FREEMASONRY TODAY
Don't be Pressurised
Some useful tips on a range of financial issues is provided by Mervyn Clarke
I have been inundated with enquiries about stakeholder pension schemes and their effect on business. Banks and other institutions are bombarding businesses with literature, much of which seems to imply a panic, which is entirely wrong.
While early preparation is desirable, the deadline is nearly a year away. For instance:
- The deadline by which employers must provide employees access to a stakeholder pension scheme is 8 October 2001, although schemes are already being marketed;
- At the moment there is no compulsion for employers to contribute to the scheme. (Warning! The Government may change this in the future.);
- Subject to certain limits, employees make their own decision about what to contribute, if anything. (I suspect the Government may introduce some compulsion here in the future.) Yet again the employer becomes the unpaid administrator for the Government;
- At present there are a few exemptions, in particular employers with fewer than five employees (again, this may change);
- Remember, employers must not "advise" employees, only provide information. Advice must be given only by persons properly regulated by the Financial Services Authority (FSA).
There are lots of leaflets available, and I recommend a chat with a reliable Independent Financial Adviser (IFA) – don’t allow yourself to be pressurised.
For employees:
- Make a decision as soon as possible about how much money, if any, you want to put on one side in the stakeholder scheme;
- Check your employer has consulted you and provided you with details of the scheme by 8 October 2001. (Best to remind your employer about the need to take action.)
A quick word about IFAs. They have a distinct advantage over the "tied" advisers employed by certain insurers and banks. They can, and should, check for the best terms on offer in the marketplace. But watch out! There are still incompetent people about, and make sure commissions payable are fully disclosed to you. I have never understood why the Government allowed the term "adviser" when commission sales are involved. I have heard many horror stories of vulnerable people being pressurised by banks and building societies despite the regulations.
If in doubt see a properly qualified accountant, who is also an IFA. The monitoring bodies of properly qualified accountants really "jump on" anyone who fails to give proper advice.
Then there is the issue of inheritance tax and wills. Have you recently valued your assets and made a will? Do you know what happens if you die without making a will?
If the answer is "no" to any of these questions, then see an accountant or solicitor specialising in these matters.
Simple will clauses, such as the provision of a "nil band trust" in your will, can potentially save in the region of £90,000 inheritance tax. A properly worded will can help protect your family’s finances at the time when they are most vulnerable.
Is there a good time for tax-effective giving? April 2000 marked the dawning of a new era in charitable giving which enables charities to more readily reclaim the tax on donations. This makes your donation worth much more to the charity, and typically a donation of £50 becomes worth approximately £64. You can also save tax yourself if you are a higher rate taxpayer.
To make matters even easier, contact The Charities Aid Foundation (CAF) on Freephone 0800 993311. They will operate a Charity Card Account for you and direct your money exactly where you want in a tax-effective way.
Mervyn Clarke, FCCA is a Principal of Carlton Baker Clarke of Greenwood House, New London Road, Chelmsford, Essex, CM2 0PP. Tel: 01245 495588, Fax: 01245 495145.
Issue 15, Winter 2000/2001
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