Our latest investment bulletin. Please be in touch if you need further information.

1. AUTUMN 2012 | ISSUE 1
Investment
Viewpoint
Increasing your
retirement income
Recent research What is an Enhanced Annuity? Boost your retirement income
suggests more than An Enhanced Annuity pays a higher income The amount of extra income you could earn
in retirement if you have a medical condition in retirement depends on your actual state
two-thirds of us that may reduce your life expectancy. of health, or your lifestyle.
could benefit from This is because an annuity is, in essence,
a ‘bet’ with the annuity provider about how If you have high blood pressure or high
a higher income long you will live. cholesterol, you could receive around 9%
when we retire, more income than from a ‘conventional’
How does it work?
by applying for an annuity. If you are a smoker, you may get
up to 13% more income. If you are very
Enhanced Annuity1. When you invest in an annuity, the provider
converts your pension ‘pot’ (the total amount
seriously ill, the extra income will be
significantly higher.
you’ve accumulated within your pension) into
Contact us today income payments, which are paid for the
Latest figures show the difference between the
to discuss your remainder of your life.
average conventional and enhanced annuity
retirement options. rates is 18.7%. Over the average retirement,
If you die before your predicted life
with a pension pot of £50,000, this would amount
expectancy, the insurance company will make
to £8,912.76 for men and £10,290 for women2.
a profit, which is used to pay the incomes of
those who live longer than predicted. If you
These significant differences highlight the
live longer than your predicted life expectancy,
importance of getting good quality advice
you will have won the 'bet' with the insurance
before you take out an annuity.
1
MGM Advantage, 2012 company – and received a higher pension
2
nnuity rates are based on analysis of data from
A than you would have otherwise received.
Investment Life and Pensions Moneyfacts by
MGM Advantage (June 2012). The analysis looked
at level annuities without a guarantee and income
levels are based on a pension pot of £50,000 and £50,000 Average Average Percentage Difference over Difference
a retirement age of 65. To create total retirement pension pot Conventional Enhanced Difference the first five years over average
income figures the Index multiplied annual annuity Annuity (per year) Annuity (per year) of retirement retirement
income by 17 years in the case of men and 20
years in the case of women. Enhanced rate figures Men £2,853.34 £3,377.62 18.37% £2,621.40 £8,912.76
are from a sample of smoker rates and enhanced
rates based on health conditions. Women £2,703.50 £3,218.00 19.03% £2,572.50 £10,290.00

2. Reducing
the risk
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Property Commodities Euro equities Property Commodities Euro equities Commodities Global bonds UK equities Commodities Gilts
7.1% 11.2% 29.8% 18.9% 37.0% 20.1% 18.5% 45.1% 30.1% 27.4% 15.7%
UK corp
Property UK equitiess Euro equities Euro equities Property Euro equities Gilts Euro equities US equities Property
bonds
10.4% 20.9% 13.8% 24.1% 18.1% 15.7% 12.8% 20.1% 20.0% 8.3%
6.1%
UK corp
Gilts US equities UK equities UK equities UK equities Global bonds Commodities Commodities UK equities Global bonds
bonds
3.0% 15.7% 12.8% 22.0% 16.8% 9.5% 5.6% 19.8% 14.5% 7.4%
10.0%
UK corp UK corp UK corp
Global bonds Gilts Property Property US equities UK equities US equities Property
bonds bonds bonds
1.8% 9.3% 11.2% 18.8% 1.6% 5.3% 12.6% 14.3%
6.7% -4.1% 6.9%
UK corp UK corp UK corp
US equities Global bonds Gilts US equities Gilts US equities Global bonds US equities
bonds bonds bonds
-9.6% 7.9% 6.6% 17.3% 5.3% -12.8% 9.8% 2.5%
5.4% 0.7% 10.8%
UK corp UK corp
UK equities UK equities Global bonds Global bonds Gilts US equities Property Property UK equities
bonds bonds
-13.3% -27.1% 4.0% 4.3% 0.7% 3.7% -22.5% 2.2% -3.5%
9.0% 8.4%
UK corp
Commodities Euro equities Gilts Commodities Gilts Commodities Euro equities Gilts Gilts Commodities
bonds
-14.1% -27.1% 2.1% 3.7% 7.9% -0.4% -24.0% -1.2% 7.2% -6.7%
1.8%
Euro equities US equities Commodities US equities Global bonds Global bonds Property UK equities Global bonds Euro equities Euro equities
-20.1% -29.6% -2.1% 3.4% 7.3% -4.7% -5.5% -29.9% -7.6% 5.8% -14.7%
The events of the past Why does multi-asset An unpredictable picture
few years have made investing work?
The table above shows how different asset
investors more aware The principle behind this strategy is to invest classes have performed over the last 10 years.
in a variety of assets, each of which reacts It’s clear that it's almost impossible to predict
of the risks posed by
differently to changes in the economic and which asset class will generate the highest
market volatility. market background. A drop in the value of returns in an individual year.
While investing always one asset may then be offset by increases
carries risk, there are in other asset classes, leading to smoother For example, Gilts was the second worst
overall performance. performing asset class in both 2009 and
ways to help reduce it.
2010. But, in 2011 it was the top performer.
Recent market history has illustrated the
One of the most effective benefits of taking a diversified approach to Commodities went in the opposite direction,
strategies is known as investing. It is a technique that has been used going from top performer in 2010 to second-
to good effect by experienced investors worst performer in 2011.
'multi-asset investing' over the years, and can add value to large
– or, put simply, not and small investments alike. Putting your eggs in more than one basket
putting all your eggs can help to reduce risk. Whatever your level of
investment experience, you can benefit from
in one basket.
professional advice.
If you'd like to discuss the
investment options we can
offer you, please get in touch.

3. Making
financial
advice clearer
From 31 December 2012, changes are
being made to the way you receive and
pay for investment advice.
These changes are happening because
the industry regulator, the Financial
Services Authority (FSA), wants to make
the process of financial advice clearer,
in what can be a very complex area of
the market.
Higher standards More control
By the end of the year, all pensions All of these changes will culminate
and investment advisers will need to in higher professional standards and,
meet a higher qualification standard ultimately, a better service for you.
in order to continue advising you in That’s because you’ll be more
that area. They will also need to confident in the advice you’re given
keep their knowledge up-to-date – (thanks to the higher qualifications)
a process that will be independently and you’ll know exactly what you’re
assessed and verified. paying for from the outset (thanks
to clearer charges).
Clearer charges
Importantly, you’ll also have greater
The cost of advice will be clearer.
peace of mind when it comes to
Instead of receiving commission from
managing your money, because
product providers, the cost of the
your adviser will be in touch more
advice you receive will be agreed
often to let you know how your
with you upfront. This agreement
investments are doing.
will also include a description of
any ongoing services you’ll receive
How will it affect you?
in return.
We’ve already started preparing
Clearer description for the changes so that we’re
ready ahead of the 31 December
of services
deadline.
The way financial advisers describe
the services they offer, and whether To find out what we’re
they advise across the whole of the
doing, and how it will affect
market or from a select range of
providers, will also be clearer. you, please get in touch.
You can also find out more
about the changes online at
www.fsa.gov.uk/advicechanges

4. The cost of equality
From 21 December, EU law changes could mean
you pay more for personal insurance1.
For less than
a daily coffee
If you drive a car, you’ll probably Do I need Family Protection? With food and fuel
know that insurers take your Unlike Car Insurance, which you have to buy costs rising, it's nice to
gender into consideration when every year, Family Protection is something find something that
quoting your premium. most people buy when they take on new or remains affordable.
additional financial responsibilities. Life Insurance prices,
But you may not be aware that the same logic
for example, have
also applies to the pricing of other types of If you have financial responsibilities (such as
personal insurance. This includes things like a mortgage), or a family to provide for, Family
decreased steadily
Life Insurance, Critical Illness Cover and Income Protection should be considered essential. over the past decade,
Protection Cover - often collectively referred as average life
to as ‘Family Protection’. It can provide a regular income or lump sum expectancy has
should you become unable to work through gone up.
At the end of this year, changes to the EU illness, accident or unemployment. It can
Gender Directive will outlaw the use of gender also ensure a cash payout if you were to die.
as a pricing factor for all personal insurance. That
Prices are now at a level
means men and women could find themselves What can I do about where you can protect
paying more for Family Protection. the pricing changes? your loved ones for
less than the price of a
Counting the cost The next couple of months provide a window
daily takeaway coffee1,
of opportunity to secure Family Protection
As well as the law change detailed above, at today’s rates. meaning peace of
life insurance companies will also be forced mind is within your
to pay more tax from the start of next year. Insurers are likely to experience a flood of reach – even in these
The combined impact of these changes applications towards the end of the year
could mean you’ll soon pay an extra
days of austerity.
– some of which they may struggle to process
20% – or more – for Family Protection1. before the price increases take effect. 1
30 year-old non-smoker, £200k
decreasing life assurance and critical
illness cover, 25 year term, Guaranteed
If you want to find out how these rates. Male: £30.07 per month (£1.00
Based on industry estimates from LV= (June 2012)
1
price changes could affect you, per day based on 30-day month);
Female: £33.50 per month (£1.17 based
and the Actuarial Profession (March 2012). please speak to us today. on 30-day month). Cost accurate at
30/8/2012.
Capital Solutions T 01582
343090
(08/12) COPEN622 Exp: 1/12/2012
25 Springfield howard@capital-solutions.org.uk
Bushey Heath www.capital-solutions.org.uk
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