I am in my mid-40s and am self-employed.
I am married and my children are in private education. At present,
I have a range of savings and pension funds but I am looking for advice on how to plan for my business over the next 12 months and also over the medium term. How would you suggest I go about this?
At this time of year, many of us are reviewing our affairs and considering what changes, if any, could be made.
First, we need to consider what has been achieved in 2001. At this time last year, we made a list of key areas that needed to be considered and decided how much time and budgeting needed to be allowed for in the business plan. These key areas could be summarised as:
l Stakeholder pensions.
l Personal pension contributions for key employees.
l Review of protection, including permanent health insurance, life and critical-illness cover.
l Personal financial review including investments, protection and mortgage.
As far as stakeholder pensions are concerned, you were briefed last year that you
needed to make allowance for stakeholder and that employer contributions would help with
We offered to explain to all your staff how they would benefit in a positive statement on your behalf. So far, there has been take-up from 30 of your staff on the basis of a direct-offer letter. We have also offered a group death-in-service benefit which is being taken up by your staff without employer contributions.
Personal pensions are, of course, very important to you and adequate funding is essential but can the business fund increase this year? Do you need to reduce contributions or even stop? You may already be feeling the effects of recession but have not
yet planned for the position worsening, as there is always hope that the upturn will follow shortly.
You need to review the protection aspect and ensure that, whatever happens to the pensions, you are not left
without financial protection
at a time when they are most vulnerable.
This is the time to review all borrowings and consider refinancing, as the rates available on personal and business are at an all-time low.
I believe in being proactive and feel that many clients should plan for the worst and build reserves at a time when balance sheets are strong and there is no pressure from their bank. The fact is that you will still be paying school fees in a recession as well as maintaining your lifestyle although, inevitably, you will cut back when needs must.
You should consider remortgaging with a drawdown facility in place to help you
juggle your finances if the
pressure is on next year. This could be your saviour, enabling you to keep your bank from putting on the screws if the forecasts look poor and getting a charge on your house to increase the overdraft.
We need to review your investment portfolio and consider if there should be fund switches and whether you have maximised your Isa allowance. It may be necessary to encash savings if the need arises. All financial protection plans should be reviewed every couple of years to see if we can improve on the quality of cover or reduce premiums.
Indeed, it may be that you are at a stage where the cover can be reduced or stopped as a result of financial stability from your portfolio, an inheritance or simply because you are retiring.