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“ There may not be much that those in the lower income brackets


can do about it.


Sarah Hill Editor, 20/20 Magazine





ECONOMIC PROBLEMS-make financial planning even more important


Fewer Island households will be better off this year, even though the experts are predicting that the economy will improve gradually. Finding a job will remain a problem for many, although Jersey is likely to remain among the lucky ones avoiding the 25% plus


unemployment rates experienced by some other countries nearby.


Businessmen will certainly be more cautious and won’t be taking on many more staff or investing a lot of money until the picture improves considerably.


So most households will need to be more careful with their finances if they want to try to maintain their lifestyle.


Luckily there’s plenty of scope to improve the way many of us look after our money because although everyone knows it’s a precious commodity, not everyone treats it as such.


For example, a survey carried out by the big UK financial services company, Prudential, shows that many of us don’t even talk about money with our partners.


The Pru says many British couples are burying their heads in the sand over their financial situations, and that one in seven couples over the age of 40 admit that they have never discussed their finances. That means 4.2m people in the UK, and about 14,000 people in Jersey are not discussing this vital subject with their partner.


Fears about having awkward conversations drives this behaviour, according to the Prudential, with 15 per cent of those surveyed admitting they feel uncomfortable talking to their partners about financial planning.


A concern that these conversations will boil over into arguments is


Page 52 20/20 Money Matters


another reason that couples avoid talking about their finances - money is the third most likely subject to cause arguments among couples, with nearly one in four (23 per cent) claiming that they fight over finances, ahead of work (10 per cent), and politics and religion (5 per cent). Only household chores (27 per cent) and disputes about family (30 per cent) are more likely to cause disagreements.


Even for the majority of couples who do discuss their retirement plans, long-term issues are likely to be side- lined, as short-term everyday expenses take priority, the Prudential says. Daily living costs and household bills are regularly discussed by more than half, and one in three couples speak about the costs of home improvements, large purchases and luxuries.


However, discussions about long- term planning are far less prevalent as the survey at the end of 2012 showed. Only 16 per cent of couples claimed to regularly talk about retirement income and pension planning.


‘Money can be a tough topic to discuss at the best of times,’ Vince Smith-Hughes, retirement expert at Prudential said. ‘Many couples prefer to steer clear of conversations about finances, and especially discussions about longer-term issues like retirement which might feel light- years away. Yet it really pays to be honest about your financial situation. Being open about discussing long- term financial planning as early as possible will help couples to ensure they can enjoy a comfortable retirement together.’


The Pru survey reinforced the findings of a local survey carried out by Spearpoint Retirement Services Ltd earlier last year.


The survey found that almost a third of Channel Islanders were not aware


of what kind of pension they had. More than a half were also unsure about what their pensions are likely to pay out when they retire. Three quarters didn’t even know what a Retirement Annuity Trust Scheme was and 53% didn’t know the approximate value of their pensions.


This lack of knowledge might be understandable, because pensions and retirement planning are not the most exciting or easiest of subjects. They are, however, extremely important if you want to be able to afford a reasonable lifestyle when you retire. As the basic States pension increased last October to only £187.25 per week for a married couple, most people realise that they have to find additional sums to fund their retirement. Many will have an occupational pension scheme from their employer, but as these are becoming less affordable as the rules are changing. That means pensioners could be in receipt of an old age pension and an occupational pension and still be short of what they need to afford a reasonable retirement. Luxuries might well be out of reach.


There may not be much that those in the lower income brackets can do about it. There’s a cost involved in administering these schemes, and even clever investment companies are struggling to produce the returns needed to pay out these pensions. However the good news is that the vast majority of people can improve their retirement income, particularly if they start investing in a scheme early enough. And the only way to find this out, is to go to a reputable financial adviser and ask.


However, as the Prudential survey showed, only 13 per cent of UK respondents said that they had been to a financial adviser with their partners in the past five years.


That is taking a risk which is close to being foolhardy.


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