THE ANNUAL FINANCIAL HEALTH CHECK

Every year we are all encouraged to have a series of ‘annual check-ups’. We will typically take our car to a garage, to ensure that everything is in good working order. Then maybe a trip to the dentist and the local optician, with many of us also arranging to have a full medical check up – to hopefully ensure everything is in good working order and ready for the year ahead. But what about our finances?? Do they not need exactly the same care and attention, to avoid costly mistakes further down the line??

In this article, we will be looking closely at why we need to review our financial affairs each year and what we can do to hopefully keep ‘on track’ for the future. Let us look firstly at the key reasons why this is now so important for us all….

• Legislative Changes – These can occur typically twice a year, with more and more expatriates being caught in the UK’s ever widening net. For example, are you aware of the recent major changes to the UK Domicile and Residency rules?

• Financial Markets – Ever since the Global Financial Crisis in 2008, investment markets have struggled to adapt to a dramatically different economic climate. The need for continual review and adjustment, therefore, has probably never been greater. When were your investments last reviewed?

• New Products & Services – Each year brings with it new opportunities to minimise tax, whilst simultaneously maximising your investment returns. It is vital, therefore, that you are aware of such opportunities as and when they arise. Who is keeping you up to date with these new opportunities?

Financial Planning is about firstly analysing a person’s current situation, agreeing a strategy to help them to achieve their desired goals and then finally implementing a course of action to hopefully move them forward towards their objectives. But after implementing such a plan of action, it is essential that this is then reviewed on an on-going basis.

For example, someone aiming to sail across the Atlantic, does not just simply look at a compass and perhaps some charts, then set sail and that is that. They analyse all the current conditions, plot a route to take them from A to B, but then continually monitor those conditions, making any required adjustments along the way. It should be exactly the same when you plan your finances and in particular your retirement, or you could well pay a very heavy price at a later stage. So what areas do we need to look at?

How much will you need when you retire?

It is no good just burying your head in the sand and hoping that everything will be alright. The sooner you calculate exactly what you will need when you retire, to maintain a reasonable standard of living AND keep pace with inflation, the better placed you will be to face the future. You will never find people complaining that they have too much money in retirement….only too little.

Do you know how much you have tucked away in UK pension schemes?

Whether you have money in private pensions or in a former occupational pension arrangement, we can help you quantify EXACTLY what is available to you and where appropriate, advise on the transfer out into a qualifying offshore arrangement. With transfer values now at record highs, why delay? Take control of your money NOW.

Have you considered all the possible options to transfer these funds away from the UK?

Since April 2006, expatriates with UK pensions have been allowed to transfer them out of the UK into Qualifying Recognised Overseas Pension Schemes (QROPS). The tax advantages for doing so can be quite significant, so the sooner you free yourself from the UK’s HMRC tax net, the better off you are.

What will these funds give me in retirement?

We can help you to quantify exactly what benefits, both initial tax free cash and income, you can expect in retirement and more importantly WHEN. In addition, with transferred funds, it is possible to access up to 30% of the fund at age 50……PLUS an income of UP TO 3 TIMES that of a UK scheme.

Do you know exactly how much you will get from the state?

One in five people who retired last year will rely entirely on the state pension for their income. This is worrying when you consider 83% of 25 to 54 year olds don’t know the value of their state pension and more than 30% overestimate how much they’ll get. For 2013/2014 the basic state pension will pay up to £110.15 a week. There is a proposal to replace the complex system of basic state pension and additional state pension with a flat rate of £140 a week (in today’s money). Would that be enough to fund the retirement you want??

Is this enough to live on, or can you do anything else?

Obviously for someone who has ceased regular employment or who has already retired, there is very little we can do to enhance their retirement benefits. In such a case, it is more a matter of ensuring that your pension returns are maximised and that you do not pay unnecessary taxation on the resulting benefits. However, for those who still have the means to do so, additional funds can be accumulated through a programme of regular savings. You can then also benefit from compound interest of course, which Albert Einstein once described as “the most powerful force in the universe”.

Is your invested capital keeping pace with inflation?

With the lowest interest rates for over 50 years and current inflation of around 4%, your capital must grow by AT LEAST this amount each year to maintain it’s purchasing power, or ‘real’ value. But how can this all be achieved? We cannot eliminate risk, but we can certainly manage it for you, by helping you to determine an acceptable level of risk.

How do you provide for your family after your death?

You need to make sure that your current / future pension arrangements will provide for your loved ones after your death. UK schemes are subject to a 55% REDUCTION on death, leaving your beneficiaries with less than half of what they should have. This can easily be arranged and again we can guide you through the whole process, to ensure capital and income is available to the right people AND at the right time. For those people with insufficient existing provision, we can also provide cost effective life cover to help eliminate financial hardship upon your death.

Everybody makes mistakes in life – and pensions are no exception. The only difference is you could pay much more – and over a longer time – for pension mistakes than for any other. Why? The latest life expectancy figures reveal 65 year old pensioners today are expected to live off their pension for an average of 21 years (men) and 24 years (women) – nearly a quarter of their whole life. Today more than ten million people in the UK can expect to live to see their 100th birthday – 17% of the population.

Make an appointment NOW for your FREE financial

health check, to see what shape you are really in!!

The above article is reproduced by Asia Pacific Pensions who can be contacted either by email at [email protected] or alternatively by telephone on either 038 074644 or 0800 178 269.

The information provided in this article is not intended to offer advice. It is based on Asia Pacific’s interpretation of the relevant law and is correct at the date of printing this article. While we believe this interpretation to be correct, we cannot guarantee it.