Annual Survey of Hours and Earnings Figures
Whilst the forthcoming election has recently dominated much of the news, the Office of National Statistics has released its Annual Survey of Hours and Earnings figures (ASHE).
The release of the data, which is of interest to many clients, their legal team and their advisers, was of no shock in that once again, the cost of care continues to rise.
Whilst we have seen wages across most sectors rise, the cost of care has risen by more than the Government’s target for inflation of 2%. The actual increase for the most commonly used 80th percentile of ASHE 6115 over the past 12 months is 3.49%. This now means the average annual increase over the past 20 years is 3.02% per year.
To put this into perspective, a client would need to make a gross return of 5.98% so that after tax and charges their monies can keep pace with the increase in the cost of their care and case management.
The figures below illustrate the reasons why a client needs financial advice before and after the settlement of their claim.
- Gross Return 5.98%
- Investment Charges 1.30%
- Tax (Higher rate tax payer) 1.19%
- Net Return 3.49%
Even with the current discount rate at -0.25% these figures illustrate why we at Adroit believe that Periodical Payments should always be considered where clients have a recurring significant expenditure. Periodical Payments provide a guaranteed, Tax free, Indexed income for life (or an agreed period), thereby removing all the investment risk.
Adroit will be analysing the data and providing a full report soon.
For more information, please click here.
If you have any queries, please call us on 0800 884 0006 or email firstname.lastname@example.org