The COVID-19 crisis is forcing millions of people into strange new scenarios. Lockdown may prove to be very difficult for many people. However, for others, it will be a great opportunity to ensure that they take care of pressing admin and financial demands. With more time on your hands, it makes sense to take the opportunity to start taking care of those life issues you’d otherwise leave until a rainy day.
That rainy day is here – and here are a few things you may wish to consider during lockdown before shops and businesses reopen. Life won’t go back to normal for a while yet – which is why it’s a great time to get ahead on your admin.
Track Down Your Pensions
Are you losing track of your pension pots? If you’ve been working for various companies over the years and are unsure where your pensions lie, now is the time to start tracking and tracing. There could be thousands of pounds waiting for you to unlock just by doing a little bit of research.
Association of British Insurers in 2018 estimated that there is around £20 billion held within 1.6 million pension pots that have been forgotten about. If you suspect you have an old pension pot you can now track these down using the free government Pension Tracing Service at the following address:
Research the State Pension
On the subject of pensions, your state pension is another huge financial factor you should consider when arranging various admin. The government has made a number of changes to state pension policy over the years, which are of course well worth looking into. The new state pension rules generally require individuals to have a 35 year record of National Insurance contributions to receive the full state pension. Credits are given depending on certain benefits and earnings thresholds. Be sure to check your National Insurance contributions record and your state pension forecast at the link below:
Write a Will
Writing a Will might seem all doom and gloom, but it’s a crucial step towards ensuring your next of kin inherits your estate in accordance with your wishes. It also makes administering your estate on death easier. Statistics show that the majority of British adults still don’t have a Will. This can make things very awkward, complex and expensive when you pass away. Make sure you have an up to date Will in case the worst happens.
Arrange a Power of Attorney
Similarly to setting up a Will, it is a good idea to establish a power of attorney should you be unable to attend to your own affairs. Once your Attorney has been nominated, this person will have the legal right to take financial action and make decisions on housing, investments and more on your behalf in the event that you are unable to do so due to ill health or accident.
Take Out New Insurance Cover
If you do not have any life, critical illness or income protection insurance in place, then putting a basic level of protection in place is probably more affordable than you think. There is a large personal insurance gap in the UK and most people would be left in a difficult financial situation if their spouse was to pass away prematurely or suffer an illness or injury that would impact their ability to earn. The Financial Conduct Authority conducted research that revealed 65% of the adult population has no form of insurance. Among the 35% who do have some form of cover, more of them (10%) have critical illness than income protection (just 4%) – of the 26.7 million households just 300,000 have an income protection policy in place. More of us insure our phones and pets than our income.
Update Your Insurance
If you already have insurance cover, do your current insurance policies give you the protection you need? Is the level of cover suitable? If you’ve married, divorced, moved house, had a promotion or pay rise, had children or retired since you took out life, critical illness or income protection insurance, the policies probably need to be reviewed. It is important that any policies you have in place are reviewed every few years. For example, is your life insurance policy really going to do enough for your next of kin should the worst happen? Is your income protection policy still enough now that your mortgage payments are higher?
Look Up Direct Debits
In the same vein, if you are still paying out for insurance services that are no longer relevant to you, it is high time you bade them farewell. You may be paying for insurance each month, for example, without even realising it. Make sure to set up a plan of action to check out your regular debits, and to flatten down or remove any which simply aren’t relevant anymore.
Check Government Schemes
COVID-19 presents a host of big changes for various government schemes and policies. Government advice and guidance updates daily. For example, there are grants available for small businesses and sole traders, job retention schemes, bounce back loans and opportunities for homeowners to take mortgage holidays during the pandemic. It’s worth checking if you are impacted, what you might be able to claim. The latest guidance is available by clicking the link below:
Budget, Budget, Budget
Now is a great time to consider your outgoings and your income. This time in lockdown has been an eyeopener for some people and highlighted just how much they usually spend on going out and socialising. Do you already have a firm budget in place? If not, now is the time to start putting plans into action. Carefully weed through unnecessary expenses and trim a little financial fat. For example, you might want to save money on cinema passes, travel and unused gym memberships. Can you go out once every other week instead of every week (when things return to normal). Any money saved can go towards creating an emergency fund or towards retirement.
Give to Charity
Why not take the time during lockdown to make a real difference to a cause that is close to your heart? If you make charitable donations and opt into Gift Aid, you can add an extra 25% in donation money on top of your gift without having to pay another penny. You can also claim some of this back on tax returns if you pay more than the standard rate each year. It’s worth looking into.
Give Money to Loved Ones
It is also an excellent time to start giving financial gifts and support to your loved ones while you are able to. You should look carefully into limits on financial gifts which are exempt from inheritance tax. While you are alive, it makes sense to gift as much money as you can to loved ones now to potentially reduce the value of your estate for Inheritance Tax purposes.
Ensure You Have ICE Set Up
ICE, or In Case of Emergency, is a document which ensures your friends and family know what to do if the worst happens. Establish this document now, and let your family know where it resides. Include details of your financial adviser, accountant, solicitor and the location of your Will.
The pandemic is offering some people time to catch up on crucial financial admin – why not make the most of the time and put pensions, insurance cover, Wills, and charitable donations to task? Milestone Financial Planning is here to help. Call us now on 01246 903053 for more details or email us for a free consultation.