The Money Advice Service (MAS) provides financial and money management services throughout the United Kingdom. It offers a host of services for the people of the UK including debt management, investment, borrowing, home and mortgages, pension and retirement, and other budgeting services.
It was set up way back in 2010 to help and improve the proper management of people’s income. Originally, Money Advice Service was known as Consumer Financial Education Body, until it was renamed later in 2011.
MAS is also responsible for funding and improving the quality, consistency, and availability of debt advice. It also enhances the understanding and knowledge of public financial matters including the economic system of the UK.
How Money Advice Service Help to Manage your Income Better?
Money Advice Service was initially created to raise awareness among the citizens of the UK about managing their cash in a better way. Sometimes, a lack of budgeting skills and poor money management can push you into unrecoverable debt.
Managing Your Money
It requires advices from a top-class organisation to manage your money and make ends meet when your monthly income is low. So, here are some helpful tips tailored by MAS to help you manage your money on a tight budget.
Make a Budget
The very first step to take control of your money is by fixing your monthly budget. So, include all your earnings and expenses in one place and work out a cost for your living.
Moreover, making a budget gives you a clear picture of your income and expenses. Hence, then you might be able to keep aside more money for your savings.
Cut your Cost Down
Although earning more money can be difficult but, setting a spending limit is not impossible. So, try and cut down any extra expenses that you don’t require.
According to a study, the average UK households spend about £3329 per year on water, energy, electricity, and other bills. You can cut down your expenses by choosing a cheaper utility provider.
Claim Entitled Benefits
There are lots of benefits that you are entitled to avail from the UK government. Some benefits are there to help you out in different circumstances like income support or relief support in cold or any harsh weather condition. Hence, make sure that you are using every entitled benefit provided by the UK government.
There are different kinds of loan schemes available under different circumstances. If provided adequate details, then you might get an interest free budgeting loan from the government to help make ends meet during your rough time.
Based on the details about your income, you can get a budgeting loan sanctioned from the government of the UK. It is basically an interest-free loan and can help you with the following things.
- Other miscellaneous expenses like clothing and footwear
- To buy any furniture or household equipment
- For Improving, maintaining or securing your home
- To pay any rent in advance or reduce expenses for a new home
There are various other loans that you can take to solve any monetary issues. However, things like a payday loan or a logbook loan can make your situation worse.
Moreover, these types of loans are very expensive for borrowing. So, look for any other possible ways to clear out your dues as well.
Besides, you can ask your friends and family for help or even make them consider joining a credit union. It offers banking services to people who in normal condition find it difficult to get it.
The Money Advice Service Budget Planner is a free service. It analyzes your budget and spendings to give you a result that helps to take control of your money.
How to Use The Budget Planner?
To get started with the budget planner make sure to have as much information about your income and expenses. It can be bank statements, bills related to your expenses, rent, etc. to give you more accurate results on your budget.
- First, go to the Money Advice Service Budget Planner website. Thereafter, enter the amount you spend and earn in a month.
- Next, a calculator gives you some insights by breaking down your finances in different categories like household bills, living costs, etc. From this, you can know how much you spend on each category
- Along with the chart, it also gives you important tips to improve your budget. The tool might suggest where you can cut down to save most of your money.
How to Get Maximum Benefits from your Pension?
There are different types of pension plans available for the citizen of the UK. Understanding the importance of each scheme might benefit you during your retirement.
What are the Different Types of Pension?
There are 3 main types of pension:
- The State Pension
- Defined benefit pensions
- Defined contribution pensions
The savings that you build up in a defined contribution pension scheme are referred to as “Pension pot”. So, you and your employer both have to contribute to this scheme to build a pot of savings over the time of your employment.
Further, this pot can be used to give yourself an income when you choose not to work at all.
The State Pension is paid by the government and it is a secured amount that increases with the rate of inflation each year. By making a contribution to the National Insurance during your working life, you can claim your State Pension.
In some cases like bringing up children or claiming certain benefits, you can use the state pension provided by the government. The full new state pension for the year 2019-20 is about £168.60 per week.
However, according to the government, to be eligible for the full state pension, you would need 35 years NI record or atleast 10 qualifying years on your national insurance record.
After reaching the maturity of your State Pension age, you get a letter after 2 months telling what to do next. You may also choose not to take the state pension. So, if you don’t do anything, then automatically your pension will be deferred with an increased rate of 1% every nine months.
Thereafter, the extra amount along with your regular pension will be paid in full once you decide to take it out.
Defined Benefit Pension
Defined benefit pension is for those people who work in the public sector or for a large multinational company.
This pension is related to the salary of a person. In return, it pays out a secure income for life that increases every year.
The money you get in a DB pension is defined by the time you have been a part of the scheme. It also depends on the amount of money you earn. You might also opt for a final salary scheme where the pension is defined on your pay when you leave the scheme or retire.
If you take out pension before the age of 65, it will reduce your pension amount considerably. After that, you can take your money from your pension account tax-free. Although, the amount you can take out without any tax will depend on the scheme rules.
However, before transferring any money, talk to a financial adviser so you don’t have to give up on any valuable benefits.
Defined Contribution Pension
In this type of pension, you build up a pension pot with your employer, which you can use later if you decide to cut down or stop working. The main highlight of this pension scheme is that you can draw at least 25% of your pot amount without giving any tax. But to withdraw any money from your pot, you need to be at least 55 years old.
The amount that builds up the pension pot depends upon the following factor.
- The level of different charges you pay
- Contribution of you and your employer
- Your investment performs
Defined contribution pension includes schemes from the workplace, personal and stakeholders.
After 55 you have full freedom to use your contribution pension pot. However, the longer it takes to mature, the more money you will get on your retirement.
Also, you can use free services like Pension Wise to get impartial advice on how to use your pension pot wisely.
What is the Pension Calculator?
To help you during your retirement plans there are services like the Money Advice Service pension calculator. In a few easy steps, it can give you an overview estimation of the amount you will get by the time of retirement.
The information includes income from defined benefit and defined contribution schemes. It also includes the basic state pension to give an overall estimation of your income.
To calculate your retirement pension:
- First, calculate your state pension age and state pension income amount.
- Next, choose your retirement age and calculate the target income you would like once retired.
- Now, give information about your pension pots or any other source of income.
- After analyzing all the information, it will provide your likely income when you retire.
This will also identify any shortfall and suggest different ways to improve your income if you fall short of the target amount.
Shop Around for an Annuity
An annuity gives you a regular retirement income for the rest of your life. In most cases, it is an irreversible decision. So, to get the best deal, it’s important to choose the right type of annuity.
Get an Advice on Annuity
Most people use their defined contribution pot to purchase an annuity. However, after the age of 55, you can utilize your pension account in any way you wish. For this reason, it’s important to get advice on annuity before you get it.
There are many FCA registered financial advisers that can help you with your retirement plans. Once you understand all your available options, find the right Money Advice Service annuity for you.
Finding the Right Annuity
There are hundreds of people who invest billions in retirement plans by purchasing the wrong annuity. But, Money Advice Service annuity provides a 4-step guide to get the best deal for you.
1. Choose the Type of Annuity
Choosing an annuity properly is important, as it is an on-off and irreversible decision in some cases. It’s more than just getting the best value on the market. Below are different types of annuity:
- Basic lifetime annuities
- Fixed-term annuities
- Investment-linked annuities
Consult your financial adviser to know which type of annuity program will be best for your pension pot.
If you have a medical history then you can get an enhanced annuity. So, don’t hide any of your health problems with your financial adviser.
2. Check Benefits Offered by your Pension Provider
Your pension provider will contact you before your retirement regarding the details of the total value of your pension pot. Also, with an indication of the retirement income, your pension pot may be generated.
You may check with your pension provider if your pension pot includes a guaranteed annuity rate (GAR). This can be very valuable to you as it can provide much better rates than those that are generally available.
Though GAR can come with several restrictions, it gives a significant boost to your retirement income. There can be several other hidden benefits of your pension plan that can be hampered once you take an annuity. So make sure to check everything before you opt for an annuity program.
3. Compare with MAS Annuity Tables
Use the comparison tables to know how much of retirement income you will get from a basic annuity in the open market.
The comparison tables are anonymous, quick and easy. So, all you need to do is enter some basic information that includes:
- The postcode number of yours
- Your date of birth
- The total amount in your pension pot
- Type of annuity you are looking for
- Basic health-related questions
You need to provide some other basic information that is needed to compare your annuity with the open market. You can always go back to MAS annuity tool and compare your choices.
4. Discuss with a Retirement Income Expert
Annuity determines the income for the rest of your life. So it’s important to choose the right annuity. We recommend you to prepare your annuity plan and share them with a financial adviser.
A financial adviser is a qualified professional that is recognized by the FCA. So, if the advice they provide turns out to be unfavourable, then you are protected by the Financial Conduct Authority or the FCA.
To gain more clarity on annuity plans, you might also consider talking to an expert using the Money Advice Service number.
Other Ways to Get an Annuity
If you are not satisfied with the type of annuity you are getting, you can buy it from an annuity broker or through a pension provider.
If you are buying annuity through a broker, then he/she will provide information about different annuity options only. They won’t provide any additional financial advice regarding it. Hence, you must choose what’s best for you based on the information provided.