Inheritance Tax (IHT) in the UK is a subject that was once something that only affected very wealthy people. It may be one of life’s unpleasant facts but today it affects more people than ever, partly due to the rise in the property market that has not been matched by a corresponding rise in the IHT threshold.
Different types of investments are affected in different ways by factors such as economics, interest rates, politics, conflicts, even weather events. What’s positive for one investment can be negative for another, and when one rises another may fall. This interlinked movement between assets is known as ‘correlation’.
Parents with adult children living under their roof are spending £1,200* more than their Empty Nester counterparts each year on everyday household expenditure, bringing the total annual cost of ‘Full Nest Syndrome’ in the UK to £3.2 billion[1].
With an ageing population and increasingly more children living at home for longer, more and more people are joining the ‘Sandwich Generation’, having to fund family at both ends of the spectrum, such as their parents and children as well as themselves.
Employers estimate up to a third of their staff would struggle to continue in their current jobs past traditional retirement ages, research for MetLife Employee Benefits[1] shows. Its nationwide study found HR directors believe that, on average, 31% of their current workforce would not be able to perform their jobs adequately once they reach normal retirement ages, even though 54% of them expect an increase in the proportion of older staff.
New research[1] suggests that UK adults are planning to use equity investments to help them outstrip inflation and manage the rising cost of living. Over half (53%) of UK adults rate the rising cost of living as their number one fear for retirement, and almost a third (32%) of pre-retirees[2] say they would retain some exposure to stocks and shares to offset the negative effects of inflation on their retirement income.
T he gap between the fortunes of savers and non-savers continues to widen, and research supports these findings[1]. ‘Habitual savers’ continue to put away more for a rainy day, but the total number of people saving has fallen, and, despite improvements to the economy, one in five people in the UK have no savings at all.
With the news that the tax charge on pension funds will be removed before age 75, some commentators have suggested that over 90% of people retiring in good health should expect to live beyond age 75. For someone with moderate levels of health issues, over 80% might expect to live to at least 75. The tax landscape beyond age 75 is different, with tax being paid on monies passed on.
The Chancellor, George Osborne, has brought forward the expected announcement on the tax charge that applies to certain individuals’ pensions on their death. The new rules will simplify the existing regime and come into force from April 2015, abolishing the 55% tax that applies to untouched defined contribution pension pots of people aged 75 or over, and to pensions from which money has already been withdrawn.
Over half of the UK population are unaware of government plans to reform the State Pension and the impact that will have on them, according to recent research[1]. Among the 55 to 64-year-old age group, 32% are unaware of the changes.