Monthly Archives: June 2022

17% INCREASE IN SUSPICIOUS OR SCAM-RELATED ACTIVITY

Any of us can fall victim to a scam. Scams are increasingly common and many people are caught out. They can be very distressing, and the impact is often emotional as well as financial. If you’ve been the victim of a scam, remember that you’re not alone

Increasingly, scammers are relying on our psychological biases to trick us into handing over important data, financial information and our money. There are a growing number of scams that are harder to identify, with scammers using increasingly complex psychological tactics to ‘socially engineer’ their victims into handing over personal data or money.

Would-be investors are vulnerable to manipulation from scammers when put under time pressure, promised greater returns on investments or contacted by what they think is an authority figure. Research highlights the psychological tricks that scammers use, as data shows a 17% rise in reported scams. The data highlights that almost three-quarters of Britons have seen an increase in suspicious activity and of those who were scammed nearly four in ten (39%) didn’t report it.

Criminals carrying out scams usually apply pressure tactics, illusions of scarcity or pretending to be a trusted authority to ‘socially engineer’ their victims. The findings come as consumer polling shows that seven in ten Britons claim to have seen an increase in suspicious or scam- related activity, but almost a third of respondents (31%) admit they wouldn’t know what to do if they found themselves in that position.

PURCHASE SCAMS

Purchase scams, where people buy goods online which don’t exist or never arrive, accounted for over half (53%) of reported scams – with an average value of £980.

Scammers create a perceived scarcity and therefore ‘value’ in what they are selling to motivate consumers to act quickly and not rely on their better judgment. This might be advertising something as a ‘one-time offer’, a limited edition price or availability, or rushing us into buying something that ‘has’ to be bought now – even if you’ve never seen the product in real life.

You should never be rushed; it’s always important to take the time to check before proceeding with a purchase. If it’s a big-ticket item like a car, unless you’re buying directly through a well-known brand, it’s good practice to see it in person before spending any money.

IMPERSONATION SCAMS

Over two-thirds of Britons (64%) would be more likely to comply with a request if they believed it was coming from an institution they knew, such as their bank, the police or even the NHS.

It’s not surprising, therefore, that scammers exploit this insight. In these situations, scammers will harness that sense of authority to instil fear
in their victims – perhaps suggesting their bank account has been compromised, a payment is overdue or that they will be fined if they do not pay the full amount. Psychologically, many of us will take these at face-value if they’re coming from what we believe to be a reputable institution.

Real phone calls from a bank will never ask customers to do things like share their PIN/ security information or to transfer money to a ‘safe account’.

INVESTMENT SCAMS

Investment scams often account for the highest average value type of scam, which is why they’re such enticing options for fraudsters – with £15,788 lost on average to these types of scams in the last quarter.

Investing should generally be a very measured activity and people who are looking to invest their money will often do a lot of research before making their decision, or at least ask for a second opinion. However, scammers are experts at exploiting the fact that people want to grow their assets, and that we can sometimes put our better judgement aside for a high return opportunity.

Worryingly, this is reflected in the research, with three in ten (32%) admitting they would be willing
to go with an investment or savings provider they’d never heard of if they thought the returns would
be higher than those of their existing provider. A further fifth (21%) stated they were unsure, indicating they could potentially be convinced.

Check the Financial Conduct Authority (FCA) website and its warning list (https://www. fca.org.uk/scamsmart/warning-list) for cloned companies to make sure you’re dealing with a genuine company. If you have any suspicions, talk to someone you trust and don’t ignore your concerns. It’s important to ask questions and make sure you feel comfortable in the choices you are making – and remember, if the returns seem too good to be true, they probably are.

WE’RE HERE TO HELP YOU

If you would like to speak to us about any concerns you may have, we’re here to listen to you. To find out more or to discuss your situation, please contact us.

WOMEN HAVE LOWER PENSION POT SIZES IN EVERY AGE BRACKET

The staggering impact of the gender pension gap has been revealed in new research, which shows that women have lower pension pot sizes in every age bracket, with the situation significantly deteriorating as they approach retirement. Worryingly, women on average retire with less than half the income of men.

GENDER PENSION GAP BY PENSION CONTRIBUTIONS:

REDUCTION IN CONTRIBUTIONS PAID INTO PENSIONS
The amount paid in contributions has a big impact on what is received at retirement and the difference between men’s and women’s contribution rates is stark. For most people, the effect of working part-time means a reduction in contributions paid into their pension.

If a person opts to reduce their full-time working hours to three days a week, they might expect their pay and their pension contributions to reduce by 40%. However, because of auto- enrolment (AE) thresholds, the impact could be greater than that.

GOOD FINANCIAL PLANNING

A person earning £30,000 opting to reduce their hours by 40% would see their pay reduce by 40%. However, because of the lower qualifying earnings threshold (LET) under AE, their pension contributions would reduce to around 50% of their full-time value. A worker earning £20,000 would see their pension contributions reduce by over 58%.

Pension contributions are unlikely to be a deciding factor when considering whether to work part-time. What is important is that people understand the long-term impact on their pension when they are making that decision. This is crucial to good financial planning

UPPING PENSION CONTRIBUTIONS

Some people might consider upping their pension contributions, but this would have to be carefully balanced against disposable income. Another option some parents may consider is sharing the caring responsibilities to help spread the long-term financial impact.

One significant change to help women in this position would be to remove the LET. It has the potential for the biggest impact on closing the gender pension gap and has been promised by government for the ‘mid-2020s’.

HOW TO HELP CLOSE THE GENDER PENSION GAP

• If you are working part-time and areautomatically enrolled into a workplace pension scheme, consider increasing your monthly contributions, if it is affordable.

• If you earn less than £10,000 per year, speak to your employer about your options for joining your company pension scheme.

• If you are thinking about reducing your working hours to help balance family life, you might want to consider whether it is better for you or your partner to work part-time. As part of those considerations, you might want to look at which of you gets higher employer pension contributions.

• When it comes to saving into a pension, starting early allows a small contribution to build up over time.

• For those in a long-term relationship, have a stake in your finances. Should divorce ever come into the picture, keep pensions at the forefront of your mind when splitting assets.
• Check your National Insurance record to see if you will get the full State Pension amount when you retire. You need a total of 35 years of National Insurance contributions, or, in some cases, you can apply for credits. If it looks like you might be short, you might have the option to pay to fill in the gaps.
• Apply for Child Benefit even if your overall household income means you need to pay it back through a high-income Child Benefit charge. If you are not working while looking after a child you get State Pension credits automatically until your youngest child is 12 years old as long as you are claiming Child Benefit. If you do not claim Child Benefit you do not receive the credits.
• Talk to your employer about the policies they offer.

TIME TO BOOST YOUR RETIREMENT SAVINGS?
Whatever retirement means to you, we’re here to help you establish a financial plan for the lifestyle you want. To ensure your plans stay on track or for more information, please contact us.

REVOLUTION IN FAMILY LAW FINALLY REMOVES THE NEED FOR BLAME AS A BASIS FOR DIVORCE

No one enters into marriage expecting it to end in divorce. However,
for many couples, divorce is the sad reality. If you are facing divorce, it is important to know that you are not alone. Each year, thousands of people go through the divorce process.

While divorce can be a difficult and emotionally charged time, there
are things you can do to make the process go more smoothly when important decisions need to be made. Keeping a level head to negotiate a fair financial settlement is vital.

NO-FAULT DIVORCE REMOVING THE NEED FOR BLAME
From 6 April 2022 no-fault divorce came into effect in England and Wales. This is a long-awaited revolution to family law, finally removing the need for blame as a basis for divorce. Now the only ground for divorce is that the marriage has ‘irretrievably broken down’.

This means the law no longer requires blame to be apportioned, neither is there any requirement to fit your particular circumstances into one of the five facts that you previously had to prove, i.e. there is no need to cite behaviour or adultery nor wait for the minimum two-year separation period.

MORE AMICABLE RESOLUTIONS FOR PARTIES

In addition, further crucial changes are that the respondent to the divorce is now unable to contest the divorce (the limited grounds to challenge a divorce relate to jurisdictional grounds or validity of marriage). If you and the other party both agree the marriage has broken down irretrievably, then a joint application for divorce can now be made.

IF YOU FIND YOURSELF IN THIS SITUATION, HERE ARE 5 POINTS TO CONSIDER

1. SEEK PROFESSIONAL ADVICE IMMEDIATELY
Seek legal and separate financial advice immediately. Your professional financial adviser can help you draw up a list of joint and personal assets and valuations, so any legal advice you seek is based on accurate information. This can make an appointment with your solicitor more time and cost effective.

You’ll need to draw up a list of assets e.g. first or second homes, pension pots, investments, value of any businesses etc., checking when they were purchased and finding out if they should fall into the category of marital assets. In addition, list all your outgoings both joint and individual.

2. CANCEL ALL SHARED FINANCES

Cancel any financial commitments that might be in a joint name immediately. The more unscrupulous partner could take advantage otherwise and saddle you with debt you are liable for. So cancel credit cards, joint accounts, personal loans and even overdrafts if possible and set up afresh in your own name.

3. TIMING IS EVERYTHING

Although it may be the last thing on your mind, choosing the right time of year to divorce could significantly impact on the financial outcome for each individual. When a marriage or registered civil partnership breaks down, it is likely that tax will not be at the top of the agenda.

Your tax position refers to the amount of Income Tax and Capital Gains Tax you’ll need to pay. During the divorce process, there is a window of time where a spousal exemption applies and then drops off.

4. SPLITTING PENSIONS

When it comes to pensions, finding a way to achieve a clean break so you are not tethered to your partner forever is key. What can be divided depends on where in the UK you are divorcing. In England, Wales and Northern Ireland the total value of the pensions you have each built up is taken into account, excluding the basic State Pension.

In Scotland, only the value of the pensions you have both built up during your marriage or registered civil partnership is considered. Normally, anything built up before you married or after your ‘date of separation’ does not count.

There are two main ways of dealing with pensions at divorce that apply across the UK.

1. Pension sharing is often the favoured way of dividing a retirement fund because it achieves a ‘clean break’. This involves couples splitting one or more pensions. The aim is to ensure that the future incomes of both spouses are equalised. Your professional financial adviser will be able to help you implement any pension sharing order after the splitting process is complete.

2. The second option, pension offsetting, sees pension rights balanced against other assets, such as the home. Typically, if one spouse has a pension fund worth £500,000 and the couple jointly own a property worth £500,000, one may keep the property and the other keep the pension – though things are rarely that simple, so professional advice is key.

5. BUDGET FOR YOUR FUTURE

Whatever happens, your life is going to be very different once the divorce is complete so it’s important to budget for the future life you want to live. Obtaining a copy of your credit report is a good start, so you know what your standing is, especially as many people will need to think about a new mortgage after divorce. A credit report will also highlight any joint lending you might be liable for.

FINANCIAL PLANNING FOR DIVORCE – WHAT DO YOU NEED TO KNOW?
Obtaining professional financial advice can be invaluable in guiding you through the myriad financial decisions from valuing and splitting pensions, financial disclosure and income planning, to valuing investments, managing tax and implementing court decisions to get your finances back on a sound footing. To discuss your options, please contact us.

ENSURE YOUR FINANCIAL SECURITY FOR WHEN YOU MIGHT NEED IT MOST

There are a number of reasons why you might need life cover and critical illness cover. If you have dependents, then it is important to make sure that they will be financially secure if something happens to you. If you have a mortgage or other debts, then life cover can help to pay these off.

Critical illness cover can provide you with a lump sum of money if you are diagnosed with a specified serious illness, which can help to cover the cost of treatment and make sure that you and your family are financially secure.

NOT SO KEEN TO INSURE OUR OWN LIVES

But, according to new research[1], only 32% of people in the UK have life insurance compared to 64% who have taken out an insurance policy to cover their homes. Showing that there is still some truth in the old adage ‘An Englishman’s home is his castle’, it would seem some people place more importance on insuring their homes than their lives.

The figures reveal that whilst we’re happy to protect our latest iPhone purchase (14%), our upcoming holiday from the unpredictability of COVID (21%) and our furry four-legged friends (19%), we’re not so keen to insure our own lives to protect our loved ones.

RELUCTANT TO THINK ABOUT OUR OWN MORTALITY
Indeed, 66% of people aged over 35 do not have life insurance cover, and a further 84% do not have critical illness cover. Whilst 58% of people with pet insurance and 47% with mobile phone insurance have not taken out life insurance.

It is not unusual for people to be reluctant to think about their own mortality, especially younger people in their 30s and 40s. However, it is important for people during the accumulation phase of their lives, which is generally those under 50, to think about protecting their financial journey.

TRANSFER RISK TO AN INSURANCE PROVIDER

Taking out life insurance and critical illness cover can help to transfer risk to an insurance provider. It is a way to help protect the journey towards meeting your financial goals.

Almost a fifth of the respondents (19%) who have life insurance in place said they do not have, or they are not confident that they have, sufficient life insurance to pay off their debts and provide for their dependents should the worst happen.

PROTECT YOUR FAMILY OR OTHER LOVED ONES
Less than half (45%) of those polled say their existing life insurance policy will cover their mortgage and only a quarter (24%) say it would cover their current salary. A further 15% say it will only cover the basic cost of living for their dependents, 4% realised that their current policy covers a previous salary which is lower than their current earnings, and 20% admit they simply don’t know how much their life insurance would cover.

Whether it’s to protect your family or other loved ones, it is important to take professional advice and make a plan, which can be reviewed regularly, to ensure that the people that matter to you are taken care of and that your financial goals can be achieved

MAKE SURE YOUR LOVED ONES ARE LOOKED AFTER, SHOULD THE WORST HAPPEN
We’re here to help you protect your loved ones today, so you don’t have to worry about tomorrow. To discuss your plans or for further information, please contact us.