As you will be aware, the statutory sick pay in Gibraltar is only 2 weeks full pay and 4 weeks half pay in any 12 month period. Group Income Protection insurance is a valuable benefit which provides financial protection in the form of a replacement monthly income for your employees (and their families) if they are unable to work for a protracted period. There are tangible and intangible benefits for the employer as well.

Firstly, the amount paid in premiums to the scheme is a deductible expense and will therefore reduce the company’s corporation tax bill. Not only is it a relatively low cost benefit, but a wide variety of features can be added and it can be tailored to the employer’s requirements. It also allows the company to demonstrate its commitment and care to its employees and their families. This is something that, in turn, may increase employee morale and loyalty from existing employees and makes a business more attractive to new employees.

Protect and care for your staff with a Group Income Protection policy.

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Have you reviewed your employment contract recently?

Imagine a situation where something were to happen to you (or any of the earners in your family for that matter) which resulted in you, or them, not being able to return to work for an extended period of time. Unfortunately, this scenario is not all that uncommon nowadays.

Legally, the Gibraltar Government or any private company you work for only has to pay you two weeks full pay and four weeks half pay in any twelve month period. The question you have to ask yourself is, do you think that the statutory minimum is enough to cover your monthly expenses and maintain a good quality of life?

With the imminent closure of the Leeds Building Society in Gibraltar, it may be that you will have to transfer your money elsewhere, but where? The answer to this depends entirely on how much of a return you would like to receive on your current savings. You could transfer it to another bank, however, considering the current low interest rate environment, inflation could have a serious impact on the value of your savings over the long term. To put this into perspective, if you had £10,000 of savings in a bank with an interest rate of 0.5% and inflation, which has averaged 2.7% in Gibraltar over the last few years, the value of your money would erode by 2.2% per annum. On this basis, over the 10 year period, the value of your money would reduce to £8,005.50.

It is often the case that obtaining a life insurance policy isn’t high up on ones “to do” list. There are, however, many benefits of such a policy. Put simply, life insurance provides a financial safety net, should the unthinkable happen.

On the whole, most people obtain life insurance to cover their mortgage and provide their family with the peace of mind that they will be financially secure should anything happen to them. This is particularly the case if the individual is the household breadwinner. However, life insurance can also be taken out in preparation for future costs such as weddings and funerals. Additionally, those individuals on the Allowance Based System are entitled to tax relief in Gibraltar, making life insurance even more affordable.  

Moving from the UK permanently is a massive decision. There are a huge number of issues to consider and some of the financial aspects are as follows:

1. P85 - This is a form that allows you to advise HMRC that you have left the UK and possibly enable you to obtain a tax rebate. It needs to go back to HMRC

2. R105 - Another HMRC form which enables you to receive interest from relevant UK accounts without deduction of UK tax

Retirement should be a period in your life where you are not worried about your finances.  Funnily enough, for most people, it’s only at retirement when they realise just how much, or indeed how little, they have saved over their lifetime.  However, there is one simple trick to ensure you make the most out of your retirement – start saving as early as possible!

Increased life expectancy and an over reliance on the state pension has resulted in many people not making the appropriate provision for their retirement. By starting your pension early and allowing a significant amount of time for your pension pot to grow, you may well be able to live the retirement of your dreams. The state pension should play a part in your retirement provision but if you rely solely on it, you could be in for a surprise at how little you will have to spend on the things you imagined doing at retirement, such as going on a luxurious holiday or buying that new car you always wanted..

If you start saving into your pension early enough, not only will you have the benefit of time but you will also benefit from pound cost averaging over time. We explain how pound cost averaging can work to your advantage in an earlier article we published on our website. You can read this by clicking on the following link:

https://www.abacuswealth.gi/blog/104-benefits-of-pound-cost-averaging

Contact us today to ensure that you can prepare yourself for the retirement you really want.

Daniel Pitaluga

Trainee Wealth Manager

When you have money available to save or invest, it is worthwhile taking the time to consider whether you should repay or reduce any debts, you may have. You could inversely consider this as a risk free investment. Most Banks are currently paying in the order of + or – 0.5% interest on savings, but charge much higher rates of interest on mortgages, other loans and credit cards. So if you are paying compound interest of 19% on an outstanding credit card balance of £10,000, and you have this amount of money in your bank account earning 0.5%, why not consider repaying the credit card debt which will save you 18.5% interest?

To be in a position to earn an investment return of this magnitude, you would have to take a considerable amount of risk with your capital and could even lose some or all of it whereas, repaying the credit card debt produces a known and risk free outcome. You will also feel psychologically better.

Put simply, Group Death in Service is a group life assurance scheme offered by an employer to its employees. It pays out a tax free lump sum, or in some cases, a long term income, to the family of the deceased employee, should they die whilst in service. The amount of cover chosen by the employer is usually a multiple of the employee’s salary. Typical examples are 3 or 4 times the employee’s salary but can be higher or lower depending on the employer and the employee’s position within the company. It is also possible to include the additional benefit of critical illness, therefore protecting the employee if they were to be diagnosed with a specified critical illness that would prevent them from being able to return to work.

The benefits for the employee are clear. It gives the employee peace of mind and reassurance that the money paid out by the policy will help their family avoid the financial hardship that would arise on their death, had such insurance not been in place. However, Group Death in Service does not solely benefit the employee. There are also tangible and intangible benefits for the employer as well. Firstly, the amount paid in premiums to the scheme is a deductible business expense and will therefore reduce the company’s corporation tax bill. Not only is it a relatively low cost benefit, but a wide variety of features can be added and it can be tailored to the employer’s requirements. It also allows the company to demonstrate its commitment and care to its employees and their families thereby fostering increased employee morale and loyalty.

Contact Abacus Wealth Management today if you think your business could benefit from a Group Death in Service policy.

Daniel Pitaluga
Trainee Wealth Manager

A lot has been written about Brexit and QROPs but rarely have the two been combined in one article. A QROPs is simply an offshore pension plan that will accept transfers of frozen UK pensions. This enables the QROPs plan holder to have complete control (trustee approval permitting) over the direction of investment and the timing of taking benefits, which can be taken from age 55 onwards. A QROPS can be a very effective, pension vehicle, if used correctly.