Your Money Queries – 13th May

Q. I am the HR Manager of a medium-sized regional business. We are in the process of assessing our options for complying with the auto-enrolment legislation and our obligation to enrol all relevant employees into a workplace pension. We had been told by our employee benefits consultant that the costs of this advice could be passed on to our employees and be deducted from their pensions. However, a contemporary has told me that this would be ill-advised. Who is correct?

A. Your contemporary is correct.

Whilst some employers have sought to pass on the cost of advice received in respect of auto-enrolment (known as consultancy charging), in my experience the vast majority of employers have borne this cost. It is difficult enough to liaise with staff and deal with their queries in respect of auto-enrolment, without having to tell them that you, as their employer, will deduct the cost of advice that you have received in respect of your compliance with the legislation from their pension funds/contributions.

In November 2012 the Pensions Minister, Steve Webb, wrote to the ABI calling for an urgent review of consultancy charging. Last week Mr Webb announced that the government will ban consultancy charging in respect of schemes used by employers for the purpose of complying with their auto-enrolment obligations. Therefore, going forwards, it would be prudent for employers to meet the cost of any advice received in respect of auto-enrolment and they will have to bare those costs once the ban is introduced.

If you are in any doubt as to your obligations and your options in respect of auto-enrolment, I recommend that you seek assistance from a chartered financial planner, who specialises in corporate pensions.

Q. I am an only child and my mother died recently. Several years ago she prepared a “home made” will that she purchased from a well-known high street store. That will states, quite clearly, that her estate is to be divided equally between me and my stepfather (whom she married shortly before making that will). My mother’s main asset was her house, which has been valued in excess of £500,000. I have been told by a friend that, because all of my mother’s assets were held jointly with my step-father, I am unlikely to receive anything from her estate. Is this correct?

A. First, I am very sorry to hear of your loss.

Although, on the face of things, it may seem incredibly unfair that you would not receive the inheritance that your mother had intended, it is possible that your friend is correct and that you may not receive anything. This underlines the importance of seeking appropriate financial and legal advice in a timely fashion.

Essentially, whether your friend is correct will depend upon how your mother owned her house with your stepfather. There are two ways of owning property jointly with another; either as “joint tenants” or “tenants in common”. If the property is owned as “joint tenants”, the death of the first party automatically transfers ownership of the property to the surviving party regardless of any will. However, if the property is owned as “tenants in common” the deceased party’s share will pass in accordance with their will (provided that they have made one).

Therefore, if your mother and her husband owned their property as “joint tenants” your friend is correct and your stepfather is, as a matter of law, the sole owner of their home. However, if the property was owned as “tenants in common” then your mother’s share of the property will pass in accordance with her will (assuming that it is valid).

If your mother and stepfather owned their property as joint tenants, it is possible for your stepfather to execute a deed of variation changing the nature of their ownership of the property to a joint tenancy and thus enabling your mother’s share of the property to pass in accordance with her wishes. This is, of course, dependant upon the nature of your relationship with your stepfather.

There are also other steps that you may be able to consider in order to seek a share of your mother’s other assets, such as savings and investments, including a claim under the Inheritance Provision for Family and Dependants Act 1975. This is more likely to be a viable option if you can demonstrate that you were financially dependant upon your mother prior to her death.

I recommend therefore that you seek advice from a solicitor, who specialises in wills and estate planning, as a matter of urgency. It may also be prudent to seek assistance from a chartered financial planner to understand fully the extent of your mother’s assets and how they might be divided between you and your stepfather in a tax-efficient manner.

Q. I have heard a rumour that the government is set to realise its stake in both RBS and Lloyds, returning them to public ownership. Is this correct?

A. The government has not, as yet, announced that it is to sell its shares in the two part-nationalized banks. However, it would appear that the ground is being prepared for the government to relinquish its stakes in the banks.

For example, Sir Philip Hampton, the Chairman of RBS suggested recently that the bank’s recovery would be “substantially complete” by the middle of 2014 and that the bank is beginning to prepare a prospectus, together with the Treasury, to sell the government’s stake back to the public.

Furthermore, the Policy Exchange, a right-wing think-tank is rumoured to have urged the Chancellor, George Osborne, to reprivatize the banks by means of a mass share distribution to the public. This was an idea first raised by the Deputy Prime Minister, Nick Clegg, in 2011, who suggested that giving shares to approximately 40-45m UK adults of working age would be the most equitable way to reward taxpayers for their intervention. It has been suggested that the Policy Exchange favours a “Tell Sid” style privatization, similar to that of British Gas in the 1980s. Such an exercise would be the largest such share issue in UK history.

The more cynical commentators also suggest that a privatization of the two part-nationalized banks would be a popular move ahead of a general election in 2015.

If you have a question you would like Trevor to answer, please email it to: yourmoney@rwpfg.co.uk or post it to Your Money, Rutherford Wilkinson Ltd, Northumbria House, 21-23 Brenkley Way, Blezard Business Park, Newcastle upon Tyne, NE13 6DS.

Rutherford Wilkinson Ltd is authorised and regulated by the Financial Conduct Authority.