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20/03/14How was it for you?

How was it for you

The Budget I’m talking about!

My first blog gets to be about the Budget, which up until recently, was about as exciting as watching paint dry…Maybe some of you think it still is!!!

Well there were some humdingers in there for my industry, which certainly got people talking down at Buckden Marina where I have my morning swim & if something makes you want to talk to strangers about it, then that’s got to be good even for our well being.

So, first off, Pensions

Being able not to use an annuity is no big news. In recent times, you’ve always had the opportunity to change schemes and use an alternatively secured pension-I’m not saying that it is or isn’t right, I’m just saying regardless of the scheme you have, you can always avoid using an annuity. What got people talking was that the chancellor came out & said it!

While we’re on the pension theme, we saw 2 other major changes:

first, was the ‘small pot’ situation. Currently, those with up to £15k in up to two schemes, could take a quarter of the value tax free & the remainder also as cash, but taxed at your highest marginal rate. The chancellor doubled that to £30,000, which could be held in up to 3 schemes-that number is significant, as its estimated the majority of people with a personal pension (that’s to say not a big public or private sector pension) have an average value of £30,000. That’s great news, because with a fund value of £30k, once you take your cash entitlement of £7,500 the remainder might provide you with £100 per month.

The second change was the ability to take the whole enchilada-yup the whole pot & do what you want with it. So you take your tax free cash entitlement of 25%, then the remainder is taken with a tax rate of 20% as opposed to a whopping 55% as it is currently.

Now, on the surface, this sounds great-but beware. The natural tendency for those who have had to tighten & tighten & tighten the belt when they get a lump sum of money is to whoooooooosh! let out the belt! so is this new relaxation rule ‘Quantitative Easing’ in disguise? could be…but I think we’re all a bit more savvy, after all, if we spend it all, we only have our state pension to fall back on & I know what most people think about that! But, it does give the retiree a fantastic array of choice, which can lead to a headache, so I was delighted to see that the Chancellor is looking to back ‘Free Financial Advice’ to those who’ll need it most.

Most of these new changes come into force from April 2015, so only time will tell as to what further changes-if any are made.

Savings

Whether George Osborne pandered to UKIP or the ‘Silver Pound’ his changes to ISA’s & the re-introduction of ‘Pensioner Bonds’ was genius. For far too long the ‘Silver Surfers’ have had to put up with the whammy of financially helping their children & grandchildren as well as suffering a major minus growth figure when you take inflation into account. Not everyone finds it easy to invest in anything other cash deposits, so to finally see a more generous allowance-& simplified at that-along with the planned pensioner bonds (rates were muted at 5% but that remains to be seen), was really good stuff.

Now I could go on & on about other aspects, but hey, we’ve only go so many minutes to eat a sandwich or have a cup of coffee, or if you’re my eldest daughter, take the ‘phone to the loo (but don’t drop it in as she did!) so lets wrap this up…

A budget cannot as we know-please everyone. Its the 3ft duvet on a 4ft bed, you cover as much as you can. Yes, some will say minimum wage needs to be a lot higher, housing needs to be lower, benefits higher & don’t ravage & cut local authorities budgets….I have to say, I believe, if you can build a road, you then need houses, shops, businesses etc; & whilst not perfect by any stretch of the imagination, it will be interesting to see how much is achieved, before we scratch our heads & vote again.

Thanks for reading & see you soon,

Victor

I'm on a mission to de-mystify financial services

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