People accessing their pensions on the rise

During Q4 2020, more people accessed their pensions and more money was withdrawn, compared to Q4 2019. A total of £2.4bn was withdrawn from pensions in Q4 2020, a 6% increase from the £2.2bn withdrawn in Q4 2019.

HMRC data indicates that 360,000 people accessed their pensions in the three months to 31 December 2020, up 10% from the same period in 2019, meaning the average amount withdrawn per individual was lower1.

Pandemic impact

There is usually a slight decrease in the number of savers accessing their pensions in the final quarter of the year, meaning that this change in behaviour is potentially a result of the pandemic. With unemployment and redundancies rising, many people may be feeling the need to dip into their pensions, for relatively small amounts in some cases.

Weigh your options carefully

Taking money from your pension may seem attractive in the current climate, but it’s not without its risks. We can help you weigh up your options so that you can make an informed decision.

1Gov, 2021

The value of investments and income from them may go down. You may not get back the original amount invested. Inheritance Tax Planning is not regulated by the Financial Conduct Authority. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.

News in Review

“A huge national effort”

During the May Bank Holiday weekend, a momentous milestone was achieved as the UK surpassed 50 million vaccine doses administered: 34,588,600 first vaccine doses and 15,500,949 second doses. As a result of the unprecedented programme, nearly 66% of the adult population have had at least one dose, ahead of the next stage of the road map on 17 May.

Health Secretary Matt Hancock, commented on the success of the programme, “These jabs are saving lives and helping us get back to normal… I want to pay tribute to everybody involved in this huge achievement – the NHS, armed forces, volunteers, councils, scientists and the British public. A huge national effort.”

This week, EU leaders are meeting to discuss plans for non-essential overseas travel, in a bid to revive the tourism industry. In the UK, the Prime Minister said the approach to foreign travel will be sensible, to avoid “an influx of disease.” In London, G7 Foreign Ministers are meeting for their first face-to-face talks in over two years; led by the UK Foreign Secretary Dominic Raab, discussions will centre around ways to defend international rules from external threats.

Across England, Scotland and Wales this Thursday, voters will be taking to the polls in the latest local elections.

UK trade deal backed by European Parliament

Last week, the European Parliament ratified the post-Brexit EU-UK trade deal, with Members of the European Parliament voting overwhelming in favour, by 660 votes to 5, with 32 abstentions. Boris Johnson hailed the outcome as a “final step in a long journey”, with the trade deal providing “stability to our new relationship with the EU as vital trading partners, close allies and sovereign equals.” Lord Frost, the UK’s Chief Negotiator, said the vote “brings certainty and allows us to focus on the future.” In an address to the European Parliament, European Commission President Ursula von der Leyen, cautioned that the UK will face tough action if it breaches the trade agreement.

Eurozone experiences another recession

As output fell due to lockdown measures, in Q1 2021, the eurozone contracted by 0.6%, the second consecutive quarterly contraction (0.7% in Q4 2020), taking the bloc into a technical recession (two consecutive quarters of negative growth). Many European economies have been severely impacted by a renewed surge in COVID-19 infections and restrictions. In the first three months of the year, Italy, Spain and Germany registered falls in output, while France rebounded slightly, growing by 0.4%. An uptick in growth is expected in the coming months, as vaccination programmes continue and subsequent easing of restrictions support consumer confidence.

Average house price reaches record high

The most recent Nationwide House Price Index shows that last month, annual house price growth rebounded to 7.1%, up from 5.7% the previous month. The data also highlights that prices increased 2.1% month-on-month, the largest monthly increase since early 2004, pushing the average house price to a new record high of £238,831, a rise of £15,916 over the last year. Robert Gardner, Chief Economist at Nationwide, commented, “With the stock of homes on the market relatively constrained, there is scope for annual house price growth to accelerate further in the coming months… Further ahead, the outlook for the market is far more uncertain. If unemployment rises sharply towards the end of the year as most analysts expect, there is scope for activity to slow, perhaps sharply.”

100 days in the job

Last Friday, US President Joe Biden, completed 100 days in office. He has devoted much of the last few months to passing a $1.9trn stimulus bill and deploying the vaccine rollout programme. Other key initiatives over the last three months or so, include re-joining the 2015 Paris Agreement to tackle climate change and setting out a $2trn infrastructure plan. The US economy is rebounding faster than expected after contracting sharply in 2020. Economic growth is expected to surpass 7% this year. Last week, the Federal Reserve kept its target range for the benchmark interest rate unchanged at between 0% and 0.25%, citing the need to continue supporting growth. Chairman Jerome Powell said there were clear signs of progress in the economy but that the recovery is “uneven and far from complete.”

Here to help

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

News in Review

 “We must make decisions that will avoid the worst consequences of the climate crisis”

US President Joe Biden has pledged to cut his country’s carbon emissions by 50-52% compared to 2005 levels, by the year 2030. The President unveiled the new target during his opening remarks at a two-day virtual Climate Summit, which started last Thursday to coincide with Earth Day. Mr Biden said there was a moral and economic imperative to act, adding, “Scientists tell us that this is the decisive decade – this is the decade we must make decisions that will avoid the worst consequences of the climate crisis.”

Boris Johnson, who was among 40 global leaders to attend the virtual summit, described the announcement as “game-changing”. The Prime Minister also stressed the UK’s commitment to tackling climate change and in his concluding remarks said, “Let’s use this extraordinary moment and the incredible technology that we’re working on, to make this decade the moment of decisive change in the fight against climate change and let’s do it together.”

Strong economic recovery predicted

On Monday, the EY ITEM Club released its latest economic projections which suggest the UK will grow at its fastest rate on record in 2021. The forecasting group said the economy had proven “to be more resilient than we ever expected” and upgraded its growth prediction for this year from 5.0% to 6.8%. The body’s Chief Economic Adviser, Dr. Howard Archer, said the forecast implies the economy will “emerge from the pandemic with much less long-term ‘scarring’ than was originally envisaged and looks set for a strong recovery over the rest of the year and beyond.”

Vaccine rollout continues

A key factor behind the recovery prospects is the successful vaccination programme, with over half of the UK population now having received a first dose. Earlier this week, Health Secretary Matt Hancock confirmed the country remains “on track to offer a jab to all adults by the end of July.” There was also further good news on the vaccine front with Fujifilm Diosynth Biotechnologies saying its Billingham plant was on track to produce 60 million doses of the new Novavax vaccine.

COVID – second wave in India

Meanwhile, in India the COVID death toll has sadly surpassed 200,000, as the country continues to struggle with a devastating second wave. The capital Mumbai and the western state of Maharashtra have been especially impacted. International efforts are underway to provide critical medical supplies and oxygen.

Borrowing at peacetime high

Amongst a raft of economic statistics released in the last seven days, public sector finance figures showed government borrowing at its highest level since the end of World War Two. During the first full financial year of the pandemic, Office for National Statistics (ONS) data showed the government borrowed £303bn, nearly £250bn more than in the previous fiscal year. Despite this record figure, the data was better than expected, with the 2020-21 annual total £24bn below the Office for Budget Responsibility’s forecast produced in March.

Sales recovery; inflation higher

The latest retail sales statistics, also published last Friday, showed February’s partial recovery continued last month. According to ONS data, total sales volumes rose by 5.4% in March, with the clothing sector the biggest beneficiary, as shoppers purchased new outfits before lockdown restrictions started to ease. In addition, ONS reported a rise in purchases of mobility equipment as older people ventured out more following their vaccinations, along with an increase in sales at garden centres.

Last week also saw release of the latest inflation data, with an increase in the cost of fuel and clothes pushing the Consumer Prices Index (CPI) up to 0.7% in March, from 0.4% the previous month. While the rise was slightly below expectations, economists continue to warn of mounting inflationary pressures, which could push the CPI rate above the Bank of England’s 2% target later this year.

Housing market sees sales surge

Data published last week also revealed a buoyant housing market as buyers and sellers rushed to complete deals ahead of the original Stamp Duty holiday deadline. HMRC figures showed there were 180,690 property transactions in March, the highest monthly total since records began in 2005, while ONS data showed this fevered activity pushed up property prices with the average UK house price in February 8.6% higher than a year earlier.

Here to help

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

Vaccine sparks optimism among investors

Spring has arrived and, for the first time in what feels like a long while, hope is in the air – and we are all certainly in need of it. Positively for investors, the signs are looking increasingly optimistic, with belief growing that we are making our first steps toward meaningful economic recovery.

The rapid development, approval and rollout of several effective coronavirus vaccines has sparked hope that restrictions can soon start being lifted as per the government’s ‘road map’. Recent research has also shown encouraging signs that, as well as protecting vaccinated individuals, the programme will also slow transmission within communities. This has sparked hope of a powerful surge in economic activity in the near future as restrictions ease.

Recovery goes global

Vaccine programmes aren’t just causing a renewed surge of positivity in the UK; the International Monetary Fund’s latest forecasts suggest that the global economy is projected to grow by 5.5% this year. This represents an upward revision of 0.3% from the IMF’s last projection in October 2020. Vaccine-related optimism was also behind a strong inflow of equity funds across the final quarter of 2020.

Could rates go negative?

The Bank of England held interest rates steady at 0.1% in February, but it gave banks and building societies a six-month period to prepare for such a possibility. If introduced, sub-zero rates would further reduce the incentive to save on deposit, potentially increasing demand for shares. And, consequently, this would place even greater emphasis on investment portfolios.

Spring clean your finances

The future of the economy remains uncertain, but there are positive signs for investors. So, it’s more essential than ever to ensure your investment portfolio is working for you. Now could be the perfect time to undertake a review of your portfolio and rebalance the allocation of asset classes as required, ensuring your investments are well-diversified and performing in line with your long-term requirements and objectives.

The value of investments and income from them may go down. You may not get back the original amount invested. Inheritance Tax Planning is not regulated by the Financial Conduct Authority. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.

Your mortgage options during a divorce

Divorce can be an incredibly stressful time for couples and the financial impact it can have only adds to the pressure. Unfortunately, many family lawyers are predicting the stresses of the last few months to result in a post-lockdown divorce boom.

For couples who own their home, one of the biggest decisions they face is what to do with the property.

Options available to you

One option is to put the house on the market and split the proceeds of the sale between you. However, it’s important to remember you will need to cover the costs of selling up, including estate agent and solicitor fees. You’ll therefore need to ensure you have enough equity in the property to make this option worthwhile.

If you don’t own much equity or one of you wants to stay in the property, another option is for one partner to buy out the other. Before doing so, however, the partner remaining in the home will need to weigh up whether they would be able to get a mortgage on their single income, and whether they could cover the costs of running and maintaining the property.

Seek advice

We understand that going through a divorce can be a difficult time, which is why we’re here to explain the financial options available to you and help you make the right decision, so please get in touch.

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments. You may have to pay an early repayment charge to your existing lender if you remortgage.

At sea with your finances?

If you feel a little at sea with the financial basics, you’re certainly not alone – and yet many people are needlessly ashamed of their lack of financial understanding.

A recent study1 revealed that 55% of adults struggle to open up about money, with nearly one in five (18%) citing shame or embarrassment as the primary reason, followed by not wanting to burden others (18%) and 15% feel it causes stress or anxiety. We’re here to tell you that nobody is expected to know everything about their finances.

If you’re concerned about your finances or need help with basic financial topics, we aren’t here to judge. We’re on hand with simple, jargon-free advice that will provide you with the confidence and understanding you need to take control of your finances once and for all.

1Money and Pensions Service, 2020

The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.

Scottish Budget Update

On 28 January 2021, Scottish Cabinet Secretary for Finance, Kate Forbes, set out the government’s proposed spending and tax plans for 2021/22. Speaking almost a year after Scotland’s first COVID-19 case was identified, she told MSPs that the “pandemic has shaken our society and economy to the core.”

Ms Forbes stated that the Budget would address “three key priorities” for Scotland’s future, these being:

  • Creating jobs and supporting a sustainable recovery
  • Responding to the health pandemic
  • Tackling inequalities.

She added that certain assumptions had been made when drawing up the Budget, due to the fact that the UK Budget was not taking place until March.

The economy and business

To support businesses and economic recovery from the coronavirus crisis, the Finance Secretary announced measures including:

  • Total investment of £1.1bn in jobs and skills support
  • The launch of a five year £100m Green Jobs Fund and commitment to establish a Green Jobs Workforce Academy
  • Doubling of the Local Authority Discretionary Fund to £60m.

Personal taxation

The Finance Secretary told MSPs that now was the time for “stability, certainty and targeted support” so there would be no changes to Income Tax rates. The thresholds for each tax band would, however, increase in line with inflation, as follows:

  • Starter rate of 19% payable on earnings over £12,570, up to £14,667
  • Basic rate of 20% to be charged on earnings over £14,667, up to £25,296
  • Intermediate rate of 21% to be paid on earnings from £25,296, up to £43,662
  • Higher rate of 41% on earnings over £43,662, up to £150,000
  • Top rate of 46% on earnings over £150,000.

Meanwhile, the cut to Land and Buildings Transaction Tax (LBTT) for homebuyers, which was announced during the first lockdown, is due to end on 1 April. The Scottish Government has been under pressure to extend the tax ‘holiday’ after Chancellor Rishi Sunak announced that the equivalent scheme in England is to be extended until the end of June, but at the time of writing, this has not occurred.

COVID-19 and healthcare

Ms Forbes expressed gratitude for the dedication of Scotland’s health workers throughout the pandemic, saying “When the history of this pandemic is written, our NHS and social care staff will be recognised as the undisputed heroes they are. I’m sure I speak for everyone in this chamber – everyone in this country in fact – when I offer them our heartfelt thanks.”

In recognition of the ongoing severity of the pandemic, Ms Forbes announced:

  • £869m to support Scotland’s response to COVID-19,
  • £1.9bn for primary care
  • £143.5m in funding to tackle alcohol and drugs issues – a £50m increase
  • £1.1bn spending on mental health services – a £139m increase.

Tackling inequality

Education, the Finance Secretary stated, is the best way of addressing inequality and she announced:

  • £2.7bn across education and skills, including £1.9bn for universities and colleges
  • Support for Gaelic education to remain steady at £25.2m
  • £39.8m for the early learning and childcare (ELC) programme.

Transport, infrastructure and connectivity

Aiming to reduce Scotland’s reliance on cars and to offer a more environmentally sustainable form of mass transport, a £1.6bn investment in the country’s bus and rail services was announced, in addition to the following:

  • Increase in spending on motorway and trunk roads from £748.9m to £825.9m
  • £10.5m for the National Islands Plan, which is designed to tackle depopulation and improve transport links
  • £102.7m for digital connectivity, up from £63.4m.

Closing Comments

In closing her Budget speech, Ms Forbes said, “Now, with large-scale vaccination, focused firstly on the most vulnerable, there is some light at the end of the tunnel. This Budget seeks to build on that hope, and by focusing on how we continue to protect, recover, rebuild and renew our country, it seeks to make that light at the end of the tunnel shine that bit brighter.”

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.