Factors driving the evolution of investing

Factors driving the evolution of investing

The environment and climate change has been a hot topic over the last few years. In 2021, more than ever before, environmental and socially responsible issues are at the forefront of the investment landscape. Whilst the practice of ESG Investing has been around since the 1960’s it certainly something that as advisers, we talk about more than ever.

In October and November 2021 Glasgow hosted the UN Climate Change conference better known as “COP26” COP stands for Conference of the Parties, and was attended by countries that signed the United Nations Framework Convention on Climate Change (UNFCCC) – a treaty agreed in 1994. This was the 26th conference hence the title of “COP 26”.

Prior to the conference, the UN released the following goals that COP26 needed to achieve.

 

  1. Secure global net zero by mid-century and keep 1.5 degrees within reach

Countries are being asked to come forward with ambitious 2030 emissions reductions targets that align with reaching net zero by the middle of the century.

To deliver on these stretching targets, countries will need to:

  • accelerate the phase-out of coal
  • curtail deforestation
  • speed up the switch to electric vehicles
  • encourage investment in renewables.

 

  1. Adapt to protect communities and natural habitats

The climate is already changing and it will continue to change even as we reduce emissions, with devastating effects.

At COP26 we need to work together to enable and encourage countries affected by climate change to:

  • protect and restore ecosystems
  • build defences, warning systems and resilient infrastructure and agriculture to avoid loss of homes, livelihoods and even lives

 

  1. Mobilise finance

To deliver on our first two goals, developed countries must make good on their promise to mobilise at least $100bn in climate finance per year by 2020. International financial institutions must play their part and we need to work towards unleashing the trillions in private and public sector finance required to secure global net zero.

 

  1. Work together to deliver

We can only rise to the challenges of the climate crisis by working together. At COP26 we must:

  • finalise the Paris Rulebook (the detailed rules that make the Paris Agreement operational)
  • accelerate action to tackle the climate crisis through collaboration between governments, businesses and civil society.

(ref: https://ukcop26.org/cop26-goals )

 

What is ESG Investing?

ESG stands for Environmental, Social, and Governance investing. ESG evaluates how investments or companies in various categories are related to long-term environmental and societal impact. These include ‘green’ elements such as conservation of natural resources, social factors like inclusivity, and governance considerations regarding how a company is run.

Even prior to COP 26 ESG has been accelerated by the COVID-19 pandemic and increased attention to social and governance issues.

The financial industry is increasingly looking to make it easier to understand how ESG investing is quantified, by using specific measurement criteria to score investments on a consistent scale.

ESG aims to rank investment opportunities with a wide range of sustainability metrics in mind, from green energy initiatives and waste management to fair labour practices, board member diversity, and executive pay.

Over time we are likely to see ESG investing becoming the norm. Companies that meet ESG criteria are now seen as the companies of the future, able to adapt and evolve with the times.

During turbulent markets such as those seen in 2020, ESG funds often performed better than their traditional counterparts. This shows that now and, in the future, we hopefully should not have to sacrifice performance to be socially responsible and environmentally friendly in our investment choices.

If you would like to know more about investing and ESG choices or to review your own investments, please get in contact with one of our Independent financial advisers

More from our wealth management experts

You can find all of our latest wealth management articles and resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

Natasha Fathers, Director of HWM

Natasha Fathers

Director of Hawsons Wealth Management Limited, Sheffield

0114 229 6557

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Changes to the Trust Registration Service (TRS)?

Changes to the Trust Registration Service (TRS)?

What is the Trust Registration Service (TRS)?

The Trust Registration Service (TRS) was introduced in June 2017 as a result of the 4th Money Laundering Directive (‘4MLD’) to gather more information about trusts in a drive towards more transparency and to enforce compliance. The 5th Money Laundering Directive (‘5MLD’) came in to force on 10 January 2020 and this has resulted in a number of changes to the TRS requirements which took effect from 6 October 2020.

What requirements did 4MLD impose in respect of Trust Registration?

This required new and existing trusts with tax liabilities to register with HMRC via the online Trust Registration Service portal. This procedure replaced the completion and submission of the Form 41(G) for trusts.  As part of the drive towards transparency, the TRS requires trustees to provide national insurance numbers and dates of birth for all trustees, settlors, beneficiaries and other individuals with control/influence, as well as an accurate list of assets held within the trust at the date the trust commenced.

Under 4LMD all existing trusts as at June 2017 with tax liabilities were required to register by 31 January 2018. In addition, all new trusts with tax liabilities were required to register by 5 October following the tax year they first became liable to tax. A penalty regime was also introduced for late registration.

4MLD also required trustees to submit an annual declaration to HMRC by 31 January following the tax year confirming whether there have been any changes to registered information or not. However, this requirement only applies to trusts with a tax liability.

What effect has the transfer from 4MLD to 5MLD had on the TRS?

The 5MLD widens the definition of trusts required to register, changes the deadline for registration, changes the deadline for reporting changes to registered information and removes the link with taxation meaning that even certain trusts without tax liabilities have to register.

What types of trust now need to register under the TRS?

In terms of the scope of trusts now impacted by the TRS there are now three broad categories for which trusts need registering:

  1. All UK express trusts (regardless of whether they have a UK tax liability);
  2. Some non-UK express trusts (for example trusts who have no UK trustees but own land/property within the UK and/or trusts with at least one UK trustee which acquires UK property or enters into a business relationship with a relevant person in the UK such as a financial adviser or other obliged entities);
  3. Non-express trusts and excluded express trusts where they have a tax liability. Although there is a low money laundering risk, they must still be registered to receive their Self-Assessment (SA) Unique Tax Payer Reference (UTR) which is required to submit SA tax returns.

What is the new deadline for registering trusts under the TRS?

The regulations originally stated that the deadline for registering new trusts was changing to 30 days from the date the trust was set up. However, following representations from various professional bodies this has been increased 90 days. Therefore, all trusts created on or after 1 September 2022 must be registered within 90 days.

The regulations originally stated all non-taxable trusts existing prior to 9 February 2022 are required to register by 10 March 2022. However, there have been delays in getting the TRS system ready to accept registrations from non-taxable trusts. Therefore, HMRC have said they will extend the registration deadline to the later of 1 September 2022 and 90 days from the inception of the trust for non-taxable trusts in existence on or after 6 October 2020. HMRC announced that the portal was available to accept registrations from non-taxable trusts on 1 September 2021.

How do trustees notify HMRC of any changes to the trust and what is the deadline?

The deadline for notifying changes to registered information will be reduced to 90 days from the date the trustees become aware of the change. This deadline was originally to be 30 days but HMRC have extended the time limit to 90 days as a 30-day window was likely to be challenging for trustees.

What records do trustees need to keep?

The regulations require trustees to maintain accurate and up to date written records of all the actual and potential beneficial owners of the trust

The information to be maintained:

  • Full name of the trust
  • The date on which the trust was created
  • The country where the trust is considered to be resident for tax purposes
  • The place where the trust is administered
  • A contact address for the trustees
  • Full name of advisers who are being paid to provide legal, financial or tax advice to the trustees in relation to the trust
  • Details of the settlors and beneficiaries

This information should be held because under the legislation any law enforcement authority can request information about the beneficial owners of the trust including from a trust which does not incur a liability to any of the relevant UK taxes.

Next steps

The rules in respect of trust registration are complex and the HMRC guidance is not yet complete.

Therefore, if you’re unsure of whether you need to register or want help registering in itself, please don’t hesitate to contact Aaron Hemmington, Tax Partner at Hawsons or Natasha Fathers, Director at Hawsons Wealth Management.

More from our tax experts

You can find all of our latest tax articles and tax resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

Aaron Hemmington

Tax Partner, Northampton

01604 645 600
Natasha Fathers, Director of HWM

Natasha Fathers

Director of Hawsons Wealth Management Limited, Sheffield

0114 229 6557

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Women in Later Life Divorce

Women in Later Life Divorce

Women face the larger financial burden

Divorce can be a very difficult time emotionally and financially for those involved. It can be especially difficult in later life due to the fact that married couples will have built up financial assets together. These joint financial assets are likely to include bank accounts, insurance policies, investments, shares, and your home. However, in most cases of later-life divorce, it is women that face the larger financial burden.

 

The gender pay gap and the motherhood penalty

Despite positive changes towards attitudes to women in the workforce, there is still a large gender pay gap, recently calculated to be 15.5%. In addition, women who choose to take time out of work to raise children will be less financially independent and will face further struggles when they return to work due to a changing environment, skills gap, and prejudice. The combined effect of these issues is likely to be that women will have fewer savings and a smaller pension pot than men.

 

Pensions

Research has found that on average, women in their 60’s will retire with around £51,000 in pension savings, compared to £156,000 for men. This demonstrates that on average men will retire with more than three times the wealth of women. Following a divorce, a woman’s income will fall on average by 33%, compared to 18% for men. Despite the financial inequalities women face during their lifetime, nearly 25% intentionally relinquish their rights to their partner’s pension in the divorce settlement. Considering the financial inequalities they face, giving up the right to their partner’s pension can be a particularly poor choice for women and can often result in poverty in later life.

 

How do I find financial fairness?

Financial advisors can help smooth the divorce process and achieve financial fairness. A specialist advisor can help identify the correct financial options for their clients. The earlier you introduce a financial advisor into your divorce proceedings the more value they will be able to provide for you.

 

How can we help?

At Hawsons Wealth Management, our team of financial advisors are able to provide you with highly professional, fully independent, tailored advice to help you secure your financial future.

More from our wealth management experts

You can find all of our latest wealth management articles and resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

Natasha Fathers, Director of HWM

Natasha Fathers

Director of Hawsons Wealth Management Limited, Sheffield

0114 229 6557

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State Pension Age Increases – Start Retirement Planning Now

State Pension Age Increases – Start Retirement Planning Now

State pension age increases to 66 years’ old

It’s Official! From 6 October 2020 men and women in the UK will now have to wait until their 66th birthday to receive their state pension. UK residents born between 6 October 1954 and 5 April 1960 will now receive their state pension at the age of 66. For those born after 5 April 1960 there will be a gradual increase in the state pension age to 67, and then to 68 years old.  

This comes from the chancellor’s triple lock pledge; where the state pension increases each year along with inflation. Inflation is based upon average earnings, and prices. Another reason why this move was made was because of an increase in life expectancy. To receive the full amount of the state pension worth £175.20 per week you must have 35 qualifying years of national insurance contributions.

 

Young people need to plan ahead

We recommend young workers should plan ahead and think about their retirement options. It is looking very likely that the state pension age will continue to increase as life expectancy continues to rise. Young workers should accept they are unlikely to receive their state pension until at least the age of 70 years old. Start saving for retirement as early as possible to build a bigger pension pot to supplement the state pension or allow you to retire earlier.   

 

How to plan for retirement?

Everyone is different and will have different needs and ability to save, but as a start:

  • Be part of the company pension scheme
  • If Self-Employed, start your own pension
  • Clear debts – your income in retirement will be lower.
  • Have a plan!

 

What retirement lifestyle would you like?

Ask yourself the above question.  How much money per year will you need to accommodate your lifestyle during retirement?

The current full state pension is £9,100 per year (£175 per week).

Assuming you are debt-free, the below table gives you an idea of the income you will require to fund a particular lifestyle during retirement;

Lifestyle

Single

Couple

Minimum

£10,200 per year

£15,200 per year

Moderate

£20,200 per year

£29,100 per year

Comfortable

£33,000 per year

£47,500 per year

 

Minimum Lifestyle

A minimum lifestyle covers all your basic needs with a small amount of money left over for social occasions.  You would live a very basic lifestyle, not spending much on food or running a car and having one UK holiday each year.  Statistics show around 75% of employees achieve at least this standard of living during retirement.

If you are a couple, achieving a minimum retirement lifestyle is much easier, especially if you both can claim your full state pension.

For a single person, it will be more difficult to achieve a minimum lifestyle as your state pension is unlikely to be enough.  You will need something else to supplement your income.  

 

Moderate Lifestyle

To be more financially secure you will need to save for a moderate lifestyle. In a moderate retirement, you will be able to have more money for social occasions and you may be able to have one holiday abroad per year as well as run an older car.

A single person, receiving their state pension would need approximately £11,000 more per year. This figure is much the same for a couple if they both receive the full state pension. 

 

Comfortable Lifestyle

Being more financially secure and able to afford some luxuries requires you to aim for a comfortable lifestyle.  You will be able to afford luxuries such as holidays, change the car every few years and pay for additional extras such as subscription services. 

If you are single and receive the full state pension you will need an additional £24,000 per year. Couples who both receive a state pension will need an additional £29,500 per year. 

 

How can we help?

At Hawsons Wealth Management our team of financial advisors can help you prepare for the retirement you want. Our experts consider all retirement planning options and help you find the right retirement plan for you. This could include private pension plans and investment options. Our advice will be tailored to your individual circumstances to help you get the best retirement fund possible.

If you would like to discuss your retirement plan with us, please contact us for a free initial meeting.

If you would like to find out more about our personal pensions and retirement planning service, please visit our website here.

More from our wealth management experts

You can find all of our latest wealth management articles and resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

Natasha Fathers, Director of HWM

Natasha Fathers

Director of Hawsons Wealth Management Limited, Sheffield

0114 229 6557

Natasha Fathers is appointed as Director of HWM

Natasha Fathers Appointed Director of HWM

The Directors of Hawsons Wealth Management Limited voted unanimously to promote Natasha Fathers Chartered ALIBF AdvDipFA PETR CertLTCP to Director and welcomed her to the Board. After 5 years with the company, she has demonstrated her ability and commitment and this latest achievement in her career is well deserved. We look forward to working alongside Natasha as we continue to grow the business together.

Natasha Fathers, Director of HWM

Natasha Fathers

Director of Hawsons Wealth Management Limited, Sheffield

0114 229 6557
Pension Scams: £30m Lost Since 2017!

Pension Scams: £30m Lost Since 2017!

Over £30 million has been lost to pension scams since 2017, according to the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR).

A total of £30,857,329 in pension savings has been lost to scammers since 2017, data published by the FCA and the TPR revealed. Reported losses ranged from under £1,000 to as much as £500,000. The average victim was a man in his 50s, the FCA and the TPR found.

65% of pension savers said they felt confident they could spot a scam. However, four in ten would put themselves at risk unknowingly by engaging with a common scam tactic, such as being told it’s a time-sensitive offer.

The FCA and the TPR have advised savers not to be pressured into making any decisions about their pensions, and to reject unexpected pension offers, whether these are made online, via social media or over the phone.

Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said:

‘During these uncertain times, it is more important than ever to defend your lifetime savings from scammers.

‘Fraudsters will seek out every opportunity to exploit innocent people, no matter how much or how little you have saved.’

More from our wealth management experts

You can find all of our latest wealth management articles and resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

Natasha Fathers, Director of HWM

Natasha Fathers

Director of Hawsons Wealth Management Limited, Sheffield

0114 229 6557