Don’t panic, a lesson from our recent history

Obviously our primary hope, is that the situation in The Ukraine can de-escalate as soon as possible. The people effected are in our thoughts at this time.

My job, however, is to talk to people a little closer to home about the impact on investment markets.

There’s no getting away from the facts, the majority of our investments have seen losses in recent weeks.

So, what do we do.?

My answer is always to stick to the rules



Avoid Greed

Avoid Fear

Take Advice.

The last time we had significant falls in investment values was during the start of the Pandemic.

On March 17th, we wrote to our clients with the following letter.

The current situation regarding Coronavirus and its impact on investments.

We felt it would be a good idea to write to you regarding the current situation on Coronavirus and its impact on investments.

Firstly, our main hope is that the impact of this virus causes the least damage possible and that people are able to continue with their lives.

We continue to follow advice from the Government regarding the office and what we should do. We have put in place measures, so should any of us need to self-isolate we would be able to work from home. We therefore expect to be able to keep the office open throughout.

Regarding investments, this has proven to be a very difficult time and (as ever) the stock market does not like uncertainty. Whilst these are unprecedented times, history tells us, that holding investments for the long term is normally the correct course of action. Short term panic can often lead to poor decisions and losses.

We always believe in long term investing and sticking to the principles of time and diversity whilst avoiding greed and fear.

As always, we will continue to act in your best interest.

6 days later, the world markets bottomed out, and by December that year the majority of our funds had recovered to above their previous highs.

Whether the falls will match those seen in February/ March 2020 or we will need to send another letter remains to be seen.

Nobody has a crystal ball

Budget 2020 – what it means for you

Chancellor Rishi Sunak’s first-ever Budget on 11 March focused on supporting business and the economy, and there was some good news for your savings, pension and taxes.


Tapered annual allowance thresholds raised by £90,000: The ‘adjusted income’ and ‘threshold income’ levels have been increased to £240,000 and £200,000 respectively from the start of next tax year. This is to help reduce the number of high earners affected by the tapered annual allowance, with doctors and GPs particularly in mind.

For those still caught, taper will take effect by reducing the annual allowance by £1 for every £2 of adjusted income over £240,000.

However, the minimum level the annual allowance can be tapered down to is reducing from £10,000 to £4,000. So those with income above £312,000 will only be entitled to a £4,000 annual allowance from next year.

There are no changes to the standard Annual Allowance, which remains at £40,000, or the money purchase Annual Allowance which stays at £4,000 (with no carry forward).

As expected, the lifetime allowance for 2020/21 goes up by CPI.

To address a discrepancy in the level of tax relief that those earning under the personal allowance are entitled to, the Government will be launching a ‘call for evidence’.

The Government is reviewing options to ensure that low earners who are members of pension schemes which give tax relief under the ‘net pay arrangement’ are treated fairly. Under these schemes, the employer deducts an employee’s contribution from gross pay. This means that those with net pay under the personal allowance (after deducting their contribution) currently lose out on tax relief. The aim is to put these individuals on a level playing field with similar employees who are members of a ‘relief at source’ scheme and get basic rate relief on all of their contributions.

Top slicing relief clarification following ‘Silver’ case

The Government has acted to provide additional clarity on the calculation of top slicing relief on investment bonds. HMRC recently updated their guidance on the calculation of this relief and legislation will now be introduced to formally clarify how an individual’s allowances are applied in determining the amount of relief available.

This change comes on the back of the recent ‘Silver’ case. In this first tier tribunal case, the taxpayer successfully argued that when calculating top slicing relief, they were entitled to a full personal allowance because their income plus the average gain was below £100,000 (whereas including the full gain meant their personal allowance would have been tapered to nil).

This position has now been confirmed in legislation and will mean in future the rules are applied fairly and prevent excessive relief from being claimed.

The draft legislation also confirms that, for the purpose of calculating top slicing relief, allowances must be used against all other income before it can be applied to the bond gains.

Income tax

There are no changes to UK income tax rates, bands or allowances, with the personal allowance and higher rate threshold remaining at £12,500 and £50,000 respectively for the 2020/21 tax year.

Capital Gains Tax

The annual capital gains tax allowance will increase to £12,300 for individuals (and personal representatives) and to £6,150 for trustees of settlements, for disposals in the 2020/21 tax year.

Inheritance tax

As expected, the IHT nil rate band will remain frozen at £325,000 until April 2021.

The residence nil rate band will increase from £150,000 to £175,000 from April 2020, delivering on the Government’s commitment to allow some couples to leave an IHT-free inheritance of up to £1,000,000 to future generations.

Good news for family saving: JISA limit increases to £9,000

As expected, the Individual Savings Account (ISA) annual subscription limit remains unchanged at £20,000. However, in a positive move for young savers, the annual subscription limit for Junior ISAs and Child Trust Funds will be increased from £4,368 to £9,000.

The range of ISAs available remains unchanged, with the exception of the Help to Buy ISA, which closed to new investors in November 2019.

National Insurance thresholds increased

Employees and the self-employed will not have to start paying NI contributions until their earnings reach £9,500 (the primary threshold). This change was expected and is in line with the Government’s aim to increase these thresholds to £12,500, the point at which individuals start to pay income tax.

There are no changes to the upper earnings limit of £50,000 (the level at which the rate drops to 2%) or to the contribution rates.

Entrepreneur’s relief limit cut

Entrepreneurs who sell their business could face an increase to the amount of Capital Gains Tax (CGT) they may have to pay. Entrepreneurs relief means that CGT is payable at 10% on gains up to a lifetime limit. This limit is reducing from £10,000,000 to £1,000,000 with immediate effect.

Any capital gains on the sale of businesses which exceed the limit will be taxed at 20% for higher and additional rate taxpayers.

IR35 changes to go ahead

Changes to off payroll working, often referred to as IR35, will be included in the Finance Bill. This will see large and medium sized private companies becoming responsible for making the decision as to whether contractors working for them should be included on their payroll and deduct PAYE and NIC

*Source: Standard Life


Unmarried woman wins automatic right to late partner’s pension in decision that could affect millions

Unmarried partners could be entitled to a “survivors pension” following a landmark Supreme Court ruling yesterday.

A case won by a woman who was denied access to her long-term partner’s pension after he died suddenly will improve the pension rights of millions of unmarried couples across the UK.

Denise Brewster, in her early 40s, argued she was discriminated against after being told she was not entitled to payments from her late partner’s occupational pension because he had failed to sign a form nominating her as a beneficiary.

Such forms are not required for married couples but until now public sector pension schemes and some private sector pensions have demanded them for couples who are not married.

Ms Brewster and Lenny McMullan had lived together for 10 years and owned their own home.

They got engaged on Christmas Eve 2009, but Mr McMullan died suddenly between Christmas night and the early hours of Boxing Day morning.

At the time of his death Mr McMullan had 15 years’ service with Translink, which delivers Northern Ireland’s public transport services. He was paying into Northern Ireland’s local government pension scheme.

Ms Brewster was denied access to her partner’s pension by Translink on the grounds that she and Lenny had been cohabiting and were not married.

She took her case to the High Court in 2012 and won.  But the Northern Ireland Local Government Superannuation Scheme appealed against the decision and in 2013 it was overturned by a two to one majority in Northern Ireland’s Court of Appeal.

In order to take her case to the Supreme Court, Ms Brewster turned to crowd-funding to raise the initial £4,000 required, since there is no Legal Aid available for such cases.

Giving the Supreme Court’s ruling, Lord Kerr said: “To suggest that, in furtherance of that objective, a requirement that the surviving cohabitant must be nominated by the scheme member justified the limitation of the appellant’s Article 14 right, is, at least highly questionable.” He ordered the nomination form to be “disapplied”, arguing there was “no rational connection between the objective and the imposition of the nomination requirement”.

What will the ruling mean for cohabiting couples?

The myth of the ‘common-law marriage’ still pervades, but in reality cohabiting couples have few of the rights of their married counterparts.

For example, should one partner die, the other has no automatic right to inherit from them, even if they have been together for years.

Similarly, if one partner dies, the other is not eligible for any bereavement benefits as they would be if they were married.

This applies even if the unmarried couple have children together.

Yesterday’s Supreme Court decision bestowed on Denise Brewster the same right to claim a ‘survivor’s pension’ as she would have done had she been married to her partner Lenny McMullan.

It’s seen as a landmark case because it could set precedent for future situations where a distinction is made between married and unmarried couples.

It remains to be seen how this will play out in reality, but the decision is bound to be used in future cases to strengthen the rights of unmarried couples, particularly in the case of pensions.




Reasons to not be cheerful

Following on from our blog yesterday, the pound has hit its lowest level against the dollar since 1985, helping the FTSE 100 surge to near record highs.

Sterling fell to its weakest mark against the US dollar for 31 years, sinking to $1.27.46, following the Prime Minister’s confirmation of a timetable for triggering the Brexit process.

However, with a cheaper pound promising to boost earnings, the London share index soared.

Its highest ever intraday level, in April 2015, was 7,123. However, in dollar terms, the FTSE’s value remains well below its referendum result level.

The FTSE 100 consists largely of export-dominated multinationals which make the bulk of their sales in dollars.

A weaker pound is also good news for exporters, as their goods are more attractive to overseas buyers, but it will hurt holidaymakers picking up foreign currency.

Exporters on the mid-cap FTSE 250 helped it reach an all-time closing high of 18,342.

The nature of this week’s sterling movement has been largely attributed to announcements at the Tory conference in Birmingham.

Investors fear a so-called ‘hard Brexit’ with the UK losing access to the European single market as part of plans to clamp down on immigration.

One of the key things that’s weighing on the pound now is we’ve got low interest rates and the market expects interest rates to go even lower in the UK.

Reasons to be cheerful…..

ALL-TIME HIGH: The FTSE 100 just hit its highest level ever!

The FTSE 100 — Britain’s benchmark share index — just hit the highest level in history, smashing its previous record, set in April 2015.

Around 12:05 p.m. BST (7:05 a.m. ET) the index hit 7,128 points, surpassing its previous intraday high of 7,123. That’s an increase of just more than 0.4% so far on the day.

Here’s the chart:

ftse 100 all time high *

Gains are being led by Whitbread, the retail company which owns Costa Coffee and several other major names, and high street stalwart Next. Next is higher by more than 4.2%, while Whitbread is up 3.7%. Retailers are getting a boost on the day thanks to some better than expected data from the British Retail Consortium.

The main catalyst of the gains across the whole index is another weak day for the pound, which has fallen 0.85% on the day so far,  after a report that a so-called “hard Brexit” could cost the Treasury £66 billion per year.  If you discount Thursday night’s “flash crash” — which was reportedly so bad because of low liquidity — there is still a clear downward trend for sterling, with no clear sign of the bottom.

To the uninitiated, a weaker pound might seem like bad news for UK stocks, however around 70% of the revenue of the companies that make up the FTSE 100 is derived from abroad, meaning that when sterling is weak, they make more money. That is because the index is stuffed full of mining companies, oil firms, and pharmaceutical giants who use the UK as a base, but tend to denominate their assets in dollars.

Essentially, when the pound does badly, the FTSE does well, as evidenced by the 19% gain in the index since it crashed on the day after Britain voted to leave the EU.

ftse 100 since brexit

It is also worth noting that when measured in dollar terms, the FTSE is substantially below its all-time high, and actually remains well below its pre-referendum level, as this chart from Sky News last week shows:

ftse 100 dollar denominated Sky News

However, if the FTSE maintains its current level, it will hit an all-time closing high in pure terms, surpassing the 7,103 close of April 27 2015, the same day as the previous intraday high.

Elsewhere in Europe, gains are of a similar level to the FTSE, with major bourses generally climbing between 0.3-0.5% on the day. Here’s the scoreboard:

Screen Shot 2016 10 11 at 12.24.31


Reaction to Referendum Result- Making Your Mind Up!

Yesterday it  seemed clear, polls, betting websites, global stock markets  and currency markets all indicating that we would remain within the European Union.

However in a dramatic night’s compulsive viewing we saw a vote to leave win by a margin of 52%-48%.

So we have voted to leave and the world’s stock markets and currency markets immediately reacted, seeing billions wiped off the price of shares, the pound at a 31 year low against the dollar and strong rumours that we would lose our AAA credit rating.

However following the address from Mark Carney some calm has appeared to return from the initial chaos.

We anticipate that The Bank of England will stand by the necessary contingency plans they advised they had, and have confirmed this morning they will implement. The market will require liquidity and  this may mean Interest Rates cuts and possibly even the re-emergence of Quantitative Easing.

Alternatively a rise in inflation may see a quicker than expected rise in interest rates.

The only certainty is uncertainty.

The majority of our investments are designed to be diversified. Whilst equities have been sold off massively, other asset classes will have rallied.

Should exports become cheaper and imports more expensive in this environment, then markets will pick over the details of this and the winners will emerge.

The media will be full of scaremongering for weeks to come. Many commentators will say rash and unhelpful things. The stock market has already fallen and it does not feel good. However, the losses are only crystallised if you sell.

Do not panic is our advice, markets  have always recovered,  even though these losses could be described as self induced they will behave as they always have done before.

We believe in time in the market rather than timing the market.

Ian, Martin and Will.

The new Lifetime ISA

Available from April 2017, the Lifetime ISA is designed to help the younger generation save towards their first home and their retirement. It can be set up by those aged 18 to 40 and contributions will be limited to £4,000 a year and will count towards the overall £20,000 yearly ISA limit. Any contributions made before the age of 50 will benefit from a 25% government bonus – if the maximum contribution is made in a tax year, this is equal to £1,000.

Withdrawals will be tax-free in three circumstances:

  • For use towards the purchase of a first home worth up to £450,000 (provided funds are not withdrawn in the 12 months after opening an account),
  • For use in retirement from age 60, and
  • For those diagnosed with a terminal illness.

Withdrawals before such a time are possible, however the government bonus will need to be repaid (including any investment return on this) and a 5% charge will be levied on the remainder.

On death, any funds will be treated in the same way as standard ISAs, i.e. they are included in the estate for Inheritance Tax (IHT) purposes. But as per current ISA rules a surviving spouse/civil partner can utilise the ISA value at date of death to make a one off payment into their own ISA and rely on the inter-spouse exemption to avoid a liability to IHT.

Further detail is still expected and the government are considering whether tax-free access should be available for other specific life events and whether to allow borrowing from the fund without losing the bonus, similar to plans available in the US.

There has also been no detail on the decumulation options available in retirement. For example, it is not clear whether it will be possible to use the fund at age 60 to purchase an annuity within the ISA – the announcements state that qualifying investments will be the same as per current cash and stocks and shares ISAs, these rules currently specifically prohibit an annuity as an investment.

Whether or not an individual is better off in the Lifetime ISA as opposed to a pension depends on a variety of factors, including their marginal tax rate during their working life, their marginal tax rate in retirement, the level of employer contributions available and whether pension contributions are made on a salary sacrifice basis or not.

One point where the Lifetime ISA definitely wins over a pension is the charges made for early withdrawal. In the Lifetime ISA, the 25% government bonus and any investment return on the bonus are repaid and a 5% charge on the remainder, making a total of 24%. Total unauthorised payment charges, including scheme sanction charges on a pension would come to 70%.

The Lifetime ISA does not give access to retirement savings until age 60, whereas the Normal Minimum Pension Age (NMPA) is currently 55. But the 2014 Budget announced that the NMPA will be directly linked to increases in the State Pension Age (SPA) and those that are 40 when the Lifetime ISA is introduced next year are unlikely to be able to access their pensions until they are at least 57 anyway. (Note that the legislation linking the NMPA to the SPA was expected in the Taxation of Pensions Act 2014, however it was not included so it could be that this policy will now be withdrawn).

One of the reasons ISAs have been so popular is that the rules are relatively straightforward. Pension legislation has evolved over many decades and even pension simplification hasn’t really simplified that much. Arguably, some of the complexity is necessary though, such as pension sharing on divorce and the protection afforded to pensions in bankruptcy. You would therefore imagine that equivalent rules would eventually be introduced for the Lifetime ISA as well.

Current ISA rules do not allow for annuities to be held in an ISA, meaning that the only way the ISA can be converted into a guaranteed income for life is to move the fund into a purchased life annuity outside of the ISA regime, resulting in part of the income being taxed after all.

Obviously pension savers can already withdraw their entire fund as one lump sum in retirement, but tax tends to act as a brake on withdrawals meaning that many will stagger their withdrawals. This natural brake won’t be there on the Lifetime ISA and there is a risk that savers will run out of money more quickly.

Arguably the bigger risks are that individuals will opt out of auto-enrolment and therefore miss out on employer contributions and that individuals will withdraw large parts of their savings to purchase a first home and then have to start again on their pension savings at a later stage in life.

If an individual starts contributing £4,000 a year from age 18 to age 50, they could contribute a total of £132,000 and gain a government bonus of £33,000. Whilst this sounds like a lot, we know that many will not start saving until much later in their life and there is a question over whether £4,000 a year is really enough to provide a deposit for a first home and a decent income in retirement.

It will be 20 years from the launch in 2017 before any Lifetime ISA savers can use their funds in retirement, who knows what the pensions and ISA market will be like then?


Should we stay or should we go?

Allianz Global Investors have recently produced the article below in relation to the Brexit debate and we thought this was an interesting read.

What does Brexit mean for investors?

Anticipation is growing in advance of the UK’s 23rd June referendum on its European Union membership. The key battle lines for a potential British exit—colloquially known as “Brexit”—have already been drawn on the issues of immigration, political and financial accountability, and bureaucracy. Yet rather than focus on these qualitative and political topics, we find it more helpful to focus on the UK and EU’s distinct perspectives on two separate scenarios: Brexit and Brexin.

Scenario 1: Brexit is approved
The view from the UK:
While bookmakers see only a 25 per cent chance of Brexit, the Scottish Independence referendum of 2014 makes others think differently. Clearly, polls can be misleading and there may be a larger-than-normal group of undecided voters influencing the outcome. If the pro-Brexit camp wins, a range of scenarios could play out in the UK:

  • Domestic political tensions could rise and lead to another debilitating referendum if, despite Scotland’s recent vote to remain in the UK, the UK votes to leave the EU.
  • Uncertainty over treaty renegotiations would lead to less inward investment but not have much immediate impact; both the UK and the EU wish to remain constructive trading partners.
  • Don’t expect a major shift away from London as a major financial centre; the euro zone simply doesn’t have the essential financial and support infrastructure to replace it.
  • Do expect some medium-term consequences if euro-related financing activities are “onshored” to euro-zone countries.

Investment conclusions for the UK:

  • If the Brexit camp wins, the British pound sterling, as well as UK gilts and bonds, would likely come under pressure.
  • A weaker sterling would help FTSE-listed companies that earn significant revenue overseas; many have underperformed due to the strong pound and to commodity market volatility.
  • Brexit would generally be more positive for UK equities than bonds

The view from the EU:
Brexit would undoubtedly be a blow to the prestige of the European vision at a political level, but it could allow an easier transition to “the United States of Europe” as fiscal unification and the establishment of a transfer union become easier. Indeed, Brexit may prompt serious reflection by some member states about the future of Europe, and this could lead to a clearer vision for all.

However, if other countries feel the UK cherry picked its membership and relationships, there may well be more political strife – particularly with migration increasing the popularity of nationalist politicians, especially in France; and with new evidence that Germany is making unilateral decisions for Europe, as it did with Turkey.

Europe has less at risk economically from Brexit than the UK, but that could change if political conditions worsen. Nevertheless, the current arguments against Brexit may be too apocalyptic.

Investment conclusions for the EU:

Brexit could be a “Pandora’s box” for the EU as a whole; if other countries see their own exits as viable policy options, we may see wider fixed-income spreads and greater asset-price volatility in at-risk countries.

If a pro-Brexit vote prompts countries to test the idea of leaving the euro, that could lead to volatility and an opportunity to invest in attractive assets at lower prices.

Scenario 2: The Brexin camp wins
The view from the UK:
A “no” vote on Brexit, which we believe is the more likely outcome, would be positive for internal investment, since the UK has one of the most competitive and flexible European labour forces, and positive for the political credibility of Europe. Moreover, Prime Minister David Cameron would remain in charge, which would ensure policy continuity for four more years. The UK would still wrestle with many policies that the EU wants to implement, but it is easier to advocate policy from within than without. Throughout this time, we expect the Bank of England to stand pat on monetary policy.

Investment conclusions for the UK:

  • Much uncertainty would be removed and the risks around both trade and the role of London would be clarified.
  • The UK would remain able to shape the future of the EU and to promote the much needed reforms that Europe still needs to implement.

The view from the EU:
While Brexin would reassure the EU’s political credibility on the world stage, a “two-speed” Europe would find it harder to move toward more integration. The UK would continue to remain a non-euro member and guard jealously any further moves that would affect its ability to act independently. Brexin may also make additional integration more difficult; perhaps France and Germany would prefer to “shrink to grow” by losing members who do not share their strategic vision of a United States of Europe.

Investment conclusions for the UK:

  • Europe faces other challenging political events in 2016 and 2017, including elections in Spain, Ireland, Germany, France and Italy. Thus, even if the Brexin camp wins, we expect more asset-class volatility from other political developments.
  • Although a no vote on Brexit would lay to rest some concerns over the political direction of Europe as a whole, significant policy choices remain if Europe is to create the proper foundations for a new economic, fiscal and political future.
  • A clear vision for the EU for the next 25 years is badly needed to address the tough times that many have endured since the financial crisis; without this vision, investors may again doubt the EU’s commitment to the euro and related assets.

*Taken from Allianz Global Investors as at March 2016

Help To Buy ISAs

The rather unheralded Help To Buy ISAs have finally been launched this week. 1st December saw a number of Banks offering excellent headline rates for the new savings plan designed to get young people into their first homes. The Government is providing a significant boost to encourage any potential savers. We think these plans will rightly be very popular once people are fully aware of the benefits.
The key points are…
  • Savers get a bonus when they buy their first home of 25% (Up to £3000). Your solicitor will apply for this.
  • Available to any First Time Buyer 16 or over
  • Set to last until 2030
  • Two first time buyers can take out Help to Buy ISAs and receive bonuses of up to £3000 each
  • Help to Buy ISAs can be used towards purchases up to £250,000 (£450,000 London)
For more information please visit the link below

Should I top up my state pension?

From Monday 12 October, the government is offering millions of people the chance to get a higher income in retirement, through top-ups to their state pension.

In many ways the scheme – known as Class 3A – looks generous.

But it may not necessarily be the best way to boost your pension, and indeed by doing so you may lose other benefits.

As a result, the Department for Work and Pensions (DWP) is advising people to get financial advice. But here are some general guidelines:

Who is eligible?

Anyone who is already receiving a state pension, or is due to receive one before 6 April 2016. That means that men are eligible if they were born before 6 April 1951. Women are eligible if they were born before 6 April 1953.

The idea is that such people should be compensated, as they will not be eligible for the new – and more generous – flat-rate state pension, which starts in April 2016.

Any current pensioner can benefit. Those who live for a long time will inevitably get better value out of the scheme than those who live for a short time.

How much money could I get?

The maximum you can get is £1,300 a year, or £25 a week. This will be paid on top of the current state pension of £115 a week. How much you pay for that income depends on your age. For example, if you are 65, that £25 income would cost you £22,250. That is a one-off payment, which you will not get back. However, if you are 80 it would only cost you £13,600. You can chose to buy a smaller amount.

The government has produced a calculator to help you work out costs.

For further info please see

What other benefits does the scheme offer?

The top-up payments will rise with inflation, as measured by the Consumer Prices Index (CPI).

In addition, spouses or civil partners will, in most cases, be able to inherit some of the payments. They will get between 50% and 100% of the cash. The rules for passing on the payments are the same as they are with the additional state pension.

Who is the scheme not suitable for?

Anyone who has not got a full National Insurance contribution record – frequently women or those who have been self-employed – is likely to be better off topping up through another existing scheme, known as Class 3.

That scheme is far more generous financially, but only applies to people who have not got a full contribution record.

However, anyone who claims means-tested benefits may see them reduced, as a result of their income being boosted by either of these schemes. In particular, anyone who claims the guarantee element of pension credit, housing benefit, or council tax support may be affected.

Those whose incomes may exceed £42,385 as a result will also be liable to the 40% rate of income tax.

Anyone who is in poor health may not get good value for money out of it. Such individuals may do better to buy an enhanced annuity.

Could I get better value elsewhere?

Experts say the top-up scheme represents very good value for money. Buying a top-up at the age of 65 provides an annual return of 5.84% on the payment you make.

An equivalent private-sector annuity – which also offers an inflation-linked income for life – would provide a return of 3.69%, according to investment provider Hargreaves Lansdown.

Cost of buying an annual income of £1,300 a year
Age Class 3A Pension top-ups Standard annuity
65 £22,250 £35,215
70 £19,475 £30,128
75 £16,850 £24,743
80 £13,600 £18,800
source: HL/DWP

“No private pension company can offer such an attractive deal,” said Tom McPhail, pension expert at Hargreaves Lansdown. According to his calculations, the cost of buying a pension top-up is much lower than the cost of buying a standard annuity. See table above.

However, some people may want to consider other forms of investment as an alternative. Peer-to-peer lending can offer returns of 6% before tax, and at the same time individuals would keep their capital. But, unlike top-up payments, such investments do carry a level of risk.

How long do I have to apply?

The scheme will only run for 18 months, so is due to finish in April 2017. It is not known what will happen after that.

*Source – BBC Website