EFPG has just posted an article about considerations that both employees and employers should consider about the Occupational Scheme or Group Personal Pensions that the employer is offering or is going to offer.
The article is not technical but covers general points that EFPG believes to be the most relevant areas that should be reviewed.
For employees the article covers the points:
- How much will my employer pay into my pension?
- How much will I have to pay into my pension? Is this flexible?
- Will the combined contributions be sufficient to provide enough income in retirement? If not can you contribute more?
- Where is my money going to be invested?
- What costs will my pension face?
- How flexible is the arrangement? Are there any penalties for altering/stopping contributions? Can the pension be transferred? Can the arrangement be cashed in and invested elsewhere?
For employers the article covers the points:
- Should you offer your employees a pension scheme?
- If so how much should you pay into it?
- And at the end of the day will your employees thank you?
The full article is quite long but does give insight to the questions as posed above. If you would like to read it, please follow this link.
How much does free advice cost?
That might sound like a daft question. The answer is obvious. Nothing – free means it doesn’t cost anything, Of course that cannot be the case unless a charity, government body or similar is giving the advice – even then that definition of free is arguable.
Financial advisers who offer free advice are intermediaries and are compensated by financial companies via commissions. So, there is always that angle of conflict of interest that one needs to be aware of. You really don’t know whether what they are selling to you is really good for you or good for them as a commission-generating sale.
There are less clear costs of not seeking advice as well.
The Cost of Education.
Do you want to spend the time to bring yourself up to a decent level of knowledge? Then to stay updated with the constant changes? How long will it take you to become knowledgeable?
The Cost of What You Don’t Know.
There are things that you know you need to learn, but what about the things that you don’t know you need to learn? How are you going to become aware of them?
The Cost of Consequences.
Do you understand how different things are interrelated? Actions in one area can often cause harm in another. How are you going to become aware of all the interconnected relationships and consequences?
The Cost of Mistakes.
Can you afford to learn from your mistakes? Some mistakes are minor, while others can be quite serious. If you make a mistake, how costly will it be, and do you have the time and resources to rebound from your mishap?
The Cost of the Unknown.
Do you have the temperament to do what is necessary to succeed? Sometimes the correct action or behaviour is counter-intuitive. Professionals are trained to cope with unplanned difficulties and disasters. How will you cope?
The Cost of Time.
What is the value of your time? How will you determine when you are spending too much time trying to solve a problem versus the alternative of paying someone else to solve it?
While there is a clear cost associated with engaging a financial adviser these subtler costs of not working with one when the situation warrants it should be taken into consideration. When you stand to gain more than the fee charged by your adviser, the time is right to ask for advice.
How EFPG Charges – transparency
EFPG prefers to follow the UK’s RDR framework even though there is no requirement to do so in Gibraltar. When providing advice e.g. for a personal pension plan we would state the cost of the advice to you, the costs associated with investing your pension contributions (trading and custody) and the costs of the selected investments so you can clearly see all of the costs associated with your pension arrangement. We are completely transparent in this respect to give you the comfort in knowing that your investment for your retirement has no hidden charges or commissions that could negatively affect the quality of your retirement.
For the full article please follow this link
Everyone has heard of blockchain but most consider that it is synonymous with cryptocurrencies, especially Bitcoin.
Since the rise and fall of cryptocurrencies with Bitcoin trading at $3,588.38 (at the date this article was written) from a high of $19,783.21 in December 2017, one might consider Bitcoin and hence blockchain is dead or of little relevance.
This could not be further from the truth.
Blockchain technology has far more applications that are being researched and exploited.
This week HSBC has claimed to have settled three million foreign exchange transactions and made payments worth $250 billion using blockchain technology.
Blockchain is certainly not limited to facilitate financial transactions. The technology is being applied for uses in the logistics industry, to develop a decentralised internet, for real estate transactions and more.
Although crytocurrencies may have not been the best of investments at the end of 2017, investment opportunities in companies developing innovative solutions using blockchain might be very rewarding in the coming years.
For the full article please click here.
New measures introduced in the Italian 2019 budget are designed to attract people who have sufficient economic resources to be able to contribute to the Italian economy.
From 1 January 2019, any retired immigrants who are not resident in Italy and are in receipt of a pension could be eligible for a 7% flat-rate tax on all their foreign income.
Some local authorities are even offering houses for as little as €1 if certain conditions involving restoration of those properties are met.
If you would like to know a little more please see the main article.
As today is International Women’s day we would like to comment on a series of factors that can influence a woman’s financial status and independence.
Income Inequality
The law is clear, men and women should be paid equally. However, in Gibraltar there is a wide gap in employment and earnings between men and women:
- The gender pay gap stands at 22.5%. This means that on average women earn 22.5% less than men which equates to 82 days of unpaid leave.
- Women account for 61.3% of people earning less than £12,000 per annum and only 19.1% of people earning over £60,000.
- 67.1% of people with part-time positions are women and only 41.1% of those with full-time positions.
- In the private sector and the M.O.D. less than 40% of full-time positions are held by women. Only in the public sector are things more equal with women holding 54.2% of full-time positions.
So how can this inequality be addressed?
The first steps need to be taken by employers. Employers who want to close their gender pay gap need to overcome the traditional views on parenting roles, in which the mother is expected to look after the children. Women are as such often pigeon-holed into taking up part-time positions. This can have an effect on women’s career progression. Further, men are assumed to be only suitable for full time jobs and this can become an obstacle for men to opt for part-time or flexible working if they will be taking care of the children.
In addition, there is sometimes an unwillingness by employers to take on women of a child-bearing age to positions of responsibility.
Employers need to re-configure the idea of full and part time jobs. They need to incorporate more flexibility in the working hours that will allow women and men to balance their family lives and workloads. Furthermore, employers need to ensure that career progression on a part-time basis is not only acceptable, but aspirational.
We know that many of the more poorly-paid occupations are those traditionally done by women, requiring skills traditionally regarded as ‘feminine’, such as people skills and caring skills. So women ‘choose’ to work as nurses, teachers, or shop assistants, while men ‘choose’ to be surgeons, construction workers or engineers. The issue here is that we undervalue traditionally female skills. But there is also a perceived wisdom that women choose low-paid occupations because they offer more flexibility, or are more family-friendly.
Opening up traditionally male sectors and occupations to flexible working would encourage more women to work in them, and more men to switch to working part-time.
Pension Inequality
Aside from being denied the potential to earn more money, the knock on effect is that women save around 40% less into their pension pots than men. Part of this may be that financial decisions are often linked to the traditional ideas about male and female responsibilities. The advice women receive on pensions generally comes from men (e.g. fathers or partners), deferring to them the decision-making about pensions. Women should be encouraged to take control of decisions that effect their own personal financial well-being.
In Gibraltar the problem is compounded by traditional pensions being insurance company-based products provided by the likes of Generali and RL360. These products can provide reasonable value for money if payments are made throughout the life of the policy until the maturity date. However, if payments are stopped for an elongated period – especially in the early years, the policy might lose significant value or even lapse with no value at all.
EFPG has a pension solution for young families. The Jubilee pension is inherently flexible and low cost as we manage and administer it. EFPG is therefore able to offer a 12 month break of payments for young couples who have a new child, that will have no detrimental effect on the value of their pensions. This is only available once the pension has been active for 18 months but we hope that this will encourage young couples to start saving early and close the gap in pension inequality.