Released 1 April 2016

HMRC have published a Policy Paper on the new Personal Savings Allowance (PSA) for individuals.

Broadly, the PSA means that basic rate tax payers will be able to receive up to £1,000 of savings income, and higher rate taxpayers up to £500 of savings income, without any tax being due. Alongside the introduction of the PSA, banks etc. will cease to deduct tax from account interest they pay to customers.

The PSA will be introduced with effect from 6 April 2016.

More details are available here.

Reverse mortgage may not be the most practical retirement solution for everybody, but they are important for many retirees to consider today, says one personal finance columnist.

The most recent financial crisis left an everlasting impact on the trillions of dollars Americans held in home equity since the housing market boom and bust of the last decade. But as home values have been recovering over the years, the return of housing wealth warrants serious consideration for reverse mortgages among retirees and pre-retirees, suggests columnist Scott Burns in a recent article published by the San Antonio Express-News.

Homeownership may not be the entire ballgame, but it accounts for most of the innings, Burns writes. Slice the figures any way you like, and the action is still in homeownership. And home equity is where the vast majority of working and near-retirement Americans have the bulk of their net worth.

Burns article is a follow-up to a previous column he recently published detailing how to buy a new home with 50% down and never having to make a mortgage payment. The article, which spotlighted the capabilities of the Home Equity Conversion Mortgage for Purchase product, spurred outcry from readers questioning [Burns] sanity.

Some thought the whole thing was some kind of trick, Burns writes in his most recent column. Others knew someone who had taken out a reverse mortgage and lost their home. Theres a lot of distrust out there for a tool that seems too good to be true. 

The reality, he writes, is Americans have a massive stockpile of home equity, which has since returned to pre-crisis levels.

At the end of 2015, Americans owned an aggregate $22 trillion worth of home equity--the same amount as they did in 2005, the year before the housing bubble broke, according to the most recent Federal Reserve Flow of Funds report. This total home equity value stacks up against mortgages of $9.4 trillion, leaving homeowner equity at $12.6 trillion, an increase of $6 trillion from the 2011 market low.

Whether you measure the total or the increase, its a lot of money, Burns writes.

But for those who were already retired or just retiring at the beginning of the meltdown, millions of people lost half of their savings and parked what remained in cash. 

They missed the market recovery, he writes. Thats another reason the biggest pool of money most Americans have to help pay the bills during their retirement is their home equity.

Reverse mortgages will be important for many, Burns says, because they allow people to access their housing wealth, which they can use to shore-up shortfalls in personal savings.

Today, most workers dont have pensions, he writes. Many have managed to save only a small amount of money. Still others saw a large amount of savings become a small amount. For all these people, home equity may be the difference between a comfortable retirement and a miserable one.

Burns then goes on record to say that he predicts the US is just entering the Age of Reverse Mortgages.

You can use one [reverse mortgage] to provide lifetime income and stay in your house until you die, he writes. You can sell your home and use some of the proceeds to buy another and never make a mortgage payment, even as you create a fund of cash to invest. Whatever you do, you will increase your retirement standard of living in a measured and predictable way.

Read Burns column.

Written by Jason Oliva

Money View, an India-based money management app and ICICI Prudential Mutual Fund, have jointly launched an app-based solution to allow users to grow their money.

Money View, in partnership with ICICI Prudential Mutual Fund, will offer two exclusive products: Savings+ and Tax Saver+. These products facilitate users to save and grow their money.

Savings+ is designed to get users in the habit of saving money regularly for their short and medium term goals - like buying a car, taking a family vacation, creating an emergency fund, etc. The product serves as a suitable alternative to traditional saving options.  These savings could grow by allowing users to park them in Liquid Funds offered by ICICI Prudential Mutual Fund. Furthermore, such schemes usually have no exit load or withdrawal penalty, which gives users the flexibility to withdraw the funds whenever they need.

Tax Saver+, the second product offered through this partnership, helps users save on their tax by investing in Equity Linked Savings Scheme (ELSS) option provided by ICICI Prudential Mutual Fund. Users can save up to Rs. 46,350 in taxes depending on their tax rate by investing up to Rs. 1.5 lac annually.

ICICI Prudential Mutual Fund and Money View have integrated their systems to make this offering completely digital. Users can create a new account by completing quick and easy paperless application form within the Money View app and start investing through Savings+ and Tax Saver+. The user can not only invest from the app but also manage their portfolio, invest more or withdraw funds (subject to applicability of lock-in period for ELSS) anywhere anytime with just a few taps on the Money View app.

This new feature is expected to allow users to better manage their savings in a convenient and digital way from the app itself. 

Last month, my office introduced legislation that would help combat the looming retirement savings crisis facing our country and the state of Iowa. This crisis has been measured by many recent studies, including a Federal Reserve report that found 31 percent of America's current workforce has no retirement savings or pension.

Here in Iowa, small business workers are especially impacted by this crisis. According to the AARP Public Policy Institute, 42 percent of Iowa's private sector employees do not have access to an employer-sponsored retirement savings plan. Senate Study Bill 3164 proposes a solution to this problem: Retirement Savings Iowa.

Offered to Iowa's small business workers through their employers, Retirement Savings Iowa aims to allow every working Iowan the opportunity to save in an employer-provided retirement savings plan. While federal regulations are still pending, we are advocating four key features: voluntary enrollment, automatic payroll deduction, portability and tax advantages.

Retirement Savings Iowa would operate much like our successful 529 plan, College Savings Iowa, emphasizing professional investment management and affordability. It would be designed specifically for small businesses that do not already offer a retirement savings plan to their employees, removing many of the complexities and costs associated with setting up and maintaining these plans. Most importantly, it would offer small business workers access to the ease and convenience of saving through automatic payroll deduction.

We applaud businesses in Iowa that provide robust retirement plans to their employees. But we have heard from small business owners who would like to provide their employees with a retirement savings plan and are unable to do so for various reasons. Our legislation approaches this dilemma head-on. We aim to fill the gap for those small businesses that are currently not providing any type of retirement program through payroll deduction.

Retirement Savings Iowa would be a personal savings fund opened for and controlled by each individual employee. By offering automatic payroll deduction and the ability to move the plan across employers, employees are provided with the ease and independence of saving for tomorrow, regardless of where or for whom they work. Neither employers nor the state would be able to contribute to these accounts.