UK Pensions are set to get more flexibility

Swany



Joined: 01/12/2009
Posts: 255

Message Posted:
09/12/2010 09:36

Minister are working on draft legislation that will mean as from April 2011 there will be no obligation to buy an annuity from an insurance company with money saved in a pension.



It looks like more flexible options will be announced including continued investment and income draw down all offering greater flexibility than the current situation.



There still will be a limit on the amount of money a pensioner can take from the fund at any one time and the tax free cash lump sum of 25% is likely to remain.



The proposed law will, as promised in the June emergency Budget, remove the effective obligation to buy an annuity at age 75. The new pension legislation will form part of the 2011 Finance Bill.



This means that if you are about to take the benefits from a UK pension it may worth waiting till April 2011 or if you live outside of the UK permanently maybe some of the other options outlined in the guide ( http://www.ncmoneyguide.info/?page_id=199) would be more appropriate.

cyprusairsoft



Joined: 22/06/2009
Posts: 2066

Message Posted:
09/12/2010 10:59

good post thanks

dutty


Joined: 09/06/2009
Posts: 75

Message Posted:
09/12/2010 11:49

Yes good post but its funny because most people I come across who are reaching the age of 65 dont realise they dont have to buy an annuity. When you you look at the literature sent to them buy the insurance company its very clever. They usually send you several quotes showing various options Eg Tax free cash and a level annuity or no TFC and just an annuity and then usually the same but with an increasing annuity. The initial pack never mentions the DRAWDOWN option and more importantly never mentions impaired life annuities people dont realise you can get higher annuity rates if you have high cholesterol levels. I know when I retire, 6 months before that date(If i was not doing drawdown -which i will ) I am going to start to smoke 10 cigs a day and drink 30 units of alcohol a week(I probably already do that one) because both these things will get me a higher annuity rate. The stupidity is most people dont realise there pension will have an OMO on it and in most cases the company they -

Swany



Joined: 01/12/2009
Posts: 255

Message Posted:
09/12/2010 11:55

OMO =

Open Market Option

This means you can shop around which is a very important feature of a pension and often not explained by the pension provider because they want to keep the business.

dutty


Joined: 09/06/2009
Posts: 75

Message Posted:
09/12/2010 11:56

have invested there money with and probably been loyal to will not give them the best annuity rate. In fact most of the big boys Standard Life Clerical Medical The Pru ETC do not do impaired life annuities (ILA) so they dont have to tell you about them. They hope you have had a serious illness then you die early and hey ho guess who makes a load of money out of you.People need to speak to IFA's. If you speak to you typical bank financial adviser you will get a blank look when talking about ILA's. I see this stuff every week and its really anoying at how much money people are loosing

Swany



Joined: 01/12/2009
Posts: 255

Message Posted:
09/12/2010 12:36

Sorry I have just found out that the link in first post will not work unless you are logged into the site. Best to go to http://www.ncmoneyguide.info log on / register and then go to North Cyprus Money Guide tab on the top and then choose UK Pensions.



Also sorry to split dutty’s posts 3 and 4 they should be read together.

itfc1978


Joined: 31/03/2009
Posts: 187

Message Posted:
09/12/2010 12:42

It is a crying shame that so many people just take the offer made by the vesting provider.



An increased pension can be had by getting a better rate with another company or impaired life rate through a specialist provider.(You do not have to be that ill to qualify and smoking counts)

This can be done through a UK BASED AUTHORISED AND QUALIFIED INDEPENDENT FINANCIAL ADVISER

Who will utilise the OPEN MARKET OPTION(OMO)



The difference can be amazing and will be paid for the rest of your life and spouse if selected adding up to 1000`s of extra £`s in your pocket.



Drawdown is also available but not for the fainthearted as the money will stay invested whilst you draw an income from it. Again a IFA will give advice on this



I retired as an IFA some years ago but I believe the documentation sent on retirment to an individual has to point out the advantages of the OMO but of course it has to be read!

dutty


Joined: 09/06/2009
Posts: 75

Message Posted:
09/12/2010 16:40

The big problem I see is that they always do mention the OMO but this is always the last thing they mention and most people have lost the will to live by about page 3 of a sometimes 20 page pack

Swany



Joined: 01/12/2009
Posts: 255

Message Posted:
10/12/2010 07:57

Glad that cyprusairsoft and dutly enjoyed the post and were positive.

I hope that all of you that have gone to http://www.ncmoneyguide.info found it informative and that it will prove a useful resource to you.

I agree with dutty in 8 it is a big problem the pack is not easy to use and it seems set out for lethargy to rule.

dutty


Joined: 09/06/2009
Posts: 75

Message Posted:
10/12/2010 14:33

Lethargy- there's a big problem when talking about financial services



I have been a financial consultant for 20 years and actually found about half a dozen people who know what their employer is going to pay them if they are off ill-MAD



I do a pension arrangement for a citizens advice bureau the employer puts 6% of the employee’s salary in the scheme the employee does not have to put anything in( fairly generous you would think) About a third of the employees are not in the scheme.-MAD



I deal with a local authority that operate a final salary scheme the current contributions are employee 6% employer about 14% to put this in supermarket terms this is effectively BUY 1 GET 3 FREE. 20% of the staff are not in the scheme-MAD

dutty


Joined: 09/06/2009
Posts: 75

Message Posted:
10/12/2010 15:09

I see at least three people a week that when I ask them what interest rate they are getting on their deposit money quote me what they were getting when they took the account out. Since then the bank has cleverly altered their rate and in most cases they are getting less than 0.5%. Why don't people just check it ONCE a year- LETHARGY

dutty


Joined: 09/06/2009
Posts: 75

Message Posted:
10/12/2010 15:28

I come across lots of people who have outstanding balances on credit cards and yet have money in cash ISA's



Credit Card interest 17% approx



ISA interest 3% approx



MAD

dutty


Joined: 09/06/2009
Posts: 75

Message Posted:
21/12/2010 15:37

I come across elderly people who still have their property in joint names and the solicitor who did the conveyance never mentioned or explained tenants in common-MAD

lovingcyprus


Joined: 02/03/2007
Posts: 1272

Message Posted:
21/12/2010 22:09

Message 5 is incorrect the Prudential do in fact offer Impaired Life Annuities and have done so for several years.

lovingcyprus


Joined: 02/03/2007
Posts: 1272

Message Posted:
21/12/2010 22:16

Some annuity providers also base your pension on where you live, so for example if you lived in Glasgow you would receive a larger pension than thos living in say Norwich.



Why is this you ask, its because your life expectancy is lower living in Glasgow.

lovingcyprus


Joined: 02/03/2007
Posts: 1272

Message Posted:
21/12/2010 22:34

Message 3 is incorrect.



To qualify for a smokers annuity you have to have been smoking ten or more cigarettes a day for the past 10 years, So starting to smoke 6 months before taking your pension will not work.



The annuity provider may want you to take a test which will tell them whether of not you have been a smoker for years. They will also ask your GP

rowlo



Joined: 12/10/2008
Posts: 4796

Message Posted:
21/12/2010 23:20

its all designed to rip you off ?

dutty


Joined: 09/06/2009
Posts: 75

Message Posted:
23/12/2010 14:06

Message 3 was a sarcastic comment highlighting how much people are missing out.



Most companies (Those who don’t do impaired life annuities ILA’s) don’t ask you any medical questions. In fact it comes down to more than medical questions; your occupation can have an impact on the annuity. In fact it is your predominant lifetime occupation that is important.

dutty


Joined: 09/06/2009
Posts: 75

Message Posted:
23/12/2010 14:10

Message 14 not very good rates in fact never once have they come out top of any table i have looked at

thecat


Joined: 07/02/2009
Posts: 4

Message Posted:
23/12/2010 15:50

You'll usually find Just Retirement and Partnership are hovering at the top of the enhanced pension annuity tables. In fact, as with everything, companies will almost always try to better each other just to get the business.

No1Doyen


Joined: 04/07/2008
Posts: 16617

Message Posted:
23/12/2010 15:58

thecat. Very true.

lovingcyprus


Joined: 02/03/2007
Posts: 1272

Message Posted:
23/12/2010 16:06

Message 19



It is no good just looking at tables to find the best annuity, to advise a client properly you need to obtain full details of their health problems and their medication. Once you do this and submit that info to the annuity provider you will find that the annuity offered is better than that shown on any comparison table.

lovingcyprus


Joined: 02/03/2007
Posts: 1272

Message Posted:
23/12/2010 17:55

agree with Message 20, I find that generally Just Retirement come out best

In cases where they don't they always ask what do they have to beat then they will requote for you with an annuity that beats what other companies have quoted. Their administration is also very good.

thecat


Joined: 07/02/2009
Posts: 4

Message Posted:
23/12/2010 18:55

Very true, loving cyprus. We now use a common application form which providers have agreed to. The details can be taken from the client and then faxed/e-mailed to each company. They then all have the same information to base their quotes on.

thecat


Joined: 07/02/2009
Posts: 4

Message Posted:
23/12/2010 18:55

very true lovingcyprus. We use a common application form which providers have agreed on. We take the details of the client and fax/e-mail the form to all the companies in order for them to quote on the same basis.

Swany



Joined: 01/12/2009
Posts: 255

Message Posted:
23/12/2010 22:13

With all this talk of annuities it is worth remembering that annuities are not always the best option especially if you are living outside of the UK. It maybe that another that the other options will give you more income due to how much more tax efficient they are.



For more information look at http://www.ncmoneyguide.info register - log on and read the section UK Pensions.

dutty


Joined: 09/06/2009
Posts: 75

Message Posted:
04/01/2011 19:16

MSG 23 & 24



You are right just and partnership do always come out on top but you have to be a little careful as I have noticed that both companies usually do their initial quotes based on a worse case scenario where health problems are concerned. As the cat says you only really know when you have filled in a common application but also be aware that some common applications do not ask about your predominant lifetime occupation - which is important

EricCrapton



Joined: 30/12/2010
Posts: 325

Message Posted:
04/01/2011 20:33

What a bummer. I've just started my private pensions to finance my move to Cyprus! Oh well, as they say: Shit happens

Swany



Joined: 01/12/2009
Posts: 255

Message Posted:
04/01/2011 22:17

Eric what a bummer indeed there would have been lots of interesting things that may have been appropriate to you. But depending on what you mean by started and when exactly you started it may not be too late.



If you have not found it already you may find http://www.ncmoneyguide.info of interest.

EricCrapton



Joined: 30/12/2010
Posts: 325

Message Posted:
05/01/2011 12:43

Swany: Thanks for the link but unfortunately I will be living in the South so may not apply to me but I will check it out anyway.

Swany



Joined: 01/12/2009
Posts: 255

Message Posted:
05/01/2011 13:55

Eric lots won't be but this is probably the best info about tax etc on the south.



http://www.deloitte.com/view/en_CY/cy/insights/Publications/cy-pubs-10/cy-pubs-10-tax/979107d9fce86210VgnVCM100000ba42f00aRCRD.htm.



The South has it's own opportunities which I am sure you will find out and enjoy.



Hope the move goes well.

EricCrapton



Joined: 30/12/2010
Posts: 325

Message Posted:
06/01/2011 00:46

Swany: Thanks again. I looked over the deloit information and to be honest the majority of it looks as though it won't be applicable to me and the rest of it went straight over my head. Subject to finances, which are still not fully finalised, I will be in semi-retirement. And if things go according to plan (And yes, I know they hardly ever do!) my main income will come as a part-time entertainer. Even then it will be a small annual amount and probably below the tax threshold, which as far as I can see is 19,500 Euros.



As far as opportunities go in the South, I'm informed things seem to be in flux and have been since the South joined the Euopean Union. (No change there then!) My Godson has been made redundant twice last year!



One thing is for sure I will enjoy Cyorus, whether I'm in the North or the South

Swany



Joined: 01/12/2009
Posts: 255

Message Posted:
06/01/2011 08:18

Eric just one point you may want to note and that is if you are using the double tax agreement and not paying UK tax on your UK pension than this will become part of your earned income in the South (still probably cheaper than paying tax in the UK).

EricCrapton



Joined: 30/12/2010
Posts: 325

Message Posted:
06/01/2011 12:30

Swany: That depends because if you've not seen my profile, I live on the Isle of Man and believe the tax on my pension may be even lower! But yet again thanks for bringing that to my attention and will check it out with a mate of mine who is a tax expert. Just out of interest do you work for Deloit by any chance?

Swany



Joined: 01/12/2009
Posts: 255

Message Posted:
06/01/2011 12:45

Hi Eric sorry was not staking so did not look at profile and as so many have false info on Cyprus 44 there is often not much point.



No I don't work for Deloit but I do think their tax info is very good. I am an IFA on the North so my specialism is the TRNC. If I have to declare an interest then http://www.ncmoneyguide.info web site is my brain child (with a little help from my friends).

EricCrapton



Joined: 30/12/2010
Posts: 325

Message Posted:
06/01/2011 13:59

Swany: I must be very naive then



For sure the deloit website is full of the right information but with most things financial it's hard to take it all in. Just like when I had to fill in what seemed like hundreds of forms to start my private pensions. After spending what seemed days trying to take it all in I realised 80% of the sheets I was sent could go straight in the bin!

lovingcyprus


Joined: 02/03/2007
Posts: 1272

Message Posted:
24/01/2011 13:48

Re message 1



This is really nothing to get to excited about, the facility not to purchase an annuity after age 75 will only apply to some 1% of pension savers.



Those who have sufficient pension funds to secure a £20,000 lifetime income be it state pension, final salary pension or annuity. These requirements would require you to have a pension fund of some £250,000. These people will then be able to withdraw unlimited funds from their pension fund.



If you do not or will not have a large enough pension fund to fulfil this requirement then now could be the time to purchase an annuity. It is thought that going into the future annuity rates will fall because we are living for much longer.

Swany



Joined: 01/12/2009
Posts: 255

Message Posted:
24/01/2011 15:30

Re 37



I was very interested to read your comment “These people will then be able to withdraw unlimited funds from their pension fund”. I have not come across this before please would you let me know your source (ie revenue update or the like) because I will need to update the North Cyprus Money Guide if this is the case.



Come April 2011 there will be more flexibility but if this is a benefit or not for an individual would be for them to work out with their advisors.

lovingcyprus


Joined: 02/03/2007
Posts: 1272

Message Posted:
24/01/2011 18:40

Re message 38



Financial secretary to the Treasury Mark Hoban told Citywire that the government proposed that unlimited funds could be withdrawn from Pension funds. copy and paste the link below into your browser.



http://citywire.co.uk/new-model-adviser/government-plans-minimum-income-requirement-for-drawdown/a414847



Remember though that all these proposals are still subject to actually coming into force from probably April 2011, there are still various parties involved in consultations.

Swany



Joined: 01/12/2009
Posts: 255

Message Posted:
25/01/2011 00:58

Re 38 Thank you for the link.



After reading it I was relieved that my understanding of the situation was not at odds with yours just that you had omitted the rest of the quote which qualifies the context of unlimited and the rules that may apply.



"Flexible drawdown will allow access to unlimited lump sums subject to a minimum income requirement (MIR). The consolation does not suggest what this level should be."



It will be interesting to see what the minimum income level will be if this proposal goes ahead.

lovingcyprus


Joined: 02/03/2007
Posts: 1272

Message Posted:
05/02/2011 13:28

A very important point one should consider when approaching the retirement date under your pension plan is to find out whether the plan has guaranteed annuity rates, if it has it is quite possible that the guaranteed annuity rate will be much higher than those offered to smokers and those in ill health.



In cases where the policies have guaranteed annuity rates you will probably be better to take the annuity.



I have seen policies which have guaranteed annuity rates of 12%, what this means is if you have a fund of £100,000 to puchase the annuity you will have an annual pension of £12,000 whereas if you used the open market option you would only get say £6,500 (male age 65ish)



The most important thing is to seek advice and that doesn't mean chatting to your mate down the pub.