Finance: Making plans

Planning for your financial future can be worrying, especially amid the current talk of a UK pensions crisis. Phil Mellows gives some advice.

The lifestyle survey featured in The Publican earlier this year revealed that most licensees plan to retire by the time they are 60. It's a fine aspiration but how many can be sure they are financially prepared to take such a step?

Recent talk of a pensions crisis might well have prompted many licensees to wonder whether their retirement will be a secure one. If it has, this can be no bad thing. The pensions field is increasingly confusing and the best advice is that you should review your pensions provision at least once a year.

Of course, in the last Budget the government announced its intention to clear up some of the muddle with its scheme to simplify the taxation of pensions.

At the moment there are no fewer than eight different taxation regimes that apply to pensions. The plan is to replace this with a single "lifetime allowance" which will apply to anyone retiring after April 2006.

The tax trigger figure will be set at £1.5m rising to £1.8m for those retiring in 2010/2011 when the scheme will be reviewed. You might think that's way out of your league, but it is not as much as it sounds.

Because it's a lifetime allowance it's based on 20 times your anticipated annual pension and it also includes death in service benefit.

The government reckons that only 5,000 people will find their pensions are taxed as a result but some experts believe this may turn out to be a conservative estimate.

"We might well be surprised how many will be affected," says Ian Walmsley at F&W Financial Solutions. "It could be more than just the top executives and it's something that needs to come out in the open so we can talk about it."

Ian is agent for the long-running Licensed Victuallers' Pensions Fund which many pub tenants are members of and says the fund's trustees are concerned that rather than simplifying the system the new regime will, to begin with at least, create confusion.

His advice to all licensees is to review their pension provisions well before April 2006 and seek advice on the best course of action, for instance converting part of your pension into a lump sum.

"If you leave it until after April 6, 2006, you may miss some opportunities to improve your retirement income and benefits," he warns.

Even without the latest "simplification" pensions are a constantly shifting issue. You might, for instance, expect a longer retirement today than when you started paying your premiums.

"Many of us will live far longer than our predecessors," explains Ian. "It is anticipated that by 2006 the number of people over pensionable age in the UK will reach 11.3 million.

"Retiring in your early 60s could mean you have as many years in retirement as you have worked in your entire life. Will you have sufficient income to sustain your standard of living?"

One financial adviser who is helping licensees sort out their pensions is Alan Corbyn of Priest Hill Financial Services in Yorkshire. He, too, is worried about the uncertainty surrounding the subject.

"Pensions are something everyone is concerned about these days - the problem is that not everybody finds the time to do anything about it," says Alan.

"Before the government changed everything in 2001 people had an idea of what they could expect. But now everyone's case is different."

Alan's advice is to, well, get advice. "Financial advisors have had a bad name in the past but we are now very well regulated and people really do need to talk to an independent expert," he says.

A Smart way to borrow money​

Brewery loans could be given a new meaning with an innovative scheme launched by Scottish Courage.

Called Smartfinance, the idea offers ScotCo customers a chance to finance business expansion by taking out a commercial loan with the Bank of Scotland. Those who take up the option have the chance of opening a current account with the bank in which interest earned is used to reduce the interest charged on the loan.

ScotCo customers can access Smartfinance loans at base rate plus 1.5 per cent regardless of loan-to-value ratio, and offsetting reduces this rate further. Minimum loan amount is £50,000 and the maximum borrowing term is 20 years.

The result, promises the brewer, is "an on-trade borrowing solution where the loan is repaid earlier giving the customer significant savings or, alternatively, reduced monthly repayments".

"We are not just in the business of supplying drinks," it explains. "We also aim to add value to the licensed trade. We regard our relationship with customers as a business partnership that delivers mutual benefits. Smartfinance offers a flexible financial product that allows us to help customers realise their business ambitions."