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Your own free will

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We all want to make sure that our wishes are respected once we’re gone, right? But, worryingly, almost two thirds of adults in the UK haven’t got a will.

Age UK and other well-known charities, including the British Heart Foundation and Marie Curie, have come together to help tackle this problem by offering free wills in October. Solicitors across England, Wales, and Northern Ireland have signed-up to Free Wills Month to offer people aged 55 or over a free ‘simple’ will writing service, which can include updating an existing will or drawing up a new one.

A will can explain what you want to happen when you’re no longer here, reduce the tax you pay, and make it easier for family and friends to deal with your estate. As well as allowing you to make sure that your estate goes to the people who matter most, you can also state any gifts or donations you want to make to charity.

Sorting out your will can be a difficult topic to talk about, let alone actively organise. But it can be one of the most important things you do for yourself and your family. And once it’s done, it will likely give you peace of mind too. It makes sense to check your Expression of Wish form while you’re organising your will to ensure that your pension provider knows who you’d like your pension to be left to should anything happen. Get in touch with your pension provider to find out more.

Head over to https://freewillsmonth.org.uk/ for details on how to find a participating solicitor in your area. But remember, appointments may be limited and it only runs during October!

Taking care of the grandkids and your State Pension

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The school term is well underway, those new uniforms are starting to fit a bit better and everyone is getting settled into a routine. Working parents will also be weaving together a complicated web of formal childcare combined with help from friends and family to cover the school run and after-school care. Pension planning falls off everyone’s priority list, as school costs and practicalities need immediate attention. However, there is a little-known National Insurance provision that could offer a bit of help to some of the unpaid army of grandparents, aunties and uncles helping out with childcare at any time of the year. And what better time to look into it than today, National Grandparents’ Day.

Entitlement to the State Pension is linked to an individual’s National Insurance record over their working-age lifetime. Employees and self-employed workers pay National Insurance contributions from their earnings. But for people claiming benefits due to illness or unemployment, National Insurance credits are instead available to maintain entitlement to the State Pension.

Many people have an incomplete National Insurance record for myriad reasons: gaps in paid employment, periods of earning below National Insurance thresholds, time spent living abroad, or early retirement or redundancy. An individual with an incomplete National Insurance record can pay voluntary National Insurance contributions in cash, buying their entitlement to a full State Pension with top-up payments before they reach State Pension age.

However, for some grandparents (and other family members who provide childcare) there may be another option. Formally known as the Specified Adult Childcare Credit, these National Insurance credits are transferrable from a main parent or carer to a grandparent or other family member who provides some childcare for a child under 12.

Child Benefit is available to anyone responsible for a child under 16 (or 20 if in education or training) and includes National Insurance credits for the parent or carer. It is these credits that may be available to transfer, as long as the original recipient doesn’t need them. In practice, childcare is often necessary because a main parent or carer is at work, and so is already making National Insurance contributions from their own earnings. This means that the main carer does not actually need the National Insurance credit that comes with Child Benefit, and so it can be transferred to someone else who does need it.

The National Insurance credit can be claimed by a wide variety of family members or their partners. It’s available for any week or part week of childcare, and for any number of weeks in a year. Applications can be back-dated to 2011, plugging a sizeable gap that might otherwise cost hundreds or even thousands of pounds in up-front voluntary contributions.

For anyone considering voluntary cash payments to plug gaps in an incomplete National Insurance record, completing a very simple form might provide a no-cost option to build a full State Pension entitlement.

The factsheet and form are available from the Department for Work and Pensions website, which also details the helpline number for questions about your own circumstances.

Save up to £2,000 a year on your childcare

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Are you a parent? Did you know that you might be able to save up to £2,000 a year on childcare if your child is under 12 (or under 17 if disabled)?¹

The Government’s Tax-Free Childcare scheme offers families support towards childcare costs of up to £2,000 per child (up to £4,000 if your child is disabled). The scheme adds 20p for every 80p you put in, effectively giving you back the 20% basic-rate tax on what you pay.

You can use the scheme to pay for childcare including nurseries, childminders, playgroups and after-school clubs. And you don’t need to use the money straight away either. You can build up credit to use when you need it most, like during school holidays.

To qualify, you, and your partner if you have one, must both be working, earning a minimum of £125.28 per week if you’re over 25 (the equivalent of 16 hours per week at the national living or minimum wage currently), and each earning less than £100,000 a year.

To find out more, take a look at the Childcare and parenting section of the Government’s website.

The Tax-Free Childcare scheme replaces the Childcare Vouchers system that closes to new applications on Thursday, 4 October 2018. For more information about childcare options visit https://www.gov.uk/browse/childcare-parenting/childcare.

¹www.moneyadviceservice.org.uk/en/articles/help-with-childcare-costs

Gathering your pensions in

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If you’ve worked at different places in the past, it’s likely that you’ve built up some workplace pension entitlement while you were there. Have you remembered them all and do you look after them? Or would it be easier and better for you to pull them all together and put them all in the same place?

Of course, as with most things, there are some pros and cons of doing this:

The possible benefits:

Ease of access: having all of your pensions in one place can make it easier to keep track of your retirement savings and cuts down on the paperwork and log on details.

Easier to plan: a combined view should make the picture of your retirement savings clearer and make it easier to plan how you’ll use your retirement account when you come to retire.

Save money: it may be that you can take advantage of lower fees, as some older policies may have high fees in comparison to today’s plans.

More investment choice: you might want to invest in a wider range of funds than you have with your older plans; ones that offer you more variety or suit your approach to risk better.

Potential for better investment returns: we all want to boost our retirement savings and maybe you feel you can get better investment returns elsewhere or that your savings would be better managed by moving them. Remember though, returns are never guaranteed, and past performance isn’t necessarily indicative of future results.

Potentially more options: your previous plans might not give you access to all of the current retirement options, such as flexible withdrawals. So moving these into a current retirement account would open up your choices.

What to look out for:

All ‘eggs in one basket’: with all of the money in the same place, you may not have the same spread of risk or variety as keeping them all separate. This might be an issue if the funds don’t perform well, or something happens to the provider itself.

Exit fees: be careful, as some providers may impose an exit penalty. So make sure you find out if there is one and how much it will cost you to move the money.

Loss of guarantees: some old plans have built-in guarantees around annuity rates, which might be important to you if you plan to buy an annuity when you retire. These will be lost if you transfer them to another plan.

Higher fees: the plan you move to might actually have higher charges, but you may be happy to accept these based on other factors, such as hope of a better return or more choice and flexibility on offer.

Time it may take to transfer: your money will be dis-invested when you decide to transfer, and may not reach the new plan to be re-invested for a while. This means that there is the potential you could lose out on any investment gains in this interim period

If you’re not sure what to do, it’s a good idea to get financial advice (there will be a cost for this). You’ll need to do this anyway if you’re thinking of moving from a defined benefit (final salary) scheme with a transfer value over £30,000, as there are then even more things to think about, such as giving up a guaranteed income and future increases, as well as certain death and dependant benefits.

Conquer the back to school chaos

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September is in touching distance, the kids are getting bored and you are rushing around the house rounding up the uniforms and buying the entire stationary aisle in your local newsagent. Yes, it’s that last minute attempt to prepare for the start of the school term!

Well fear not, we have some great tips to help you save the pennies and get the kids back to school with minimum dramas.

  1. Make a list – we all love a list, don’t we? It really helps to keep you on track, so why not try making a list for your back to school shopping too? Do your research online, see where the best deals are and make yourself a ‘non-negotiable’ list (if possible!).
  2. Leave it a little closer to term time to start your shopping – last minute shopping can often provide the best value for money, especially on uniforms and stationery.
  3. Don’t be a stranger to the ‘pound shop’ – we might not like to admit it, but we’ve all been in there! After all, pencils are pencils, right? Pound shops are also great for notepads, math sets, plastic containers and drinks bottles.
  4. Plan your travel arrangements – check if there’s a school bus which would help you out or perhaps a neighbour who you could share the school runs with.
  5. Buy some good quality shoes – this may cost you a little more upfront, but if you can afford it, a good pair of shoes can make it through the whole term, whereas fabric plimsolls or pumps may not even make it to half term.
  6. Check on study materials – do the kids need any specific study textbooks? If you’ve got relatives or friends with kids in the year above, you may be able to recycle some of the relevant books. If not, it would be worth checking out some online, secondhand booksellers.

People like you: 50+

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Making sure you’re prepared for when you stop working doesn’t have to be a chore and you’re not on your own! There are people just like you out there and we’re sharing their stories so you can benefit from their experiences.

Meet 64 year old Brian…

What type of retirement are you hoping for Brian?

With so many decisions to make around retirement I have had to think long and hard about what I want to do. Luckily my health is good, I’m 64 and the time feels right to give up work and spend more time with the family and looking after our first grandchild who is growing up fast. After all, life is for living.

How do you plan to access your pension savings – a cash lump sum, a guaranteed income for life, or as a series of cash withdrawals?

I might even delay taking my State Pension straight away, so that I can benefit from the increase later on.

Whilst guaranteed incomes have had their fair share of bad press, I want to secure an income for life, so we have enough to pay our monthly bills. I know there are various options around the type of income for life I can buy, so I’ll do my research and choose carefully because I won’t be able to change it later on. I will definitely shop around for quotes from a number of providers too and go this route. I have worked hard all my life and don’t want to go into retirement worrying about money. With my wife thinking along these lines too, we should be able to enjoy a reasonable lifestyle.

Will you also rely on the State Pension to help with your living costs?

No, I’m hoping to save some of my State Pension for a rainy day or a holiday so that we can enjoy the retirement we always dreamed of! I might even delay taking my State Pension straight away, so that I can benefit from the increase later on.

4me has a library of information, short videos and tools to help you with your savings and retirement planning – find out more.

People like you: 18-29

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Do you sometimes feel like getting your head around financial planning and saving for the future is a bit of a challenge? Well, you’re not on your own! There are people just like you out there and we’re sharing their stories so you can benefit from their experiences.

Meet 21 year old Daniel…

Tell us about yourself Daniel

After the first year of University, I realised it wasn’t right for me so I left. I am now in my last year as an apprentice engineer, with a large company, learning on the job and enjoying the workplace environment. Luckily, I am still able to live at home so my monthly expenses are low.

Do you know if you’ve been enrolled into a company pension scheme yet?

My income is below the salary threshold, I haven’t been auto-enrolled in the company pension scheme just yet. But I recently attended a benefits’ seminar and now understand more about making contributions to a pension, the gain in tax relief and how much the company will pay in on my behalf. So, when I finish my training and with an increase in my pay, I can start making contributions to my pension.

Did you find it useful?

If I change jobs in the future, my pension contributions can be moved to a future employer’s pension or I can leave them where they are; either way, they will be a good start for saving towards my retirement.

What do you think you will do next?

Even though I have to wait to earn more in order to be auto-enrolled, I think I will start a general savings account with my bank anyway to help me with those rainy days I expect I will have in the future!

To find out more about auto-enrolment, visit: www.gov.uk/workplace-pensions

People like you: 50+

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Making sure you’re prepared for when you stop working doesn’t have to be a chore and you’re not on your own! There are people just like you out there and we’re sharing their stories so you can benefit from their experiences.

Meet 55 year old Catherine…

Have you started making plans for when you stop working yet?

Having just celebrated my birthday, at 55 I am now thinking about how and when to take my pension. It’s a modest amount as I have had time away from work bringing up the family and then working part-time when I returned to work. I am pleased that I did pay in to a pension and will have something to add towards my State Pension.

How has the introduction of more flexibility around taking your pension affected you?

As the pension rules have changed, I know I am able to take some cash as a lump sum now and still continue to pay in to my pension. This cash lump sum could pay off some of our mortgage which will save money overall. If possible I want to avoid paying any additional tax, my husband believes we can take the cash in stages but is unsure of the details.

Did you know you can get free and impartial help from Pension Wise from age 55?

Yes, and before I make any decisions, I’ve made an appointment to speak to an adviser from Pension Wise to help me understand what I can do with my pension savings. I will then feel more confident in my choices.

In any event, I will probably work for a couple more years, as it will allow me to continue paying into my pension and I will still be under 60 when I retire, which will coincide with my husband’s retirement plans too.

Head over to Pension Wise if you’re 55 and over and need some help with making decisions about your retirement.

People like you: 30-49

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You’re not on your own if it feels like planning and saving for the future is a bit of a challenge! There are people just like you out there and we’re sharing their stories so you can benefit from their experiences.

Meet 41 year old Marcus…

We’re sorry to hear you’ve separated from your wife…how have you been?

After the divorce from Tracey my life was a bit of a mess. I’ve had to review all my finances again, including my pension, as I had to agree to a pension sharing order. To be honest I have many worries about the future and I need to concentrate on starting over and buying a flat in the next five years or so.

I can add an extra lump sum into my pension through the bonus sacrifice arrangement and I won’t lose any of this money to the taxman.

How has starting over affected saving into your pension?

Inevitably my priorities have changed and I’ve looked at my pension details and discovered my company match whatever I pay in up to 10% – this feels like ‘a gift’ that I’m going to take advantage of. I only need to cut back a little each month on other spending in order to maximise what is on offer, and this will help to build up more savings in my pension.

Did you know that you can pay your bonus into your pension too?

Yes, I know will get a bonus in a few months as my employer is doing well, and they’ve been very good at letting us know about the benefits of bonus sacrifice. I can add an extra lump sum into my pension through the bonus sacrifice arrangement and I won’t lose any of this money to the taxman – it seems like a good idea! If I can do this every year, I won’t be overcommitting myself each month but can still keep my pension topped up.

To find out more about pension sharing, visit: www.pensionsadvisoryservice.org.uk/about-pensions/when-things-change/when-relationships-end/pension-sharing.

People like you: 18-29

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Do you sometimes feel like getting your head around financial planning and saving for the future is a bit of a challenge? Well, you’re not on your own! There are people just like you out there and we’re sharing their stories so you can benefit from their experiences.

Meet 23 year old Polly…

What do you do for work Polly?

I work in fashion retail. Going forward I hope to join the management training scheme to improve my career prospects within the Group.

What has been your experience so far with money and finances?

Growing up, money was tight, but my parents always worked and paid into pension schemes, so I understood from an early age the need to have money for the future.

I want to save up for my own flat, but don’t want to waste money on renting, so plan to stay home for the time being. I’ve heard about the Government introducing the LISA (Lifetime ISA) next year, so I am going to look into this as it could help me save for a deposit.

Did you know that a Lifetime ISA or LISA can also help you with your retirement saving as well?

Yes, I have but I would rather use the money being a first-time buyer. It also means I can keep this account open for when I eventually come to save for retirement.

Do you know anything about retirement?

I know that there is a pension awareness day soon at our Head Office where you can drop in and find out about auto-enrolment and the benefits of saving in a pension scheme – so I am planning to go.

For further information about the LISA visit: www.gov.uk/lifetime-isa.

What is 4me?

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We all have diverse needs when it comes to our physical, mental and financial wellbeing, and research shows that many of us would like help from our employers in these areas.

And that’s where 4me can help.

4me is an online tool that can help you to think more about your overall happiness and how you can get the best out of your job, your cash, your workplace benefits and more. Whatever your age, and wherever you are on your savings journey, 4me will point you in the right direction.

In 4me, we don’t use confusing jargon, and you’ll only see the information most relevant to you. There are topics tailored to your age group and it takes account of what savings you already have. Even your paperwork and terms and conditions are stored on the bookshelf so you won’t have to go searching through your ‘filing’! There’s also a library of short videos and interactive tools, all designed to guide you through the decisions you might face at any stage in your life.

  • 18-29? Stay in! – this is where your retirement journey begins
  • 30-49? Pay more in – start to build up your savings and plan  how much you need to save for the future
  • 50+? Shape and access – consider if you’re on track for the retirement you really want and think about how you might want to spend your money

The aim of 4me is to fully equip you with the tools you need to plan and make well informed decisions about your future. Speak to your employer today about the benefits of 4me, or head over to the website to find out more.

Saving money on your childcare

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If you are a parent, did you know that you could save over £1,000 a year on childcare for your little ones aged up to 15 (or 16 if disabled)?¹

That is because the cost is taken you out of your gross pay meaning you save money, as you do not pay any tax or National Insurance on it.

In order to get the vouchers, you just need to ask your employer and join their childcare voucher scheme.  You can use the vouchers to pay for childcare including, nurseries, childminders, holiday and after-school clubs.

There is a time limit though to join as these schemes are going to close to new members in the next six months. The vouchers are being replaced by a new system called ‘Tax-free Childcare’, which will give eligible parents an extra 20% towards childcare costs, up to a maximum of £2,000 per child, per year.

In the meantime, it’s worth knowing the difference between the two:

Tax-free childcare

 Childcare vouchers
Anyone can apply Only available if your company offers them
£120 per week minimum (if in a couple, both parents must work) One parent needs to work (no minimum earnings)
Child’s maximum age 11 (16 if disabled) Child’s maximum age -15 (16 if disabled)
Maximum income limit – less than £100,000 per parent No income limit
Buy up to £243 per month Tax and NI free (based on tax band)

To help you make a decision about your options, visit www.gov.uk/childcare-vouchers-better-off-calculator for more information.

¹ www.moneyadviceservice.org.uk/en/articles/help-with-childcare-costs – based on basic rate tax payer with £243 of vouchers each month