What is IFE and why do you need it? 

Independent Financial Education or ‘IFE’ is currently a hot topic so you’ve probably already heard about it, but what really is IFE and why might you and your employees need it?

Well, to start with, finances can be really complicated and we don’t get taught how to handle them at school.

As a result people learn as they go and this often causes a lot of stress and worry. IFE is designed to help people get to grips with all aspects of their finances, from the basics such as budgeting and getting the best deal, to the more complicated issues such as pensions and insurances. The result being that people feel empowered to make the decisions that are best for them

A lack of financial understanding can also mean that employees don’t truly value the benefits that are being provided by their employer. This can be a particular problem when changes are made to these benefits and employees don’t understand how they will be impacted. This often results in unrest and bad feeling within the workforce and IFE can help ease this and guide employees through any changes.  

How can we help?

We help employers run very successful IFE programmes tailored to their staff. Some programmes are run solely to help employees understand changes whilst some are targeted at specific groups of staff and others take the form of an ongoing IFE programme.

We deliver IFE in a variety of ways, including 

• face to face workshops

• individual 121 sessions

• online live meetings

• web based solutions

The beauty of this is that we can tailor what we do to meet your specific needs. Our consultants are knowledgeable and friendly and because we run an internal IFE programme for our own staff, we know what works well. 

We can also ensure that you are up to speed with new developments so that you know when your employees might need more information. A good example of this is the recent introduction of the Lifetime ISA, or LISA as it is already being called.

What is the Lifetime ISA?

The Lifetime ISA will be available from 6 April 2017 for those aged between 18 and 40. Savings of up to £4,000 can be made each tax year. For savers under 50, at the end of each tax year, the Government will add a £1 bonus for every £4 saved. This is effectively the same as providing basic rate (20%) tax relief on a £5 pension contribution from gross pay.

The savings can be drawn without penalty from age 60, or before age 60 to buy a first home. Early payment for any other reason would see the Government bonus and any interest earned on those bonuses being forfeited and an additional 5% charge applied.

What is the new total ISA annual limit?

You can currently save up to £15,240 each year into an ISA, increasing to £20,000 from 6 April 2017. So if you take full advantage of the new LISA you’ll still be able to contribute a further £16,000 towards other ISAs.

For basic rate taxpayers, LISAs could be more attractive than pension savings due to the government bonuses and both the investment return and retirement income being tax free. Currently only 25% of pension benefits can be taken tax free. This kind of arrangement may therefore be very attractive to some employees and should be considered alongside all other savings options.

Want more information?

Please contact your usual First Actuarial consultant or get in touch at ife@firstactuarial.co.uk if you would like to discuss anything contained in this bulletin or for assistance in developing your own IFE programme. Alternatively, you can find more information on our website First Actuarial IFE