Wealth Design News

HMRC have released figures that show pension savers have cashed in £15.7 billion from their pension pots since pension freedoms were introduced in April 2015.

Over 3.2 million taxable payments have been made using pension freedoms, with 198,000 people accessing £1.5 billion flexibly from their pension pots over the last 3 months, according to published HMRC figures.

There has been some discussion on the reason for the reduction of the average payment per individual in the last quarter but because providers don’t record the reason for the payments, it will all be speculation. It does appear though that the number of individuals accessing payments may have stabilized around the 200,000 mark each quarter but that could also just be coincidence.
The chancellor has asked the Office for Tax Simplification to review gifts in the inheritance tax system. Philip Hammond said that the inheritance tax system was “complex” and needed an overhaul. He said a review could look at how current gift rules interact with the wider inheritance tax system, and whether the current framework causes any distortions. Whatever the outcome the take home on death duties is far exceeding Government expectation with £900m more than planned for collected in the next five years.
Headline dividends far surpassed expectations last year with 10.5% year on year increase to a record busting £94.4bn. Sterling’s strength is a key factor here, though, and tellingly Q4 was much weaker with dividends only growing 1.1% on a headline and underlying basis. Looking at 2018, most expect growth to be slower as the rebound in miners and exchange rate gains are unlikely to be repeated.
The Pensions Advisory Service’s dispute resolution function is moving to the Pension Ombudsman in the interest of better outcomes form a simplified customer journey. Customers will now be able to access all pension dispute resolutions, whether pre- or post-IDRP, in one place. The intention is to create a smoother journey and improved complaint handling for customers which will mean the time taken for complaints to be resolved will be halved.
The London housing market is at a critical point, according to latest figures, with higher discounting by homeowners. Commentators have been swift to declare it officially a buyer’s market… for the small number of equity rich buyers who can afford a pad in the capital that is. The average home in London is now sold at four per cent below its original asking price, up from just 0.5 per cent in 2014, with up to ten percent discounting not uncommon, the Hometrack Cities Index showed. Reflecting the shift in the balance of power the number of transaction in London have fallen by twenty percent in four years.
In February TPR’s Director of Automatic Enrolment, Darren Ryder, said: “I am delighted we have reached this important landmark, which shows how far we have come since the start of automatic enrolment.

“By successfully meeting their responsibilities, employers have helped reverse the downward trend in workplace saving so that putting earnings into a pension has now become the norm.

“The continued support of the pensions industry, including pension and payroll providers and business advisers has been crucial to the success of automatic enrolment. The industry has helped us ensure employers have the tools, information and services they need to comply with the law. We are now focused on the challenges ahead so that employers continue to understand what they need to do so that staff receive the pensions they are entitled to.”
It is expected that across England and Wales, around 24,500 people will have entered a personal insolvency process in the fourth quarter of 2017 This would be an increase of nearly 7 per cent compared with the same period a year earlier and the highest figure in three years. A significant proportion was made up of individual voluntary arrangements, something that is a touch surprising given the relatively low levels of unemployment and the pressures creditors are under to give debtors more time to settle arrears. Experts point to the fact that wages are falling behind inflation and the interest rate rise to explain the annual increases in unsecured borrowing. It seems people are borrowing more to maintain standards of living rather than tightening belts a notch or two.
With UK interest rates currently at record lows and the continuing uncertain backdrop for investors, the Innovative Finance ISA (IFISA) adds another string to the ISA portfolio bow. The IFISA allows access to alternative finance returns in the form of loans or debt instruments, facilitated directly between investors/lenders and borrowers by regulated platform providers. In short - better returns, sheltered from tax in return for a bit more risk. The trouble is that providers are struggling with limited supply outstripped by growing demand. As such, many new investors could miss out, though, with the spectre of rising interest rates pushing up default rates there are dangers for those exposed to the highest risk Peer to peer products
The shift from accumulation to decumulation is a profound one in many senses and turning a pot (or pots) into a source of reliable income can complex. The old ‘buy shares, live on the dividends’ mantra remains the doctrine for many but natural yield (i.e. not eating into the value of the investment) is becoming hard to find - forget about cash, dividends are increasingly under threat and bonds look really pricey. The Telegraph looks at how to get the balance right, common mistakes to avoid and assesses some leading income-producing investments. Read more
While companies and service providers can no-longer charge customers for using a credit or debit card there are a range of unintended consequences that highlights the tendency towards ‘sound-bite-grabbing’ politics. Yes so-called rip-off charges may now be outlawed but one immediate effect of the new law is that it is no longer possible to pay your tax bill online direct to HMRC. Many retailers, especially the large ones, will of course simply find other ways of passing the costs on.