Monthly Archives: November 2010

Employers need to start thinking about how they will comply with the workplace pension reforms that start in October 2012. The requirements of the auto-enrolment will be phased in over a four-year period starting October 2012 for the largest employers (with 120,000 or more staff).

In October 2010, the DWP published a report called making automatic enrolment work, detailing the outcome of a final independent review and accepting all the recommendations contained in the report. It will now move ahead with implementing the reforms on the basis detailed in that report. We also now know the national employment savings trust (nest) will defiantly be the alternative scheme available to all employers will be affected by the new rules. There are many issues employers now need to address and questions they need to answer. Many of these are covered in this supplement, which provides an ideal summary of the main points you, as an employer, need to consider.

We asked Mark Donnelly, Independent Financial Adviser and pension specialist what employers should be doing right now, Mark said, “Some of the fine detail is not yet finalised, but employers should be looking at the rules and also reviewing existing arrangements to see how they fit in with the rules from October 2012. Employers should seek independent financial advice to ensure they comply with the rules”.

Protected rights

If your pension policy contains or is all “Protected Rights” (which will be shown on your latest Pension statement from your current pension provider), you are restricted in the choices that you have when it comes to finding the best annuity rates for this part of your pension. The reason for this is that Protected Rights replaced the part of the second State Pension, which you were €œcontracted out€ of. This dictates that if you are legally married then it must provide your spouse with a 50% pension upon your death.

Guaranteed Annuity Rates

There are “Guaranteed Annuity Rates€” that are written into some older Retirement Annuity and Personal Pension Plans that provide potentially higher pension annuity rates than the current rates available on the open market today. You may have to take your benefits in the structure dictated by the existing pension scheme. Such terms are often very attractive and as such you would normally be better taking the pension direct from you existing pension provider as these would provide the best annuity rates.

Section 32 Buy-Out-Plans including GMP A Section 32 Buy-Out-Plan is derived from a transfer from an old Company Pension Scheme. Some Section 32 plans contain Guaranteed Minimum Pension (GMP) benefits.

Where a final salary pension scheme had contracted out of the state scheme, the GMP relates to the earnings component of the state basic pension that the member would have earned while in the employer€™s scheme, had the member not contracted-out. GMPs ceased to accrue after 5 April 1997. A S32 Buy Out Plan can receive GMP and continue to protect those guarantees. Transfers in can only be accepted where there are sufficient funds to provide the Guaranteed Minimum Pension liability.

Triviality

If the total value of all your pension plans, including plans you have with other insurance companies and any pensions in an employer€™s scheme, is less than £18,000 (current tax year 2010/2011) then Government legislation allows you to take this is one lump sum payment. This option is known as commutation and 25% of the lump sum you receive is tax-free and the remaining amount will be subject to income tax. If you choose this option you would not receive a regular income for the rest of your life.\r\n\r\nWith any best annuity rates research it would be advised to seek the help of a qual

Equity release providers have been pulling out of the market in the last 12 months or so, but news today of a new source of funds from a Guernsey firm may help to bring relief to the many equity release brokers, relief that there may be money in the market now and new products and providers may emerge. Equity release allows those over the age of 55 to free up some of the equity in their homes.

New Life Mortgages recently came back into the market after a period of absence and More 2 Life re-launched its range of equity release products to the market after obtaining funding, this again shows signs that investors may be willing to back equity release products again.

We asked equity release adviser Jennie Gray her thoughts about these new product launches, Jennie said, “I am so pleased for the consumer, there has been a reduction in choice for them with firms like Prudential pulling out of the market, I am also pleased as an adviser as I can now research more products and give my clients the service they deserve”