Archive for April, 2022

Workplace pensions & Auto-enrolment

Posted on: April 21st, 2022 by fwAdmin

Workplace pensions & Auto-enrolment

Within this article I will be covering some common questions regarding auto-enrolment and workplace pensions. This is very much an overview, and any specific questions should be directed towards a financial adviser and/or your scheme provider, as everyone’s personal circumstances are different.

What is Auto-enrolment?

The government introduced auto-enrolment in 2012 to encourage more people save for retirement. Since then, more than 10 million people have been auto enrolled and with the help of their employers are saving for retirement.

Employees must be automatically enrolled into their company workplace pension if they meet the following criteria:

Should you meet the above criteria you will be automatically enrolled into your workplace pension with a minimum contribution of 8% of your annual salary; 5% by employee and 3% by employer. If you do not meet the above criteria, there is no need to feel left out – you can still choose to opt-in to your workplace pension by raising a request with your employer.

Should I opt out?

The simple answer for most people is no…

By opting out you will miss out on a number tax benefits, employer contributions and most importantly saving for your retirement.

For some however, there are special situations, which need to be considered, such as those with fixed protection and/or high earners whose contribution scope is reduced. Please refer to Pension Pitfalls for further details.

Won’t I earn less?

Whilst your net take home income will be slightly lower when making pension contributions, in most cases you will technically earn more by paying into your workplace pension. Employers must pay into your workplace pension if you do. Employer contributions coupled with tax relief essentially doubles your pension contributions, resulting in higher total earnings.

How do I double my money?

Based on the minimum contribution of 8% for every £1,000 earned the rules are as follows:

You contribute £40
You will receive tax relief * £10
Your employer contributes £30

Thus, turning a contribution of £40 into £80.

Many employers will match pension contributions that you personally make up to a defined percentage of your salary. For example, some employers match contributions up to 5%, which would turn a £40 net contribution into £100. Something well worth enquiring about.

* This is basic rate relief (20%). higher/additional rate taxpayers can claim a further 20/25% via self-assessment

What if I leave my place of work?

Regardless of where your career takes you, any money paid into a workplace pension is yours to do as you wish with. It is important to stay on top of pensions and ensure you update providers with any changes in address. There is also the potential to consolidate all your pensions into one, but this is something you should talk to an adviser about before doing so.

Please note you cannot withdraw money paid into your pension until minimum pension age. This is currently age 55 but is due to increase to age 57 from 2028, with the intention of continuing to be 10 years before state pension age thereafter.


Pensions have many advantages that will help your savings grow quicker. In terms of workplace pensions, many consider them to be long term savings plan that have the added benefits of tax reliefs and most importantly employer contributions. They are also one of few places that you can instantly double your money.

Five wealth offer holistic advice on pensions and retirement planning and are always happy to have a non-obligatory initial conversation. Should you have any questions regarding pensions and or wider financial planning please do not hesitate to contact us.


Please note: invested capital is at risk and you may find that you get back less than what you put in. Workplace Pension are regulated by The Pensions Regulator. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.






Investing for Children / Grandchildren

Posted on: April 7th, 2022 by fwAdmin

Investing for Children/Grandchildren

Many parents want to put money aside for their children to help them out in the future, whether that’s for a house deposit, university fees or something else; but where is the best place for those savings? There are various options available to put savings away for children (or grandchildren, nieces, nephews, godchildren, …) and the most appropriate will depend on each family’s circumstances and what they want their children to use the money for in the future. The following points provide a summary of the main types of savings used for children and grandchildren.

A traditional cash savings account offers a low risk option for children’s savings, with most accounts offering better interest rates than regular cash accounts. Holding funds in cash means there is no risk of the value going down but the potential for growth is low. You also need to be wary of inflation reducing the real value of the savings if they are held over a long period.

Children are entitled to the personal savings allowance which allows up to £1,000 of interest to be paid tax free meaning little or no tax is usually payable on cash savings in children’s names.

A JISA offers all the same tax advantages as a regular ISA, with no tax paid on income or gains on the funds held. A JISA needs to be set up by a parent (or guardian) for a child under the age of 18, but anyone can pay in to the JISA including parents and grandparents. There is a limit to the amount that can be paid in to a JISA each year – for the 2022/23 tax year the maximum allowance is £9,000. Any funds held within a JISA cannot be accessed until the child that owns it turns 18. From age 18 the JISA then becomes an adult ISA and is fully controlled by the child, including being able to withdraw funds as they wish.

The money in a JISA can be held in cash (in a Cash JISA) or invested (via a Stocks & Shares JISA). A Cash JISA has more or less the same benefits and limitations of a savings account with the addition of being tax free (it’s low risk, but growth is limited to the interest rate offered). A Stocks & Shares JISA offers the potential for long term investment growth however, as with any investment, the value will fluctuate and there is the possibility of getting back less than was invested.

It’s important to be aware that a child cannot hold both a JISA and a Child Trust Fund (CTF). This is relevant to any child born between 1st September 2002 and 2nd January 2011 and it should be checked that a CTF is not held before opening a JISA. It is possible to open a JISA in this case, but the CTF would need to be transferred before making further investments into the JISA.

Investing into a pension for a child offers an extremely long term investment as they cannot access the funds until age 57 under current pension rules. Whilst held within the pension the funds will grow tax free.

For most children the total amount that can be paid into a pension will be £3,600 per year, as the normal pension contribution rules apply that limit contributions to the higher of total earnings (subject to the annual allowance) or £3,600 per year. Pension contributions will also receive tax relief where the Government contributes 20% of the total amount paid in – this means that for a £3,600 pension contribution, a net payment of £2,880 is made with the remaining £720 paid by the Government as tax relief.

A General Investment Account (GIA) allows parents to set up an investment portfolio that they retain control of as it is not in their child’s name, often designating this with their child’s initials to make it easily recognisable. The GIA can therefore remain invested for as long as the parent wants it to before allowing their children access to the funds.

As the account is in the parent’s name, the investments are fully taxable on them. All the usual tax allowances are available, including the dividend allowance and capital gains tax allowance. This can mean income and gains can be managed tax efficiently but it is important to be aware of any other investments that are held that may already use these allowances such as shares held by the parent setting up the account.

Trusts offer a more complex arrangement for holding money for the benefit of children but can also provide greater control and flexibility where this is required. This is often the case where clients are looking to incorporate inheritance tax planning into their wider financial planning strategy and wish for their children or grandchildren to be the beneficiaries of their wealth in the future.

There are several types of trusts that can be used and we will be covering this in more detail in a future blog on Inheritance Tax and trusts. The main types of trust for the benefit of children or grandchildren are:


Your capital is at risk. The value of your investment can go down as well as up and you may not get back the full amount you invested. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.


The information featured in this article is for your general information and use only and is not intended to address your particular requirements. Five Wealth Ltd offer independent financial advice to a wide variety of clients, at various stages throughout their financial planning journey. If you feel that our expertise would be beneficial to you, please get in touch.


The information contained within the article is based upon our understanding of HMRC legislation and practice at the current time. Allowances, reliefs and other tax legislation is subject to change and depends on the individual circumstances of the investor.