A useful guideline for anyone approaching retirement and what actions they can take to protect their money and assets

1. Pre-Retirement Financial Planning Making sense of your financial future Presentation by …

2. One of the UK’s foremost financial commentators

4. Income? Growth? Family Protection? Taxation? Advice? Investments? Inflation? Pension Shortfall? Long Term Care? Quality of life? Costs? Inheritance Tax? Your Concerns

5. Money Management

7. Example: Figures are based on 40/80 final salary (contracted-out) with pension contribution of 6.00% of earnings. Based on 2009/10 Tax Year. Retirement Pension (Pre 65 – assuming 40 years service) Pre-retirement Salary Money Management £11,295 Net Income £18,645 £0 Pension Contribution 6% £1,500 £0 National Insurance £1,812 £1,205 Tax Payable £3,043 £6,475 Personal Allowance £6,475 £12,500 (50%) Gross Income £25,000

8. Plus ………. £30,000 Money Management

9. Question: Do you wish to continue these outgoings in retirement? NB: The amounts quoted are for illustrative purposes only What course of action? Approximately £50 per month Savings (Endowment) Approximately £150 per month Savings (Bank) Approximately £80 per month Loan / Credit Card Approximately £250 per month Mortgage

16. Interest Rates – where are they heading? Threats to your capital and income

17. Is Inflation still a threat? Inflation rates displayed are for illustration purposes only and should not be viewed as proposed past or future inflation values. Figures are based on the value of £1,000 189 358 544 20 434 599 738 10 659 774 858 5 920 950 970 1 8% 5% 3% Annual Rate of Inflation Years Ahead

18. Source: Office for National Statistics - ‘Focus on CPI February 2010’ Guide to Goods and Services Prices: 1980 vs Today * Average beer prices not recorded prior to this date ONS 303% £1.21 30p Loaf of Bread ONS 191% £1.12 38.46p Litre of Petrol ONS 159% 44p 17p Pint of Milk ONS 1987* 248% £2.89 83p Pint of Lager Source Increase Average Price Feb 10 Average Price 1980’s

19. Source: Office of National Statistics website April 10 Guide to Commodity Prices RPI 128% 217.09 95.23 Increase March 2010 July 1985

20. Your Guide to Taxation

21. “ I believe we should all pay our taxes with a smile – I tried, but they wanted cash!” - Anon Your Guide to Taxation

22. Personal Allowances based on tax year 2010/11 Your Guide to Taxation £9,640 75 £9,490 65-74 £6,475 Under 65

23. Your personal allowance is the amount you can earn each year before paying any tax. Tax is then payable as follows: £0 - £37,400 20% £37,401 – 150,000 40% Over £150,001 50% Taxable income based on tax year 10/11

24. Tax on Capital Assets on Death Inheritance Tax

25. What does this mean? 40% Is it a voluntary tax? What is the current rate of tax? What is the Nil Rate Band? Inheritance Tax £325,000 Some would say YES! IHT Levels and bases of, and reliefs from taxation are subject to change Your Guide to Estate Planning

35. Alleviation for Middle England On death Mr Smith passes all of his estate (plus jointly owned assets) to his wife free from IHT. However, this wastes 100% of his Nil Rate Band. Nil Rate Band £325,000 (As of April 2010) Mrs Smith total Sole Estate = £650,000 Mr & Mrs Smith’s total joint Estate £650,000. A transferable Nil Rate Band now arises when one party to a marriage/civil partnership dies and the amount of their estate chargeable to IHT does not use up all of the Nil Rate Band. Where this happens, the unused part can now be transferred to the surviving spouse/civil partner when they die. Assuming Mrs Smith dies after 9 October 2007, her executors may also utilise the late Mr Smith’s Nil Rate Band which he wasted by leaving everything to his widow. Less 2 x Nil Rate Bands = £650,000 Taxable Estate = £0

37. Levels and bases of, and reliefs from taxation are subject to change. Inheritance Tax Solution Mr Smith’s Estate £325,000 Mrs Smith’s Estate £325,000 Mr Smith leaves the £325,000 in a Discretionary Will Trust. Total Estate = £325,000 Taxable Estate = Nil Nil Rate Band £325,000 (As of April 2010) If the potential growth in value of an asset is likely to outstrip future increases in the Nil Rate Band, tax planned Wills on first death leaving an amount up to £325,000 [2010/11] to a trust should still be considered. TAX DUE @ 40% NIL TAX DUE @ 40% = NIL Year 2010 value of trust - £390,000 (available NRB - £325,000 had asset passed to surviving spouse on first death.)

38. Levels and bases of, and reliefs from taxation are subject to change IHT savings may still be made via tax planned wills in the medium/long term even where the combined estate is <=£650,000. Couples with existing Pre-Budget wills should revisit them. A simple codicil may suffice for required changes. The ideal solution may be to always use a first death discretionary nil rate band trust and let the trustees decide the right action to take when death occurs. Outcome

39. Your Guide to Wills and Estate Planning

45. Your Guide to Investment

48. Honister Scale – Investment Risk High Low Venture Capital Trusts Emerging Markets Far East / Japan UK Smaller Co’s Global & UK Equity Growth / Income Funds Tracker and Manager Funds Cautious Managed / Distribution Commercial Property or With Profit Funds Individual Gilts and Fixed Interest / Cash Banks/Building Societies / National Savings Single Company Shares Futures/Options

51. Cash Bonds Shares Security and Accessibility Income is dependent upon Interest rates set by Bank of England Returns unlikely to match Inflation Minimal potential for income growth Minimal potential for capital growth Low volatility Behave differently from shares so can provide differentiation Relatively high and consistent income Limited potential for growth of income Limited potential for growth of capital Can be volatile Lower income than bonds Income can fluctuate Potential for rising income Potential for capital growth over long term Your Guide to Investment

52. £5,000 invested for 10 years – Invesco Perpetual Income, with NET income re-invested Your Guide to Investment Past performance will not necessarily be repeated in the future. Capital held in a deposit account is guaranteed not to fall in value, whereas the value of units and income from an equity- based investment can fall as well as rise and is not guaranteed. Equity based investments should be considered as medium to long term investments, therefore if you withdraw in the early years you may not get back your original investment.

53. FTSE 100 vs Halifax House Price Index Your Guide to Investment Past performance will not necessarily be repeated in the future. Capital held in a deposit account is guaranteed not to fall in value, whereas the value of units and income from an equity- based investment can fall as well as rise and is not guaranteed. Equity based investments should be considered as medium to long term investments, therefore if you withdraw in the early years you may not get back your original investment.

54. Source: Fidelity Total Return 31/01/94 to 30/01/09 excluding charges Be Invested… Stay Invested… -6.14% 0.40% 4.54% FTSE All Share UK Best 40 days missed Best 10 days missed Annual & return stayed invested Index Market

58. Thank You

59. Honister Partners 62 Anchorange Road Sutton Coldfield West Midlands B74 2PG Telephone: 0845 013 5600 Facsimile: 0121 362 1010 Website: www.honisterpartners.com Honister Partners Ltd is an appointed representative of Sage Financial Services Ltd. The Financial Services Authority does not regulate taxation advice or will writing. Past performance is not a guide to future performance. The information given is based on our current understanding of Law and Inland Revenue practice. Tax rates and reliefs may change and their value depends on the individual circumstances of the investor. The information provided in this presentation has been provided as information only and does not represent individual advice. It is unrealistic to assume that markets/funds or indexes will perform as they have done in the past. Honister Partners offer advice based on the whole of the market.