Investment Trusts are companies that buy and sell shares in other companies.
When you invest in an investment trust company, you become a shareholder of that company. Your shares will rise and fall in value according to supply and demand for the shares.
Investment trusts enable you to spread risk by investing in numerous other companies - without the hassle of having to buy, monitor and sell shares individually.
Proceeds can be taxable if the investor is a higher rate taxpayer and may also be taxable for lower rate taxpayers.
The money invested is used to buy units in a selected fund. Most insurance companies offer a wide range of funds from low to high risk.
What is it?
A lifetime annuity pays a guaranteed income for your life from the funds you have built up in your pension plan. Your annuity provider will pay you a regular income taxed in the same way as earnings. The amount of income payable is dependent on your age and health, the size of your pension fund, economic factors, the type of annuity and the options you select. You should also be aware that once you have purchased an annuity you cannot cash it in or make changes to your selected options.
Annuity options include:
Single-life or joint-life - A joint life last survivor annuity pays out until the second life dies. It is possible for the annuity to continue at the same level to a survivor but most couples elect for a survivor’s income of between 1/3rd and 2/3rds of the original amount. It is not necessary for a couple to be husband and wife and any person of either sex may be eligible for a survivor’s pension, although it may be necessary in such circumstances to show financial dependency (the rules on who can be paid a survivor’s pension were relaxed from 6th April 2015 although annuity providers will have their own restrictions in place). With some pension schemes a spouse’s pension must be provided. The higher the level of survivor’s pension included, the lower the starting income will be.
Frequency of Income - You may select at the outset how often you want to receive your income payments. Most people choose monthly, but you can be paid quarterly, half-yearly or annually.
Income paid in advance or in arrears - Payments can be made either in advance or arrears. If you opt for monthly income and purchase your annuity on 1st January and you receive your payment on that day, you are being paid in advance. If your first payment is not made until 1st February, you are being paid in arrears. Payments made annually in arrears would give the highest income figure but the first payment would not be received until a year after annuity purchase.
With Or Without Proportion - When you die, an annuity with proportion will pay a proportionate amount to cover the period from the last payment until the date of death. This is most valuable when income payments are made on an annual basis. This option is only available for payments made in arrears. Without proportion represents the cheaper option.
Level, Escalating or Decreasing - A level annuity pays the same amount of income year after year. It pays a higher income compared to the initial starting income available under an escalating annuity, which will take a number of years to catch up and exceed a level annuity. An escalating annuity, on the other hand, is designed to increase each year. The greater the level of escalation chosen, the lower the initial income will be. It is possible to select a fixed rate of increase each year normally in the range of 3% to 8.5%. Alternatively, you can choose to link increases to reflect changes in the Retail Prices Index (RPI) - however, your income is not guaranteed to increase each year as the RPI may not rise and if it did fall, so might your income. Some annuities arising from occupational pension schemes can also escalate by Limited Price Indexation (LPI). LPI means your income increases each year in line with the RPI but only up to a maximum of 5% or 2.5% depending when the pension was earned. It is also now possible to purchase an annuity that has the facility to be decreased.
A guarantee period - If you select a guarantee period and you die within the period chosen, payments will continue for the balance of time remaining. Normally the guarantee period will be either 5 or 10 years although providers are free to offer their own choice of guarantee periods as there is no longer a maximum period set by the government. Remaining instalments would be paid as an income to the nominated beneficiary and would be tax free if you die before age 75 and subject to income tax at the beneficiary’s marginal rate(s) if you die after age 75. The longer the guarantee period, the more costly the option is.
Annuity protection lump sum death benefit - This option allows for a return on death equal to the difference between the cost of annuity purchase and the gross income payments received. If you die before age 75 the payment to your beneficiaries will be tax free and if you die aged 75 or over it will be taxed at the beneficiary’s own income tax rate(s).
Some annuity providers offer annuities which pay you a higher than normal income if you have a medical condition(s) which can affect your normal life expectancy. These are called impaired life annuities.
An enhanced annuity may be available if you smoke regularly, are overweight, if you have followed a particular type of occupation or live in certain parts of the country.
Active Financial Partners Limited (AFP) is a national firm of independent financial advisers (IFAs) who use the whole of market in order to provide the most complete and independent service. AFP provides complete compliance and technology support services to self-employed IFAs across the UK.
AFP is a wholly owned subsidiary of one of the largest wealth management firms in the South of England which has been providing private and corporate wealth management solutions since 2001.
AFP is authorised and regulated by the Financial Services Authority.
Jonathan Hales excels in providing holistic financial planning advice to individuals, families and small businesses. With 7 years industry experience, professional qualifications through the Chartered Insurance Institute, membership of the Personal Finance Society and the Society of Mortgage Professionals, Jonathan can provide the expertise to help you achieve your financial objectives.
Active Financial Partners Limited
Kent Office Address:
77 Gaze Hill Avenue, Sittingbourne, Kent, ME10 4SJ
Telephone us on: 01795 477744 / 07886 516 087
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Telephone us on: 0239 223 9810
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Active Financial Partners is committed to providing a range of financial and investment services for all of our clients, whatever their needs.
Through our; IFA's, recommended business partners, and associates, we are able to provide you with the following services:
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As our homes are the most important asset that we are ever going to own, it is imperative that adequate home insurance is taken out for your property. You will never know when you will need to claim under your home insurance so it is best to make sure you are covered properly.
Statistics show that 1 in 4 people in the UK will get burgled during their lives but people still choose to ignore this and don't get any protection whatsoever. Other unforeseen circumstances such as floods and fire may also wreak havoc among your possessions and by not getting covered properly you are taking a big risk in losing out financially.
There are two types of home insurance;
Buildings insurance is a mandatory condition when taking out a mortgage and lenders will insist that this insurance is in place. This will protect the house being damaged from events which cannot be repaired.
Contents insurance is not usually a mandatory requirement when taking out a mortgage, but it is in our own interest to secure your personal belongings as you have worked hard for them and if anything was to happen then you will be kicking yourself.
Remember, there are many home insurance providers out there and looking for the best cover for your house is important because after all it's your possessions and looking after them should be paramount
Independant Financial Advisor
T: 01795 477744
M: 07886 516087