The coronavirus pandemic has quickly changed the way we live our everyday lives and, while the main concern is safeguarding people’s health, many are already feeling the financial impact of the situation.
Having a degree of financial certainty can alleviate some of the stress you may be feeling. We can help you and your family understand the financial impact of the pandemic and recommend action you could take. Here are some of the issues with which we may be able to help:
- What is a mortgage holiday, are you entitled to one and if you are, should you take advantage of it?
- Are you paying too much for your mortgage? With interest rates at an all-time low, could you save money by re-mortgaging?
- Do you need to access your savings? If your money is locked away for a fixed length of time, you will be pleased to know that you may be able to access it without having to pay the normal penalties.
- However, if you have money in fixed rate accounts it might be best not to take any out if you can possibly avoid it. As you will know, interest rates have fallen and the chances are you will be earning a higher rate of interest than is currently being offered.
- If you have life insurance and income protection insurance, the good news is that they are likely to pay out if you do need to make a claim due to coronavirus. It is still possible to take out life insurance and income protection policies, although you will be asked questions such as whether you have had COVID-19 or tested positive for it.
- If you are a member of a traditional, public sector defined benefits pension scheme the good news is that your pension income remains guaranteed.
- If you hope to retire in the next year or two and have defined contribution pension schemes (most private sector pension schemes are now defined contributions, as are all personal pension plans, including SIPPs), you are probably worried that the value of your pension pot will have fallen. Remember, you may have other pension pots from previous employers. A professional financial adviser will be able to check that your funds are invested appropriately and recommend changes if they aren’t.
- If you are more than five years away from retiring, it is probably best to leave your defined contribution pensions as they are, assuming that you have already taken financial advice about the way they are invested, and sit out the crisis in the hope that values will rise again.
- If you are already taking your defined contributions pension via what is known as drawdown you should assess whether you need to reduce the amount of regular income you take. If you are taking out more than the 3.5% a year recommended by the Institute and Faculty of Actuaries1, you should consider taking out less, hopefully just for the short term. Maybe you have other savings you could use. A professional financial adviser can help you decide on a suitable course of action.
- If you are being made redundant and are over 55 could this be an opportunity to take early retirement? Whether this is feasible will depend on how much you have built up in various pension schemes and other savings during your working life. A professional financial adviser can help you with the rather complex calculations required to work out whether this is a viable option.
- People who don’t pay their income tax through the PAYE system and instead file self-assessment tax returns and pay their tax in January and July, won’t be obliged to make the July payment – the government has announced that they can defer paying income tax until 31 January 2021.
Finally, if the family income has dropped, perhaps because you or your partner are no longer able to work you should find out if there may be allowances you can claim. If you are self-employed, could you claim a grant through the coronavirus Self-employment Income Support Scheme? If you are renting and fall into arrears you should explain the situation to your landlord immediately. You are still obliged to pay the rent at some stage, but they may give you more time to pay.
Book a no obligation initial telephone consultation
To book your personal telephone consultation, which will take place at a time that suits you, call 08000 85 85 90 or email email@example.com or contact your usual Lighthouse Financial Adviser.
The initial consultation is designed to discover whether or not you would benefit from financial advice and there is no obligation on either side to proceed further. Any advice related fees will be clarified with you before any commitment to proceed.
The value of your investments can go down as well as up, so you could get back less than you invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation. Trusts and tax advice which contains no investment element is not regulated by the Financial Conduct Authority.