Archive for December, 2013

Helping with the cost of Care

Posted by Sam Binstead

The cost of care in later life can sap your lifetime savings, force you to sell your home and leave you with very little to pass on to your children. It is a worry for many people and although funding from the local authority is available, it only comes into effect when you have less than £23,250 of assets remaining.

Parliament is currently considering a proposal which tries to protect people’s savings and homes from unlimited care costs by offering a ‘fairer capped funding system’. If it is passed, by 2016 it could give you more options when looking at funding long term care. The Care Bill proposes the following for those people needing to fund their own care:

  • Local authorities will help with the cost of care sooner through changes to the means tested capital limits
  • A cap on the total amount you have to pay for care will be introduced
  • The ability to defer the payment of care costs for everyone allowing you to keep your home

Those are the headlines but is it all as good as it sounds? (more…)

Planning for long term care

Posted by Sam Binstead

Over the past few years, we have become all too familiar with the effects of an ageing UK population on pensions funding and the gap in state benefits. However, there is another serious issue at stake and it is one that, all too often, is not considered until it becomes an acute problem – the older we grow, the more healthcare we are likely to need. Furthermore at the same time as the state is becoming increasingly concerned about demands on its funds, the cost of long-term care is rising.

Many people are therefore looking for ways to help prepare for such an eventuality, either through a pre-funded insurance policy or, if the situation has already arisen, through an immediate care plan. ‘Immediate needs annuities’ can help to bridge the gap between your income and the cost of your care and are designed to help cover the cost of care if you need it immediately. They pay a guaranteed level of income for as long as you live, in exchange for the payment of a one-off lump sum. Pre-funded care plans are no longer available to purchase, although you might have a pre-existing policy that allowed you to insure your future care requirements before they arose. Another possibility would be to consider using your pension pot to buy an enhanced annuity if you have a medical condition, a long-term illness or a lifestyle that could affect your health.

If your income is sufficient or if you have significant savings, you might be able to make any necessary payments for care from your existing resources – in fact, this could well be the most appropriate strategy in the case of short-term requirements.

Above all, however, it is important to plan ahead. Could you – or a family member – need long-term care, either now, or in future?

Do you have the money to pay for long-term care?

What type of care might be required?

What will happen if your care costs increase more quickly than your income?

If you are using your savings, how long will they last?

Could your savings be depleted before your needs cease?

What if you live much longer than expected?

These are common concerns for anyone facing an immediate need for care. Chilvester can help you through the maze. Please contact us for an initial meeting.

UK markets lag during November

Posted by Sam Binstead

Most major equity markets posted gains in November despite some short-term volatility that was primarily triggered by macroeconomic data and speculation about the future path of US monetary stimulus. However, despite mounting evidence the UK economic recovery is gathering momentum, UK stockmarkets lagged most of their developed peers during the month. Over November as a whole, the FTSE 100 index declined 1.2%, the FTSE 250 index fell 0.1%, and the FTSE SmallCap index fell 0.7%.

The Organisation for Economic Co-operation & Development (OECD) has cut its forecast for global economic growth in 2013 to 2.7%, citing weakness in emerging economies, although it believes that growth will pick up by 2015. In contrast, the organisation raised its forecast for UK economic growth this year to 1.4%. Elsewhere, the Office for National Statistics (ONS) confirmed that the UK economy had expanded by 0.8% during the third quarter of 2013.

Rarely far from the spotlight these days, the banking sector attracted a considerable amount of attention during November. In particular, Royal Bank of Scotland (RBS) defied expectations with an announcement it would not divide its operations into so-called ‘good’ and ‘bad’ banks but would instead set up an ‘internal bad bank’. The move did not follow the advice laid out by the Parliamentary Commission on Banking Standards. The credit rating of RBS was subsequently downgraded by Standard & Poor’s (S&P), and was also assigned a ‘negative’ outlook by the ratings agency. As justification, S&P cited the bank’s restructuring plans and also pointed to “considerable uncertainties” over RBS’s exposure to future litigation.

Elsewhere in the banking sector, HSBC announced a 30% rise in third-quarter pre-tax profits that was fuelled by robust performance in the company’s home markets of the UK and Hong Kong. Looking ahead, HSBC sees “reasons for optimism with some evidence of a broadening recovery”. Meanwhile, the Bank of England’s Financial Policy Committee is to consider whether it needs additional powers to control the amount of capital that UK banks must hold on their balance sheets.

Following the high-profile initial public offering of Royal Mail in October, leisure group Merlin Entertainments was floated on the London Stock Exchange during November. The company – whose assets include Alton Towers, Legoland and Madame Tussauds – was floated at a price of 315p per share, which valued the business at almost £3.2bn.

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