Financial

Viewpoint
Issue 16 Summer 2016

Your latest newsletter from Seneca Reid Limited

A year on from
pension freedoms

The reforms give people whove worked and

saved hard greater flexibility over how and
when they access their pension savings and
mean anyone reaching retirement age has
been able to withdraw some, or all, of their
pension (subject to tax on everything above
the first 25% they take out).

Lamborghini sales unaffected

A year on and figures suggest over 230,000

people have accessed more than 4.3 billion
from pension funds. The average withdrawal
is 18,750 laying to rest the fear that retirees
would be tempted to blow their entire pension
pot on a Lamborghini.
In fact, with 516,000 payments made, it goes
to show many people have chosen to take their
money in instalments, rather than everything
in one go.
The figures also showed:
the highest number of partial withdrawals
were made by consumers aged 55-59
consumers with bigger pension funds were
more likely to have taken financial advice
around 60% of drawdown and annuity
customers stayed with their existing provider
Seneca Reid Limited

Making the right decision

The age at which you can draw your pension

is currently 55, but this is set to increase to 57
from 2028 and, from then, in line with the rise
in the State Pension age, albeit remaining
10 years below.
From 6 April 2015 those aged 55 or in a defined
contribution pension plan are able to access
pension savings in a number of different ways:
buying an annuity

future possible/anticipated living expenses

incorporating, possibly, a budget for care
unexpected expenses such as car repairs,
home maintenance and health problems
gifts either now or in the future
the extent to which youd like to leave an
inheritance for your family and dependants
With choice comes complexity, so it's important
to take advice before making decisions on
your pension.

Flexi Access Drawdown previously known

as flexible drawdown

Contains public sector information licensed under

the Open Government Licence v3.0.

uncrystallised Funds Pension Lump Sum

(UFPLS) this allows you to draw money
directly from your pension fund. Of each
payment you withdraw, 25% is tax-free and
the other 75% is taxed as income via PAYE

HM Revenue and Customs practice and the law

relating to taxation are complex and subject to
individual circumstancesand changes which
cannot be foreseen.

Its also important to consider not only your

pension savings including the state pensions
but also any other savings and investments
you may have. And if you choose to continue
to invest amounts that you dont need to access
immediately, you should think about:
your current essential income needs such
as your day-to-day living expenses and
other known or planned expenditure
your current health status
your lifestyle and the non-essential
expenditure, such as holidays, new cars,
sports and hobbies, entertainment etc

info@senecareid.co.uk

01279 874480

If youre looking to access your pension

savings or youd like advice on your
pension choices, please get in touch.

COPEN1304 Exp. 31/03/17

In April 2015 the government

introduced the most
significant pension reforms
for a generation.

Are cash ISAs still relevant?

Clearly the latter carry a varying degree

of investment risk (depending on the
type of funds you invest in), but does
a record-low savings rate mean cash
ISAs are dead?
The benefits of a cash ISA

Whatever the current rate of interest, the fact is that savings

in a cash ISA are free from income tax and they dont count
towards your Personal Savings Allowance. This means you
can have a cash ISA and earn up to 1,000 income from
other savings (500 if youre a higher-rate taxpayer),
before having to pay tax.
Whether or not you choose to invest in the stock market,
youll always have a need for rainy day funds in the event
of an emergency and as a safe, tax-efficient haven, cash
ISAs are a useful vehicle. They are easy to open, you
normally wont need to give notice to withdraw funds
and anyone over 16 can save up to 15,240 in the
current tax year.
Seneca Reid Limited

info@senecareid.co.uk

Investing in the stock market

If these benefits still dont outweigh the chance of a better

return on your money, its worth looking at a stocks and
shares ISA, where you can invest in individual company
shares, unit trusts, investment funds, government bonds
and corporate bonds.
By choosing to invest in a stocks and shares ISA you don't
pay capital gains tax (CGT) on any gains made great if
you exceed the 11,100 annual CGT allowance. However,
as with any stock market investment your money is at risk,
so youll need to think about how much risk you are
prepared to take before you take the plunge.
The tax efficiency of ISAs is based on current rules. The
current tax situation may not be maintained. The benefit
of the tax treatment depends on individual circumstances.
Although there is no fixed term, you should consider stocks
and shares ISAs to be a medium to long term investment
of ideally five years or more.
The value of your investments and any income from
it may fall as well as rise and is not guaranteed.
You may get back less than you invest.
You should not use past performance as a reliable
indicator of future performance.

01279 874480

If youre not happy about the return youre getting

on your savings, please get in touch and well help
you explore your options.

COPEN1291 Exp. 05/04/17

Since 2012, the average cash ISA rate

has fallen from 2.84% to just 0.82%,
while stocks and shares ISAs are
performing far better, delivering an
average growth of 7.4% during the
2014/15 tax year.

Dont be a victim of online fraud

Whats the worst that can happen?

You may be thinking an email hack could lead to nothing

more than someone reading the endless emails youve
received from Groupon, but with fraudsters becoming
more sophisticated it could be far more serious.
In a recent case a financial adviser received an email,
seemingly from one of his clients, asking him to arrange
a large withdrawal from one of their investments:
My client, a lady in her 60s, emailed me asking me to
arrange a withdrawal from one of her investments. The
email came from her personal account and I had no cause
to suspect it was anything other than genuine. My client
said she was abroad and unable to speak on the phone
(which was also plausible as I knew shed been planning
a trip to Spain), but she was keen to get the funds.
However, she also asked for the money to be paid into
a bank account that differed from the one held on record.
I called the platform provider to process the withdrawal
and they suggested I obtain verification of the new
account details. It was only when I received her copy
bank statements for the account that I became suspicious.

Thanks to the advisers professionalism and care

for his client, the crime was averted and the matter
handed over to Action Fraud.

Password protection

While its not always possible to protect your personal

data, especially if its stolen from a large company such
as TalkTalk, you should take the following measures to
make your personal accounts more secure:
choose a strong password, the longer the better, with
a mixture of numbers, lowercase and uppercase letters
and special characters
never use the same password on different accounts
keep your antivirus software and security patches up
to date to protect against malicious software or URLs,
spam or phishing attacks and key loggers

If you have been hacked

If you feel your email or other accounts such as online

banking or social media have been accessed it is possible
to take back control.
Access your account, if the password has been changed
click the forgotten password link. Once you are in your
accounts change the password. If your email has been
accessed check your junk, deleted and sent items for
emails not sent by you. If your bank account has been
accessed, check for any transaction you dont recognise
and report any suspicious activity to the relevant sources.

There was no named account holder, plus there was

evidence of online betting and debits for purchases in
London, which I didnt associate with my client. I then
picked up the phone and called my client. Surprise
surprise, not only was she at home, but she knew
nothing about the withdrawal request."
Seneca Reid Limited

info@senecareid.co.uk

01279 874480

Ask us about the procedures we have in place

when it comes to protecting your nancial affairs.

COPEN1297 Exp. 16/06/17

With cyber crime hitting the headlines

more and more these days it's not just
big businesses like TalkTalk and
Ashley Madison that are in the
fraudsters sights.

Financial back pains

Back pain is a common problem that
affects most of us at some point. In
2014/15 9.5 million working days were
lost due to musculoskeletal disorders
including back pain. To put that figure
in perspective that's just over 26,000
years of lost productivity.
In some cases the back problem will be temporary
and the sufferer will recover and return to work, but
conditions vary enormously in their severity and can
occur at any time.

Preventing back pain

How you sit, stand, lie and lift can all affect your back.
When you think about how much time the average
person spends sat at a computer, its important to be
aware of your posture in order to help prevent injuries.
One of the biggest causes of back injury, particularly
at work, is lifting or handling objects incorrectly. When
moving an object at work or home you should:

avoid twisting your back or leaning sideways,

particularly when your back is bent
keep your head up
know your limits
push rather than pull
distribute the weight evenly
From spinal surgery to physiotherapy or joining
a gym, the treatments are many and varied.
Exercise is an excellent way of reducing the chances
of suffering from back pain and walking, swimming, yoga
or pilates can all help to improve flexibility and strengthen
the back muscles. That said, we are all still susceptible.

What if you do slip a disc?

Being off work with a bad back could wreck your financial
plans, so its important to have adequate income protection
in place. This replaces a proportion of your income if you
are off work and can help to relieve the pressure on you
and your family so that you can concentrate on recovery
rather than worry about the next bill.

think before you lift

If you havent protected your income, or its been

a while since you reviewed your cover, please get
in touch.

start in a good position

COPEN1296 Exp. 31/12/16

keep the load close to your waist

Seneca Reid Limited

info@senecareid.co.uk

01279 874480

Lasting Power of Attorney

A will deals with matters in the event
of your death, but what if you became
unable to handle your affairs while
still alive?
If youre worried that, as you get older, a physical or mental
illness could affect your ability to manage your personal
affairs, you should consider setting up a Lasting Power
of Attorney (LPA). This is a legal document which allows
you to appoint one or more people to either help you make
legal decisions, or make them entirely on your behalf.
There are two types of LPA available: Health & Welfare
and Property and Financial Affairs.
Health and Welfare LPA your appointed attorneys will
be able to act on your behalf if you become completely
unable to make decisions regarding your own wellbeing.
For example, if your circumstances mean you require full
time care, or a particular medical treatment they will step
in and act in your interests.

When deciding who you would like as your attorneys,

there are a few things to consider:
how well do you know them?
how well do they look after their own affairs?
do you trust them to make decisions that are best
for you?
will they be comfortable making these decisions?
if you choose more than one attorney, youll also need
to decide whether they will make decisions separately
or together
When you set up your LPA you can nominate replacement
attorneys in case your chosen attorneys become unable
to carry out the role for whatever reason.
Knowing that your financial affairs will be looked after
by people you trust can give you valuable peace of mind.
Lasting Powers of Attorney are not part of the Openwork
Limited offering and are offered in our own right. Openwork
Limited accepts no responsibility for this aspect of
our business.

If you need help deciding whether an LPA would

be suitable for you, or any help setting up an LPA,
please get in touch.

COPEN1307 Exp. 17/06/17

Property and Financial Affairs LPA your attorneys can

make decisions concerning your bank accounts, paying
bills or even selling your home if required. Unlike the Health
and Welfare LPA, this version can be used as soon as it is
registered, but only with your permission ie. you are still
fit to make other decisions on your affairs.

Choosing your attorneys

Seneca Reid Limited

info@senecareid.co.uk

01279 874480

The risks of being underinsured

Most of us wouldnt think twice about
protecting our home, car, TV or smart
phone we even insure our holidays
and pets. But there's one aspect of
protection that too few of us consider
what happens to our homes and our
livelihoods in the event we have an
accident, serious illness or die?
Whats your greatest financial asset?

What would you say if you were asked whats your greatest
asset? Your home? After all, it is one of the biggest financial
commitments we undertake. Think again. If you calculate
how much income youll receive between now and
retirement, the reality is that your income is your greatest
asset. So have you protected it in the same way youve
protected your home?
New research suggests in most cases the answer is
no, with 64% of households surveyed having no income
protection in place. And this is despite nearly half of
co-habiting couples in the UK claiming they are reliant
on both salaries just to make ends meet. In fact, 34%
admitted they would have to make substantial changes
to their lifestyle if one partner was unable to work:

Protecting your income

Every year almost a million people find themselves unable

to work due to an accident or illness. Taking out income
protection provides you with a tax-free income if youre
sick or injured and unable to work. It could help you pay
your mortgage/rent, utilities bills or even any medical bills
you may incur.

Protecting against the unexpected

While losing your income could put you and your family
in a difficult situation, what if you or your partner were
diagnosed with a critical illness? The last thing youd
want to worry about would be your finances, especially
as a study by Macmillan Cancer Support shows that the
average family of someone receiving treatment for cancer
has a monthly shortfall of 200 even if they slash their
spending to the essentials.
80% of us consider broadband to be essential, but less
than 39% think that financial security for dependants in
the event of a critical illness is. Critical illness cover or
life insurance may not sound like priorities for you, but
the financial buffer they can provide at such a difficult
time could be invaluable.
There are a number of affordable protection products that
give you financial peace of mind in the event of accident,
injury, or worse.

59% would have to cancel holiday plans

21% would cancel gym memberships

10% would ask family for additional help

with childcare

such as downsizing their house

Talk to us about protection insurance tailored for

your circumstances.

More shockingly around 12% would have to visit

food banks just to keep food on the table.
Seneca Reid Limited

info@senecareid.co.uk

01279 874480

COPEN1300 Exp. 16/06/17

13% would have to make a drastic change

The value of financial advice

Whichever way you come at it, its important to think

about your financial goals and what you would like to
achieve with your money. This is especially true if you
have other people who rely on your income.
This is where we come in. As professional financial
advisers, we can make this job easier and add real value
when it comes to protecting your family, investing wisely,
moving home or planning for a comfortable retirement.

Getting to know you

When advising you about your finances we want to

understand you not your money. Well take the time
to find out where youve come from, where you are now
and where you would like to be in the future.
Together, we can design a plan to help you better manage
your financial affairs, save tax efficiently for retirement, and
ultimately achieve your financial goals whether short,
or longer-term.

Ensuring contingency along the way

Throughout your life, youll need to find answers to

many different financial questions:

can we support our children with their wedding costs

and house deposits?
can we make our money work harder and smarter?
when can we retire and how much will we need
to support our lifestyle?
when were no longer here, who would we want
to benefit from the wealth weve created?
We can help you answer these questions and make the
right decisions to benefit you and your loved ones now
and in the long run.

Planning for the unexpected

Not everything in life is straightforward and things

dont always go to plan. We can help you prepare for
the unexpected and put in place some financial safety
nets in case anything happens to impact your family
or disrupt your plans. Think about:
whether your family could cope financially if either
you or your spouse/partner died?
how much income you would have if you were taken
seriously ill and couldnt work?
whether your business would survive without you
or your key people?
how your lifestyle may change if you had an accident
and couldnt do the things you do today?
By getting to know your priorities and goals and
understanding the bigger picture, we can piece together
a plan to ensure the things that matter to you most your
family, income, business, or maybe all three are protected
leaving you on track to achieve your financial goals.

how much should we offer on a new house?

when can we buy a new car?

For more information on how we can help you

create and achieve your nancial plan, please get
in touch.

whats our holiday budget?

shall we start our own business?
can we help fund our childrens education?
Seneca Reid Limited

info@senecareid.co.uk

01279 874480

COPEN1288 Exp. 16/05/17

Everyone is unique. We all think and

work differently. Some people are
good with words, and others, numbers.
The same might be true when it comes
to planning and managing our finances.
But however different our approaches
might be, we probably all have similar
goals for our money.

A financially-rewarding retirement

While financial wellbeing

is not the only contributor
to a satisfying, healthy and
enjoyable life, its still a
pretty important one.
For most, during working life, financial wellbeing
will depend on whatever they do to earn money.
However, as well as securing the living
standards you want when youre working, its
also important to think carefully about putting
some of that income aside for your future.
Generally speaking, the more you save and the
earlier you start saving, the better shape your
financial assets are likely to be in when you
need to draw on them.

Choices at retirement

When work ends or reduces, your financial

assets have a bigger part to play. And for many
their pension fund will be an important (but not
necessarily their only) financial asset. The
decision on where to draw funds from when
money is needed to replace or supplement
earned income will be an important, and
sometimes complex decision and there
are many factors that can influence it:
whether to convert pension savings held
either in a personal or workplace pension

Historically, most people have bought a

lifetime annuity on retirement. In April 2015,
there were some big changes to the ways
in which you can take money from your
pension fund.
The new options introduce more choice and
more complexity. The fundamental principle
though, is that once youve reached age 55 you
will have the ability to access all or any part of
your pension fund, albeit taxed, however and
whenever you want to.

The State Pension

For many, the pension the State provides

will form a key part of their retirement income.
The amount of State Pension youll get usually
depends on the National Insurance contributions
youve paid.
The age at which you can claim State Pension
is changing. Its currently 65 for men. State
Pension Age (SPA) for women is gradually
increasing from 60 and will reach 65 by
November 2018. SPA for both men and women
will then increase to 66 by October 2020 and
then to 67 and eventually 68 by 2046.

Self-evidently, the greater the value of your

investment, the greater chance you will have of
a financially rewarding retirement. But the more
investments you have, the more important it will
be to think very carefully about where you take
money from when the time comes to take it.
A good understanding of the tax rules that apply
to your investments will be essential to good
decision making. Youll also need to think about
the relative importance of certainty of income,
access to capital, and preservation of capital for
your family, as well as the degree of risk youre
prepared to take to achieve your required level
of return on the investments that remain in your
pension fund.
The value of your investments and any income
from them can fall as well as rise and you may
not get back the original amount invested.
HM Revenue and Customs practice and the law
relating to taxation are complex and subject to
individual circumstances and changes which
cannot be foreseen.

A new single tier State Pension of 155.65

maximum a week, replacing the Basic and
Additional pensions, will affect people reaching
State Pension Age from 6 April 2016 onwards.

how to make your pension income last

(given most of us are living longer)
how to protect your income against the effects
of inflation

If youd like expert advice on your

retirement choices, please get in touch.

01279 874480
info@senecareid.co.uk
www.senecareid.co.uk
COPEN1303 Exp. 31/03/17

Seneca Reid Limited

Thremhall House,
Thremhall Park, Start Hill,
Bishop's Stortford,
Hertfordshire,
CM22 7WE.

Ensuring good decision-making