By Dolana Conco, Regional Executive at Alexander Forbes
Losing a loved one is one of the most difficult experiences a person can go through, and during this difficult time, you don’t want your loved ones to have to worry about finances.
Your family will receive a share of your retirement savings and a life insurance pay-out if you die while being a member of a retirement fund. The trustees of the fund have a legal responsibility to make sure that death benefits from the fund are paid to those who are financially dependent on you.
If your death benefit is through a policy that is separate to the fund, then the trustees will not be involved and this benefit will be paid out according to the nomination of beneficiaries’ form that you’ve completed with that specific insurer, or else your employer will decide.
What retirement fund members need to do
- Keep your ‘Who needs financial support when I die?’ form up to date
This form is so much more important than anyone thinks – even though it is not a last will and testament. The trustees must, by law, find all the people who are financially dependent on you, as well as those whom you love and would want to leave a portion of your death benefit to when you die. Those who depend on you for financial survival are called your dependants. Examples are your spouse or life partner, children (of any age), parents, people you need to pay maintenance to or anyone else in your life who depends on you financially.
If no one is financially dependent on you in any way, you can choose someone else as a beneficiary (family, friend, or even a charity). If you choose to give your death benefit to a charity when you die, the money will first be paid to your estate and then paid over to the charity of your choice. If this form is not up to date, it could take the trustees much longer to identify who should receive a share of your death benefit from the fund.
- Submit the correct documents
The most common reason for delays in paying an insured death claim is that there are missing, incomplete or incorrect documents submitted with the claim. Your employer can assist with what is needed and can check that the form has been completed fully and correctly before submission. In general, the following information is needed:
- a certified copy of the death certificate
- the identity document or passport of the deceased member
- a copy of a pension-backed housing loan (if applicable)
- proof of the extent of any financial dependency of the beneficiaries
What your retirement fund needs to do
The trustees of your fund have a legal duty when you die to distribute your death benefit from and through the fund. The trustees must find all dependants and nominees to decide how to share the retirement savings and life insurance pay-out fairly. To make a fair decision, the trustees will consider the following factors, among others:
- Age of the beneficiaries
- Relationship to the deceased
- How financially dependent they were on the deceased
- Their financial affairs
- Their future earning potential and prospects
- The total amount of the retirement saving to be distributed
The trustees can choose to give a beneficiary no pay-out, as the law doesn’t say that every beneficiary must get some money. However, they must consider the needs of each beneficiary and the amount available for distribution.
If there’s information that the trustees may not have considered when they made their decision and the draft resolution has already been prepared, your family needs to contact the trustees urgently. The fund’s administrators will pay the death claim once they get a response from all beneficiaries, or if no response has been received within 30 days of sending the draft resolution document.
There are various reasons for delays in paying a death claim from or through the fund, including the employer not completing the claim form in full, missing or incorrect documents, investigations for the trustee resolution taking longer than expected, outstanding tax issues and beneficiaries not providing their bank account details.
Make sure your family knows what can go wrong and what to do to make the process run smoothly – it all plays a part in leaving a legacy that you can be proud of.
WHY HIGH NET WORTHS SHOULD BE LOOKING AT ANGEL INVESTING IN A NEGATIVE INTEREST RATE ENVIRONMENT
By Oliver Woolley, Envestors
As England gets through its second lockdown, Bank of England policymakers report the UK we may be headed for negative interest rates. This would be the for the first time this has happened in the bank’s 326-year history.
With interest rates already at 0.1%, central bank officials announced an additional £150bn stimulus package, in an attempt to boost consumer spending during the second wave of the pandemic.
Despite news of a vaccine, the BoE has taken the total stimulus to £895bn, as double-dip recession forecasts emerge.
In the event of negative interest rates becoming a reality, banks would have the incentive to lend more by making loans cheaper, but account holders would likely be asked to pay to hold money in a savings account.
While plans for negative interest rates are pending, government bonds are already selling at a negative yield of -0.003%, with investors hoping for the safe haven of government issued bonds paying out to get their money back in three years.
Between negative returns on savings accounts, lower yield on bond holdings, a volatile stock market and a projected dip in property prices, investors don’t have many options to diversify their portfolio in a negative rate interest environment.
However, for investors who are comfortable with risk, early-stage investing may be the answer. Angel investors support early-stage companies through financial backing, typically in exchange for equity in the company. An additional benefit for angel investors is the generous tax reliefs offered under the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS).
What is angel investing and why is it attractive?
An angel investor (also known as a private investor, seed investor or angel funder) supports early-stage enterprises by providing funding and getting actively involved in the business. Typically, the amount invested is between £5,000 and £50,000 per investment.
Early-stage investments are high risk as the number of early-stage businesses that grow through to an exit is low. Previous research suggested that 56% of investments in early-stage companies went bust. This is why experienced angels aim to build a diverse portfolio of 20+ investments.
While angels usually have to wait a number of years before recovering their initial investment, returns can be considerable. Due to the high risk nature of angel investing, high net worth individuals are usually looking for a 2.5x Return of Investment (RoI).
When first starting out, an investor should look for a well put together business plan with a defined exit strategy. Many angels choose to join an angel network when starting out, where investors can pool investment capital and invest alongside like-minded, experienced investors.
Tax relief through EIS and SEIS
In order to encourage investment in start-up companies which play a vital role in the economy, the UK government has launched several tax relief programmes, including the Enterprise Investment Scheme (EIS). This scheme, which makes investing in early stage enterprises tax-efficient, has encouraged £22bn in investment in 31,365 companies.
By investing in an EIS eligible company, angels receive income tax relief of 30% of the amount subscribed for eligible shares. Investors can put in up to £1m per tax year in EIS qualifying companies for the tax relief; this cap rises to £2m if investing in knowledge-intensive EIS companies.
In order to qualify, companies have to be trading for less than seven years and can raise a maximum of £12m.
Through EIS, angels receive a Capital Gains Tax (CGT) exemption, carry back and loss relief which can be offset against CGT or Income Tax.
Looking at a practical example:
If an angel invested £10,000 and the company failed, their actual loss would only be £7,000, due to the 30% income tax relief. However, a top rate income taxpayer paying tax at 45% will be able to claim loss relief on their tax liability at the 45% level. In this example, they’re eligible for further relief of £3,150, making their actual loss £3,850.
The success of EIS led to the introduction of the Seed Enterprise Investment Scheme (SEIS), promoting investments in riskier, earlier stage companies. About 80% of UK angel investors seek relief through EIS or its sister scheme, SEIS.
SEIS allows HNWIs to invest up to £100,000 and receive 50% tax relief on their investment. In order for companies to be eligible for SEIS, they have to have been trading for less than two years and cannot have more than £150,000 in previous investment.
Hot investment sectors
Reports from the British Business Bank and the UK Business Angels Association reveal that many investors are still seeing positive returns during the pandemic.
While angels are battling economic uncertainty, around three quarters are optimistic about the market bouncing back within the next 12 months.
Healthcare, Digital Health and MedTech, BioTech, Life Sciences and Pharmaceuticals are the leading sectors in terms of investor engagement during the COVID-19 crisis.
Software as a Service and FinTech have fared well throughout the pandemic and are still attracting a large number of investors.
Getting started with angel investing is now easier than ever, with an array of angel networks that can provide advice and support. Industry-association, the UKBAA, offers an Angel Investment Accelerator which is designed for those new to early-stage investing.
In order to choose the right angel network, HNWIs should look for the most active networks; Research body Beauhurst recently published a list of the most active networks in the UK.
Active networks will present a greater array of screened opportunities as well as connecting new investors to more experienced ones.
The best networks cover a variety of regions, sectors and investment sizes, and they’re forthcoming with examples of previous investments, so first-time angels can make the right choice on how to grow their portfolio.
So, while looming negative interest rates may require a rethink of current investment strategies for many – it might also open up a new and exciting investment class that offers much more than just financial gains.
ABOUT THE AUTHOR
Oliver Woolley is CEO and co-founder of Envestors. Envestors’ digital investment platform brings together entrepreneurs and investors across geographies, communities and sectors – creating the single marketplace for early stage investment in the UK.
Envestors partners with accelerators, incubators and angel networks to provide a white-label platform empowering them to promote deals, engage investors and connect to other networks.
Founded in 2004, Envestors has helped more than 200 high growth businesses raise more than £100m through its own private investment club.
Envestors is authorised and regulated by the Financial Conduct Authority.
QUICK FIXES TO LOWER YOUR CAR INSURANCE
Car insurance is something we all have to pay for, no matter how much we despise it. However, it’s not all bad. There is light at the end of the tunnel, as there are several things you can do to reduce your car insurance payments. We have teamed up with RAC Shop to put together a simple list of quick fixes on how to lower your car insurance legally.
Never take the first quote you find to be the only price that you should be paying for your insurance. Whether you’re looking for new insurance or you are looking to renew your current insurance shopping around and comparing car insurance prices can save you a significant amount of money. This also helps you find the best possible deal. Staying loyal to your current insurer can, in some cases, be a hindrance and could lead to paying more and more each time you renew your insurance.
Pay Up Front
Once you have found an insurer that you are happy with and have found the best deal for your vehicle, it is always a far better idea to pay in full upfront rather than in instalments. When you sign up to pay monthly, insurers are far more likely to charge you interest on top of your base fee. Which can sometimes be up to around 30% APR, which is precisely what you want to try and avoid.
Pay For What You Use
People may think that you are likely to get the best deal when paying for a third party fire and theft policy rather than a comprehensive one. However, the team at RAC Shop would recommend always going comprehensive, which can be cheaper than a lower level protection plan. Some insurers associate third party fire and theft policies with high-risk drivers that are looking for the most affordable option and would therefore automatically charge you more as a result.
Avoid adding modifications to your car
It may be tempting to get carried away with adding modification after modification to your vehicle, however even changing the simplest of things such as upgrading your stereo or speakers can increase rather than decrease the price of your insurance premium. This is because the more modifications you make to your vehicle, the more desirable your car is to thieves. Modifying any part of the car’s body or engine, for example, are something to be avoided, as vehicles with these modifications incur higher insurance premium prices as they tend to be driven by younger drivers who are at a higher risk of crashing.
However, not all modifications mean your insurance price will skyrocket. Car alarms and dash cams added will reduce your insurance price. Some insurers even offer up to 10% off your insurance if you fit a dash cam to your vehicle. You are improving safety whilst decreasing your payment. What more could you want? Remember, it is essential to declare any modification you make to your car for any claims that are made not to be rejected.
Add a Black Box
A black box is a small tracking device that is widely used especially with young or new drivers, which allows insurance companies to see how well you drive and as a result, can significantly reduce your insurance.
Although adding a black box has an abundance of perks, it can also cause limitations to your driving. For example, you may be penalised for driving later at night. The other thing to note is that you will be paying for the black box every month. This allows the insurance company to re-evaluate your driving each month, where you can be rewarded with lower insurance prices for good behaviour or punished with a higher price if any rules are broken, or they deem you’re driving unsafe.
Maintain a Good Credit Score
Maintaining your credit score has seen many people reduce their insurance premium. Most insurers will use your credit information to help determine a price for your insurance premium. It has been researched and proven that people who manage their credit will tend to have fewer claims. This can be done by ensuring all bills are paid on time, obtaining only the amount of credit you need, and keeping credit balances as low as you can. All can help reduce the insurer’s policy prices.
Reduce Your Mileage
Regularly reviewing and considering how much mileage you are realistically likely to use will ensure you are paying the correct amount. If you are looking at ways to reduce this price, the less mileage you rack up, the lower your premium price will be, whereas the higher the mileage, the higher the price. If you are overestimating how much your annual mileage will be, you are effectively, just throwing money away. Keeping track of your mileage each year will make things easier when estimating your yearly mileage the next time around. Be careful not to underestimate, however, as this may end up costing you more if you need to claim on your insurance.
ONE IN FIVE INSURANCE CUSTOMERS SAW AN IMPROVEMENT IN CUSTOMER SERVICE OVER LOCKDOWN, RESEARCH SHOWS
SAS research reveals that insurers improved their customer experience during lockdown One in five insurance customers noted an improvement...
PASSWORDS, BIOMETRICS AND BEYOND
By: Hicham Bouali, Pre-Sales Director EMEA of One Identity, a specialist in identity and access management At any given...
AVATRADE NOW SUPPORTING DEPOSITS VIA PAYPAL AND RAPID TRANSFER
AvaTrade continues to grow its customer offering by adding PayPal and Rapid Transfer to its supported payment methods. AvaTrade’s customers...
GOING GLOBAL: 7 TIPS TO GET STARTED
The idea of selling your products or services to new markets across the globe is an attractive prospect for any...
KASHFLOW AND YAPILY PARTNER TO SUPPORT SMES WITH DIGITAL BOOKKEEPING AND CASH FLOW MANAGEMENT
KashFlow continues its mission to provide SMEs and accountancy firms with software that keeps bookkeeping easy to understand and even...
WHY HIGH NET WORTHS SHOULD BE LOOKING AT ANGEL INVESTING IN A NEGATIVE INTEREST RATE ENVIRONMENT
By Oliver Woolley, Envestors As England gets through its second lockdown, Bank of England policymakers report the UK we...
VIVA WALLET SUPPORTS E-COMMERCE GROWTH THROUGH ITS MARKETPLACE SOLUTION
Viva Wallet’s PSD2-compliant payment solution for online marketplaces removes the requirement for them to become licensed providers of regulated payment services. Viva Wallet is able to handle the streamlined processing of customer transactions through a PSD2-compliant escrow account...
REDUCING FRICTION ONLINE HAS BECOME BUSINESS CRITICAL
Andrew Shikiar, Executive Director at the FIDO Alliance The global pandemic has pushed the importance of remote access and authentication...
QUICK FIXES TO LOWER YOUR CAR INSURANCE
Car insurance is something we all have to pay for, no matter how much we despise it. However, it’s not...
ALL-SEASON TYRES AND HOW TECHNOLOGY IS CHANGING THE FUTURE OF TRANSPORT
Avid vehicle enthusiasts will likely know that summer and winter tyres are developed from different rubber compounds which work at...
EQUIPPING YOUR TEAM WITH THE SKILLS TO MANAGE THE CHANGING LANDSCAPE
By David Wharram, CEO of Coast Digital For businesses to emerge from the COVID-19 pandemic stronger than ever, companies...
BANKING ON THE FUTURE: WHY PAYMENTS TRANSFORMATION IS THE KEY TO SUCCESS
Simon Wilson, Co-Head, Payments at Icon Solutions Standardisation, regulation and technological innovation means payments are well on the way...
DIGITAL FINANCE: UNLOCKING NEW CAPITAL IN DISRUPTED MARKETS
Krishnan Raghunathan, Head of Finance & Accounting Services at WNS, explores how a digitally transformed finance department can give enterprises...
DATA DILEMMAS IMPACTING ESGS
Mario Mantrisi, Chief Strategy and Knowledge Officer, Kneip It’s been well documented over the past few months that the...
SIX PILLARS FOR A SUCCESSFUL CLOUD
by Giuseppe Paternò, IT Infrastructure Architect, Security Expert, and Cloud Solution Guru COVID-19 pandemic is pushing many companies to...
MARQETA CONTINUES EUROPEAN GROWTH, SIGNING THREE NEW DIGITAL BANKING CUSTOMERS
Marqeta is supporting the development and launch of three new digital banks across the UK and Europe Marqeta, the...
TECHNOLOGY IS OUR FIRST DEFENCE AGAINST MONEY LAUNDERING
Jesse Chenard, CEO of MonetaGo Fraud is an age-old problem that has plagued every industry since businesses began trading. It...
STOCARD BUILDS ON SUCCESS AS IT EXPANDS STOCARD PAY TO FOUR MORE EUROPEAN COUNTRIES
Stocard, the leading European mobile wallet with over 50 million users, launches its payment functionality, Stocard Pay, in Germany, France,...
3 KEY DIGITAL MARKETING TRENDS FOR 2021
– Emma Digital marketing is an industry where the trends are changing on a daily basis, meaning those in the...
SBER ANNOUNCES PARTICIPATION IN A PRIVATE EQUITY FUND
Sber in cooperation with a leading Middle East sovereign wealth fund announces its commitment as a cornerstone investor into an...