Recent announcements by the new Government could allow unused pension benefits to be passed to relatives more tax efficiently, further enhancing the attraction of retirement planning through such schemes.  Peter Brydon, Associate at Wealth Management firm Cave & Sons provides further information regarding some of the proposals.

At present, when you retire you can typically elect to take 25% of your pension savings as a tax free lump sum with the rest being used to provide an income.  The vast majority of people buy an annuity which will pay an income for life, although some elect for an alternative route commonly known as Income Drawdown.  Through these structures you draw a portion of your pension fund each year as income, leaving the balance invested.

Under current rules, when you reach age 75 you are forced to either purchase an annuity or switch into an Alternatively Secured Pension (ASP).  The latter is broadly the same as Income Drawdown (with somewhat different income limits) and allows you to pass on assets to your spouse or beneficiaries on death but there is a tax charge of up to 82%.

The new proposals will do away with the requirement to purchase an annuity or take an Alternatively Secured Pension at age 75.  As a result it will be possible to defer taking benefits from your pension, including the tax free lump sum, beyond age 75.

Should you die before age 75 and have not withdrawn any money, your whole pension pot can be passed on to your spouse or beneficiaries tax free.  On death after age 75 a tax charge will apply on any lump sum death benefits at a likely rate of 55%, as will be the case on death at any time after benefits have been taken.  This tax charge is designed to broadly recoup the initial income tax relief given when investors place money into a pension and is significantly lower than the potential tax charge of 82% that currently applies.

Another interesting potential change is that provided you have secured a sufficient minimum income requirement, you will be able to take as much of your pension fund as income as you want, allowing you to maximise your income at the expense of capital.

All in all, the proposed changes bring some relatively positive news to the already hot topic of retirement planning.

Capital spending totals would be maintained but ‘careful choices’ would have to be made about how it would be spent.

Mr Osborne said the government would cut the structural budget deficit - borrowing not caused by the recession - to zero in the next six years. To achieve this VAT will be increased to 20%.

Capital Gains Tax (CGT) for higher rate tax payers will rise to 28% with immediate effect but there is no change to the rate of CGT for basic rate tax-payers.

The government is also to look at how to limit higher rate pension allowances and will also accelerate the increase in state pension age to 66.

For full details please see our full Budget Summary here.

Cave & Sons stockbroker Paul Murray joined family, friends and clients to cycle 103 miles from Neville Holt in Leicestershire to Brancaster on the east coast of Norfolk, in aid of the Teenage Cancer Trust.

Paul, who opened the company’s first Leicestershire office in the town’s Friar Lane last year, said: “I have been doing this annual cycle ride for a few years now and what started as a small group of us aiming to raise a few hundred pounds has grown into a well known event, Century Cycle Challenge, which raises thousands. Thanks to the generosity of Cave & Sons clients, my colleagues and an awful lot of my friends we have raised a staggering amount, over £120,000.

“Every day in the UK, six teenagers are told they have cancer. This is a rising figure and there are already more young people than children with the disease. These young people often get a raw deal, receiving hospital treatment in inappropriate facilities catering for children or the elderly. These funds will help the Teenage Cancer Trust make a real difference to young people’s lives.”

Cave & Sons offered the event additional support by sponsoring a pitstop on route, on the Sandringham estate. “I managed to get some training in before the event,” said Paul, “but the aches and pains I have now would imply I could have done a little more!” Paul now plans to get in training for another challenge, and is considering climbing Mount Kilimanjaro next year.

You can contact Paul on (0116) 271 7210, email paulm@caves.co.uk.

investment-review-spring-2010

More than 30 businesses from Northamptonshire battled it out this month in a bid to be crowned the 2010 Hearts and Minds Challenge. The corporate quiz, compered by Heart FM DJ Murray J, raised more than £4,000 for Northamptonshire Community Foundation - a grant giving charity which supports grassroots community and voluntary groups.

Stockbroking and investment management company, Cave & Sons, were crowned the evening’s winners. A Herald & Post team finished 12th out of the 37 teams taking part.

Cave & Sons director Simon Harvey said: “What a fantastic event. “We were delighted to win, if a little surprised. However, the focus must be on the worthy causes that will benefit from the generosity of all the local firms who took the time out to participate, and on the team and volunteers at the Foundation whose hard work made the event such a success.”

Victoria Miles, chief executive of Northamptonshire Community Foundation, added: “The Park Inn proved a wonderful venue and our 38 teams of six were treated to a fantastic and interactive quiz papers and pens weren’t even necessary with everyone using their hand-held consoles to answer eight rounds of questions.”

Stockbroker Cave & Sons continues to receive alarming calls for help from local people apparently conned by ‘boiler room’ salesmen. The conmen, who earned their nickname from the high pressure sales techniques they use, trick the public out of millions of pounds each year by persuading them to buy shares in non-existent or worthless companies.

Cave & Sons’ warning comes as industry regulator, the Financial Services Authority (FSA), looks to crack down on ‘boiler room’ salesmen.  Over the last 12 months the FSA has suspended eleven firms from trading, accusing them of deliberately targeting more vulnerable sectors of society, such as older, retired people and failing to explain the risks associated with risky and complex products.  Unfortunately though, many of these scams are operated from abroad where the FSA has no jurisdiction.

In a typical scenario, an investor may receive an unsolicited call from a stockbroker purportedly based in the UK or the US, though usually they are based wherever the local law enforcement is most lax. Convincing and persuasive, the caller will encourage you to invest in a high-growth smaller company, often in advance of a major announcement or stockmarket listing that is likely to ‘double your money’. They may offer guaranteed profits but almost always fail to deliver. In many cases the companies you are investing in don’t even exist!  Sophisticated boiler rooms often use names very similar to legitimate companies and have been known to set up dummy websites to con the unsuspecting investor.

Paul Murray, who heads up the Leicester office of Cave & Sons, said: “As is generally the case, if it seems too good to be true, it usually is. Be very careful when receiving unsolicited calls about investment. It is surprisingly easy to be duped by a convincing sales call and the promise of riches for very little risk.”

So how do you know if you’re being conned? According to Paul, the best advice is to check if the company selling you the shares is regulated by the FSA by calling their consumer helpline on 0300 500 5000 or by visiting www.fsa.gov.uk/register.

If they’re not regulated, even if they say they don’t need to be, then it’s likely that they’re committing an offence by trying to sell you shares and whatever happens you won’t be covered by any of the UK compensation schemes.

Christmas came early for over 200 people in the county as three local professional firms treated guests to an evening at a star studded panto.

Stockbroking firm Cave & Sons, Handelsbanken and Howes Percival Solicitors joined forces to fund a special showing of Peter Pan at The Deco theatre on Thursday 10^th  December.

Among the guests invited by the three firms were a number of local schoolchildren.  For many of the youngsters this was their first trip to the panto as a family.

Georgie Young, a community worker in Delapre, explained: “It’s tough at the moment for many families so this was an incredible opportunity for lots of children, not just to come to the pantomime but also to enjoy it with their brothers, sisters, mums and dads. To have a family outing just before Christmas has proved a magical moment for everyone. The generosity of these companies is a true example of Christmas spirit.”

The children got to see stars including Louisa Lytton (Eastenders and Strictly Come Dancing), Danny McCall (Brookside) and Christina Baily (Hollyoaks) in the fun packed pantomime classic.

Simon Harvey, Director at Cave & Sons, said: ‘It was great to be able to put a little something back into the community at this special time of year. It was a great evening for all involved.

Chris Houghton, partner at the Northampton office of the law firm Howes Percival LLP, added: “As businesses which care about our role as good corporate citizens of Northamptonshire it was a privilege for us to treat these kids to a pantomime. They all had a great time and it really put a seasonal smile on everyone faces.”

Brian Lehane, Corporate Account Manger of Northampton’s branch of Handelsbanken, said: “We are delighted and proud to have organised such a fantastic evening for the people of Northamptonshire.  It is very humbling to see how a small gesture can mean so much to some people and we thank everyone for joining in with the fun on the evening.  We are passionate about Northamptonshire and it was great to work closely with our professional friends to make the evening a success.  We would like to extend a special thanks to Jill Roach and Stage Right Productions for making this possible.”

An imminent regulation is set to change the date at which pension benefits can be accessed – so Northamptonshire-based stockbroking and investment firm Cave & Sons is urging people to plan ahead.

This new rule, which will come into force in April 2010, is an example of the ever changing nature of pensions, so obtaining pension and retirement planning advice is more important than ever.

Cave & Sons, a local Investment Management firm of over 100 years standing, has also been providing pension advice to the local community for the last 20 years.

Here Peter Brydon, Associate at Cave & Sons, answers some important questions:

Is something happening in terms of a pension and a person’s age?     

Yes, from April 6^th, 2010 the age at which you can take benefits from most personal pension arrangements is increasing from 50 to 55. Should you wish to access your pension benefits in the near future you must do so by next April. If you are aged between 50 and 55 on April 6^th, 2010 and do not take your benefits by this date you will lose access to these for up to five years.

Who is affected by these changes?

Anyone born between April 6^th, 1955 and April 5^th, 1960, will be affected by the changes because, should you want to begin receiving an income (including the tax free cash sum available from such plans) from one or more of your pensions in the near future, you will need to act prior to April 5^th next year or face having to wait for up to a further five years.

Why is this happening?

We are living longer than ever before, giving rise to concern that people will not have enough income to see them through their retirement. By delaying the age at which benefits can be taken, the period of time that pension funds remain invested will increase, thereby logically increasing the likely value of the final pension ‘pot’. At the same time, it also follows that the benefits will be payable for a shorter period of time as the person will be at least 5 years older.

All this should mean that the income received by the individual is at a higher level than would otherwise have been the case and, as a result, reduce the potential for that person to be a ‘burden on the State’. Indeed, the Government has already taken action in this area by increasing the state pension age to 68 with effect from 2046.        

What should we do now?

Whilst during these tough economic times you may feel that there are more pressing issues than when you can take your pension benefits, it is sensible to at least be aware of this change in the rules.

The stockmarket has risen by approximately 50% since its lows in March of this year and, depending on your circumstances, now may be an opportune time to consider your options for the increased value of your arrangement(s). Should you fall within the age range referred to above and wish to discuss how you could take any potential benefits, or if you would like some other advice concerning your pensions, then you should talk to a Pension expert.

We would recommend that you take advice on a fee basis rather than taking advice from someone who will only be paid by receiving a commission on any products that they advise you to take out. This way you can ensure your best interests are being looked after. 

Investment Review Autumn 2009

Cave & Sons have been chosen by Premiership Rugby Club Northampton Saints to provide a trading facility for the Company’s shares on a matched bargain basis, after the Company delisted from the Plus Markets.

Cave & Sons has a long association with the Saints and has been an active corporate sponsor to the club for a number of years. Simon Harvey, a Director of Cave & Sons said “As a leading stockbroker in Northampton, we are very pleased to be offering this facility to existing shareholders and fans and wish the club every success this season.”

Northampton Saints originally listed on PLUS nine years ago when it raised capital to fund the first stage of the stadium redevelopment. It was also considered that it would help to create a market for its shares. However, since then the Company has not found it necessary to raise additional funds from the public market, the Board considers that the cost of maintaining the listing does not currently represent the best use of shareholders’ funds, nor of management time.

Those wishing to acquire or dispose of shares in the club will be able to leave an indication with Cave & Sons that they are prepared to buy or sell at an agreed price. If the order is able to be matched with an opposite buy or sell instruction, a transaction would be effected.

For more information please see our dedicated page on the website. If you require further information or If you would like to buy or sell shares in Northampton Saints PLC, please contact Simon Harvey on 01604 621421.