As the global COVID-19 pandemic progresses, you may have queries and concerns about the performance of your investments. Specifically, our clients have seen a significant decrease in the value of their portfolios within a short space of time. We are here - to ask you not to panic, and to reassure you that during these difficult times, we are still open for business. For more information and advice, call one of our financial advisers today.

We recognise your questions and concerns - as we are all in the same boat. In my own experience, my lockdown has been very much bitter sweet to date. My son had a last minute dash back from university when he finally realised the government were locking down the country, and as mentioned in my previous blog article, my daughter was due to be sitting her GCSEs this summer, which of course, are now not going ahead. She has still been doing school work, whilst learning how her grades will be assessed in the summer.

It has however, been good to spend so much time with my family during this period - even if the shopping bill has somewhat increased!

On the bitter side, the lockdown has meant I haven’t been able to see my fiancée, who lives with her daughter in another town to myself. This has been incredibly difficult, although I am thankful for the wonders of modern technology which have enabled us to keep in contact via Facetime.

Of course, I realise that many people are having to deal with issues far more difficult than mine - and I am thankful that all my family and friends are all currently safe and well.

I have found this time to be quite reflective, a chance to assess all aspects of my life. For instance, I have been in touch with people close to me far more than I normally would have, and hope that this continues once the lockdown is over.

I, like many of our clients, have found that I have time to plan for my future; by making sure my Will, life cover and other financial aspects of my affairs are in place and up to date. If you need guidance whilst planning your financial affairs, we can place your individual concerns in the trustworthy hands of our legal experts at Ince.

Finally, during this enforced lockdown I have noticed that there seems to be some pressures to learn something new, like an instrument or a foreign language. In my opinion - do what it takes to get your through this period of time. If that is sitting in front of the TV, watching films or a new series on Netflix - so be it (no guesses for what I have been doing!).

Richard Brazier – Director – Hanover Financial Management Limited

Firstly and most importantly, I hope you are staying fit and healthy whilst managing to cope with the current circumstances and Government measures. These are certainly unprecedented times, and I can only keep my fingers crossed that life will return to normal soon.

In regards to investment portfolios, you will have no doubt seen how the global investment markets have fallen especially since the outbreak took hold in Italy, and subsequently the rest of Europe. Much of the fall was initially through fear and uncertainty, followed by concerns on how much damage this will do to the world’s economies in the longer term.

Governments and Central Banks have been very quick to announce a multitude of financial measures and stimuli but these have done little to alleviate the fears of the global markets. However, on the back of the latest stimulus plans that were agreed in the US, the markets rose for three days running at the end of last week. Showing how volatile the markets have been this hasn’t happened since February.

I would not like to say this will be the end of any falls, or that the bottom has been reached, as we are in unchartered territory. Indeed, already this week we have seen sharp increases and decreases in the markets and I suspect the volatility will continue for some time to come.

It is an easy thing to say, but I realise from my own investment portfolio not an easy thing to practice, which is not to panic at this time. History has always shown that shares have a good record of generating real returns over the long term, and these falls eventually become blips on performance graphs.  It is also true to say that bear markets (where a market falls by 20%), such as the one we have now entered, have always been far shorter than bull markets (where a market is on the rise).

I realise this is a very unsettling period, as we all come to terms with the Government lockdown. I am having to get used to home schooling my daughter who was meant to be sitting her GCSE exams this summer! At Hanover we are all getting used to working remotely, as per the Government guidelines, which I do not envisage impacting on our service capabilities to you.

For more information and support, please do not hesitate to contact your adviser.  In the meantime please stay safe and we look forward to seeing you soon.

Richard Brazier – Director – Hanover Financial Management Limited

To help employers through current difficult times, the Government has introduced the Coronavirus Job Retention Scheme. The aim is for employers to “Furlough” employees rather than lay off staff, with the Government paying some of the costs.

Coronavirus Job Retention Scheme

The main features of the Scheme are as follows:-

1. In force for at least 3 months, starting 1 March 2020.
2. Claim 80% of furloughed employee’s salary, up to £2,500 a month.
3. Covers employers NI contributions and minimum Automatic Enrolment Contributions (i.e. 3% of salary above Lower Earnings Limit, which is £512 a month for March and £520 a month from 6 April 2020).
4. The employee’s salary is subject to the normal deductions for tax, NI and Pension.
5. For an employee on Statutory Sick Pay - they can be furloughed once this ends.
6. An employee who is on Statutory Maternity Pay remains eligible for 90% of average weekly earnings for the first 6 weeks and lower of 90% of average weekly earnings or SMP at £148.68 per week up to 5 April 2020 and £151.20 from 6 April 2020. If employer offers enhanced pay during maternity, the additional payments are “wage costs” and are covered by the Scheme.
7. The online system to claim will be available at the end of April 2020.

Pension Contributions

For furloughed employees the following applies:-

1. Salaries under the scheme are pensionable so employees will need to pay pension contributions (unless they elect to opt out).
2. If employer tops up the pay then the employee must pay pension contributions on the actual salary paid.
3. Employers will receive support for employee contributions at the minimum AE required level, (with a band of excluded earnings) so if their scheme is more generous then they will need to pay the additional employer contributions.
4. Employers still have all their obligations under both Automatic Enrolment legislation and their contractual commitments to staff (which they may seek to vary, but may need to take legal advice on the impact of this).

The Pensions Regulator (TPR)

The requirement to continue with Automatic Enrolment contributions has not been lifted, as some had hoped. However, the following should be noted:-

1. TPR have indicated that they will give employers more time to pay their automatic enrolment contributions before using their enforcement powers.
2. TPR are not suspending all enforcement activity, as employers still have a duty to pay pension contributions in a timely manner.
3. Pension providers have been asked to be flexible when agreeing payment plans.
4. In the longer term, all missed contributions must be made up in full, so that staff do not miss out.

Other Benefits

As a furloughed employee remains an employee on contract, all their normal benefits continue to apply. The precise details of how this works in practice are still being considered. However:-

1. Group Life insurers have indicated that claims are likely to be paid based on pre furloughed salary.
2. Group Income protection insurers have also indicated that claims are likely to be based on pre furloughed salary, but are considering the position as in some cases this could lead to the insured benefit being higher than the reduced furlough pay. With the issue of self-isolation they are also considering how the start of the deferred period should be determined.
3. Group medical insurers have typically adjusted some of their benefits. For example, in some cases increasing the NHS cash benefit if admission is due to Covid 19, and funding video or telephone consultations with medical consultants. As the Government takes over much of the private hospital network and staff to assist in dealing with the crisis, private hospitals are starting to cancel non-emergency operations. For conditions already approved, typically if the procedure is cancelled, the approval can be carried forward. Physiotherapy sessions have largely moved online and insurers are seeing increased demand for video and telephone GP support and for online and telephone counselling services to assist with mental health and other issues.
4. The coronavirus itself is not a critical illness covered by Group Critical Illness policies. However, if the virus leads onto a condition that is covered then insurers are considering claims.
5. With schools and nurseries shut and many working from home, many employees are reducing their orders for Childcare vouchers. As this scheme is now closed to new entrants, employees should be reminded that if they take a break of more than 12 months then (under current rules) they will not be able to start again.

Comments

All of the above should provide some help to businesses in these difficult and challenging times. Claims under the Job Retention Scheme cannot be made until the portal is up and running which will not be until end of April. In the meantime, businesses are encouraged to apply for Coronavirus business interruption loans, from the British Business Bank, if they need funding support before it is possible to apply for the grants under the Job Retention Scheme.

All current employment legislation remains in place and as a reduction in salary is a contract variation, employers should generally seek the consent of employees to changes and seek legal advice to clarify the impacts and risks of any changes as necessary.

It is good to see that the Pensions Regulator is prepared to be flexible, but note that this is just on timing of the payments as ultimately all amounts due must be paid. The impact of investment return on member funds does not appear to have been considered currently, but if investment markets have risen significantly by the time payments are caught up there is a potential issue of claims for missed investment return.

It is important to remember that a furloughed employee remains an employee and entitled to all their normal employee benefits. As we move forward through this difficult time the position on how this will impact all benefits will hopefully become clearer, as insurers have time to consider the position but at the moment this is a fast moving landscape.

How we can help

If you would like to discuss any aspect of this article please don't hesitate to contact Robert Young or Graham Smithson.