Old-fashioned pension funds with over £100 billion in assets could deliver much less than retirees expect, according to research by Which?, says the Financial Times.
These ‘lifestyle’ funds typically move assets from ‘risky’ investments such as shares to ‘safer’ assets like fixed interest as planholders approach retirement. But under the new ‘pension freedom’ rules, many people will keep their funds invested and draw an income from them, in which case this type of ‘de-risking’ is likely to result in lower returns and lifetime income. Experts said that while lifestyle funds could still be suitable for younger people, those nearing retirement should review them.
Regulators crack down on landbankers
A firm that lured thousands of investors into buying land on the basis that it would get planning permission lost its case in the Supreme Court, says the Financial Times. The regulator had argued that the company was effectively offering collective investments which the law required to be regulated, but the firm was unauthorised by regulators. Other landbanking firms have closed but new schemes of the same kind tend to recur.
Barclays new 100% mortgage questioned
Barclays is offering 100% mortgages of up to 5.5 times income to property buyers whose parents put 10% of the purchase price into a Barclays account where it has to stay for three years. The rate is an attractive 2.99% for an initial three years with no fee. The only risk to parents’ cash is if borrowers fail to keep up their loan repayments. Experts question whether this a return to the bad old lending ways of the last property boom in 2005-07. The main risk, they warn, is of ending up with negative equity, a risk that rises the higher the proportion of the property value that is borrowed.
Hard-hit savers turn to current accounts
With interest rates on instant access savings accounts and cash ISAs at rock bottom levels, savers are turning to current accounts to earn a bit of interest, says the Herald. Several banks offer current accounts that pay interest up to 5% on balances up to £2,500 provided a minimum is paid into the account each month.
Bank of Mum and Dad lends £5 billion
Research by insurers Legal & General says parents will advance over £5 billion to children this year to help them buy properties, says the BBC. One in four first-time buyer purchases will get help from the Bank of Mum and Dad and the average sum is £17,500. In 2016 over 300,000 purchases are likely to be helped in this way.
Don’t buy rip-off cover
‘Don’t let Parky and Co lock you into their rip-off life cover’ urged the Mail, in a hard-hitting analysis of the Over-50 life insurance policies that are heavily marketed on daytime television with ads featuring celebrities like talk-show host Michael Parkinson. Vouchers and free gifts including plasma TVs are used as incentives, but the plans offer poor value, often paying out less then the premiums that have been paid in. The failure to pay just one monthly premium can mean the plan is cancelled and the policyholder gets nothing.
£64,000 salary to buy average home in 2020
If recent trends in house prices continue, by 2020 buyers will need a salary of £64,000 and a deposit of £46,000 to buy an average home for £270,000 in 2020, says the Mail citing research by housing charity Shelter. In London, first time buyers will need a salary of £106,000 because a typical home will then cost £558,000.
Pension Funds Advice
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About Us: Churchill Wealth Management is a team of independent financial advisors/financial advisers (IFAs) based in Clifton, Bristol. We provide independent financial advice, including pension advice, investment advice, inheritance tax planning and protection/insurance advice.