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January Newsletter

Welcome to our January newsletter. In this issue we have putting a number on the value of advice as product of the month. 10 easy ways to add house value in a slow market, what you need to know about pensions, social care and tax in 2020 and the email you should always send to a hotel before staying to save you money.

Product of the Month


Putting a number on the value of advice

Royal London, in conjunction with the International Longevity Centre recently put a number on how much financial advice is worth to those who receive it. Here, Tom Dunbar elaborates on the findings of that research...


There are many myths and misconceptions around financial advice: some say it is only for high net worth people while others believe the fees are too high. In recent years we have worked with the International Longevity Centre - UK to expose these myths and quantify the value of financial advice.

In What it's worth - Revisiting the Value of Financial Advice data was analysed from the ONS'sWealth and Assets survey, which has tracked the wealth of thousands of people over two yearly "waves" since 2004-06 - we are currently on Wave 5.

Through this we've been able to look at the financial outcomes of those who received advice and those who did not. Outcomes considered included the amount of accumulated pension wealth as well as net financial wealth - this includes current accounts, ISAs, life insurance products, shares etc. The probability of owning equity assets was also considered.

The results were startling with those who took financial advice being on average £47,706 better off than those who didn't. This is split between a £30,991 boost in pension wealth and an increase of £16,715 in other financial assets.

Affluent vs just getting by

One of the most important findings of the research was the proportionate impact financial advice can have on people with more modest means. The sample was split into two groups - the ‘affluent' and the ‘just getting by' - with the ‘just getting by' group benefiting from a 35% uplift in their financial wealth (shares, ISAs etc.) compared to 24% for the ‘affluent' group.

When it comes to pension wealth the ‘just getting by' group benefited from a 24% uplift in comparison to 11% for the ‘affluent' group.

A key reason why we see these improved outcomes is that those people taking advice are more likely to invest in assets with the potential to deliver to deliver more return - albeit with more risk. Across the entire sample the impact of taking advice is to add around eight percentage points to the probability of investing in equities.

Ongoing advice

The research also highlights the impact of taking advice on an ongoing basis. According to the analysis those who reported taking advice at both Wave 1 and Wave 5 demonstrated almost 50% higher pension wealth than those who only reported receiving advice in one of the waves.

Far from being something only to be enjoyed by high net worth people, this research powerfully demonstrates the enormous impact taking financial advice can have on people from across the income spectrum.

While this research is able to quantify the value of financial advice with regards to the amount accumulated in pensions and other vehicles it is also worth highlighting the other benefits that are perhaps harder to quantify but still have an enormous impact on someone's long term financial wellbeing. Tax and cashflow planning, for instance, are areas where advisers can deliver real value to their clients on an ongoing basis.

Tom Dunbar is distribution director at Royal London Intermediary


If you would like a free initial review please call 0161 702 0301 or click here and we will contact you.



10 easy ways to add house value in a slow market


How to add value to your home in a slow market: Property experts reveal 10 easy changes for a price boost


House prices aren't going anywhere in the short term, say analysts.

Agent Savills, for example, believes UK-wide prices will rise only one per cent in 2020 with a few regional variations - such as two per cent rise in the Midlands and one per cent fall in London.


So the only real way to add value to your home is to make it more attractive ready for the traditional spring buying season. 

That gives you about 12 weeks to turn your old place into the next owner's dream home.


Property experts have given their ten key changes to make to add value to your home in 2020

'Sprucing up and cleaning, and improvements that create space and privacy give a great first impression,' says the National Association of Estate Agents' Mark Hayward. 

'Don't over-personalise decor so it appeals to buyers, and let them adapt the property to fit their needs.'

Experts say ten key changes should make quick-fire returns.


1. Cut out noise

Noisy roads are one of the major reasons homes take a long time to sell and often attract offers well below asking price. 

So double glazing has a triple boost — it keeps the house warmer, makes it quieter and improves sale-ability.


2. Lag those pipes

Fit solar panels and effective loft and pipe insulation, even if you know you will have moved before the running cost reductions kick in. 

Raising the classification of your home's Energy Performance Certificate can add thousands to its price.


3. Convert the loft

Easier said than done in a short time, but given the money and a builder, this will be a big earner; it could cost as little as £20,000, but add 15 per cent to a home's value, especially if there's an en suite bathroom. 

Always use an architect and check the council's building regulations.


Refreshing your bathroom could add up to three per cent on the asking price of your home.


4. Tidy up

'Make the best of every single square foot that you've got,' says TV property makeover guru Sarah Beeny. 

'There's usually lots of wasted space in corridors with piles of coats, or shoes in the hallway. Think of clever ways of storage so you can make that space feel bigger.'


5. Refresh the bathroom

You can do this without spending a fortune, yet it could add three per cent to the asking price, according to the Nottingham Building Society. 

Low-cost updates could include new taps, shower heads, loo seats and flooring — at a fraction of the cost and disruption from a full-scale renovation.


6. Add parking

If you don't have a garage or off-street parking, consider sacrificing the front garden and add up to five per cent to the house price into the bargain.

You may need planning consent to pave the lawn and the council will want paying to 'drop the kerb', plus you are advised to use a porous material for drainage.


Parking: Adding a driveway to your property can add up to five per cent on the asking price.


7. Kitchen style

You're after a fresh look here, not a complete refurb. Start with new handles and worktops, and look at spray painting existing cupboard doors. Keep it tidy.


8. Build a conservatory

'You won't need planning permission, so long as no more than half the area of the land of the original house is covered,' says Robert Nichols of the Portico estate agency. He says they can add ten per cent in value.


9. First impressions

Smarten the front door with new numerals, gleaming ironmongery on the windows and railings, plus a window box or two. 

Hide bins in a store and keep the front lawn neat and tidy.


10. Plan an extension

Always get an estate agent's guidance first to ensure you are not over-developing your property. 

Have an architect design outline plans and secure the council's planners agreement. It will give buyers an idea of the property's potential.


What you need to know about pensions in 2020: Brexit, social care and tax


Five key things you need to know about pensions in 2020: Brexit and your investments, a new social care 'guarantee' and a tax fix for doctors


People depending on investments to fund old age are facing another year of Brexit uncertainty, after a mixed period for UK markets in 2019.

A decisive election result cleared our path to leaving the European Union, but with trade deals yet to be struck with either the EU or the US our future fortunes are still not assured. 


The newly re-elected government now has a majority that gives it the opportunity to solve major issues affecting retirement finances and health - the social care crisis leaving many elderly people with basic needs unmet, and a pension tax fiasco causing a shortage of doctors in the NHS.


Looking ahead: People depending on investments to fund old age are facing another year of Brexit uncertainty

The Government also continues to face calls to fix pension problems that disadvantage low paid workers and parents who fall foul of confusing child benefit rules. Both the above penalise younger generations of women, who are still saving into pensions.


Meanwhile, their older counterparts, women in their 50s and 60s who saw the speeding up of state pension age and say it was poorly communicated, intend to keep up their campaign for compensation despite the loss of a landmark court case at the end of 2019. 


We delve into some of the issues in greater depth below. It's worth finding out more about these pension matters and how they might alter your plans for old age. Here's what you need to know:


1. Pension investors: Brexit comeback for UK markets?

Last year, many pundits said the UK market was undervalued and might be heading for big gains in the year of Brexit. 

It turned out Brexit got postponed until early 2020, the UK is still unloved by international investors, and a full market comeback is yet to materialise.


At the time of writing in late December, UK markets are up on the year and that will have helped to boost pension funds.

Looking ahead to 2020, market experts believe the UK is cheap and poised to rebound - read our investing outlook here.

Many pension savers depend on stock market investments, though to different degrees according to your age and where your savings are stashed. 


Younger people who are still investing for retirement can ride out periods of underperformance, and pick up shares on the cheap.

Older workers getting close to stopping work, and retirees who invested their pots in income drawdown schemes after the pension freedom reforms in 2015, have more to worry about. We look at how to protect your retirement income in troubled times here.


Pension investments: Brexit got postponed until early 2020, the UK is still unloved by international investors, and a full market comeback is yet to materialise. Meanwhile, those already drawing a final salary pension get guaranteed payouts and can ignore market turbulence, as can those who bought an annuity offering similarly guaranteed payments for life.


Anyone with a final salary pension who is yet to retire should also be fine, as long as the employer meant to fund it doesn't go out of business. 

Even then, the Pension Protection Fund will save most of your money.


But for those yet to retire who would like to buy an annuity, rates remain at rock bottom and will stay there unless interest rates start to recover.


2. Social care: Fresh bid to achieve consensus over who pays the bills

The Conservative manifesto offered a 'guarantee' that no one needing care will have to sell their home to pay for it.

Now returned to power, the Tories aim to make an urgent attempt to build a cross-party consensus with this as a condition. 

While a deal is being sorted out, they will earmark an extra £1billion of funding every year for more social care staff, better infrastructure, technology and facilities.


This follows years of drift, when they failed to bring forward a promised social care plan to replace their much-panned idea to introduce a £100,000 'floor' on personal contributions.

How is care paid for at present? 

Under the current system someone's assets - including the family home - is depleted down to £23,250 if they need to go into a care home.

If you need care in your own home, your assets must be depleted to a level set by your local council, which cannot be lower than £23,250, but your home is excluded from this means test.


There have been many previous attempts at reaching a cross-party deal, by introducing a cost 'ceiling' to avoid some families facing catastrophic bills, for example. 

All have foundered, with proposals designed by government-backed experts ending up ignored or dropped.

It is currently unclear how the Tories' plan to ringfence people's properties, which currently have to be sold to cover bills if you need to go into a care home, might work in practice.

Everyone seems to agree people should contribute something towards their care in old age, while avoiding a health lottery where some end up facing outsize costs. 


But there is no consensus that wealthy home owners should be massively subsidised by other taxpayers who might be struggling financially.

Meanwhile, a dwindling number of elderly people are receiving financial support towards long term care, despite an overall jump in spending and in requests for help to local councils. 


'Social care funding: Time to end a national scandal', published by the House of Lords' economic affairs committee last year, said some 1.4million people had an unmet care need in 2018, and the number of elderly and working age adults requiring help was increasing rapidly. 

It called for the launch of universal free personal care. 


Insurer AIG surveyed the public last summer on how they would prefer to pay bills for support as their health declined. 

A contingency fund option, where people would fund care needs by saving into a special fund that could be bequeathed to loved ones if it wasn't used, proved the most popular.  

New bid for consensus plan: Conservative manifesto offered a 'guarantee' that no one needing care will have to sell their home to pay for it.


3. Pension tax relief: Fix for doctors could spark radical reform for all

The Government has just come out with a one-year fix for the so-called 'taper problem', which sees doctors turn down shifts for fear of shock pension tax bills, and it has promised urgent talks with the medical profession to solve the matter. 

But it has fallen short of saying it will abolish the taper, which pension experts believe is the only viable remedy.

Meanwhile, the NHS is to foot pension tax bills run up by doctors, to avoid a staffing shortage which it is feared could spark a winter crisis in the health service, and threaten patient care by causing longer waiting lists and delays to operations.

What is the taper?

The problem revolves around a controversial reform to the annual allowance, which is the amount most people can put in a pension and get tax relief - including their own and their employer's contributions, and tax relief from the Government - and is currently £40,000.

'The taper' was introduced by former Chancellor George Osborne in the 2016/2017 tax year. 

It means the annual allowance is gradually reduced from £40,000 to £10,000 for those whose total income, including any growth in their 'pension rights' over the year, is between £150,000 and £210,000.


However, tax charges can kick in if your income is over £110,000 a year because of the way pension rights are calculated, and these are especially difficult for workers to keep track of in salary-related schemes like the NHS one.

High earning doctors who work unpredictable overtime shifts to reduce waiting lists find it hard to work out how close they are to the £110,000 threshold.


This temporary solution has provoked outrage among financial experts, who are calling on the Government to reform the system for all higher earners rather than give doctors a special deal.


That could reopen the issue of a radical overhaul of the pension tax relief system for everyone, not just the best-paid workers.

The Government now has a comfortable majority, and if strapped for cash it may be tempted to dust off George Osborne's old plans, shelved just ahead of the Brexit referendum, to axe pension tax relief and introduce a Pension Isa.

Introducing a Pension Isa would mean savers no longer receive tax relief on contributions to a pension. 


Instead it would pay out tax free in retirement, providing a future Government didn't slap penalties back on later.


The other option that could be on the table is a new flat rate of tax relief on contributions, probably of between 25 per cent and 33 per cent.

This would see lower earners taxed at the basic rate of 20 per cent get an extra Government boost to their pots at the outset - and see the value of their pensions rise as a result - while those on 40 or 45 per cent wouldn't get back their full whack of tax any longer.

Either plan would abolish for good the principle that the money people put towards old age saving is not taxed no matter how much they earn - an idea that originated in the Finance Act of 1921. 


4. Tax loophole: New look at fixing issue penalising the low paid

A separate pension tax relief problem, this time affecting low paid people, is also facing the Government.

In their manifesto, the Conservatives promised a 'comprehensive review' of a loophole which sees workers, mostly women, earning between £10,000 and £12,500 lose pension top-ups automatically paid to the better off.

This was a victory for the party's former Pensions Minister Ros Altmann, who has campaigned vigorously on the issue, and comes despite a Treasury Minister saying last year that solving it was not 'cost-effective'. 


We have repeatedly highlighted the scandal since spring 2018, and pointed out at this time last year that the Government would find itself under growing pressure unless it addressed the unfairness of penalising the worst off workers, while the rich get their full whack of pension cash. 


Short-term fix: The NHS is to foot pension tax bills run up by doctors, to avoid a staffing shortage

Lady Altmann and the Net Pay Action Group are now pushing a solution which involves HMRC identifying which workers are losing out at the end of each tax year. 

The taxman would then issue refunds via the existing P800 system, or let people offset the refund against a liability in a self-assessment return.'I do hope Ministers will act rapidly,' says Altmann. 'The lowest-paid are surely those who need the most help with their pensions and a "one-nation" approach must at the very least ensure the low earners are no longer penalised just by virtue of the way their pension scheme is administered.


5. Child benefit: Government's own tax gurus say system is 'unreasonable' 

This is Money is campaigning against the unfairness of parents ending up with a smaller state pension because of innocent paperwork errors.

Parents - mostly mums - can end up tens of thousands of pounds worse off in retirement due to losing valuable credits. 

We have made progress on one front, with HMRC now waiving the usual time restrictions on correcting records in cases where the 'wrong' partner's name is put down on a child benefit form, if the delay is 'reasonable in the circumstances'.



One couple managed to convince HMRC their delay was 'reasonable' because they made an innocent mistake in being unaware his filling in the form could result in her losing huge sums in state pension in old age. 

Meanwhile, damning consumer research by HMRC revealed how parents are confused - and gutted - to discover child benefit errors can hit their state pension.


It confirmed people are almost entirely in the dark about the link. 

And parents said they didn't see the point in filling in the form if one of them was a higher earner, and so they weren't entitled to get child benefit payments. 


The Government's own tax gurus, in the Office of Tax Simplification, issued a stinging report in October saying it was 'unreasonable' for parents to lose state pension over child benefit errors they can't later correct.

They said people 'can easily disadvantage themselves' under a system that 'appears illogical' and 'is inherently confusing', and told the Government to find a way to restore state pension credits to parents who have lost them.

The OTS, an offshoot of the Treasury that provides independent expertise on tax issues, also called on the Government to fix the pension tax anomaly affecting low earners mentioned above.

The email you should always send to a hotel before staying to save a fortune


Planning a holiday isn't usually the cheapest activity, and once you've paid for transport, accommodation and saved for food and things to do, your purse can be left feeling a heck of a lot lighter.


But by planning ahead, you can save yourself some considerable cash - at least when it comes to how much you'll need to pay for taxis when you arrive.


It may seem obvious, but many of us don't check in advance how much we should *really* be paying for taxis abroad, and it can often lead to holidaymakers being charged far more than they should be, reports the Mirror.


Speaking to Bloomberg, Lexi Alford, the world record holder for being the youngest person to travel to every country, revealed her top tips for making sure you don't get ripped off by taxi firms when you're on your jollies.


She said: "Email your hotel before you arrive and ask what the average price is for a taxi from the airport to the hotel.

"Sending this simple email has saved me hundreds of dollars over the years, because I’ve avoided being taken advantage of by taxi drivers with inflated prices or fixed meters."

She then explained that if you get to the hotel and the meter is 'unbelievably high', you should refuse to pay for it and go into your hotel to ask for help.

If that doesn't work, Lexi suggests telling the hotel staff to call the police, at which point the driver 'will give up'.

Many hotels offer direct transfers as part of the package so you can see all the costs up front. If not, simply ask them for advice on the best public transport to use.


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