Investment Matters

In this week's Investments Matter, Paul Kenworthy covers essential updates for financial planners, including the latest changes to Prudential's PruFund range, an exciting industry event focused on sustainable investing, and what to expect from the upcoming UK Autumn Budget. These developments could have a significant impact on your clients' portfolios, making it crucial to stay informed and prepared.

PruFund Updates 

Prudential have released their latest quarterly Expected Growth Rate (EGR) and Unit Price Adjustment figures for their PruFund range.  

As part of the smoothing process, Prudential set EGRs. These are the annualised rates that an investment would normally change in line with. The EGRs reflect Prudential’s view of how they think each PruFund fund will perform over the long term (up to 15 years). 

Although Prudential use a long-term view of performance to set EGRs, they also have to take into account shorter term performance. On a daily basis, if the shorter-term performance differs too much from the current EGR, Prudential would have to amend the value of the fund up or down to ensure they are not returning too much or too little. These are the UPAs.  

In this recent announcement, Prudential have confirmed that the EGRs have decreased by 0.30% for the following funds: PruFund Risk Managed 4 & 5 and PruFund Planet 4 & 5, whereas the EGRs have decreased by 0.40% for the following funds: PruFund Growth, PruFund Cautious, PruFund Risk Managed 1, 2 & 3 and PruFund Planet 1, 2 & 3. 

An upward UPA of 2.19% has been applied toe the PruFund Cautious and Protected Cautious (Dollar) funds for the following plans, International Prudence Bond and International Investment Bond.  

Goodstock Conference  

On 19th September 2024, NextGen Planners will be presenting the Goodstock Conference at Dynamic Earth in Edinburgh.  

NextGen have called this event ‘The first-of-its-kind Conference for Financial Planners who are passionate about investing for good.’ 

However, this is not just a sustainability conference, it is a long term project to change the way that financial planning conferences are held in the UK.  

All proceeds from this event will to towards Lauriston Farm, which is an urban farm in North West Edinburgh which grows food for people and Wildlife.  

Myself and Amy North will be attending the Goodstock Conference and we will be providing our insights in the days following the event.  

The agenda and speakers have been announced, and it sounds like it will be a very exciting and informative event.  

If anyone reading this is attending and would like to catch up with us, either contact one of us in advance, or just come and say hello to us on the day.  

UK Autumn Budget 

The new Prime Minister Sir Keir Starmer has stated that the Autumn Budget (due to be delivered on October 30th) is going to be ‘painful’. He stated that “we have no other choice given the situation that we are in”, clearly laying the blame entirely on the previous Government.  

The Prime Minister and Chancellor have both committed to the previous pledges to not increase National Insurance, Income Tax and VAT, along with protecting the State Pension Triple Lock.  

This has lead to much speculation that some of the areas of focus in this Budget will be Inheritance Tax (IHT) and Capital Gains Tax (CGT). This could come in the form of increased levels of taxation, or in the reduction of the allowances / exemptions.  

The CGT annual exemption has been reduced significantly over the last few years, from £12,000 on 2022/23 to £6,000 in 2023/24 to the current amount of £3,000. 

The amount of IHT that was collected in the 2023/24 financial year was a record £7.5bn, with it being expected to reach around £10bn by the end of the decade. 

The Office for Budget Responsibility has estimated that a total of £15.2bn will be raised in CGT in the current tax year. This represents 1.3% of all receipt and is equivalent to £530 per household and 0.50% of national income.  

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We will be keeping a very close eye on the announcements made in the Autumn Budget, as it will likely affect a large number of investors. The potential changes to Inheritance Tax and Capital Gains Tax, in particular, could have significant implications for the financial planning strategies you offer to your clients. As financial planners, it’s crucial to stay informed about these developments so that you can provide timely and accurate advice that aligns with your clients’ best interests.

At We Complement, we understand the challenges that financial planners face in adapting to an ever-changing fiscal landscape. Our service is designed to support you in delivering the best possible service to your clients by offering resources, insights, and tools that complement your existing expertise.

If you’re looking to deepen your knowledge, streamline your practice, or simply stay ahead of the curve, We Complement is here to help. Connect with us today to explore how our solutions can enhance your service offering and keep you prepared for the changes ahead.