Mantle Financial Planning ® Chartered Financial Planners & Tax Advisers 2017-10-17T12:18:09Z http://www.mantlefp.com/feed/atom/ Colin Caulfield <![CDATA[New Inflation Figures Released]]> http://www.mantlefp.com/?p=6257 2017-10-17T12:18:09Z 2017-10-17T12:18:09Z ...and it's good news for pensions !

New Inflation Figures Released

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Pensions will be the key beneficiaries of today’s five-year high inflation figures as the lifetime allowance, public sector pensions and the state pension all get more generous.

The pensions lifetime allowance (LTA) will increase by £30,000 from April 2018 to £1.03m as a result.

This is because the government announced at Budget 2015 that it would reduce the lifetime allowance for pension savings from £1.25m to £1m from April 2016, but that from 2018-2019, the allowance will be increased by CPI inflation.

The LTA represents the maximum amount of money a saver can save in their pension pot before incurring an additional tax charge.

According to Nathan Long, senior pension analyst at Hargreaves Lansdown, even a small increase “is welcome news for pension investors with larger pots. However we continue to see this limit as a penalty for those who have invested wisely.”

Ourselves and most pension experts believe as there is an annual contribution limit of £40,000 (or lower for some higher earners), the LTA serves little purpose and should be abolished.

Today’s figures will also have an impact on the state pension, with next year’s state pension increase likely to be £164.33 a week (£8,545.50 a year), as it is based on September CPI figures (among other things).

Public sector pensions for next year are also linked to the September inflation rate. Since 2015, these schemes have moved to using ‘career average earnings’ as opposed to ‘final salary’ pensions. This basically means that each year members ‘bank’ their accrued pension and this is uprated in-line with the previous September’s inflation.

According to Hargreaves Lansdown, some pensions increase this cumulative accrued benefit by more than inflation, such as the Teachers’ Pension (CPI + 1.6 per cent), NHS Pension (CPI + 1.5 per cent), and the Police Pension (CPI + 1.25 per cent).

So, with inflation of 3 per cent, the increase for pensions being accrued will be 4.6 per cent on the Teachers’ Pension, 4.5 per cent for those in the NHS and 4.25 per cent for the Police Pension Scheme.

If you would like more information,  please contact us >>

New Inflation Figures Released

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Investment Committee <![CDATA[Weekly Market Update]]> http://www.mantlefp.com/?p=6245 2017-10-16T14:16:48Z 2017-10-16T07:30:16Z Global stock markets were in a positive mood, with several major indices reaching record highs...

Weekly Market Update

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Global stock markets were in a positive mood, with several major indices reaching record highs, including Japan’s Nikkei which hit its highest level for 21 years. While markets continue to move ahead, the geopolitical risks remain, alongside the real risk of a deflating euphoria which could dent the strong growth momentum.

At the start of the week, Theresa May set out plans for a contingency scenario should no deal be reached. Michel Barnier, the European Union’s chief negotiator, subsequently described Brexit talks as being in a state of deadlock. Theresa May has been forced to delay the introduction of her flagship EU withdrawal bill in the face of a planned rebellion by pro-European Tory MPs who are working intensively across party lines to rewrite the legislation.

The rise in European markets was helped by a dissipation of the tensions between the Spanish and Catalan governments. After the disputed Catalan referendum on 2 October, a degree of calm was restored when Carles Puigdemont, the Catalan president, held back from a formal declaration of independence to seek dialogue with Madrid. Although the outcome of the current stand-off between the Catalan and Spanish authorities remains highly uncertain, markets rallied in relief that a full-blown crisis had been avoided for now.

German exports jumped the most in a year, boosting the trade surplus of the eurozone’s largest economy. Seasonally adjusted exports increased 3.1 per cent from July, smashing economists’ expectations of 1 per cent. The figures contrast concerns from some economists that a rise this year in the euro would weigh on exports.

The International Monetary Fund stated that it expects the global economy to grow by 3.6 per cent this year and by 3.7 per cent in 2018. However, the UK has had its growth forecast revised down as it is now a notable exception to a trend of higher global growth. The IMF predicted the UK economy would grow by 1.7 per cent in 2017, as the negative effects of Brexit start to show. Mr Hammond will be under further pressure over the state of public finances in his Budget next month, as weak economic forecasts derail the government’s plans.

Minutes from September’s meeting of the US Federal Reserve showed that officials expect an interest rate hike later this year but concerns over persistently low inflation continue to weigh on sentiment. In the wake of hurricane related production disruptions at oil refineries in the Gulf Coast area, gasoline prices soared. But underlying inflation remains relatively muted even as evidence suggest wages are starting to rise.

 

Weekly Market Update

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Investment Committee <![CDATA[Weekly Market Update]]> http://www.mantlefp.com/?p=6239 2017-10-09T08:51:06Z 2017-10-09T07:00:49Z Renewed optimism over potential tax cuts sent US stocks ahead...

Weekly Market Update

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A positive week for the US economy as signs of economic strength and renewed optimism over potential tax cuts sent US stocks ahead. The US trade deficit narrowed while exports reported strong figures. The jobs numbers were relatively static but more importantly wage growth rose 0.5 per cent in September, providing some evidence that inflation will likely rise from here and will certainly increase market expectations that the Federal Reserve will hike interest rates in December.

Questions were raised over Theresa May’s future as British prime minister following a lacklustre party conference in Manchester. This was meant to be an opportunity to assert her authority, following her decision to call a snap election backfired. Unfortunately, the speech did not go as planned and the talk about behind the scenes is now whether she stays or goes. That is a massive distraction as the UK faces this unprecedented challenge of Brexit. Even if the prime minister resigned, there is no obvious successor because of rivalries and divisions within the party.

Sterling suffered from that poor address due to the uncertainty it created for the Prime Minister’s future and the path for Brexit. With the Tory Party conference out of the way, sterling is likely to continue to be put under pressure as the focus returns to the state of Brexit negotiations, the economy and the weak UK balance sheet.

Catalonia voted for independence from Spain in an unofficial referendum that was pledged with violence. The ramifications of the referendum have been keenly felt in Spain’s equity and bond markets. Financial stocks were hit the hardest, with banks based in Catalonia, notably Caixa Bank and Sabadell, being hit the hardest. Sabadell has already decided to move its legal headquarters out of the region.

The vote in Catalonia, which was ruled illegal by Madrid, was overwhelmingly in favour of independence, and the Barcelona-based Catalan government has threatened to secede in the coming days.

If you would like more information on the above article or advice on your personal financial circumstances, please contact us >>

Weekly Market Update

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Colin Caulfield <![CDATA[Royal Mail To Strike Over Pension]]> http://www.mantlefp.com/?p=6233 2017-10-09T08:52:24Z 2017-10-05T11:59:09Z Royal Mail union members have voted in favour of strike action...

Royal Mail To Strike Over Pension

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Money Marketing reports that nearly 90 per cent of Royal Mail union members have voted in favour of strike action after the postal service’s Defined Benefit pension scheme was closed.

While a new money purchase (‘Defined Contribution’) set-up means combined employee and employer pension contributions could almost reach 20 per cent, The Communication Workers Union described the pension changes as an “attack on the pension rights of hard-working postmen”.

Union executives will meet later this week to decide the next step, but the vote, which saw 70 per cent turnout, leaves open the possibility of a Christmas walkout.

Hargreaves Lansdown senior pensions analyst Nathan Long says: “Royal Mail’s decision to close their defined benefit pension scheme is entirely in keeping with many employers keen to cap the uncertainty of future pension costs. Delivering on these changes is proving more challenging, with the threat of industrial action now hanging over the busy Christmas period.

Although we have sympathy for the posties, it should be remembered that this is something private companies have gone through already, due to the unsustainable increased costs for an employer of providing Defined Benefit (DB) pensions. No FTSE100 company that we’re aware of offers new employees a DB scheme now – 25 years ago they all did. 

If you would like to discuss pensions centred on your own personal circumstances, please contact us >>

Royal Mail To Strike Over Pension

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Investment Committee <![CDATA[Weekly Market Update]]> http://www.mantlefp.com/?p=6228 2017-10-02T15:15:01Z 2017-10-02T07:00:14Z Catalonia experienced a contentious referendum to declare independence from Spain...

Weekly Market Update

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Catalonia experienced a contentious referendum to declare independence from Spain amid violent clashes as the constitutional court banned the vote and sent Catalan’s autonomy into question. To date, a declaration of independence would have no legal force, and unlikely to have backing from the international community. Nevertheless, it remains a challenge of authority and revives the populist vote.

Donald Trump unveiled some details of his proposed tax reforms last week. Mid-term elections are due next November and the pressure to implement a strategic tax reform package has increased, even though US GDP growth was revised upwards to 3.1 per cent. The individual tax rates were highlighted including a recommendation for a surcharge for the very wealthy. But President Trump did not set out the income levels at which the rates would apply, so it is unclear just how much of a tax cut would go to a typical family. The reforms have come under fire for favouring only businesses and the rich.

UK GDP rose by just 1.5 per cent annually in the second quarter of 2017. That is the slowest annual growth since 2013. However, there was positive news in the composition of growth in the second quarter, which showed bigger contributions from business investment and exports. With inflation above the Bank of England’s target Mark Carney has hinted that interest rates are likely to rise in November. Given that growth is falling, inflation potentially peaked combined with a high indebted consumer, any monetary tightening will be difficult to justify.

Eurozone manufacturing firms reported their strongest month of job creation on record in September. The manufacturing purchasing managers’ index for the currency area came in at 58.1, representing a six and a half-year high. Germany’s figures were particularly strong with manufacturing growth expanding at a rapid pace.

Oil prices rose following forecasts for rising demand and as Turkey threatened to halt Kurdish exports through its territory after the region voted for independence from Iraq.

If you would like more information on the above article or advice on your personal financial circumstances, please contact us >>

Weekly Market Update

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Investment Committee <![CDATA[Weekly Market Update]]> http://www.mantlefp.com/?p=6218 2017-09-25T13:26:11Z 2017-09-25T07:30:32Z A dramatic week with rhetoric between Kim Jong Un and Donald Trump accelerating...

Weekly Market Update

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A dramatic week with rhetoric between Kim Jong Un and Donald Trump accelerating, a historic move by the US Central Bank, major elections in Germany and a snap election called within Japan. This should have been enough to unnerve markets, but ultimately investors remained confident believing that economic fundamentals are improving.

The US Federal Reserve held interest rates but confirmed it would start reducing its balance sheet next month. This double announcement was largely anticipated and the move to a normalisation should be considered a positive one. The Fed was however, more aggressive than expected on the timing of rate rises and maintained its forecast of a further rate hike by the end of the year.

In terms of QE, the Fed has used the proceeds from maturing assets in its portfolio to buy more bonds. But this process will be scaled down from October onwards, with a small amount being allowed to roll off the balance sheet each month, with the aim to reduce their holdings to $3 trillion by 2021.

US retail sales and industrial production both came in well below consensus expectations in August, although a lot of that weakness resulted from the disruption caused by Hurricane Harvey. The number of Americans applying for unemployment benefits unexpectedly fell while the Philadelphia Federal Reserve’s business sentiment index rose to its highest level in three months, signalling further strength in the economy that could help bolster the Federal Reserve’s case for another rate rise this year.

The German Chancellor Angela Merkel secured her fourth term in office. This did not come as a surprise, of course, particularly considering the strength of the German economy. However, the process of forming a coalition could be more challenging following the populist rise, and with the Social Democrats pledging to forge an opposition party.

But the clear winners of the election were the right-wing AfD and the free-market FDP. Both parties more than doubled their share of the popular vote versus the last election, jumping over the 5 per cent threshold needed to secure representation in the next parliament. The next parliament will be represented by six parties, which complicates the formation of a new coalition government since none of those parties is close to the 50 per cent majority. In the longer-term, however, it could well increase the EU’s reluctance to make many concessions for fear of putting more wind in the populists’ sails.

In the UK, Moody’s rating agency downgraded the UK’s credit rating, stating that public finances are more stressed than the Treasury acknowledges and that the challenges of Brexit will increase risks to policymaking. The timing of the rating agency’s decision could not be more wounding for Theresa May, who hoped her speech in Florence, seeking to revive life back into the Brexit negotiations, would ease her political difficulties.

If you would like more information on the above article or advice on your personal financial circumstances, please contact us >>

Weekly Market Update

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Sean O'Shea <![CDATA[Beware Pension Crooks]]> http://www.mantlefp.com/?p=6214 2017-09-25T13:30:51Z 2017-09-21T08:34:39Z Pension rules now provide more flexibility but also make it easier for you to be 'scammed' if you're not careful...

Beware Pension Crooks

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The Times reports that MPs are to review whether the ‘pension freedom’ changes of two years ago are working in practice, in particular over concern that they are exposing vulnerable people to fraud.

Frank Field, chairman of the committee, said that “a new breed of pension crooks” had grown up to try to part people from their retirement savings. The committee will also investigate wider concerns that too many people may be risking poverty in old age because of the temptation to splurge.

“Pension freedom and choice liberated savers to choose what they wanted to do with their own money,” Mr Field said. “This was welcome, but as with any radical reform it is important to monitor its practical effects closely to ensure it is working as envisaged. In this case, it is vital that adequate support ensures people are equipped to ensure they don’t make decisions they subsequently regret.”

George Osborne stunned the industry when, as chancellor, he announced the changes, overturning the decades-old convention that savers in defined-contribution pensions funds qualified for tax perks today usually to buy an annuity tomorrow and so ensure that they did not become a burden on taxpayers in old age.

A million pension pots have been accessed since the reforms went live and £11.8 billion withdrawn, according to figures from the Financial Conduct Authority. Nevertheless, it is not clear that the practice is as common as the FCA suggested: another 5.6 million pots in the 55-65 age bracket remained untouched.

One big concern is that people are emptying their pension pots only to invest the money in other assets, surrendering the tax advantages of pension saving.

“This behaviour is totally irrational and highlights the lack of trust and ownership that people feel towards pension saving,” Jon Hatchett, of Hymans Robertson, the actuaries, said.

Thirty per cent of people accessing their pots were doing so without taking advice, the FCA found. Mr Field quoted police data which suggested that more than £43 million of people’s retirement savings had been lost to fraud since the policy was announced.

If you would like to discuss how pension rules affect you, please contact us >>

Beware Pension Crooks

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Investment Committee <![CDATA[Weekly Market Update]]> http://www.mantlefp.com/?p=6210 2017-09-19T08:19:02Z 2017-09-18T07:00:12Z Hurricane risk diminished whilst tensions surrounding North Korea eased at the beginning of last week...

Weekly Market Update

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Hurricane risk diminished whilst tensions surrounding North Korea eased at the beginning of last week sending US equity markets to record highs. However, it was not long before geo-political risk escalated as North Korea launched a second missile over Japan, prompting missile drills from South Korea and further warnings from the US.

The latest missile launch followed the imposition of fresh sanctions by the United Nations Security Council. These sanctions include restricting oil imports, banning it from exporting textiles and ending new visas for North Koreans seeking to work abroad. To get Russia and China to agree to the measures, however, the limits on oil imports were watered down. Nevertheless, the sanctions are likely to have a major effect on the North Korean economy.

UK inflation beat forecasts to rise to 2.9 per cent in August, from 2.6 per cent in July. However, it looks likely that inflation will fall back next year, as the effect of Brexit-induced sterling weakness falls out of the year-on-year calculation. This means less pressure on the Bank of England to consider raising interest rates in the near term.

However, the minutes of the MPC meeting showed that attitudes had hardened and that monetary policy could be tightened by a somewhat greater extent over the forecast period than current market expectations. But hiking would clearly damage the financial outlook of overly indebted consumers and an increase in default rates in parts of the consumer credit market would not be welcome at this stage from the midst of a withdrawal from Europe. Despite no hike, sterling rose as the committee now sees a need to reduce stimulus over the coming months, in line with central bank rhetoric that is being repeated across the world.

US inflation rose, supporting a rise in expectations that the Federal Reserve will raise borrowing costs once again this year. The consumer price index rose 0.4 per cent in August from July, proving a 1.9 per cent figure for the year. While improving from recent lows, there is no sign of a regime shift in US inflation, despite the tight labour market. Globalisation and technology continue to dampen prices.

If you would like more information on the above article or advice on your personal financial circumstances, please contact us >>

Weekly Market Update

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Colin Caulfield <![CDATA[St James’s Place Funds Underperform]]> http://www.mantlefp.com/?p=6205 2017-09-19T08:23:27Z 2017-09-13T09:39:59Z Only two of 26 funds outperformed their benchmarks over both one year and five years...

St James’s Place Funds Underperform

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Only two of 26 funds offered by investment provider St James’s Place have outperformed their benchmarks over both one year and five years, and since their inception, a new analysis shows.

Ten of the 26 funds have, however, underperformed when looking across one year, five years, and since inception.

Of the 36 funds currently offered by SJP, Square Mile said it could assess only 26 because the funds’ reports often displayed more than one representative index.

An SJP spokesman says: “SJP funds are monitored against the unique investment objective for each fund, and are presented net of all associated costs — i.e. all advice costs, platform or administrative charges, product tax wrappers and external fund manager fees.”

Architas investment director Adrian Lowcock says: “Effectively, [SJP] is saying it has bundled all its costs into the fund, which means the client has no idea what they are actually paying”.

This is not in the spirit of the current RDR legislation because investors cannot do a genuine comparison.

According to SJP reports in March, costs for the funds are close to 2 per cent in most cases.

This is important to clients as it must be remembered that SJP are NOT independent – advisers of the St. James’s Place Partnership only represent St. James’s Place Wealth Management plc.

If you would like to compare the performance and charges of SJP funds you hold to others in the market place, please contact us >>

St James’s Place Funds Underperform

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Investment Committee <![CDATA[Weekly Market Update]]> http://www.mantlefp.com/?p=6207 2017-09-12T08:02:16Z 2017-09-11T07:00:11Z Last week was dominated by the tragic impact of several natural disasters across the Caribbean and US...

Weekly Market Update

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Last week was dominated by the tragic impact of several natural disasters across the Caribbean and US. As well as taking a terrible human toll, the hurricanes prompted anxiety about their impact on the US economy. Jobless claims were reported at their highest level in more than two years, ascribed in large part to the effect of Hurricane Harvey on workplaces and livelihoods.

A deal to lift the debt ceiling in the US helped mitigate investors’ concerns about North Korea’s nuclear weapons tests. President Trump reached a deal with the Democrats to package a three-month extension of the debt ceiling into a forthcoming bill to provide relief following Hurricane Harvey. Whilst Republicans had sought a longer extension, this temporary measure at least provides some breathing space.

In the UK, retail spending increased last month at the fastest rate in almost two years, as a weaker pound led to more residents opting to holiday at home and to an influx of tourists from overseas. However, the British Chambers of Commerce, became the latest organisation to downgrade UK growth forecasts over the next two years. They expect growth next year to be the weakest since the 2008 recession, with GDP rising by just 1.2 per cent.

The ECB decided to keep interest rates unchanged and confirmed the current monthly pace of €60bn net asset purchases would continue until the end of December. Mario Draghi, President of the European Central Bank, said that it would have to take the euro’s recent strength into account in deciding when to begin reducing its asset-purchase programme.

The bank is widely expected to begin winding down its purchases from January, following improvements in the eurozone economy and amid fears that eurozone central bankers will run out of assets to buy. The stronger euro has caused the ECB to revise downwards its inflation forecasts, whilst raising its growth assumptions. Eurozone inflation has been curbed by the stronger currency, which means that there is less pressure on the ECB to adopt a tighter monetary policy. Any decisions will likely be taken in October (26th) at the next meeting.

If you would like more information on the above article or advice on your personal financial circumstances, please contact us >>

Weekly Market Update

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