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					Information caveat


•     The content of this presentation is provided for illustrative purposes only and is not
      intended to be used for individual investment or financial planning and does not
      constitute personal advice.

•     Whilst every effort is made to ensure the accuracy of information contained in the
      presentation it cannot be guaranteed. In particular the rules relating to tax can frequently
      change.

•     Any reference to tax or the operation of tax or tax reliefs are illustrative only and the tax
      treatment in respect of any individual depends upon the circumstances of each
      individual.

•     All copyright or other intellectual property rights in the material constituting this
      presentation which has been provided by Wealth at Work Limited remains the property
      of Wealth at Work Limited.


WEALTH at work is a trading name of Wealth at Work Limited which is authorised and regulated by the Financial Services Authority and is a member of the Wealth at work group of
companies. Registered in England and Wales No. 5225819. Registered Office 70 Great Bridgewater Street, Manchester M1 5ES. Calls may be recorded and monitored for security and
training purposes.
Expenditure in retirement


                                    UP   SAME   DOWN

  Mortgage / Loans / Credit Cards

       Household / Utilities

         Food & Clothing

         Motoring / Travel

             Hobbies

             Leisure

             Holidays
Life expectancy

 Examples of non smokers in good health
              Sex       Age      Married     Single
             male        55       80½          78
             male        60       81½          79
            female       55        84          90
            female       60       84½         90½
 For the first time in the UK, pensioners now outnumber the
 number of children under age 16 – Office of National Statistics
         How to increase your life expectancy:
        Men – get married or walk 2.8 miles a day
        Women – divorce him or walk 1.5 miles a day
                   www.calculator.net
Income flexibility




          Acceptable
         Income Level
                         State Pension

£          Income
          Provision




    50     55      60   65     70        75   80   85   90
                              Age
Can I afford to retire?

 What will I have to spend?
 While working for BT you typically pay:
 •   Income Tax
 •   National Insurance
 •   BT Pension contributions
 •   BT UK saveshare
 •   Mortgage
 •   Loans

 When retired you typically pay:
 • Income Tax
BT Pension Scheme

 Sections
 • Section A
   • Members who last joined the Scheme before 1st December 1971

 • Section B
   • Members who last joined Section B between 1st December 1971
      and 31 March 1986, or were subsequently readmitted to the
      Scheme

 • Section C
   • Members who last joined the Scheme on or from 1st April 1986
BT Pension Scheme

 Features
 • Section A
   • Normal Pension Age: 60 (all benefits)
   • Final Salary (all benefits)
   • Option to elect for Section B or C terms
 • Section B and C
   • Normal Pension Age:
       •   Pension and lump sum built up before 1st April 2009: Age 60
       •   Pension and lump sum built up from 1st April 2009: Age 65

   • Pension Basis
       •   Pension and lump sum built up before 1st April 2009: Final Salary
       •   Pension and lump sum built up from 1st April 2009: Career Average
           Revalued Earnings (CARE)
BT Pension Scheme

 Section A
 • Pension
    • 1/80th x Pensionable Service x Final Pensionable Salary
 • Lump Sum
    • 3/80ths x Pensionable Service x Final Pensionable Salary
       (i.e. 3 x pension)
 • Benefits reduced by 6%
 • Can elect for Section B or C benefits
 • Example
    • 40 years Pensionable Service and £30,000 Final Salary
    • Pension: 40/80 x 94% x £30,000 = £14,100
    • Lump sum:          3 x £14,100 = £42,300
BT Pension Scheme

 Section B
 Benefits built up before 1st April 2009
 • Pension
      • 1/80th x Pensionable Service x Final Pensionable Salary*
 • Lump Sum
      • 3/80ths x Pensionable Service x Final Pensionable Salary
          (i.e. 3 x pension)
 • Example
      • 30 years Pensionable Service to 31/3/2009 and £30,000 Final
        Pensionable Salary
      • Pension:     30/80 x £30,000 = £11,250
      • Lump sum:          3 x £11,250 = £33,750
 * based on final pensionable salary at date of leaving BT
BT Pension Scheme

 Section C
 Benefits built up before 1st April 2009
 • Pension
      • 1/60th x Pensionable Service x Final Pensionable Salary*
 • Lump Sum
      • By exchanging pension for tax free lump sum
      • Rates depend on age and market conditions
 • Example
      • 20 years Pensionable Service to 31/3/2009 and £30,000 Final
        Pensionable Salary
      • Pension 20/60 x £30,000 = £10,000
      • Lump sum by exchanging pension
 * based on final pensionable salary at date of leaving BT
BT Pension Scheme

 Sections B & C
 Benefits built up from 1st April 2009 (CARE)
 • Pension
    • 1st April 2009 to 31st March 2010 = 1/80th x £30,000 = £375
    • 1st April 2010 to 31st March 2011 = 1/80th x £31,000 = £388
    • 1st April 2011 to 31st March 2012 = 1/80th x £32,000 = £400
                                                          £1,163

    • Lump Sum
    • 3 x pension:      (3 x £1,163) = £3,489
BT Pension Scheme

 Section B
 Pension benefit totals as at 31st March 2012
 • Pension pre 1st April 2009: £11,250*                                          £12,000
 • Pension post 1st April 2009: £ 1,163†                                         £ 1,198
                                                                                 £13,198

 • Lump sum: 3 x pension (3 x £13,198) = £39,594


 * Based on final pensionable salary at date of leaving BT
 †   Increased at the lower of RPI or pensionable salary increases - assumed @ 3% RPI
BT Pension Scheme

 Section C
 Pension benefit totals as at 31st March 2012
 • Pension pre 1st April 2009: £10,000*                                          £10,667
 • Pension post 1st April 2009: £ 1,163†                                         £ 1,198
                                                                                 £11,865

 • Lump Sum
         • Built up before 1st April 2009: by exchanging pension for cash
         • Built up from 1st April 2009: (3 x £1,198): £3,594
 * Based on final pensionable salary at date of leaving BT
 †   Increased at the lower of RPI or pensionable salary increases - assumed @ 3% RPI
BT Pension Scheme

 Increase your retirement benefits
 • You can increase your retirement benefits by paying
   Additional Voluntary Contributions (AVCs)
 • Contributions receive tax relief, within limits, and grow
   free of most taxes
 Section A & B
 • Added years – additional years of pensionable service
 • AVCs – contributions are invested in a defined
   contribution fund
 Section C
 • AVCs – contributions are invested in a defined
   contribution fund
BT Pension Scheme

 Increase your retirement benefits
 Example Sections A & B
      •   Pension                              = £10,000 p.a.
      •   Lump Sum                             =   £30,000
      •   Maximum Lump Sum                     =   £55,000*
      •   Amount of AVCs paid in               =   £12,000
      •   Maximum lump sum is now              =   £58,000*
      •   Normal lump sum plus AVCs            =   £30,000 + £12,000 = £42,000
 This is less than the maximum permitted lump sum, therefore
 all the AVCs can currently be withdrawn tax free!!!
            but the actual cost to you was only £9,600!!!
                            (or £7,200 for a 40% taxpayer)
 * actual amount may vary according to age
BT Pension Scheme

 Early Retirement
 • Benefits accrued to 31st March 2009 have NPA of 60

 • Benefits accrued from 1st April 2009 have NPA of 65

 • Early payment reduction factor approximately 5% for each
   year before NPA
BT Pension Scheme

 Easement
 • Early payment reduction based on NPA of 60 for ALL
   the pension

 Conditions for Easement
 • Must leave BT before 1st April 2012
                    and
 • Must draw pension immediately on leaving
BT Pension Scheme

 Easement
 Example of early retirement at age 57 in March / April 2012
 Earned pension to 31/3/09:                     £12,000
 Early payment reduction (16%):                 £ 1,920
                                                £ 10,080
 On 31st March 2012
 Earned Pension to 31/3/12:       £ 1,198
 Early payment reduction (16%): £ 192
                                                £ 1,006
                                         Total Pension    £11,086
 On 1st April 2012
 Earned Pension to 1/4/12:        £ 1,198
 Early payment reduction (35.8%): £ 429
                                                £ 769
                                         Total Pension    £10,849
BT Pension Scheme

 Easement
 Example of early retirement at age 57 on 31st July 2012
 Earned pension to 31/3/09:                    £12,000
                         (16%):
 Early payment reduction (14.4%)                  1,920
                                               £ 1,728
                                                 10,080
                                               £ 10,272
 On 31st March 2012
 Earned Pension to 31/3/12:       £ 1,198
 Early payment reduction (16%): £ 192
                                               £ 1,006
                                        Total Pension    £11,086

 Earned Pension to 31/7/12:         £ 1,331
 Early payment reduction (34.7%):   £ 462
                                                £ 869
                                         Total Pension   £11,141
BT Pension Scheme

 Should I think about taking my pension now?
 Example incorporating easement:

 • Full pension payable from age 60 - £10,000 p.a.

 • Reduced pension payable from age 57 - £8,400 p.a.

 • Does this look like a good deal?

       It depends on how you look at it!
BT Pension Scheme

 Factors to consider
 • When would you prefer to retire?
    • Now or Later?

 • What will be your NET income?
    • Don‟t forget that deductions from pension will be lower than
       deductions from salary

 • Earlier payment of lump sums gives greater personal
   flexibility
    • Repay personal debts / mortgage
    • Investing for the future – more later
BT Pension Scheme

 Increasing pension or non-increasing?
 • Historical increases have averaged 2.9% p.a.
 • Future increases could be more or less than this
 • The calculations will be personal to you
 • Work out where your „income crossover‟ and „cumulative
   crossover‟ points are
 • The more attractive option for “most” people is the higher
   starting pension – it gives more income NOW
 • Everyone has different circumstances and objectives and
   it‟s important to seek guidance
BT Pension Scheme

 Increasing pension or non-increasing?
 Example - 57 year old with 30 years service




Pension
 £10,265
 £10,000
  £8,400




                           Income Crossover    Cumulative Crossover
                              11 / 12 years       20 / 21 years
BT Pension Scheme

 Summary of your options
 • Take your accumulated benefits before the normal
   pension age of 65
    • Pre 1st April 2009 pension is only reduced if taken before age 60
    • Post 1st April 2009 pension is reduced if taken before age 65
       (sections B & C only)
 • Easement
    • ALL the pension will have the same early payment reduction
       applied, if you leave BT before 1st April 2012 and take all benefits
       immediately
 • Convert part of your pension which increases, for a higher
   starting pension which doesn‟t increase
    • Gives you more immediate income
    • Can offset the effect of early payment reductions
BT Pension Scheme

 Benefit Statements
 • Current statement at 31st March 2010 available on
   Gatekeeper

 • BT Pension Portal (BTPP)
    • Access through „BT People‟
    • View your pension benefit statement
    • Perform illustrations of how much pension you will receive at
       various retirement ages and with different pension and lump sum
       choices
State Retirement Pension

 • Payable at age 65 to men born before April 1959,
   and to women born between April 1955 & April 1959

 • Women born between April 1950 & April 1955 have a
   retirement age based on a sliding scale between 60 & 65

 • Anyone born after April 1978 will receive SRP at age 68

 • Those born between 1959 & 1978 will have a pension age
   based on a sliding scale between 65 & 68

 • Obtain your State Pension Age from www.direct.gov.uk
State Retirement Pension

 • Basic State Retirement Pension – £97.65 per week
 • Determined by number of years of N.I. contributions
 • 30 years of credits are required for a full pension
 • State Second Pension (S2P) an additional earnings
   related pension
    • BTPS Sections B & C have been „contracted in‟ since April 2009
 • Obtain State Pension Forecasts for you and your spouse
   / partner
    • Online at www.direct.gov.uk
    • Form BR19
    • Telephone 0845 3000 168
Job Seeker’s Allowance

 • Amount of benefit is £65.45 per week
 • Benefit is payable for up to 26 weeks
 • If receiving a pension of more than £50 per week, benefit
   is reduced by the excess over £50

 • If your BT pension is more than £6,004 p.a. you won‟t
   receive any benefit

 • You probably don‟t need to register to obtain NI credits
     • You may have the necessary 30 years credits for the full State
        Pension already
     • Obtain a pension forecast to confirm
Employee share schemes

 UK saveshare – choices on leaving
 Choice 1
 • Provided you have reached age 60 or saved for at least
   3 years – you can use some or all savings and any
   interest to purchase a reduced number of shares at the
   option price, within 6 months of leaving
 Choice 2
 • Withdraw savings and any interest / bonus immediately
 Choice 3
 • Continue saving beyond six month window to end of term
   and benefit from tax free bonus
Employee share schemes

 directshare – choices on leaving
 Choice 1
 • Shares are sold and proceeds sent to participant
 • No Income Tax, National Insurance, or Capital Gains Tax
 Choice 2
 • Shares transferred to EasyShare online share account
 • No IT, NI, or CGT, but future gains are subject to CGT
 Choice 3
 • Share certificate issued on request
 • Tax treatment as for option 2
Principles of investment


 There are only two types of investment .....
                                  ….. secure or risk

 Don‟t put all your eggs in one basket …..
                                        ..... diversify

 If something looks too good to be true .....
                                     ..... it usually is
What are your objectives?


  Access

  Income

  Growth           All from one investment ?

  Security                  Diversify
  Tax efficiency
Asset distribution




                 Access    Income
                                           Tax
     Security
                                       Efficiency

                      Growth



       Balance between the three will depend
       on the Investor’s specific requirements
Matching assets to your needs

 Asset classes
 • Access – cash
    • Deposits
    • „Other‟ cash based investments
 • Income – bonds
    • Gilts
    • Corporate bonds
 • Growth – equities
    • Direct shares
    • Investment Trusts
    • „Pooled Funds‟ e.g. Unit Trusts, OEICs
Investing for growth

 Cash v Bonds v Equities
         Retail Price Index

         Finex Money Deposit 90 days

         IMA Sterling Corporate Bond

         FTSE All Share
Controlling risk



• Single stock concentration

• Single industry concentration     Don‟t put all your eggs ….

• Single geographic concentration            …. in one basket

                                          Diversify
• Currency
How do you actually invest?



• Cash deposit accounts
• Gilts & Corporate Bonds directly
• Company shares directly
• Investment trusts                  Combination
• Tracker funds
• Unit trusts
• OEICS
Taxation

 • Use tax allowances and exemptions
    • Income Tax
    • Capital Gains Tax

 • Avoid tax inefficient wrappers

 • Use tax efficient wrappers
    • Pensions
    • Individual Savings Accounts (ISAs)
Individual Savings Account (ISA)


 • An ISA is not an investment
 • It‟s a „tax wrapper‟
                                         £10,200
                                            up to
                       Cash      Bonds   £5,100 cash
                                         balance in
                                          „stocks
                          Equities
                                             &
                                          shares‟
 • Interest is free of Income Tax
 • Growth is free of Capital Gains Tax
You could start NOW by using your BT shares
Making a Will

 Intestacy

   You unfortunately die without having made a valid will

        Who gets your worldly possessions?

                 Your dependants?

                  Are you sure?
Making a Will

 Tactics
 • Make a will or review an existing one

 • Use a solicitor
    • don‟t use a „Will writer‟ or „do it yourself‟

 • Don‟t „forget‟ anyone – they could contest the will

 • Consider making bequests to people other than a spouse
   or Civil Partner

 • Think about using will trusts instead of absolute bequests
Making a Will

 ‘Other’ planning
 • Consider gifts into trusts now, for the future benefit of
   children or other relatives

 • Review property ownership – tenancy-in-common

 • Using discretionary will trusts could help protect family
   wealth

 • Get advice on effecting a Lasting Power of Attorney
Seeking advice

 Seven Golden Rules
 1. Take advice from more than one specialist adviser who fully
    understands your company‟s pension and share schemes
 Recommendations should:
 2. Be personalised and in writing
 3. Contain a good spread of investments
 4. Be mindful of your personal tax situation
 5. Give clear indications of the method of remuneration for the adviser
    e.g. Fees/commissions AND the actual cost to you directly or
    indirectly
 6. Ask about ongoing service and active management
 7. Take your time – but start planning now!
          Invest in haste, repent at leisure
WEALTH at work

 Specialise in providing financial education, guidance, and
 investment planning advice to employees of large corporations




….and have detailed knowledge of your company benefits….
WEALTH at work

 Our complete planning approach
 • One to one personal consultation to create an individually
     tailored solution
 •   Guidance on BT pension options and share schemes
 •   Integrating the impact of State Pension and earnings
 •   Investing for income using secure investments
 •   Investing for growth with a diversified spread
 •   Guidance on personal tax planning
 •   Personal written investment planning report
 •   No obligation
WEALTH at work

 Our service to you
 A fee based service to:

 • Implement your complete solution
 • Actively manage your portfolio on an ongoing basis
 • Regularly review your strategy, including taxation
 • Provide regular investment valuations
 • Provide regular investment & taxation newsletters
 • Supply annual tax statements

				
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