1.contributing To Pensions Flashcards
How long do you need to have been resident in the U.K. To benefit from tax relief on a pension
At some time during the 5 years immediately before the year in which contribution was made - relief maybe limited to £3600 per tax year
What is ANI
Stands for adjusted net income - this is the total grossed income someone earns includes earnings dividends interest etc - some people loose their personals allowance as their informed over £100,000. Some times pension contributions can reduce your income so less personal allowance is lost .
If income is £123,000 personal allowance is completely lost
What is pension input period ?
And what is the total input amount ?
PIP runs from tax year to tax year end -
It’s is possible that a pension that was open on the 8 July 2015 has 3 input periods , the reason the AA was £80.000 for anyone have a MP scheme at the 8th July 2005 was to avoid a tax charge incase someone had paid in 2 lots of £40,000 Total input amount is the total paid in to the pension whether taxed or not at including growth or premiums paid in the year member does , and contributions made in the tax year benefits are taken if member is seriously ill
Basic state pension
Single tier state pension from 6 April 2016
State pension age
30 NI contributions
If reached state pension age by April 2016
Increase in line with NAE maximum of 2.9%
35 years NIC
MIN 10 yrs NIC
Current males -65 females from 60-65
Dec- 2018Oct 2020 will 66
April 2026 to April 2028 will go up to 66 and 67
Disadvantage of an annuity
Level - eroded by inflation.
No option to stop restart payment - inflexible
Premature death - poor value
GARS - if client decides to take any annuity other than the one in their contract - they can lose guarantees that they had
Investment linked annuity -poor investment can reduce returns
UFPLS
Only bee taken from a uncrystalized unused money purchase fund
Half past nine
Health Atr Legislation Fund performance Pcls/Capital Annuity Spouse Tax New products Income Need for state benefits Estate planning
Investment corridors
70-90 =65%-80%
80-84 = 50%-75%
85-89= 35%-60%
90 + = 20% -40 %
Health expectancy Level of existing investment Atr Experience Capacity for loss Fund selection
What does herding mean
When people imitate others i.e. The purchase of property in Spain in 2007 - people will do it regardless of the risk just because others are doing it
Tactical asset allocation
To maximise short term opportunities favourable currency movement
I.e. If the the asset allocation is 60-70% equities so any change from 65 % is an example of This
Stochastic modelling
When mathematical techniques are pallid to show probable fund volatility
Gives investor a range of plausible future scenarios
It allows investor to make a more informed decision
It provides predictions not certainty
Risk tolerance
Risk capacity
Tolerance- it’s like risk perception often superficial and influenced by recent events and attitude to risk formed by family background education and lifetime experience- changed over time - and should carry out a regular reassessment.
Risk capacity is more objective of the clients ability to withstand losses or shortfalls in returns
