Money Management articles from September 2002

Money Management archives from September 2002

Too important to ignore.(inheritance tax)(Brief Article)(Statistical Data Included)
September 1, 2002... At 40%, inheritance tax can create a headache for the beneficiaries of a substantial estate. Apart from frittering away the value of the estate above GBP250,000 by spending it, the only recourse for those with an inheritance tax liability...

10 Easy Steps; How to set up a trust Will Hadfield outlines 10 easy steps that will make the legal aspects of putting an investment into trust plain sailing.(Brief Article)
September 1, 2002... IFAs seeking to put their clients assets into trust will need a professionally written deed that complies with the huge body of trust law. These documents are available from both solicitors and many product providers. However, IFAs can make the...

Trustees powers and responsibilities; Will Hadfield looks at 12 legal principles regarding trusts.(Brief Article)(Statistical Data Included)
September 1, 2002... Trustees are responsible for the investment of GBP35bn of assets held within trusts, according to promotional body Solicitors for Independent Financial Advice. Their powers to invest the assets are governed by both statutory legislation and the...

Trust basics; Will Hadfield looks at the detail of the four most widely used trusts.(Statistical Data Included)
September 1, 2002... BARE OR ABSOLUTE TRUST What is it? When parents invest their childrens own money they immediately create a bare trust. The bare trust will come into being whether or not the parents establish a trust deed with the parents as the trustees....

Investments fit for a trust; Choosing investments for any trust is a delicate balancing act between securing growth and avoiding unnecessary tax liabilities. Will Hadfield, explores the perils and assesses the opportunities of investment planning for trusts.
September 1, 2002... Selecting the investments for a trust is a thankless task. If the trustees deviate from the powers of investment laid down by the settlor, they may be sued for breach of trust by the beneficiaries. If a court finds that by exceeding the powers...

First steps for married couples; Nil rate band planning is the essential first step in estate planning for married couples. Marcia Daly, trusts and estate planning adviser at Clerical Medical, looks at the key issues.(Statistical Data Included)
September 1, 2002... Inland Revenue statistics show that nearly half of inheritance tax paid relates to money on deposit and to securities. Additionally, 5% of inheritance tax paid relates to life assurance policies not in trust. This is shown in detail in Graph 1....

Where the money comes from; Varying an inheritance to a trust produces such significant inheritance tax advantages that it must always be considered. Michael Greenwood, trusts and estate planning manager at Clerical Medical, looks at some opportunities for using deeds of variation.(Brief Article)(Statistical Data Included)
September 1, 2002... When someone dies, the probate solicitor will be concerned primarily with the efficient administration of the estate and distribution of the assets. Tax planning for the beneficiaries of the estate will not be the chief concern. If the...

Tax is not the only reason; The most common reason for establishing a trust is tax planning. But, as Michael Greenwood, trusts and estate planning manager at Clerical Medical, suggests there are some good non tax reasons why a trust should be considered.
September 1, 2002... Whether wealth is inherited or built up through enterprise and hard work, preserving it within the family will often be a significant worry. It is all too easy for assets to be lost through divorce, when businesses fail or though funding long...

Minor legacy, not so major headache; Legacies to children under 18 years of age can create problems for executors. Marcia Daly, trusts and estate planning adviser at Clerical Medical, considers a practical solution.(Brief Article)(Statistical Data Included)
September 1, 2002... Where a gift to a minor child is contained in a will, it is often not possible for the executors to make immediate payment. Minor children cannot give a legally valid receipt to the trustees, neither can the parent or guardian unless there is...

Foreword by Andrew Smith MP; This autumns Green Paper on pensions regulation will need to strike a balance between safeguarding employees pension rights and minimising red tape to encourage employers to set up schemes. Work and Pensions Secretary, Andrew Smith MP, says that there s.(Brief Article)
September 1, 2002... In Chinese script, the symbol for change is made up of the symbols for opportunity and challenge. I can think of few instances where this is more clearly illustrated than the subject of pension reform. Both the Pickering report on...

Opportunities for intermediaries; With a new Pensions Act and a radical overhaul of retail savings regulations on the horizon, intermediaries must prepare for changes to their remuneration and areas of expertise. Friends Providents manager of corporate pensions marketing, Martin Palmer,.
September 1, 2002... In the world of financial services, the year 2002 will surely be remembered as the year of reviews. To date we have had key reports from the FSA on CP 121 and with profits. Both Sandler and Pickering have now reported. But we are still only at...

Forever changes; While the industry is still adjusting to the introduction of stakeholder and lower charges, the pension providers are having to prepare for the reforms unveiled by Sandler, Pickering and the FSA. Paul Stanbridge, head of pensions strategy at Friends Provi.
September 1, 2002... Pension providers have, for several decades, changed selling practices, administration systems and processes to conform to new legislation and regulation. But they must expect close scrutiny. The pensions industry is a multi billion pound...

Life in the 1% world; Every company with five or more employees is required to provide its workers with some form of pension arrangement. Will Hadfield examines the difference between products and providers in a marketplace where uniform charging structures remain a distant pr.(Statistical Data Included)
September 1, 2002... Corporate pension provision is becoming cheaper. The reduction in annual management charges (AMCs) to 1% or less has spread from stakeholder products to GPPs and beyond. But the transition is far from complete. Charges on pensions business...

Making the State pay; With the imminent introduction of the pension credit, it has seldom been more difficult to know when to rely on State benefits rather than private provision. Will Hadfield looks at when it makes sense to make no savings and why contracting out is often a.(Statistical Data Included)
September 1, 2002... Any lifetime savings will generate extra income in retirement. Income may be generated from private pension provision, investments or rental yields without losing State pension benefits in the form of the minimum income guarantee (MIG) and,...

Spot the difference.
September 1, 2002... The Pickering report may have recommended that the number of pension products be reduced from 20 to three but, until a new Pensions Act comes into force, distinguishing between products will remain as complicated as ever. Chris Bellers,...

How to change product terms; With the advent of stakeholder, many corporate pension planners may consider moving existing schemes to arrangements charging 1% or less. Friends Providents product conversion manager, Brian Dingsdale, shows how different types of charging structure affe.(Statistical Data Included)
September 1, 2002... Despite their relatively high profile, stakeholder friendly pensions are not always the inexpensive option that they appear to be. Yet, many companies are electing to use this type of vehicle for future pension provision. This raises the need...

How to switch providers; Sponsoring employers are often forced to change product provider after receiving bad service. Friends Providents product conversion manager, Brian Dingsdale, explains how to manage the complex conversion process.
September 1, 2002... John Adams is fed up with pensions. He is confused, he is alone and he thinks he is being ripped off. In 1994, Johns employer had a reasonably well funded defined benefit (DB) occupational pension scheme. John had been a member for years....

Shrewd recruiting; Paul Harper, managing director of Paul Harper Search & Selection and Harper Recruitment, looks at the need for shrewd recruiting in the current financial climate.(Brief Article)
September 1, 2002... It is an indisputable fact of business that if what your company does can be done better, faster or cheaper, sooner or later it will be. Senior managers and business owners are more aware now than ever that their future is on the line. With...

MY FIRST JOB; Name: Brian Newbould Age: 50 Company name: Skandia Position/title: Research and development.(Brief Article)(Interview)
September 1, 2002... What was your first ever job? Sales assistant in a model shop that also sold fishing tackle. It was unusual but then we have food supermarkets selling petrol today. I worked Saturday afternoons as I had to go to school on Saturday...

OFF THE CRITICAL LIST; Critical illness insurance has become increasingly popular in recent years. But claims are rising. Helen Pridham looks at the ways insurers and reinsurers are reacting.
September 1, 2002... Critical illness cover has become one of the best selling forms of insurance. Over the past three years the market has more than doubled in size and the ABI (Association of British Insurers) estimates that about 6m adults and 2m children are...

TAKING STOCK; To buy into a bear market is to attempt to catch a falling knife, and a sharp one at that says former investment banker Russell Taylor who answers some readers questions.(Statistical Data Included)
September 1, 2002... Investors tempted by siren voices suggesting that this is the time to buy the market should remember the 1970s. The bottom of the worlds last primary bear market was reached in January 1975. Then, the London market was selling on a dividend...

PENSION GAPS GET PERSONAL.
September 1, 2002... Next year savers will get combined pension forecasts in todays prices. A great many of them will realise how puny their pensions will be. They will then ask how they are to escape, and the answers do not appear to be there. The ostrich-like...

THE NEVER, NEVER MORTGAGE; One day, some of this might be yours, although youll have to keep up the payments. John Hancock looks at the new realities of paying off the mortgage.(Brief Article)(Statistical Data Included)
September 1, 2002... Enter the 50 year mortgage! screamed the headlines and we all felt a bit of a chill at the prospect of reaching the age of 70 and still having five years left to pay for the house we bought at 25. Of course, the facts were quite a lot less...

GHOSTS IN THE MACHINE; With-profit bonds, much maligned by the media, do have a vital role to play in proper portfolio planning says Graeme Cumming, investment manager at Save and Invest. You just have to pick your providers carefully.(Column)(Statistical Data Included)
September 1, 2002... There is perhaps no single subject that has been more intensely written about of late than with profits. Whether it is the continued fallout from Equitable Life, concerns over endowment payouts or the implications of industry wide reviews, with...

CAPITAL PUNISHMENT; New FSA guidelines have proposed a shake up of capital adequacy requirements across the industry. Jon Cudby looks at the implications of the changes and the impact that they are likely to have.(Financial Services Authority)(Statistical Data Included)
September 1, 2002... The capital adequacy requirement has long been a cross that financial services companies, advisers and product providers, have had to bear. Put simply, the requirement is the regulation stipulating that a practising company must hold sufficient...

MAGICIANS NEED NOT APPLY; Smoke and mirrors are slowly but surely being expunged from the yield figures of corporate bond funds. Which funds will emerge triumphant when laid bare? Nicole Pedersen-McKinnon investigates.(Statistical Data Included)
September 1, 2002... In most situations, actions speak louder than words. The actions of pension funds are currently speaking volumes. In their droves, they are deserting equities in favour of bonds. Boots started the exodus in 2000 and it has been growing in...

ROCK SOLID? As plummeting stock markets eat away spare capital and offices turn to financial engineering to boost their solvency figures, Jess Hinings looks into life office financial strength.(Statistical Data Included)
September 1, 2002... Assessing the strength of a life office is an enormously complex task. It is arguable that the only one who is in a position to do it properly is the person running the fund and they are certainly not going to tell you. That said, IFAs are...

Active manager wanted FOR TRUST; Fidelity takes over running of Edinburgh Investment Trust assets with new four part, four manager structure.(Fidelity Investments)(Brief Article)(Statistical Data Included)
September 1, 2002... Edinburgh Investment Trusts GBP1.1bn of assets are under new management following the trust boards decision to replace Edinburgh Fund Managers with Fidelity Investments. The changeover follows a review of the investment trusts management,...

20% return guaranteed from conventional with profits bond.(Wesleyan Assurance Society)(Brief Article)(Statistical Data Included)
September 1, 2002... Wesleyan Assurance Society has launched a limited tranche of a with profits bond in response to the volatile market conditions. The Guaranteed Growth Bond is available to existing customers of Wesleyan and Medical Sickness, the companys...

SIPPS GET LOCAL AND INDEPENDENT IN SCOTLAND.(Brief Article)
September 1, 2002... The swelling ranks of SIPPs products now include a plan from the first independent SIPP practitioner in Scotland. @Sipp only administers SIPPs. It does not provide investment advice or administration for SSASs, although it expects to take...

AIG SPOILS TRUSTEES FOR CHOICE IN SEVERAL CURRENCIES.(launches trustee investment bond)(Brief Article)(Statistical Data Included)
September 1, 2002... AIG Life has launched a multi-currency trustee investment bond, the Premier Trustee Investment Bond (PTIB), aimed at the high end of the market. The bond offers access to four tracker funds, a cash fund, a range of guaranteed and protected...

Charcol responds to housing market fears with drop lock mortgage.(Brief Article)
September 1, 2002... Mortgage broker Charcol is marketing a tracker mortgage that can convert to a fixed rate loan to give protection against interest rate hikes. The tracker, which comes with no redemption charge or lender fee, charges bank base rate plus...

FRIENDS PROVIDENT INTRODUCES TWO CHARGING OPTIONS.(Brief Article)
September 1, 2002... Friends Provident International has revamped its international investment bond, relaunching the product with two distinct charging structures. The reward option is a traditional charging structure with a 6% initial charge, while the...

TIMES MUST BE HARD.(Bedlam Asset Management plans new funds)(Brief Article)
September 1, 2002... Turkeys do not vote for Christmas and fund managers do not volunteer to go without their remuneration packages. Until now that is. The FSA is currently going through the approval process for three funds from a new investment house that pays...

IN PRACTICE: I'm dying, can you help me? Jacqueline Elliott looks at the options open to advisers to help clients financially to make the most of their lives if diagnosed with a terminal illness.(Brief Article)
September 1, 2002... The article in the March edition of Money Management explained the options open to investors wishing to sell their endowment policies. However, what happens if your client is diagnosed as being terminally ill? If they have your client has...

LETTER OF THE MONTH : The fund manager matters.
September 1, 2002... In his letter entitled Dont cry over fund managers moves (MM, July 2002), B Jamieson makes some good points though, as always, the picture is never all black or all white. Clearly, the fund management companies themselves believe in the...

Pensions slip divorce.
September 1, 2002... My recent experiences show clearly that the solicitors for both sides in a divorce do not want to know about the pensions involved and actively dissuade couples from bringing this factor into the settlement equation. The lawyers say that the...

Bank credit checks are guaranteed.(Experian Information Solutions)(Brief Article)
September 1, 2002... Please may I correct the inaccuracies in the strange letter from Paul Woodward in your August issue. When you apply for a credit card you are always asked to give permission for the lender to do a credit check with a credit reference...

Sandlers good.
September 1, 2002... Ron Sandler deserves heartfelt praise from the industry, not necessarily for what he said, but for the way he said it. (See Kicking Sandler in your face, MM August 2002.) His report was clear, logical and as concise as any report as wide...

Needlers to say its a windfall; FSA issues new rules for calculating financial redress.(Financial Services Authority)(Brief Article)
September 1, 2002... The FSA has put a stop to firms deducting the value of windfalls paid as top ups to existing policies from any compensation payable. The move comes in response to the Needler judgement in July 2001. That case revolved around whether...

Bring questions to FA Expo 2002; Open forum part of the programme planned for London and Harrogate.(Brief Article)
September 1, 2002... Preparations are in full swing for Financial Adviser Expo 2002, a two day event which will take place at Excel in Londons Docklands on Thursday 17 October and the Yorkshire Event Centre in Harrogate on Tuesday 15 October. Expo 2002 offers...

New sex please, were British; Transsexual wins legal rights of a woman - including pension at age 60.(Brief Article)
September 1, 2002... A post operative transsexual who was born a man has been granted the right to be legally recognised as a woman by the European Court of Human Rights in Strasbourg. Christine Goodwin had been living as a woman since 1984 and underwent...

In sickness and in wealth; Legal rights for unmarried couples take a step forward.(Brief Article)
September 1, 2002... It has been a good month for cohabitation. Both the Law Society and the Law Commission have come out in favour of similar legal rights for unmarried couples as for married ones. And inheritance tax planning too is opening up to cohabitants. ...

Reward at Sainsburys; MLIM tries hiding behind silence.(Brief Article)
September 1, 2002... Merrill Lynch Investment Managers (MLIM) has settled an informal claim against it for under-performance brought by Sainsburys pension fund. But it is stonewalling queries on the basis for its settlement. Sainsburys action followed MLIMs...

40th anniversary competition winners; Pictures of our three first prize winners. We will be watching their progress over the next year.(Brief Article)(Statistical Data Included)
September 1, 2002... Ken Holdsworth (left) was the winner of the Scottish Widows prize, a multi manager fund run by Frank Russell Company. Kens prize was a GBP4,000 investment into the Scottish Widows opportunities portfolio trust. He is pictured with Keith Bruce,...

Industry divided over offshore funds plans; Taxation system centre of consultations.(Brief Article)
September 1, 2002... There is everything left to play for in the Inland Revenues consultation process over the future shape of the taxation system for offshore funds. The deadline for responses to the Government document, published in April, passed with...

BOOST FOR ENDOWMENT TRADING.(regulations regarding endowment policies)(Brief Article)(Statistical Data Included)
September 1, 2002... From 1 September 2002, life offices will be obliged to make clear the alternatives to surrendering an endowment policy, including selling it. The Association of Policy Market Makers, the industry body for traded policies, believes that the new...

MIsys to sell IFA business.(Brief Article)
September 1, 2002... The software group, Misys, has announced plans to float its IFA arm in order to concentrate on its banking and healthcare businesses. Misys has not revealed whether the float will take the form of a demerger or a sale of shares, but the process...

Dont miss the Complete Guide to Individual Pensions out next month; Everything you need to know about pensions and more.(Brief Article)
September 1, 2002... Money Management is delighted to announce the launch of a brand new guide to individual pensions, which will be published simultaneously with the October issue. The guide will cover all aspects of individual stakeholder and personal...

Stakeholder bogeyman fails to materialise; No employer fines (yet).(pension plans)(Brief Article)(Statistical Data Included)
September 1, 2002... Not one employer has yet been fined for failing to designate a stakeholder scheme for their employees. Although the pensions regulator is entitled to fine non compliant employers up to GBP50,000, OPRA has yet to issue a single fine. Before...

Bring your partners says legal body; IFAs may link with other professionals.(Brief Article)
September 1, 2002... IFAs may be allowed to join solicitor partnerships under legislation being considered by the Lord Chancellors Department (LCD). The idea of multi disciplinary partnerships has been around for some time and IFAs frequently link with other...

Get some exercise; OMO guidelines.(Brief Article)
September 1, 2002... The new FSA guidelines on exercising the open market option (OMO) come into effect on 1 September 2002. From that date, pension providers will be required to inform any policyholder whose pension is reaching maturity of their right to buy an...

Equitable READY TO Compensate?(Brief Article)
September 1, 2002... Compensation for Equitable Life (ELAS) late joiners has moved a step forward with Irwin Mitchell and Class Law agreeing to delay their legal action until a key review is completed. Equitable had held that late joiners had not suffered loss...

the meaning of life.(Cazalet Financial Consultings report)(Brief Article)
September 1, 2002... A report on the UK life industry predicts IFA consolidation, not a provider scramble to buy distribution. IFA firms are too small, according to Cazalet Financial Consultings Life 2002. Future winners will be IFAs and providers that cater for...

Splitting up is hard to do; Split cap market facing troubled times.(Brief Article)
September 1, 2002... Disastrous markets have brought a wave of insolvencies to the already troubled split cap sector. Exeter Enhanced Income is the latest of 12 trusts to have suspended its shares because it is technically bust. More are expected. The casualty...

Flavour of the month; Investors seeking safety. (corporate bond funds).(Brief Article)
September 1, 2002... Investors are retreating to the perceived safety of corporate bond funds. The latest fund sales figures from the Investment Management Association (IMA) reveal that such funds accounted for 48% of net retail sales in June, while UK Equity...

Resurrection man; Compulsion on the agenda again.(pension plans)(Brief Article)(Statistical Data Included)
September 1, 2002... If only everything in pensions were as unchanging as the views of Frank Field. The latest forum for the Birkenhead MPs campaign for compulsion is a 30 page report from the all party Pensions Reform Group urging the Government to introduce...

Abbey National stops group stakeholder.(Brief Article)
September 1, 2002... Abbey National has become the latest provider to scale back its involvement with stakeholder. From 1 September 2002, the bank will write no new group stakeholder business. There are no plans to leave the individual market at this stage. The...

Public faith in IFAs low.(independent financial advisers)(Brief Article)
September 1, 2002... 60% of people are wary of the financial services industry, with one in four of these worried about paying too much. Research by the CPP Group found that pushy sales techniques were most likely to produce unease, particularly amongst women....

Women claim on CI before men.(Scottish Provident research)(Brief Article)
September 1, 2002... Research from Scottish Provident has revealed that, despite living longer, women typically make critical illness claims at a younger age than men. The average woman claims on her policy at 41, three years before the average man, with cancer...

Home on the change; Mortgage advice finalised.(Brief Article)
September 1, 2002... The Treasury has finalised its mortgage advice and the FSA is now working on its rules. The definition of independent mortgage advice is still undecided. Only one big change has been made to the original draft. Before, referrals would not...

Revenue pursues trust case to the finish; Loophole appeal.(tax law)(Brief Article)
September 1, 2002... The Inland Revenue is appealing against a judgement that a specialised form of trust is not in breach of tax laws. The tax collecting agency is worried that publicity afforded to the complex trust scheme after it lost a High Court battle...

Reviews claim life office scalp; R&SA shifts focus to general insurance.(Brief Article)
September 1, 2002... Royal & Sun Alliance (R&SA) has partly blamed the Sandler and Pickering reviews for its decision to close its UK life company to new business. "The future outlook has become much clearer only a few of the large players will be able to...

Money Management makeover.
September 1, 2002... Welcome to the new look Money Management. We have revamped and redesigned our multi award winning magazine to give it a slick new image for the 21st century, keep it on the cutting edge of publishing and make it even easier for you to navigate....

COMMENT: Solvent abuse.(Brief Article)(Editorial)
September 1, 2002... About 15 years ago, when people asked me what I did for a living and I explained that I was a financial journalist specialising in pensions, their eyes would start to glaze over about halfway through the answer. Then I began to notice a subtle...