Pensioner Bonds – what you need to know

In early 2015 Pensioner Bonds will be introduced as per the Chancellors promise in the budget of 2014. The exact release date is not yet known.

Savers have suffered from a dramatic fall in interest rates in recent years and the new bonds are an attempt to address this in some way, albeit only for those aged 65 or more.

There will be 2 variants available. One will offer a rate of 2.8% over a year and the other will offer 4% over a period of 3 years.

As ever, with anything that stands out as being a ‘good deal’, there will be a limit on how much can be saved. In this case there will be a maximum of £10,000 per person per term. This means that a maximum of £20,000 per person could be saved in the bonds over the 2 periods. The minimum investment will be £500

The interest on them will be Taxable at the savers normal rate of Income Tax.

The Bonds will be made available through the state-owned savings organisation, NS&I.

The Treasury, which estimates that the scheme will cost the Tax payer £325million, will issue up to £10billion worth of bonds and there is the likelihood that they will be fully subscribed within a matter of months.

Savers must be prepared to tie their money up for a period of 1 or 3 years. Early withdrawal will result in a penalty equivalent to 90 days interest.

Once launched they will be available by post, telephone or online direct from NS&I.

Although not available to everyone, and they won’t be suitable for everyone in the target group, they will help some people to achieve a much higher return than can be obtained using a typical Bank or Building Society account.

Case Study: Long Term Care

We were introduced to a family who were looking to secure a place in a residential home for their mother and needed to find a sustainable way to fund her care for the foreseeable future.

We met with the clients to gain a thorough understanding of the situation and the finances they had available to fund their mother’s care:

  • The client’s mother, ‘Mrs A’, was 84 years old and her mobility had deteriorated to the point where she could no longer safely live alone.
  • The main cause of Mrs A moving from her own home was because of mobility problems rather than chronic health problems.
  • Mrs A had sold her own home for £250,000, which meant that she was a ‘self-funder.’
  • Mrs A’s children had looked at many different homes and decided on the best one for their mum, which would cost more than the local authority would normally pay.
  • The cost of the home was £544 per week.
  • The local authority would generally look to pay much less than this; typically £424 per week.

The family’s primary concern was that, if Mrs A’s money ran out, her place at the care home would be under threat at a time when she was likely to be much more vulnerable.

By helping the family to find a means of funding their mother’s care, we could provide them with the peace of mind that their mum would be safe and secure in the long term.

How we helped

We recommend an Immediate Care Annuity [ICA], which would meet the family’s needs by paying the care home fees, a total of £28,325 per annum, for the rest of Mrs A’s life.

The family negotiated with the care home that the cost of care would not rise for the first five years and, after five years, only by no more than inflation. The care home accepted this because they felt that the longevity of the place was secured.

The ICA was fully underwritten as the provider gathered all the necessary medical information relating to Mrs A so that they could assess her perceived longevity.

  • The ICA cost a total of £160,000.
  • The family were able to pay for the ICA using the proceeds of the sale of Mrs A’s house.
  • Mrs A retained the balance of £90,000 to ultimately pass on to her children or to provide the top up of cost between the ICA and increasing care home fee’s as time passes by.

The family’s objectives have been achieved by ensuring continuity of the majority of the care home fees by transferring the ‘risk’ of money running out to an insurer.

Now 3 years down the line, Mrs A is happy in her residential care home and the family have invested the £90,000 residue from the sale of her home in suitable investments for use later, if needed.

Our case studies are designed to give you an insight into how we have advised a variety of clients on their specific financial needs. It is intended for information and illustration only and should not be taken as individual advice.

If you have any questions relating to your own circumstances, please contact us.

* In order to protect the confidentiality of our client’s, we have changed the names in our case studies. They are, however, all based on the real life experiences of our clients.

Interest only Prisoners seek escape using Lifetime mortgages

The tightening of lending policy by Banks & Building Societies has had the unintended consequence of creating a new group of borrowers now being labelled as an ‘Interest Only Prisoners.’

What is an Interest Only Prisoner?

  • Some people borrowed on an interest only basis planning to repay their mortgage using methods that are no longer acceptable to lenders. Their current lender may be charging them far more than they could pay elsewhere but because new lenders won’t accept ‘Interest only’ they are effectively trapped with their current lender paying the higher rate.
  • Some people arranged their interest only mortgage with a term which extended into their retirement. At the time these borrowers expected to be able to either extend the term of the mortgage or move the mortgage elsewhere, later on.  Because ‘lending into retirement’ is now discouraged by lenders, these borrowers are effectively approaching the end of their mortgage term with little hope of being able to realise their initial intentions.  They therefore face the worry of the lender demanding repayment of the mortgage with no easy way of repaying or replacing the mortgage.

There are 2 fundamental changes to lending policy causing these issues:

  1. Most lenders either no longer offer Interest Only mortgages or, those that do, set such strict criteria that most borrowers don’t qualify for it.
  1. Lending into retirement is now seen as ‘high risk’ with lenders paying far more attention than ever before to an applicant’s retirement income in relation to the cost of the mortgage.

Depending on the borrower’s circumstances, and future plans, these changes have resulted in many people either facing being stuck with their current lender or significant increased cost because they have had to adopt a different repayment strategy such as switching to a repayment mortgage.

Based on the recent pension proposals, an additional problem has also come to light. In the past lenders were happy to take pension income into account in their calculations.  However, the proposed changes will allow people to ‘strip out’ their pension fund thus undermining their long term pension income.  Lenders may therefore be reluctant to rely on this income for securing the mortgage long term because the income may only last for a short period of time.

Clearly such a change of attitude and approach on the lenders part can cause significant distress to those who are not in a position to make increased repayments.  It is also distressing to be told that the lender wants their money back with the obvious first fear being loss of the house by repossession.

Equity Release Mortgages

A Lifetime, or Equity Release Mortgage as they are commonly known, may help many people out of the situation by releasing enough money to repay the mortgage but this will be subject to the property value and borrowers age.  Typical Equity Release schemes roll up interest as time goes by but some do allow the borrower to make monthly repayments.

Either way, this situation, which is continuing to develop, requires expert advice and research into all the options available. BLM’s SOLLA accredited adviser is able to guide clients through a period of high stress in order to determine what options will be available to each particular client and how best to solve the situation.  For individual advice, please get in touch with us to discuss your own circumstances.

Not everyone will qualify for an Equity Release Scheme. An Equity Release Scheme will not be suitable for everyone.  More details can be found at the Money Advice Service.

Stephen Sale

SOLLA Accredited adviser



Skandia to become ‘Old Mutual Wealth’

Fron the 22nd of September 2014, Skandia are changing their name to ‘Old Mutual Wealth’.

Skandia has been part of the Old Mutual Group for a number of years; our clients may have noticed the name on Skandia’s paperwork and letterheads. Old Mutual is an FTSE® 100, international long-term savings, protection and investment group, based in London. It was established in 1845, employs over 55,000 people and serves more than 16 million customers.

From 22 September, anything currently using the ‘Skandia’ name will change to ‘Old Mutual Wealth’ so clients may notice these changes in their correspondence they receive and on their website. Skandia has assured BLM that their change of name will have no effect on customers other than to reinforce the fact that the company is a fundamental part of an organisation with very substantial financial strength, a strong heritage and an international reputation. It will also have no effect on the way BLM works with Skandia.

Should you wish to know more about the Old Mutual Group, there is further information on the following website:

Our clients can contact us with any questions or concerns.


New ISA (NISA) Limits and options

Individual Savings Accounts (ISAs) enter a new phase from 1 July 2014. At present, ISA contributions for the 2014/15 tax year are capped at £11,880. The entire amount can be invested in a stocks & shares ISA, or up to £5,940 can be saved into a Cash ISA. However, from 1 July 2014, the ‘New ISA’ (NISA) limit will increase to £15,000 and you can invest as much as you like of this allowance in cash, stocks & shares or a combination of the two. Investors will also be able to transfer ISA savings from previous years freely between stocks & shares and cash.

Moreover, from 1 July, any interest on cash held within a stocks & shares NISA will be free of tax. This means that, from 1 July, you could have just one NISA, rather than separate NISAs for cash and stocks & shares. This simplicity might be attractive to some investors although, you should not assume you will receive the best rate of interest on the cash element, and it might be worth having a separate cash NISA if you want a competitive rate. You can also transfer your NISAs freely between providers – subject to any penalties that might be applied by your existing provider – but you can only have one cash NISA and one stocks & shares NISA in any single tax year.

Any ISA subscription made between 6 April and 30 June 2014 will be counted against the £15,000 NISA subscription and you will not be allowed to open up a new NISA for the current tax year from 1 July. Instead, you will have to top up the existing account. Check with your provider’s terms and conditions – particularly if you have already opened a fixed-rate cash ISA.

The range of investments that can be held within a NISA is also expanding – for example, investors will be able to hold corporate bonds with less than five years left to maturity. This expansion is likely to lead to an increase in new products from providers that, in turn, will provide greater choice for savers. One thing will not change, however – once it’s gone, it’s gone. At the end of each tax year, you lose any unused ISA allowance, so make sure you act in good time.

For more information or assistance contact  us on 0113 2825017 or email

BLM website:

BLM Partnership Ltd, 95 Aberford Road, Oulton, Leeds, LS26 8SL.



ISA’s are to become NISA’s

This years budget served up a few surprises. As part of the Chancellors drive to help savers, he announced a significant increase in the amount that can be paid into ISA’s and also reformed it into a ‘simpler’ savings product. Called ‘New ISA’ (NISA) all existing ISAs will become NISA’s!

The change will take place from the 1st July 2014 and from that date the overall annual subscription limit for these accounts will be increased to £15,000 for 2014/15.

For the first time, ISA savers will be able to subscribe this full amount to a cash NISA (currently only 50% of the overall ISA limit can be saved in cash). Investors are able to open one Cash NISA and one Stocks and Shares NISA each tax-year. However, once open, the Cash or Stocks and Shares NISA can be transferred between providers unlimited times.

Under the NISA, investors will also have new rights to transfer their investments from a stocks and shares to a cash account (currently only the opposite is possible). There will be consequential changes to the rules on the investments that can be held in a NISA, so that a wider range of securities (including certain retail bonds with less than five years before maturity) can be invested. In addition, Core Capital Deferred Shares issued by building societies will become eligible to be held in a NISA, Junior ISA or CTF.

Between the 6th April and 1st July 2014, the total amount that can be paid into a Cash ISA is £5,940 and the combined amount paid into Cash and Stocks and Shares ISAs must not exceed £11,880. From 1st July 2014, existing ISAs will automatically become NISAs, with a higher limit and more flexibility. Thereafter an investor can add further money to either their Cash or Stocks and Shares NISA, up to the new £15,000 limit. From the 1st July 2014, any money held in a Stocks and Shares NISA can be transferred to a Cash NISA.

Different transfer rules will apply depending when funds were paid into the Stocks and Shares account. If money is invested between April and July 2014, this sum must be transferred as a whole. Other amounts from previous years may be transferred as a whole or in parts, if the provider permits.

Child trust Fund / Junior ISA
The amount that can be subscribed to a child’s Junior ISA or CTF in 2014/15 will also be increased to £4,000.

Whilst this move is heralded to make saving into an ISA ‘simpler’, there are certain aspects which add complication. For example the fact that you can move money freely between Cash based savings to Stocks and Shares Investment and vice-versa.


We welcome these changes which are positive for savers and investors; the need for advice in terms of movement of money from one type of investment (deposit to equity based investment and vice-versa) makes the need for clear financial advice even more compelling.


Taking your Pension – why the rules needed to change

In the most fundamental change to how people can access their pension in nearly a century, the Chancellor has announced a number of changes to the drawdown, trivial commutation and small pension fund limits. The intention is to provide more people with more flexibility to access their pension savings.

One of the most striking, and well publicised of the proposed changes, is that people will no longer ‘have to’ buy an annuity. For a considerable period of time annuities have been considered to offer poor value. Ironically, annuity rates (one of the measures by which they are judged to offer poor value) is by-and-large beyond the control of annuity providers. Annuity rates are typically driven by economic conditions and conditions over recent years have driven rates down. Quantitative Easing [QE] has been a major contributor to it and QE is not something that was dreamt up by the annuity providers; it’s a policy embarked on by the Bank of England at the behest of HM Government in order to try and get the economy moving.

Another key feature of an annuity is its inflexibility. This is something that has long been derided.

Remembering that the proposed changes are still in a consultation period, we hope that by relaxing the rules this unleashes the innovative potential of the annuity providers leading to products with more flexibility and better value.

We believe that annuities still have their place in retirement planning and the need for focussed in-depth financial advice will be even more essential should the proposed changes come into effect. There will be those people who will take their pension fund, spend the money, and worry about it later. For those who don’t spend it, and prefer to use it to supplement their income, there will be many decisions to be made. For example, where will they invest it; how much, if any, Tax will they pay on the income they receive from it, and will the money be at risk?

However, the main question is “when will the money run out?” Unless you know the date of your own death, this is impossible to answer; you will either end up with money left at the end OR you will run out of money. This is a daunting prospect for most.

Without doubt, whilst the consultation process takes its course, the area of ‘at retirement planning’ has just become even more complicated. We welcome change in this area and hope that the end result is positive for consumers and not just a cynical way of accessing higher amounts of Tax for HM Inland Revenue.

Only time will tell.


Bank Base Rate – the highs and lows of 5 years of a record low

Bank Base Rate – the highs and lows of 5 years of a record low

The Bank of Englands Monetary Policy Committee has announced that the base rate will remain at its present level of 0.5%,  five years after the record low level was first introduced.
Depending on your own personal situation, this could be good news or bad news:

  • it is likely to be regarded as bad news for savers and those who don’t have a mortgage. This demographic of people have been hammered over the last 5 years and many have been forced out of a deposit based savings environment where their capital balance could not fall into one where they could lose some or all of their money in the hope of receiving a higher return overall.
  •  it will be regarded as good news for borrowers; especially those with variable rate mortgages who have no protection against rising rates. After 5 years these borrowers could be forgiven for thinking that rates will never go up and effectively tailoring their lives around a low interest rate environment.

Christopher Malkin, one of the principals and advisers at BLM,commented that whilst interest rates remained at these levels those dependent on income from their savings were being forced to make some difficult decisions about the way in which they structure their investments and that a  good proportion of people may be taking more risk than they would otherwise be prepared to accept in order to try and make ends meet. Investment risk comes in many forms but the current situation underlines the basic principle that an investment strategy should be based around a good risk assessment.

He also commented that the value of the money that people hold in Bank and Building Society savings accounts is being eroded through the insidious effects of inflation, which is generally higher than deposit account rates.

For those with a mix of a mortgage and savings, the situation is more likely to be neutral however, for those with larger mortgages or mortgages that are presently costing the maximum they can afford to pay each month, the latest ‘hold’ on rates is likely to be good news. Stephen Sale, principal and adviser at BLM, commented that borrowers should be careful not to count on interest rates remaining at these levels for much longer. Many economists are expecting rates to remain static through 2014 but begin to rise in 2015 with some predicting a rise from 0.5% to 1% through 2015 and then rising to 2% through 2016.

For those with savings such rises will be welcome but for borrowers who have very little extra in their budget to pay an increased cost, the situation may look more bleak and they should perhaps consider their options.

6th March 2014


Advice to elderly clients or relatives of elderly people

When leaving school and college all those years ago, I walked away feeling that my days of taking exams were over. How wrong I was! Since becoming a financial adviser way back in 1986 I have not stopped taking exams or studying.  And quite rightly so; it’s only right that when people put their trust in you in terms of their finances, that you know what you’re talking about. As we continue to see the transition of financial services from an industry (mainly driven by sales) to a Profession, Financial Advisers must be able to demonstrate a degree of competency through examination and continued competency through continuous professional development. The learning never ends.

Of all the exams I have sat, none were as daunting as the accreditation process I have just gone through with SOLLA [Society of Later Life Advisers]. To quote their website,  The Society of Later Life Advisers  aims to assist consumers and their families in finding trusted accredited financial advisers who understand financial needs in later life.”

To get accreditation an adviser must be able to demonstrate that they have the right set of skills to deal with older people and work within a supportive environment which recognises that the advice process for older people may be different to that for younger clients. Demonstration of these skills involves an audit process of an advisers qualifications and demonstration of a continued learning environment together with an individual assessment by an auditor in a ‘live’ situation. This was the most daunting aspect for me; before the assessment I was given a typical case scenario and then asked to prepare for a discussion where the assessor would play the role of a client. I will readily admit that initial nerves led to a degree of initial hesitation and a few moments of panic but once I got into my stride I was able to demonstrate that I had the knowledge required to advise in this area and the soft-skills necessary to be able to make myself understood.

Being granted accreditation status demonstrates that I, and the environment I work in, is tailored towards providing advice to older clients or clients with elderly relatives. It is nice to have recognition for the effort put in and I am looking forward to assisting clients with issues such as Long Term Care Fee Planning, Equity Release, Inheritance Tax Planning and Income in Retirement Planning which are just a few of the issues that concern our elderly clients or their families.

For more information about our services contact us on 0113 2825017, email or visit our website:

Stephen Sale DipFA, CeMAP, CeLTM, CeRER, CELTCI, M.ifs

 BLM_logoSOLLA 2


The Retail Distribution Review (RDR) – Commission to Fees

Intended audience: Existing clients of BLM

On the 1st of January 2013, the Financial Services sector went through one of the biggest overhauls since the Financial Services Act was introduced in 1986.

It was introduced to improve service levels and transparency and to ensure the interest of Financial Advisers and their clients are aligned.

One of those changes is to move from commission to fees. Whilst commission has sometimes been a little restrictive from a remuneration point of view for the services undertaken for our clients, BLM has always used it in lieu of a fee. However, the move to fees does allow the cost of our services to be tailored to the work we do for you and is outlined in our Terms of Business letter that we provide you with at our meetings – so
far so good.

As is usually the case, when new legislation is introduced, there is a large amount of disruption and change required, especially to I.T. systems right through the supply chain.

BLM has been discussing this with clients who in turn have been signing client fee agreement forms since early last year, and these are now being sent to the respective platforms/service providers. They in turn will be contacting clients to confirm this.

As a client of ours, if you have received correspondence with regards this matter and need a reminder as to what it is about, please give us a call on 0113 2825017.

This will not be the last you will hear from us on this matter! There are a whole host of knock on effects, or “unintended consequences” as they put it, such as; clean share classes etc……no doubt we will be discussing this with you before April 2016!

Chris Malkin, DipFA, M.ifs
On behalf of BLM Partnership Ltd.

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