An AAB Wealth advisor can help you plan for redundancy
A new report has revealed just how pressured businesses are after the lockdown.
The Resolution Foundation is a think-tank whose research indicates that as many as one in 20 employees who should have been auto-enrolled into pensions have instead been “under-enrolled” – where cash-strapped employers are paying lower contributions than they should be – or not enrolled at all.
It’s a barometer of the tough times companies have faced in the past year, and the virus pandemic has just been the (black) icing on the cake for them.
It’s unlikely to get any better in the short term, as state support and furlough schemes across the UK are now being scaled back.
It’s no surprise that the spectre of redundancy has also reared its ugly head.
For those affected by it, whether imposed or voluntary, there can be not only financial challenges but also significant mental challenges as well.
Even if we are not immediately threatened by financial dire straits, our general wellbeing, lifestyle and security may be more in need of attention than ever before.
So where do you turn if you find yourself affected by this?
You may not think your financial adviser would be able to help with both aspects, but they can.
One unofficial piece of wisdom in our office is that “the financial lifecycle is a journey, not a destination”. Along the way, the road will have ups and downs but there is one certainty to reassure you: the journey will be safer in the company of a trusted companion who can keep you right by providing essential advice that will help to settle your mind at the same time.
Step one of our “survival strategy” is to sit down with us to review your assets. A few minutes taking a snapshot of where you stand with your mortgage, savings, investments, pension and debts can be time well spent. So few people know what their assets are worth, where their money is invested, and how much they need to saving today to secure their old age.
As an example, let’s delve a little deeper into just one area where a financial review can be of great benefit. Let’s look at how you could consolidate and improve your pension situation with the help of our financial team.
Since 2015, anyone aged 55-plus can access – “draw down” – slices of their pension savings, to live on, reinvest or spend as they wish. Clearly, this could appear to many to be an attractive option in a redundancy situation. It can buoy you up, secure the immediate financial wellbeing and lifestyle of your family, and give you a breathing space while you search for your next position.
However, there are limitations on what you can save into your pension after having drawn down funds and so this is where your relationship with us, your trusted travelling companion, really comes into play.
A quarter of what you draw down is tax-free, but the rest is treated as taxable income. Good advice will mean you understand the implications of drawdown and help you with a strategy that can avoid large and unexpected tax bills.
We can also help you understand another area where transparency is in short supply – the charges involved in drawdown.
There are many charges applied to drawdown products. They vary from one pension company to another and this makes comparing one provider to another quite challenging. The tangle of pensions legislation has become something of a thicket, but having a trusted partner to help you through can make all the difference.
If you wish to have a no-obligation chat to one of our advisers, please contact us at [email protected] or telephone 0131-357 6666. We’d love to hear from you.
Andrew Dines is a director and chartered financial planner at AAB Wealth.