Money Management November 2016
In this month’s Money Management November 2016 blog… 40% of families have had to cover funeral costs after the deceased didn’t make any financial arrangements. A fifth of self-employed people would cut back on insurance if they had to reduce costs. Paying a year’s worth of voluntary national insurance could boost a person’s pension by £230 a year. And, as Philip Hammond’s first Autumn Statement draws ever closer, Assured Wealth and Estate Planning focuses on the industry body expectations.
Families cover unexpected funeral costs
40% of families have had to cover the full cost of a funeral after the deceased failed to make any financial arrangements, research by Co-op Funeralcare has found.
50% of people who passed away made financial provision for a funeral.
However, 11% of those that have had to arrange a funeral said that the deceased had not left enough to cover the costs.
18% of these had to pay more than three-quarters of the expense of a funeral. With the average funeral costing £3,800, this equates to more than £2,500.
How families are covering costs
The most common strategies to cover funeral cost shortfalls were:
- asking family or friends to contribute (54%)
- taking out a personal loan (10%)
- using a credit card (9%).
Richard Lancaster, managing director of Co-op Funeral Care, said:
“The end of our lives isn’t an easy thing to think about, and as a result, thousands of families are being left with a legacy of financial as well as emotional grief following a loss.”
Ways to save for your funeral
The research found that 48% of adults haven’t thought about how they will fund their funeral. If you haven’t started planning, there are some ways you can save including:
- savings in a bank or building society account
- purchasing a pre-paid funeral plan
- earmarking some savings or investments
- life insurance.
Self-employed lack financial protection
93% of self-employed people do not have critical illness cover, according to research by Scottish Widows.
A survey of over 5,000 self-employed workers found that 34% have life insurance cover. 21% said they would cut back on critical illness cover if they had to reduce costs.
- 62% of self-employed workers’ households are reliant on one wage earner’s income
- 12% do not know how long they would be able to pay their bills if they were not able to work
- self-employed people have average savings of £31,442 (£25,767 for the general population).
Johnny Timpson, the protection specialist at Scottish Widows, said:
“With so many UK families reliant on the income of self-employed people, it is vital that they have an essential backup plan in place should the worst happen.
“No one wants to think about disaster striking, but knowing that your family will not be left struggling will give you peace of mind and allow you to enjoy the many benefits that being self-employed brings.”
Critical illness cover
Critical illness cover provides a lump sum pay out should you suffer from a specific serious illness or condition.
There are two types of the premium on critical illness cover – guaranteed or reviewable. Guaranteed premiums remain steady over the term of the policy while reviewable premiums may rise over 5-10 years.
Illnesses covered vary depending on the critical illness insurer and the severity of the illness.
Speak to our team about insurance planning.
Increasing state pension through NICs
Workers can improve their state pension entitlement by filling in gaps in their national insurance record.
Analysis by Royal London estimates that a single year of national insurance contributions (NICs) can be bought for a lump sum of around £733.
This would boost an individual’s state pension entitlement by around £230 a year for the rest of their life or £4,600 over the course a 20-year retirement.
Someone who filled in 5 missing years could add as much as £23,000 to their pension.
Royal London predicts that voluntary contributions might be beneficial to those who have a gap between retiring and reaching state pension age.
Steve Webb, director of policies at Royal London, said:
“Large numbers of workers could gain a substantial boost to their state pension for the payment of a relatively modest lump sum.”
Making voluntary contributions
Individuals can usually only make voluntary NICs to cover gaps from the last six years.
Write to HMRC to find out if you can make voluntary contributions and how much you’ll need to pay.
You can pay monthly or make a one-off payment.
Talk to us today about making the most of the state pension.
Autumn Statement 2016 expectations
Chancellor Philip Hammond will deliver his first Autumn Statement on 23 November 2016.
In his speech at the Conservative party conference in October, Hammond said fiscal policy “may have a role to play” as he prepares to “reset” economic policy.
Here are some of the potential measures that we could see.
The government could announce the national living wage (NLW) rate for April 2017.
Conor D’Arcy, the policy analyst at the Resolution Foundation, said:
“As we approach the Autumn Statement we’ll soon learn what the NLW will be next year. An increase to around £7.50 will deliver a welcome annual pay rise of up to £600 for full-time staff.”
Infrastructure and investment
Hammond pledged £3 billion to help build 200,000 new homes and provide loans for essential infrastructure.
Adam Marshall, British Chambers of Commerce director-general, said:
“Increased house-building is near the top of our requests from the chancellor at the Autumn Statement, so it is reassuring that the government is looking at this ‘quick-win’ for infrastructure development.”
Commenting on the potential changes to fiscal policy, Carolyn Fairbairn, director general of the Confederation of Business Industry, said:
“The government is right to adopt a more flexible approach to fiscal policy at this point, but it remains essential that public finances are sustainable over the economic cycle.”
Important information about this Money Management November 2016 article
The way in which tax charges (or tax relief, as appropriate) are applied depends on upon individual circumstances and may be subject to change in the future.
This Money Management November 2016 document is solely for information purposes, and nothing in this document is intended to constitute advice or a recommendation.
While considerable care has been taken to ensure that the information contained in this Money Management November 2016 document is accurate and up-to-date, no warranty is given as to the accuracy or completeness of any information.