009
George Scrini retires
January 2010
After 32 years with Russell Ulyatt Financial Services, George Scrini, (Chairman and non-Executive Director), will be retiring at the end of January 2010.
We will obviously miss George and wish him all the very best for a long and happy retirement.
George has the following farewell message to his clients.
After much thought; actually that is not really true; after very little thought, I have decided to retire at the end of our financial year, 31st January 2010. Having started work in 1966, I have now paid sufficient National Insurance contributions for a full State pension. It is just a little disappointing that I still have to wait a few more years before I can draw it.
It would not be good for my image, as a Financial Adviser, if I was unable to retire at a reasonably youthful age. Retire has a number of definitions. I like, “To fall back or retreat in an orderly fashion and according to plan”.
I’d like to take this opportunity to thank my clients for the kind favour of their business over many years.
George T Scrini
Pre-budget report
December 2009
Click here to view a summary of the main taxation provisions announced in the pre-budget report on 9th December 2009.
As always, please get in touch with your usual financial adviser if you have any questions.
Passive investment funds and portfolio rebalancing
30 November 2009
For some time now we have been researching and studying the investment philosophy of Dimensional Fund Advisors, whose investment funds are all based on investing in a broad portfolio of stocks with the aim of achieving the market return for a wide range of equity markets. The funds are available to Russell Ulyatt clients through our Wealth Management Programme.
Dimensional minimise management charges by not actively managing the portfolio. Instead, stocks are bought for the long term in most of the shares in an index with a bias towards smaller companies, which have produced higher returns in the past. They buy shares to hold for the longer term with the minimum of dealing, research and management cost.
The principal of passive investment is to deliver the market rate of return at the lowest possible cost and the investment strategy means that passive funds will move closely in line with the chosen markets. So the funds are unlikely to be out of line with other funds invested in the same type of assets. In fact, Dimensional aim to be consistently just above average, which is designed to provide consistent out-performance over the long term.
By using the whole range of passively managed equity and fixed interest funds, we are able to offer portfolios which are designed to match a client’s investment risk profile. Furthermore, by using the facility available as part of our wealth management programme, we are able to offer regular rebalancing of funds to maintain the original risk profile.
We match portfolios with the level of risk that is likely to be required to meet the investment objective and rebalance portfolios from time to time to maintain the chosen proportions of the different assets in line with the appropriate risk profile over the longer term. This will not necessarily occur at equal time intervals, although it will be reviewed at regular intervals.
In the event that stock markets should fall, however, providing the market return will mean that Dimensional’s funds will fall, approximately in line with the market. Regular rebalancing will help to control this risk, but it does not remove the market volatility and these funds should be viewed as being for the longer term.
Research has shown that there is no optimum frequency for rebalancing a portfolio, neither does rebalance lead to enhanced returns from a portfolio. The primary benefit is to reduce investment risk by adhering to the chosen asset allocation according to the required risk profile. We therefore monitor the balance of the assets in a client’s portfolio regularly, but aim not to incur the cost of a rebalance too frequently.
The market rate of return has been exceeded by many active fund managers, some of whom have done so consistently. Unfortunately, not many are consistent and evidence shows that passive funds, which benefit from lower charges as they do not incur the same management and research costs, can use this advantage to provide above average investment returns. However, we also offer actively managed portfolios in which we again look to match the investment objective with the required level of investment risk.
Summary
- We aim to match a portfolio with the level of risk that is likely to be required to meet your investment objective.
- We rebalance portfolios from time to time to maintain the risk profile over the longer term. This will not necessarily occur at equal time intervals, although it will be reviewed at regular intervals.
- The principal of passive investment is to deliver the market rate of return at the lowest possible cost to the investor.
- This strategy will give extremely low relative volatility, but absolute volatility can be high and the value an investment is likely to move closely in line with the chosen markets.
- As such, previous levels of return might not be repeated and these funds should be viewed as being for the longer term.
- Although Dimensional’s fund managers do not actively research and select stocks, they are not tracker funds and are designed to have a bias to smaller companies and value stocks.
- We can also arrange actively managed funds.
Contracting out of the State Second Pension
November 2009
It’s a good idea to review your pension arrangements regularly to make sure your financial preparations for retirement are still on track. One important question to consider is whether you want to stay contracted out of the State Second Pension
(S2P).
Essentially, any employed person will receive two elements to their state pension according to their record of National Insurance contributions during their working life. The basic State Pension is a set amount to which is added an earnings related pension, known as the State Second Pension, sometimes abbreviated to S2P.
Until 2010, it has been possible to contract out of S2P, in which case no earnings related pension would accrue and instead the government would pay a rebate of NI contributions to the chosen personal pension provider. Slightly different arrangements apply to contracted out employer pension schemes.
Helping with your decision
Your decision to stay contracted out will depend on a number of factors including your personal circumstances, how you want to receive your benefits when you retire, and your attitude to risk. The Financial Services Authority’s (FSA) factsheet
The State Second Pension – should you be contracted out? gives more information about contracting out and any changes to the S2P. You can download
this from www.moneymadeclear.fsa.gov.uk/pdfs/contracting_out.pdf or order a copy by calling the FSA on 0845 606 1234.
Things to consider
The government is proposing some changes which could affect your decision:
- From 2012 you won’t be able to contract out of the S2P unless you are in an occupational pension scheme
- The state pension age for women is gradually increasing to 65 over a ten year period starting in 2010
- The state pension age for men and women will gradually increase to 68 between 2024 and 2046
- Contracting out won’t affect your basic state pension
Find out more
We can provide a contracting-out question and answer document to give you more information and if you would like any more help with your decision we would be very pleased to consider your own personal situation. You should do so in good time before the deadline on 5th April 2010 and to allow time to consider your circumstances and implement any changes, we suggest that you contact us by early February.
Russell Ulyatt "Wear it Pink" to raise money for Breast Cancer Campaign
November 2009
Once again, staff at Russell Ulyatt have shown their generosity by donating an impressive £90.00 to “wear it pink” and raise money for Breast Cancer Campaign.
As you can see below, everyone made a big effort to wear something pink.
The winner for being the “pinkest person” was Dawn Hill-Willis
(pictured below with Managing Director Andy Dyke).
Grace, daughter of Financial Adviser Gary Smithies (pictured below)
helped out by giving stickers and balloons to everyone.
A big thank you to everyone for supporting this worthwhile cause.
Exam success for Paul Morton
January 2010
Congratulations to Paul Morton who has recently passed the Diploma in Financial Planning – Pension Funding Options exam.
Once again, this confirms our on-going commitment to great people and the highest possible professional standards.
Various pension changes
December 2009
Changes to minimum pension age
From 6th April 2010, the Government is increasing the normal minimum pension age from 50 to 55. This means from that date you will normally have to be at least 55 before you can take new benefits from your pension plan.
This could be significant to you if you are currently between these ages and hoping to take your pension benefits before you attain 55 years of age.
If you would like to discuss the changes to the minimum age and what this means for your future plans,
Personal Accounts - a new type of pension in 2012
Under provisions contained in the Pensions Act 2008 employee pension enrolment and employer contributions are to be made compulsory.
These provisions, which are due to come into force in 2012, cover the automatic enrolment of qualifying workers into a qualifying workplace pension scheme and a duty on employers to make contributions to such a scheme. To ensure that employers are able to comply with these duties a universal personal account scheme is being created.
The main details of the scheme are:
- automatic enrolment of eligible employees aged between 22 and state pension age earning over £5,035 per annum (unless employee opts out)
- employer contributions of 3% of band earnings, initially set as £5,035 -£33,540
- employee contributions of 4%, with an additional 1% funded by the government in the form of tax relief
- both employer and employee contribution levels will be phased in over three years
- an enforcement regime led by the Pensions Regulator, with powers to penalise employers who do not comply with the regime.
Consultations and regulations will be issued in the lead up to the introduction of the legislation. These should make it clearer what is expected of employers and pension schemes in anticipation of the new regime starting in April 2012.
The Personal Accounts Delivery Authority (PADA) has recently launched a “myth busting” campaign in advance of the rules taking effect in 2012.
Budget 2009 - The effect on pension investments
In the recent budget, Mr Darling said “….I will restrict pension
tax relief for those with incomes over £150,000 per annum, so that it
is gradually tapered to the basic 20% rate”. This has the effect of the
20% rate applying to anyone whose income exceeds £180,000. There will
be prior consultation on some of the detail, including salary sacrifice
which could still be an effective way to maximise pension contributions
for some people and which remains intact for existing arrangements.
In order to prevent extra pension contributions before the effective date of April 2011, anti-forestalling measures will take effect from 22nd April 2009 and will continue until 5th April 2011.
These
will affect anyone with income of more than £150,000 in the current or
two previous tax years who changes their contribution (or benefits from
an improved accrual rate from a defined benefit scheme) and whose total
contributions exceed £20,000. “Relevant income” in this
instance is described as including not only earnings, but also pension
income, savings interest, dividends, rental and trust income.
Protected pension input means an established pattern of regular contributions. Higher rate
relief will continue to apply to this level of contribution, but it
will be the base above which extra contributions of £20,000 or more
will be affected. “Regular” means quarterly or more frequently.
The budget referred to the Special Annual Allowance, which is this level of £20,000 above which higher rate relief will not be allowed.
* Annual
or single contributions will not count as protected pension input, even
if there has been a previous pattern of paying these contributions. Any
such payments will only not receive higher rate relief if they exceed
£20,000.
Existing Salary Sacrifice arrangements are
unaffected, but any new arrangements after 22nd April 2009 will be
“added back” as part of the test to establish whether income exceeds
£150,000.
Refunds of excess contributions may, subject to
conditions, be requested by an individual whose income exceeds
£150,000. Such refunds will only be paid after the end of the tax year
and company contributions cannot be refunded.
To summarise,
anyone who is affected by this new legislation can choose to limit
their contributions to the higher of the protected pension input or
£20,000 and so continue to receive higher rate relief, or they can
decide to pay contributions in excess of this level and only receive
basic rate relief on the amount in excess up to the maximum level which
remains 100% of relevant UK earnings (which is not the same as
“relevant income”, described earlier).
Salary Sacrifice will still be worthwhile for higher rate earners who are caught by the
new legislation, although some will be affected by the
anti-forestalling measures. With the increase in the Upper Earnings
Level for 2008-09 and 2009-10 and the planned increase in National
Insurance rates for both employers and employees, salary sacrifice
could well be attractive to a greater number of people.
Finally,
the Chancellor has extended by a further year the ability for companies
to carry back trading losses for up to three preceding years. Pension
contributions could help to secure valuable corporation tax relief even
if the contributions were made during a period in which a loss was made.
Pension
contributions will still be tax efficient in comparison with many other
types of investment, but these new rules will increase the interest in
other tax-advantageous investments. The comparative benefit of these
alternatives will depend on your own personal circumstances and so we
recommend that you contact us for individual advice.
* In mid-July, the Government announced an amendment introducing a further new definition of infrequent money purchase contributions. This applies to contributions paid less frequently than quarterly and includes ad-hoc lump sum contributions. It will mean that tax relief will also be allowed on the lower of: -
a) The average of the infrequent contributions paid in the three tax years 2006/7 to 2008/9 OR
b) £30,000
Raising professional standards for Financial Advisers - The new Retail Distribution Review
July 2009
Russell Ulyatt can claim to have a long tradition of professionalism and as we have naturally endeavoured to maintain this, we have always encouraged our advisers and administrators to keep ahead with regard to professional qualifications. For a long time there have been calls for a competency framework for financial advisers. Some time ago the Financial Services Authority (FSA) published its Retail Distribution Review, setting out its intentions in this respect and they have now issued a consultation paper which shows what the FSA want for the retail investment market.
This is known as “Distribution of Retail Investments: Delivering the RDR” and is a far-reaching document that is designed to reach into all areas of financial advice.
The background to the paper is that the FSA consider the three main areas in which they wish to improve the interaction between advisers and consumers to be:
- Improved clarity for consumers
- Raise professional standards
- Reduce conflicts of interest in remuneration policies and improve transparency of the cost of all advisory services.
The review covers many areas but the main thrust is in four main areas.
- There will be Independent Advice and Restricted Advice. Independent advisers will have to offer unbiased, unrestricted advice.
- Remuneration will be set by the adviser and there must be no influence by product providers.
- The minimum qualification level for advisers will be raised to QCA level 4 (This is broadly equivalent to the Diploma of the Personal Finance Society, Dip. PFS.)
- A new Independent Professional Standards Board will introduce an overarching standards agency to maintain ethical standards.
We mentioned earlier that we have always encouraged professional qualifications among our staff and we continue with our strong commitment to Independent Financial advice. It is some time now since we changed to a fee-charging basis for the advice that we give, removing influence by product providers. We are therefore ready to embrace the new regime that will be required of all financial advisers from the end of 2012. Fees are the basis of all our remuneration and our Wealth Management Programme, which provides an excellent platform for risk based independent advice, is designed to facilitate this.
Russell Ulyatt welcome these proposals which we expect to be confirmed next year. We will continue to play our part in enhancing the professional reputation of the financial adviser.
Regional collaborative family law group lanuch
May 2008
Representatives from Russell Ulyatt Financial Services attended the launch of the South Yorkshire & Region Collaborative Family Law Group at the Law Society offices in Sheffield.
Speakers included Nick Longford, Vice Chair of Resolution (the family law group), and Judge Jones from the family court circuit.
Collaborative Family Law is a new approach set up by family lawyers to manage the divorce process in a dignified manner.
Financial Adviser Helen Lindo from Russell Ulyatt is an Accredited Divorce Specialist. Helen works with separating couples and their lawyers to look at options for settlement and look at the effects such options have on the investments and pensions that the parties hold.
Richard Jephson, Head of Business Development at Russell Ulyatt explained “Helen’s technical ability and knowledge is now coupled with training in the practical and emotional processes advocated by the collaborative law system. As members of the South Yorkshire & Region Collaborative Family Law Group we will be able to add significantly to the advice and support offered by the lawyers within the group.”
The photograph below shows Richard Jephson, Head of Business Development, Helen Lindo, Accredited Divorce Specialist and Andy Dyke, Managing Director at the recent launch.
For more details please email
