Important Changes to Drawdown – Existing clients be aware

 

There are a number of changes coming in April 20011. Some of them are quite significant for a number of  clients.

• Clients will no longer be forced to buy an annuity with their pension funds at aged 75 years. This improves the flexibility of pensions and possibly makes them more attractive for a number of clients who do not need access to their pension funds at this age.

• Clients who have been using drawdown to achieve higher incomes from their pension funds may now need to reconsider their options. As of April 2011, the maximum income permitted will be reduced by 20%. This clearly may have a big impact on some clients.

• The frequency of compulsory reviews is being moved from every 5 to 3 years. Hence, potentially increasing the risk of a reducing income over time.

• Pensions have in recent years become more flexible with regards accessing the pension fund. Triviality rules have had the impact of more older people starting plans with the objective of accumulating tax advantaged investment whilst maintaining funds below the minimum threshold (cirac18k). The new rules now permit people (with a minimal pension income of £20k per year) to access the remaining pension funds from age 75 years of age. The drawings being treated as taxable income. The latest rules mean that people can save with a higher rate tax relief of say 40% and draw benefits in full at say 20% tax.

• Death benefits on drawdown funds are at 55% but they will attract no Inheritance tax liability.

The above is based upon our current understanding of the finance Bill 2011. Individual advice should always be sought. The above information is not a complete review of the finance Bill 2011.

Suggested actions:

• If you receive an income or plan to receive an income through drawdown make sure this is reviewed in the next 3 weeks.

• If you have or are likely to have an income of over £20k per year from pensions then review your decisions about whether you should fund more into pensions.

Bad weather... Good day for the markets

When many are failing to get into work, the troops have all made it in today. Work continues and after getting back into the markets we are glad they have improved again. Here are todays figures.

FTSE 100 5641.41 + 113.14


Dax 6844.06 + 155.57

Cac 40 3660.77 + 50.33

Dow Jones 11192.62 + 186.6

Nasdaq 2542.67 + 44.44

BBC Global 30 5532.77 + 86.03

This Week @ Reeves Independent

Today has been a pretty hectic one for us in the office.

Steve our new para-planner is now fully settled in and by all means thoroughly enjoying being part of the team. We currently have lots of work going on (good thing) so he has lots to get on with. 
Liam has been interviewing half of Newcastle for the position on promotional staff that we are currently recruiting and after a few dozen phone interviews has selected the best candidates to come into the office tomorrow afternoon for some training.

Tomorrow is week 3 of the Reeves Independent Training Academy. Nigel has gave a really good introduction to the company and a start on the "approach" the next couple of weeks will really make or break the candidates as they will be doing practical training such as face to face dummy runs which will show us who we want working on our stands. Last week, new recruit James, was the first to feed through from the training academy and although I wasn't there the guys on the stand said he did brilliantly, so well done to him.

Patrick Leonard attended an Invesco seminar yesterday at the wonderful Marriot Hotel in Gateshead. Our Marketing man picked up lots of advice and opinions on the markets which will hopefully give him the grounds to write some very good articles on this very blog. I know he has taken some fantastic information from them about their review of the markets so look out for monthly reviews.

Our football team, Newcastle Chemfica are doing extremely well in the Northern Alliance division 2 and are sitting in the top 3, this weekend they entertain Red House Farm at Cochrane park. Red House are a new, youthful team that will provide the lads with a difficult test. We now do programmes on a matchday, so if you are interested in sponsoring that, let us know.

Reeves.

UK Overview September

October 2010 (covering the month of September 2010)

UK stocks were strong in September with the FTSE 100 and FTSE All-Share indices regaining positive territory for the year. The month’s strength was based around a general increase in global risk aversion and largely solid corporate newsflow, albeit that economic data domestically remained unconvincing.

Economic data released during the month added further evidence to the difficult outlook ahead. Service sector activity, a significant driver of growth, dropped to 51.3 in August, from 53.1 in July, according to the CIPS/Markit survey. The housing market experienced further signs of a downturn, as data from Nationwide, Rightmove and the Royal Institute of Chartered Surveyors showed prices falling due to an increase in supply at a time when demand is challenged by mortgage availability and concerns about the outlook for employment. This was reinforced by data showing that while the availability of mortgage credit had actually increased slightly over the last three months, the number of mortgage approvals for new house purchases fell to its lowest level for six months, based on data from the Bank of England. Retail sales data was mixed, with the ONS reporting a fall in sales during August, while the CBI’s September survey suggested that high street sales are expanding strongly.

Results from retailers, including DSG international and Debenhams, were positive, but both warned of uncertainty ahead for the UK consumer. DSG reported an increase in sales, boosted by the World Cup and iPad sales, while Debenhams forecast full-year pre-tax profits of £150m. Banking stocks were in the news as both Barclays and HSBC announced board changes. Bob Diamond, formerly head of the investment banking arm Barclays Capital, was appointed as the bank’s new chief executive. HSBC’s changes saw chairman Steven Green confirmed as the government’s new trade minister, to be replaced by the group’s chief financial officer Douglas Flint. Chief executive Michael Geoghegan was also replaced by a former investment banker, with Stuart Gulliver taking over as CEO. Lloyds Banking Group also revealed that chief executive Eric Daniels will leave over the next 12 months. WM Morrison issued first half results that were ahead of forecasts and Imperial Tobacco’s trading update was well received by the market. Merger and acquisition news also supported stocks during the month as BAE Systems announced plans to sell parts of its North American business, with proceeds expected to be in the region of $2bn. KNOC’s drawn-out bid for Dana Petroleum appeared to be heading towards a conclusion as the group gained control of more than 64% of the group’s stock.

September Markets Review

October 2010 (covering the month of September 2010)

September turned out to be a positive month for equities with US stocks leading the rally. Willingness from the US Federal Reserve to provide further monetary stimulus via quantitative easing and its commitment to reflate the US economy boosted investor confidence and risk appetite. European equities also registered healthy gains despite further reminders that the Eurozone’s fiscal crisis is far from over. Positive corporate newsflow underpinned UK stocks although economic data released here during the month added further evidence to the difficult outlook ahead. Broad weakness in the US dollar pushed the euro higher and prompted the authorities in Japan to intervene in the currency markets to weaken the yen. Commodities had a strong month with oil and gold prices rising sharply. In fixed income markets, core government bonds delivered negative returns and 10-year yield spreads for Greek, Irish and Portuguese bonds over German Bunds remain elevated.  

US

• Better-than-expected macro data dampens down fears of a double-dip recession
• S&P 500 has its best September since 1939, rising by 8.8% in US dollar terms
• Technology and industrials the best performing sectors

Europe

• Equity markets rally as corporate newsflow remains upbeat
• Spain downgraded by Moody’s while Ireland bails out the banking sector
• Euro rises to six-month high versus the US dollar

UK

• UK stocks regain positive territory for the year-to-date
• Mixed economic data suggests a challenging outlook
• Significant board room changes within the banking sector

Asia Pacific

• Japanese authorities intervene in currency markets to weaken the yen
• Japan’s second quarter GDP revised up to an annualised rate of 1.5% from initial estimate of 0.4%
• Improvement in Chinese economic data renews concerns of further tightening

Emerging Markets

• Double-digit returns for emerging market equities
• Rally driven by better economic data from US and China
• Brazil’s Petrobras raises US$70 billion in the world’s largest public share offering

Fixed Interest

• Negative returns from core government bonds and better quality investment-grade bonds, but stronger performance from high yield
• Clarity around bank capital requirements sees subordinated bank debt improve
• UK inflation remains stubbornly high

Key Points From Today's Spending Cuts

Chancellor George Osborne has unveiled the biggest UK spending cuts since World War II, with welfare, councils and police budgets all hit.

- £81bn cut from public spending over four years

- 19% average departmental cuts - less than the 25% expected

- £7bn extra welfare cuts, including changes to incapacity, housing benefit and tax credits

- £3.5bn increase

- Rise in state pension age brought forward

- 7% cut for local councils from April next year

- Permanent bank levy

- Rail fares to rise 3% above inflation from 2012

Today's Markets

Poor day for the markets. (20/10/10)

FTSE 100 5686.48 - -17.41

Dax 6465.24 - -25.45
Cac 40 3787.59 - -19.58
Dow Jones 10978.62 - -165.07
Nasdaq 2436.95 - -43.71
BBC Global 30 5407.35 - -3.73