FINANCIAL AWARENESS

Raising Financial Awareness

Raising Financial Awareness

Introduction

The present report discusses the financial awareness features for the Murray family. So for this purpose, this report covers the reasons for the financial crises, the differences between the defined benefit pension and defined contribution scheme, advice to bill about the pension fund, calculation of the tax liability, real buy to let mortgage for Anne, calculation of the net income and the calculation of the return of investment.

Part a

Reasons for the Pension Crisis

Pension fund is defined as the amount which is given to the individual after the retirement period. The pension is given in the small amount to the individual that helps the person in many ways. Most of the individual use the pension fund for running the life but various financial crises occurs in the today's era. According to the financial times in UK, pension fund industry has the large amount of disaster which also decreases the stock and the other financial market (Kyle, 2010, Pp. 54)

. The reasons for the pension crises faced by the individual person in the today's era include:

In the fiscal year 2010, the stock market collapse which put the negative impact on the European insurers. The European insurers found hard to give the insurance money to the organization. So therefore, pension crises were occurred for the individual (Kyle, 2010, Pp. 54).

Europeans face the inflation which decreases the interest rate. The decreasing interest rate in the country decreases the advantage of the pension policy which in turn increases the risk of the financial crises risk (Kyle, 2010, Pp. 54).

Defined Benefit Pension and Defined Contribution Scheme

The defined benefit pension fund is the type of the pension fund which includes the promises of the employer. The promises includes that the employer will give the pension fund after the retirement period to the employee on the monthly bases. While the defined contribution pension fund is the type of the pension fund which includes the contribution of the fund from both parties. The employer and the employee of the organization both have to make the contribution in the fund (Gustman and Steinmeier, 1989).

Advice to Bill

In the past era, people start thinking about the pension fund after they start working whether they start work on the age of the teenagers or in the other age. In order to plan for the future life, person has to think in present. The financial crises are the part of the today's life so Bill has to start thinking about the use of the income for the future life.

Part b

Calculation of the Total Tax Liability

Earning through club = 39,000 £ per annum.

Costing of apetrolcar with CO2 emissions of 107 g/km () = 18,000 £

Parking space = 875 £.

Bank savings account = 800 £

Dividend = 1,800 £

Interest on cash ISA = 575 £

Taxable Income = 61050 £

Tax rate = 40%

Total tax liability = 24420 £

The total tax liability of the person is 24420 ...