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People in their 20s save only 2.5% into pensions.  Accordingly, they should increase their annual pension contribution by £22 billion.  This is up from the £2 billion they are currently saving.  Ultimately this would ensure a good standard of living in retirement.  

For those in their 20s, saving into a defined contribution pension, are only saving about £721 per year.  In fact, this only equates to 2.46% of their salary.

Furthermore, the shortfall in private pensions can be estimated based on the frequently used ‘half your age’ rule.  Notably, this recommends saving half your age as a percentage of your salary. So someone aged 26 should aim to contribute 13% of their income.

Other Age Groups are also falling behind

However, this hardly improves as people get older.

Firstly, individuals in their 30s saved an average of £321.  This is well below the recommended £3,800 target.

Secondly, those between 40 and 50 only saved 3.3% of their income.  This equates to only £445 out of a £4,600 target.

Thirdly, those between 50 and 60 saved £557 towards a £4,500 target (see table below).

As a result, the gaps are large in percentage terms.  Ultimately, this shows that many people will considerably drop their standard of living when they retire.

Subsequently, delaying contributions means missing out on the long-term gains from compound interest on early investments. Basically, the earlier you start, the easier it is to save enough.

Age Group	Current total contribution (£bn)	Target total contribution (£bn)	Current contribution per individual (£)	Share of salary contributed	Target contribution per individual (£)
20 to 30	1.9	23.8	221	2.46%	2,639.36
30 to 40	3.00	56.6	321	2.74%	3,759.37
40 to 50	3.8	84.6	445	3.27%	4,596.63
50 to 60	5.1	111.7	557	4.33%	4,484.72
60 to 70	2.1	86.9	279	5.71%	3,452.00

For help with your retirement and financial planning, contact us. For your free initial consultation, call us today on 01603-957599.

People in their 20s save only 2.5% into pensions.

Source: HMRC – contributions to Relief at Source pension schemes by age bracket. Figures calculated by applying the half your age rule to the savings rates of both contributors and non-contributors in the 2022/23 tax year. An average employer contribution of 3% has also been factored into the calculation

Source: HMRC, Source: ONS – average salaries by age group.

Individual targets referenced are based on savings rate recommendations from the Pensions and Lifetime Savings Association (PLSA), combined with salary data from the Office for National Statistics (ONS).

Estates without a valid Will reach 5-year high. Those not leaving a Will but have left assets have risen to 51,140*.  This is up 17% from 43,600 in the previous year.

Hence, estates where the deceased passes without a Will are known as ‘Intestate Estates’.

Grant of Letters of Administration

Notably, if someone dies without a Will, you can’t gain easy access to their estate. Moreover, if they owned assets, such as property, the court must issue a grant of letters of administration. Ultimately, this appoints someone to manage the estate.

In such cases, the court appoints someone to distribute assets.  But they need to follow strict intestacy rules.  Thus, this may lead to outcomes the deceased never intended.  Such as assets passing to estranged spouses and/or distant relatives.  Or, even passing the money to the Crown if no surviving relatives can be found.

Accordingly, the number of grants of letters of administration rose sharply in the last quarter.  In brief, up 27% to 16,090, from 12,680 the previous quarter.

In particular, many people delay writing a Will because they consider themselves too young.  Similarly, they do not wish to consider their end-of-life plan.  But, this can lead to legal and personal complications for loved ones left behind. 

Intestacy Rules

Notably, intestacy rules prioritise blood relatives.  Yet, makes little to no provision for unmarried partners.  As such, loved ones may miss out on inheriting property and possessions.  

Under intestacy rules: 

• If the deceased was married or in a civil partnership. Their spouse or civil partner would inherit the first £322,000. 
• The remainder is divided equally between the spouse and any children. 
• If there is no surviving spouse or children, a strict hierarchy of relatives is followed.  This may bear little to no resemblance to the deceased’s personal wishes.

In summary, intestacy cases are likely to rise as more individuals die owning property.  As such, this typically requires a grant of letters of administration.

For help with writing your Will, call us today on 01603-957599. For your free initial meeting, contact us.

*Source: Ministry of Justice, 2023/24 vs 2022/23, year-end Q3 2024

Children and savings. In the UK, there are over 400 Junior ISA accounts, with a value of at least £100,000. 

What is a JISA?

A JISA is a child’s savings account that can be stocks and shares or cash. There is an annual allowance of £9,000.

Children and savings

Across the UK, many parents are setting their children up with savings to access when they reach adulthood.   Ultimately, there are 2,170,000 JISAs held. Notably, they shall pass to the child once they reach the age of 16. In summary, these contain an average value of £4,370. However, the majority of accounts have up to £25,000 saved:

Market Value Range	Number of Junior ISA accounts
£0 – £24,999	2,100,100
£25,000 – £49,999	55,400
£50,000 – £74,999	11,800
£75,000 – £99,999	2,400
£100,000+	400

Clearly many people are utilising JISAs.  Yet, while the majority of accounts hold under £25,000, there are over 400 JISAs with balances exceeding £100,000. Thus, this highlights the potential for JISAs to grow into significant sums over time. Moreover, especially when contributions are made consistently, and investments are given time to mature.

As children gain access to their JISA funds at 18, parents need to ensure their children understand the value of saving. Also, there is a need to make informed financial decisions before committing a vast amount of cash. Therefore, prioritising financial education from an early age can help young people manage their money wisely.

Who can pay into a JISA?

Only parents or a guardian with parental responsibility can open a Junior ISA for under 16s.  Children aged 16 and 17 can open their own Junior ISA. Once the JISA has been set up, anyone can contribute, including parents, grandparents, friends, and relatives.

When can a child access their JISA?

The child can take control of the JISA at age 16, however, funds cannot usually be withdrawn before age 18.

Contact us for help with your and your family’s financial and retirement planning. Call us today on 01603-957599 for your free initial consultation.

Do you understand your pension? A recent survey of over 2000 UK adults showed widespread confusion about pensions. While more than half (53%) claim to be knowledgeable about pensions.  Yet, only a third could correctly identify what a Defined Benefit (DB – 35%) or Defined Contribution (DC – 34%) scheme is.  Furthermore, 20% didn’t know what type of pension they hold. 

Those aged 25–34 appear the most confident.  With 76% saying they were sure they knew what they needed about pensions. However, this confidence doesn’t necessarily equate to understanding.  For example, just 44% of this age group can correctly identify the characteristics of a Defined Benefit (DB) pension.  In contrast, only 45% know the features of a Defined Contribution (DC) scheme.

Ultimately, these findings point to 5 core pension steps that could help you better prepare for your financial future.

1. Understand your pension

Defined Benefit and Defined Contribution schemes have different structures and benefits. A DB scheme promises a specific remuneration at retirement.  Notably, this is often based on your salary and years of service. Whereby a DC scheme’s remuneration depends on the contributions made and investment performance. Hence, knowing the type of pension you have should help you plan your finances more accurately.

Meanwhile, a workplace pension is where employees save for their retirement through a scheme arranged by their employer.  A percentage of your pay is automatically deducted and put into the pension scheme. Furthermore, your employer also contributes to the pension, and you receive tax relief from the government. 

2. When can you access your pension

Understanding when you can access your pension is key.  Whether this is through your workplace scheme or the state pension. Ultimately, knowing when you want to retire helps you plan how much you’ll need to save. And how long you have to build up your pension pot.

3. Understanding tax relief

Pension contributions also come with tax relief. However, more than half (57%) did not know that the government contributes to pensions in the form of tax relief.  In particular, just 7% knew that the minimum level of tax relief starts at 20%.

Subsequently, a quarter (25%) of people with a pension have increased their contribution.  But nearly 18% of those who haven’t changed their contribution levels said they were unaware they could.

4. Manage your pension

While one in five (19%) people actively manage their pension investments.  Over half (55%) said they don’t know how their pension is invested. Moreover, the majority (81%) have never changed their investment strategy.  And 25% of those say it’s because they don’t know enough, or didn’t realise they could.

Understanding how pensions are invested is crucial for long-term growth. Different investment strategies can impact the growth of your pension fund.  So, risk tolerance and retirement goals are important considerations for your pension plan. 

5. Consolidate your pensions

Lastly, more than 69% of people have between 1 and 5 pension pots.  Moreover, a further 20% are unaware of how many they have. Of those who do know where their pensions are, nearly 35% don’t know how to access them. As a result, only 15% have consolidated their pensions.  Meanwhile, a further 46% are interested in consolidation, but unsure how to proceed.  Thus, bringing multiple pensions together can significantly help simplify retirement planning and reduce fees.

Do you understand your pension? Contact us for help with your pension and retirement planning. Call us today on 01603-957599 for your free initial consultation.

Inheritance Tax Planning. More and more people are concerned that they will pay inheritance tax on their loved ones’ estates. Ultimately, this can be a huge shock to bereaved families.  Moreover, this can often be a direct result of increases in property value.

Accordingly, are you aware:

• Inheritance tax is a 40% tax paid by your heirs.
• Meanwhile, the current nil-rate band (2024//2025) is £325,000. Besides, there is an additional £175,000 allowance if you leave your primary property to a close family member.
• Furthermore, if you leave your estate to your spouse, they will not have to pay any inheritance tax.
• You can inherit your spouse’s nil rate band and property allowance if they have not used them. Subsequently, meaning there is a potential for a £1,000,000 estate to be inherited tax-free.
• Consequently, it is possible to take out a life insurance policy to cover a potential inheritance tax liability.
• Also, you can make a charitable donation to reduce the value of your estate.
• You can make small annual gifts within the tax allowance.  In fact, this can be a lovely way to help those important to you.
• Additionally, you can decide to gift larger assets to your beneficiaries while you are still able to see them benefit

1. Utilising your Nil Rate Band:
   1. Each individual can pass on £325,000 tax-free.  Married couples have a combined allowance of £650,000.
2. Using the Residence Nil Rate Band:
   1. Leave your primary residence to direct descendants.  With the £175,000 allowance; the tax-free threshold for married couples is £1,000.000.00.
3. Using your Gifting Allowance:
   1. Gift up to £3,0000 annually tax-free.  Plus smaller gifts of £250.00 per person and tax-free wedding or civil partnership gifts.
4. Planning larger gifts with the 7-year Rule:
   1. Gifts exceeding exemptions become IHT-free if you live 7 years after gifting.  With taper relief reducing liabilities between 1-7 years.

Contact us for help with your inheritance tax planning. Call us today on 01603-957599 for your free initial consultation.