Trump goes for shock approach to Tariffs!

I have just received the following from Shanti Keleman, MPS Chief Investment Officer at M&G and I thought you might find it interesting and possibly a little reassuring:

“Going into yesterday’s tariff announcements, we thought the clarity would be preferable to the uncertainty. It wasn’t. The number of countries impacted and the rates announced were more than we expected. Equity markets have – rationally – reacted negatively. If the government charges a tax on purchases of goods, then the goods will cost more. That higher cost will reduce what consumers can buy, leading to lower sales, less revenues and ultimately less money to return to shareholders.

The big question is whether these policies last. We’ve already seen multiple reversals in the 10 weeks with US President Donald Trump in office. Even with a firm resolve, pleasing voters will become a necessity as we get closer to US mid-term elections. There is a large imbalance between what the US buys and what it sells. It’s possible to lower the buying fairly quickly, via measures such as tariffs that raise prices and reduce demand. Increasing what the US sells to the rest of the world will take years, as companies need to build new factories and reorganize where they buy the materials and parts to produce goods.  Companies will want clarity on the rules they’ll be operating under, to decide where to produce goods. An environment with constant change doesn’t give that.

As of 2nd April, the S&P 500 Index had fallen -6.8% YTD (measured in sterling terms). It’s expected to be down another 3% today – 3rd April – as of (9:30am UK time). Ironically, some of the largest impact will fall on US multinationals, as they make and sell products around the world. The US dollar was also weaker, bucking the trend of the currency generally rising in response to uncertainty. The falls need to be seen in the context of a very strong period of performance in 2024.  Other equity markets have fallen, but by lower amounts. The FTSE 100 Index is down -1.2% today and the Euro Stoxx 50 Index has fallen -1.4%.

Our view is that the likelihood of tariffs staying in place for an extended period of time in the proposed form is low; the costs would be too high for voters. We’re not making any changes to our portfolios based on this specific announcement. Our equity exposure is diversified across different regions, which has worked well as the US market’s strength has faded. While government bonds have held up well, they haven’t delivered significant rises to offset the equity losses. We don’t think this is likely, as the risk of inflation will keep the interest rates paid by bonds from falling sharply. If we saw a steeper fall in equity markets, we’d likely view it as a buying opportunity.” 

As always, if you have any questions about this piece or any other finance-related matter, please do not hesitate to contact me.

Yours sincerely,

Graham Ponting CFP Chartered MCSI

Managing Partner

Panic Is Spreading Faster Than Prices Are Falling!

It’s only March, and already, 2025 is shaping up to be a turbulent year for investors.

As you likely know, markets are temporarily down from the recent peak. However, it’s not the size of the decline that’s causing the most damage. It’s the noise.

Every time the market sneezes, the news cycle screams pneumonia. Social media lights up with instant “hot takes,” doom-laden predictions, and amateur economists masquerading as experts. A dip in the great companies of the world becomes a “crash.” A pause in growth becomes a “collapse.” And before you know it, even rational, well-adjusted investors are reaching for the panic button.

The reality? Market declines happen. Always have. Always will.

Volatility is not a flaw in the system—it is the system. But in today’s hyper-connected world, we’ve lost all sense of proportion. Everything is a crisis. Everything is politicised. The combination of market movements and people’s political views is proving toxic.

This is where we at Clearwater come in.

Not just as financial planners or portfolio managers but as behavioural coaches. Because when panic sets in, logic goes out of the window. And if no one is there to stop it, years (sometimes decades) of hard work can be undone with a single bad decision.

Maybe you’ve already seen it in the last few weeks. Friends with well-diversified portfolios and clear long-term plans are spooked. Why? Not necessarily because they’ve seen their valuations fall (it would be best if they hadn’t looked), but because they’re seeing headlines that fuel their fears, social media posts that confirm their biases, and politicians who are more than happy to pour petrol on the fire.

In times like these, some clients start asking questions they wouldn't usually ask. They begin second-guessing the strategy. They look for quick fixes.

Our job is to stop that spiral. To provide context. To remind you that your plan was built with downturns in mind. That volatility isn’t the enemy; emotional decision-making is. In these moments, we are often the only barrier between fear and financial self-sabotage.

The world has changed. The speed and intensity of information has changed. But the fundamentals of good behavioural financial advice haven’t.

Our job is to help you, our clients, to stay calm, stay the course, and stick to the plan.

Please feel free to share this blog with anyone you think might find it useful. 

As always, if you have any questions about this piece or any other finance-related matter, please do not hesitate to contact me.

Yours sincerely,

Graham Ponting CFP Chartered MCSI

Managing Partner

The Trump Effect!

Introduction

Since his inauguration in January, newly elected U.S. President Trump has wasted no time implementing the Make America Great Again (MAGA) agenda, and the Republican’s policies have sent shockwaves far beyond the U.S. homeland. As global markets react to policy announcements made at breakneck speed, many investors are wondering what the new normal means for them. In this post, I review the President’s actions in multiple aspects of geopolitics and explain the impact he’s had so far.

Reversal of Support for Ukraine

Perhaps the most important contrast in policy between President Trump and his predecessor, Joe Biden, is his decision to end the government’s military support for Ukraine in its war with Russia. Whilst Biden unequivocally reiterated his support for Ukraine until his final days in office, Trump has taken the opposite approach, announcing high level talks with Russia on February 12th. Crucially, neither European nor Ukrainian officials were invited, sparking a flurry of worried condemnation from European leaders, and leaving a sense of military frailty that has since been compounded by the complete suspension of military aid from the U.S. to Ukraine on March 3rd. Subsequent to this there have been increasing negotiations regarding the Ukraine war, with the U.S. putting forward a proposal for ceasefire in Ukraine, but this (as of the date of writing) not been accepted by both sides, with Russia setting out its own conditions for a ceasefire.

The knock-on effect on the U.S. and European defence sectors has been relatively straight-forward. European defence indexes have surged, with key defence contractors making large gains as the onus for European sovereignty shifts towards self-funded defence efforts and away from the umbrella support of NATO. In contrast, in the U.S., defence stocks have experienced downward pressure caused by the uncertainty over the longevity of defence contracts put in place by Biden and proposed budget cuts to the Pentagon’s budget. The euro (EUR) has also strengthened against the dollar (USD), though this change has likely been caused by policy decisions beyond the scope of the Ukraine war (as outlined below).

The Onshoring and Prioritisation of Artificial Intelligence

The U.S. remains the dominant player in the global artificial intelligence (AI) arms race, and that looks unlikely to change despite the industry shock caused when Deepseek, a Chinese rival, released its R1 model in January, claiming to have required far less computational power than cutting-edge American models like OpenAI’s ChatGPT. Trump clearly values AI, having surrounded himself with industry experts like Elon Musk (CEO of Tesla and XAI) and Sam Altman (CEO of OpenAI) at his inauguration, and announcing the formation of the Stargate Project, a new company which intends to invest $500 billion over the next four years building new AI infrastructure for OpenAI in the United States. The world’s premier manufacturer of leading-edge computer chips, the Taiwanese Semi-conductor Manufacturing Company (TSMC) also announced on March 3rd that it would boost its U.S. investment by $100 billion, creating five new fabrication plants in the States. This signals not only a prioritisation of the AI industry, but also a clear inclination to decrease the U.S.’ current dependence on foreign supply chains for the most sought-after computer chips. Given such significant investment and the astounding rate of progress in the industry, most investors are still bullish on the prospects for technology in the U.S.

Imposition of Tariffs 

True to his campaign promise to impose stringent new economic tariffs on specific countries, President Trump has quickly followed through with a raft of economic policies that have upended the established equilibrium of global trade. This includes the US announcing 20% of additional tariffs on imports from China, 25% tariffs on imports from Mexico and Canada, and 25% tariffs on steel and aluminium from the EU and the UK. This has led to a range of countermeasures, including the EU and Canada announcing retaliatory tariffs on American goods. However, in response to the EU’s countermeasures, and as a demonstration of just the ‘tit-for-tat’ nature a trade war can deteriorate into, Trump threatened 200% tariffs on wine and champagne from EU countries. More broadly as a result, there are understandable concerns about the possibility of an extended trade war between the US and other nations around the world, and the potential impact on US and global growth, as the tariffs start to take effect.

There are undoubtedly increasing concerns in the U.S. of a recession (dubbed the ‘Trumpcession’ by some), with the dollar weakening against other major currencies, and fears of inflation returning as consumers are forced to pay more for previously cheap goods and services. This has prompted a ‘flight to safety’ in some quarters, encouraging the purchase of defensive stocks such as those in the utilities sector in equities and U.S. Treasuries on the fixed income side. Fears are particularly notable in the technology industry, which has significant exposure to foreign supply chains. Given the outsized contribution of technology stocks to the overall U.S. economy over the last couple of years or so, this has broader implications for the health of the wider stock market.

Whilst the tariffs are expected to have a negative impact for those countries directly involved, nations may indirectly benefit from the situation. For example, in response to U.S. tariffs, China has imposed additional duties on American agricultural products and been forced to look elsewhere for alternatives. This has provided opportunities for the Latin American and European agricultural sectors, which export staples like soybeans and meat to China. Similarly, countries like Vietnam and Malaysia have attracted manufacturing investments as companies seek to mitigate the impact of the U.S./China trade war by relocating production, bolstering their exports.

What impact has this had on global markets? 

Following equity markets initially rallying on the news of the Trump election victory under the expectation that potential policies of deregulation and tax cuts would be positive for companies, we have since seen this trend reverse, at least in the short term. Following US equities reaching a record high in mid-February 2025, they have subsequently fallen as some market participants have become increasingly concerned regarding the global trade environment, as outlined above. This has led to falls in wider global equity markets, given the significant weight of the US in global equity indices (due to the size of US companies within the global landscape), with leading global equity indices falling into correction territory (a fall of over 10%). However, it should be noted that these falls have simply “given back” gains experienced in the aftermath of the US election, and as such when we stand at the date of writing today (19th March 2025) and look back over twelve months, global equity indices are in clear positive territory.

Should clients take any action?

As readers of my blogs will be well aware, volatility is part and parcel of investing in global markets such as equities, and in some ways can be seen as a “cost” paid in order to achieve the higher expected returns that equities have historically delivered over the long-run, compared to more stable, but typically lower performing, assets such as cash deposits. As such, from time to time periods of significantly heightened volatility, such as what we have observed over the past month, are to be expected.

While there are clear triggering factors that have led to this volatility (most notably the election of Trump in the US and concerns regarding the impacts on global trade, at least in the short term, that this may have), during these times the best approach is to seek to “turn down” the noise on markets, and sit through the volatility. While end-investors may feel it natural to seek to take action during a period such as this, if history is a guide, then doing so during these moments is often one of the worst times to do so, risking locking in falls in asset prices, and removing the ability for any sold assets to then participate in any subsequent market recovery.

Conclusion

President Trump has a history of introducing volatility, not only to financial markets, but also the wider world around him. The first few weeks and months of Trump’s second term have proven no different, as investors try to anticipate coming announcements and the implications of his administration’s strategic decisions.

There is no doubt that the world has entered a new global trade regime, with Trump’s aggressive imposition of tariffs forcing equivalent countermeasures from other nation states, in a hurried attempt to counteract the worst of these policies.

While this new landscape is unsettling, we do not believe it impacts the long-term fundamental nature of investing, particularly as it relates to our investment approach. Our investment partners at ebi, adhere to a philosophy of a long-term buy-and-hold stance to markets, seeking to capture market returns while tilting on a long-term basis to investment factors that evidence indicates deliver a premium over market risk-adjusted returns over the long run.

While some entities will seek to actively trade and time these new market dynamics, we believe the sheer unpredictability of Trump and the speed at which he can launch new policies before turning on a dime and announcing its retraction indicates just how challenging it is to successfully actively trade this market. We wish active investment managers the best of luck while noting the evidence is firmly in our favour for approaching markets using a buy-and-hold approach focused on setting strategic asset allocations and maintaining these over the long run rather than a short-term tactical approach seeking to outperform markets over the short-run.

What is clear is just how volatile the coming years will be, headed by Trump and the new regime we find ourselves in. The Trump Effect is in full swing, but the show is just starting. 

Please feel free to pass this blog on to anyone you think might find it useful. 

As always, if you have any questions about this piece or any other finance-related matter, please do not hesitate to contact me.

Yours sincerely,

Graham Ponting CFP Chartered MCSI

Managing Partner

It’s That Time of the Year Again!

As we approach the end of the 2024/25 tax year, thoughts inevitably turn to end-of-year tax planning and any unused allowances (ISA, Pensions, etc.) that may be available.

The ISA allowance for 2024/25 is £20,000, and if you have not made a subscription (or perhaps you have only made a partial subscription), there is still time to use this allowance if you have the funds available.

Since 6th April 2016, in addition to the subscription, it has been possible to top-up ISAs with any amounts withdrawn during the tax year, including any charges deducted. This means that even if you have not made a subscription this year but have ISAs from previous years, your personal ISA Allowance may be more than £20,000 because of charges deducted during the year. If you made a subscription at the beginning of the tax year, you may still have a residual allowance left because of these deductions, which can be utilised by 5th April 2025.

If you have a Standard Life Wrap Account, the scope for top-up (in addition to any unused subscription) does not apply unless you take physical withdrawals from your ISA. This is because Standard Life deducts ISA charges from the cash held in your Portfolio, not the ISA itself.

You can access this information on the Transact website if you have a Transact Wrap Account and want to know your personal ISA allowance for the remainder of the 2024/25 tax year. From your home page, select reports, and from the drop-down menu, select ISA Subscriptions.

If you would like to use the balance of your allowance before 5th April, please ensure you advise us of your intentions before the end of March; we will be very pleased to assist.

For information, the ISA Allowance for 2025/26 will likely remain £20,000 each, so £40,000 per couple. However, there are rumours that Rachel Reeves may restrict the amount that can be held as cash.

Capital Gains Tax (CGT)   

Currently, rates for CGT are 18% for Basic Rate Taxpayers and 24% for Higher Rate Taxpayers; where property assets are concerned (excluding the main residence), the rates are also 18% and 24%, respectively. There is an allowance each year (currently) of £3,000 before CGT becomes payable.

Of course, income tax rates are 20%,40%, and 45%, so they are quite a bit higher than taxes on capital gains!

It might be sensible to consider using this year’s CGT allowance before the end of the tax year. If you wish to look into this, please let us know, and we will try to assist.

If you have a General Investment Account (GIA) with us worth more than £250k, we will contact you individually over the next couple of weeks or so.   

Many of our clients will not need to take any action, as most assets are held within ISAs and Pensions, where CGT does not apply.

As always, if you have any questions about this piece or any other finance-related matter, please do not hesitate to get in touch.

Yours sincerely

Graham Ponting CFP Chartered MCSI

Managing Partner

DeepSeek AI

You’ve probably been reading a lot about AI, Nvidia and the Chinese firm DeepSeek in the last three days. Billions were wiped off US tech share prices on Monday as the emergence of DeepSeek as the number one downloaded AI app rocked confidence in the tech giants in America.

In a nutshell? Someone has seen something smart, and thought, “I bet I could improve on that”.

Here’s the story of modern technology in one chart, which I like to call “IT ONLY GETS CHEAPER!” It’s for computer memory, but you could show it for almost any part of the tech stack

Source: 7IM/Our World in Data, shows USD Price of computer memory per Terabyte, adjusted for inflation

Someone is always coming for the leaders. Big companies are big targets. Huge companies are HUGE targets. It is quite literally the story of competition and capitalism playing out in front of our eyes.

And so, to markets. We’ve been talking about the top ten concentration risk in the US for a couple of years now.

On Monday this week, Nvidia lost the most value a company ever has in a day (beating its own record).  

Cue lots of headlines about “the US market ☹”

But…. 349 companies in the S&P 500 were positive on Monday! Waaaay more than half!

The problem is that if you put £1000 into the S&P 500, £360 goes into the top ten*. And 90p goes into the bottom ten companies. So, no matter how good a time those bottom ten companies have, they can’t make a dent. They could all double, and no-one would notice.

So, who are these little guys in the smaller bit of the US market. Let’s give you a chance to get to know some of the smallest businesses, stocks 401 – 500 in the list. Some of the plucky underdogs you haven’t heard of …

Only … you have heard of them:

Source: Dominos Pizza/Hasbro/Walgreen Boots/Molson Coors/Paramount Pictures/Black and Decker/Ralph Lauren.

And they aren’t that “little”! Many of them have been around for decades, have loyal customers, quality brands, and don’t care too much about the cost of microchips.

They offer you the chance to watch a box office hit, while eating a pepperoni pizza, washed down with a cool beer. There’s dolls and drills, polo shirts and prescriptions.

It might be worth having a little less in the giants, and a little more in these stocks … and there’s a really simple way to do it:

Equal-weight investing spreads your risk. Invest £1000, and you put £2 in every stock – whether it’s a tech giant 

… or arguably the most famous soup brand in the world (sorry Heinz).

Source: Andy Warhol

*In fact, if you work up from the bottom of the index, your £360 contribution buys you 442 of the 500 stocks!

However, the giants are the size they are for a reason, and it would be foolish to imagine that they are going away any time soon.

What wasn’t in the news yesterday was that billions were ‘wiped’ back on US tech share prices as many felt the panic caused by the emergence of a relatively unknown competitor had been overdone – it was a bit of a wakeup call nonetheless.

As always, if you have any questions about this piece or any other finance-related matter, please do not hesitate to contact me.

Yours sincerely,

Graham Ponting CFP Chartered MCSI

Managing Partner

It is really happening …… but how worried should we be about our investments?

I am indebted to my friends at 7IM for the following:

By this time next week, the power centre of the United States will have moved back to Mar-a-Lago, Trump’s “Winter White House”.

To be honest, with temperatures in Washington DC hitting -10°C next week vs. +26°C in Palm Beach, Florida, it does genuinely seem like a pretty sensible thing to do…

On the less sensible side of the President-to-be ledger are things like this:

Source: x.com/kalshi

So, are we ready for another four years of policy via Twitter X?

A couple of examples from his first year in charge – antagonising North Korea…

Source: x.com/realDonaldTrump

… and asking some poor White House intern to mock up this video and then posting it …

Source: x.com/realDonaldTrump

It’s easy to get concerned. And difficult not to be distracted.

But just for a little bit of calm, and a little bit of context, it’s worth revisiting one of our favourite charts; Big Market Days (BMDs).

It’s how we explain the idea of volatility in a more … approachable … way. Rather than worry about standard deviations (😖) or options premia (🤢), we just look at how many times the market moved up or down by more than 1%, which is usually the threshold for people outside of finance to notice.

We update it every year to see how unusual stock markets were. For what it’s worth, 2024 was almost exactly average; 50 BMDs.

The really interesting point though is that if you look at 2017, Trump’s first year in office, the fire and fury on Twitter absolutely did NOT translate to markets.

2017 saw the least BMDs since 1965!

Source: FactSet/7IM. Past performance is not an indicator of future returns.

Now look, that doesn’t mean 2017 will happen again.

But it’s worth remembering that no matter how loud the President talks, the finance world doesn’t necessarily have to listen.

As always, if you have any questions about this piece or any other finance-related matter, please do not hesitate to contact me.

Yours sincerely,

Graham Ponting CFP Chartered MCSI

Managing Partner

Lasting or Enduring Powers of Attorney

Happy New Year! I do hope you had an enjoyable Christmas and New Year break with family and friends.

Over Christmas, one of my clients asked me a couple of questions about Powers of Attorney, and I thought the New Year might be a good time to give a very brief reminder of how these work.

 A power of attorney (POA) is a legal document that allows you to appoint someone to make decisions on your behalf: 

Ordinary power of attorney (OPA).

A temporary document that allows someone to make decisions about your finances when you are unable to. For example, if you are in hospital or on holiday.

Lasting power of attorney (LPA). Previously Enduring Power of Attorney.

A permanent document that allows someone to make decisions about your finances, health, and welfare, even if you are unable to make them yourself. You can choose to give your attorneys the power to make decisions as soon as the LPA is registered or only when you lose the ability to make decisions.

Without a Power of Attorney in place, when someone loses capacity, it can prove very difficult for friends and relatives to make decisions on their behalf because of the many understandable safeguards in place.

I strongly recommend that all clients have Powers of Attorney set up. If you haven’t gotten around to this yet, maybe you could make it one of your New Year’s resolutions. I will be happy to recommend a good firm of solicitors who can do this for you, if required.    

One paragraph it is important to have included in a Power of Attorney is as follows:

“My attorneys may transfer my investments into a discretionary management scheme.  Or, if I already had investments in a discretionary management scheme before I lost the capacity to make financial decisions, I want the scheme to continue.  I understand in both cases that managers of the scheme will make investment decisions, and my investments will be held in their names or the names of their nominees.  I authorise any person holding any will or codicil of mine to disclose its contents to any attorney acting under this lasting power of attorney, but only if that person reasonably believes that: (A) I do not have capacity to authorise disclosure myself; and (B) disclosure is in my best interests.”

If this paragraph is not included, it may not be possible for some investment platforms and/or discretionary investment managers to continue to act on your behalf according to your attorney’s instructions.

If you already have an Enduring or Lasting Power of Attorney in place, this should be a relatively simple addition.

I hope you have found the above helpful but if you have any questions, please do not hesitate to contact me.

Yours sincerely,

Graham Ponting CFP Chartered MCSI

Managing Partner

Festive Greetings!!!

Adam, Kim, and I would like to take this opportunity to thank you for your continued support and of course to wish you and your family a very Merry Christmas and a Happy New Year!

As with quite a number of years now, in lieu of sending individual Christmas cards, we have once again decided to make a donation to a worthy cause.

I have decided to support Bowel Cancer UK again this year. I have lost two good friends to bowel cancer, and my late mother suffered from it in the years before her death. As with many cancers, bowel cancer can often be treated effectively (but not always) if it is identified in its early stages. For this reason, if you receive one of the rather unpleasant self-test kits, just do the test and send it back!

Cancer of course, is not a disease that affects the sufferer only, husbands, wives, children and extended family are all along for the difficult and emotionally draining ride. The more we can do to get on top of this illness in all its forms, the better.

https://www.bowelcanceruk.org.uk

I am sure you will approve of my decision to support this very important charity.

I do hope 2025 brings you all you wish for. Please remember that every minute of life is priceless and will never be repeated, so take time to enjoy, be grateful for, and celebrate your existence!

With very best Christmas wishes,

Yours sincerely

Graham Ponting CFP Chartered MCSI

Managing Partner

Why Labour’s pension plot twist needs a rethink

The inclusion of defined contribution pension benefits in people’s estates for calculating inheritance tax has really thrown a spanner in the works of estate planning. However, as you will know, I am recommending exercising caution when it comes to making big decisions around taking pension benefits before 2027, when the new rules come into force. There is strong representation against the proposals as they stand, and it is possible there could be amendments before then.

The following is an article on this subject from Money Marketing written by Steve Levin, CEO of Quilter.

“Labour’s decision to bring pensions into the inheritance tax (IHT) framework marks a significant policy shift but also introduces considerable complexity into an already overburdened system.

The challenge now lies in implementing this change without exacerbating existing inefficiencies or undermining trust in long-term financial planning.

While there is no general exemption from IHT for pensions, various provisions in the Inheritance Taxes Act 1984 have exempted pensions in specific circumstances. Since 2015, pension freedoms have offered people greater flexibility in how they take their pension benefits and pass on funds after death, serving as tools for retirement and estate planning.

The suggested IHT change is seen as closing a ‘loophole’, but this implies ambiguity that was exploited, which is not the case.

The IHT treatment of pensions has been fairly consistent, despite some recent clarifications. This change has the whiff of retrospective taxation on those who funded pensions expecting the current IHT treatment.

Altering the rules soon after pension freedoms were introduced risks undermining savers who made decisions based on the current framework. Individuals later in life may not have the scope to replan based on this cliff-edge implementation without transitional provisions.

Under the current proposals, there could be eye-wateringly high levels of taxation. Applying 40% IHT and then income tax (possibly at 40% or 45%) leads to marginal rates of 64% or 67%. This can get more extreme if pension assets push an estate over £2m, removing the residence nil-rate band.

It is unconscionable to tax remaining pension funds at levels that could remove their value almost entirely.

HM Revenue & Customs has been tasked with designing the process to implement the change, including how IHT due on pensions will be calculated, reported and paid, and how information will be exchanged between pension schemes and legal personal representatives.

The process, outlined in the technical consultation, appears to create concerning outcomes. It will inevitably increase the time taken to pay out death benefits. The probate process, already struggling with delays, will face further strain.

This growing backlog is causing significant stress for grieving families, who often cannot access key assets until probate is granted. Executors face a time-consuming process of gathering information, valuing assets and submitting forms. Adding pensions into the IHT framework will increase this administrative burden, risking further delays.

Pension schemes are often unaware of a member’s death immediately, delaying the start of legal and tax processes. Legal personal representatives, tasked with consolidating information across multiple pension schemes, will face an even greater burden. For grieving families, these delays and added responsibilities compound an already difficult situation.

The proposed introduction of a tool to generate nil-rate band statements for pension schemes may help streamline the process, but it is not a straightforward solution.

Personal representatives would need to input detailed information, adding complexity to an already time-intensive task. Pension schemes will have to decide whether to continue with discretionary processes for identifying beneficiaries, which can add significant time.

Delays may also cost families significantly. HMRC proposes charging interest on IHT owed after six months following death, currently at 7.25%. Interest will likely be charged on IHT due from schemes even where delays are not caused by them, quickly mounting up.

Ambiguity persists around what pension benefits fall within the new rules, such as death in service benefits or joint-life annuities. Including such annuities could involve actuarial calculations similar to those for annuity guarantee periods.

Alternative solutions may exist that could be palatable to the Treasury, avoid excessive tax rates, and allow beneficiaries prompt access to funds without diminishing the attractiveness of pensions. We hope that HM Treasury and HMRC are open to collaboration on this matter, and we are currently developing suggestions for consideration.

The risk of repeating the mistakes of the previous government’s hasty abolition of the lifetime allowance cannot be overstated. Poorly thought-out reforms create administrative headaches and undermine trust in the pensions system. Tax rules are already highly complex, and any changes must aim to simplify rather than complicate the system further.

While reforming the IHT treatment of pensions might generate much-needed revenue, it must be approached with care.

The government’s fiscal ambitions are understandable, but pensions are fundamentally long-term products. Sweeping changes, especially on an accelerated timeline, risk damaging the system’s stability and penalising those who planned their estates in good faith under existing rules.

By adopting a pragmatic and phased approach, the government can ensure the system remains fair, operationally feasible and supportive of the nation’s savers.”

It is possible this representation may fall on deaf ears, but let’s hope not. 

I hope you found the above interesting. As always, if you have any questions about this piece or any other finance-related matter, please do not hesitate to contact me.

Yours sincerely,

Graham Ponting CFP Chartered MCSI

Managing Partner

Topping up your State Pension

The government has given people more time to pay National Insurance contributions towards their State Pension – but the cut off date is April 2025. 

State Pension Entitlement 

Entitlement to State Pension is something many people don’t think about until they are nearing retirement age, however we are urging individuals of all ages to check their state pension record NOW to check for gaps in their contribution records. 

The State Pension changed in 2016 for men born after 6  April 1951 and women born after 6 April 1953.  The new State Pension is based on people’s National Insurance records and individuals will normally need at least 10 qualifying years on their record to get any State Pension, and 35 years to get the full amount. 

In order to properly plan for your retirement, you need to know your eligibility, this is particularly important for the self employed, those who have had low earnings, time outside the UK or breaks from working. 

Dealing with gaps in your National Insurance record – deadline approaching! 

If there are gaps in your National Insurance record which mean you don’t have enough years to qualify for State Pension, it is usually possible to make voluntary contributions to fill those gaps. However, if the gaps are between April 2006 and April 2016, you only have until 5 April 2025 to make the payment.  After 5 April 2025 you will only be able to go back 6 years, which may not be enough. 

The first step is to check your National Insurance record to find out if you have any gaps, how much it will cost to fill them, and assess if it would be beneficial to pay voluntary contributions.   

If you have gaps due to a time when you were unemployed, on benefits, a carer, or caring for children, you may be eligible to get National Insurance credits to fill the gap free of charge.  

How to check your record 

You can check your record online here by signing into your Government Gateway account, if you have one. If you don’t have one you will have the option to set one up, which usually involves providing photo ID, for example your driving licence or passport.   

If you are unable to check online, you can request a printed National Insurance Statement online here or by calling HMRC telephone on 0300 200 3500. You will need your National Insurance number and tell them what years you want your statement to cover, excluding the current and previous tax years. 

Once you have your record, you need to assess how much it would cost to fill any gaps, and decide if you want to pay voluntary contributions. You can check your statement pension forecast in your Government Gateway account, and contact the Future Pension Centre here to find out if you will benefit from voluntary contributions. 

Take action NOW 

If you need help navigating your way through your state pension entitlement, we can help, but remember you only have until 5 April 2025 to fill gaps in older tax years, so check your records NOW to ensure you have enough time, and don’t miss out on this valuable entitlement.

Please feel free to pass this e-mail to anyone you think might find it useful. 

I hope you found the above interesting. As always, if you have any questions about this piece or any other finance-related matter, please do not hesitate to contact me.

Yours sincerely,

Graham Ponting CFP Chartered MCSI

Managing Partner