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Safeguarding Your Future…

The pensioners of tomorrow are being forced to gamble their hard-earned retirement on a system based on the economics of the casino” Rodney Bickerstaffe, Former President of the National Pensioners Convention. September 2004.

Wherever you look, whatever you read its Pension failure here Pension failure there, Pensions in crisis; massive overhaul needed, change in laws required. All this to come when you had hoped for a safe and secure retirement. The whole point of investing for your future/retirement was so you could enjoy it. What went wrong?

You could analyse this all year and still not come up with a totally accurate answer. Was Robert Maxwell the beginning or did he just bring it to light. Is he any worse than companies promising and promoting false hopes, what about your government can you trust them, whether Tory or Labour? (If you think you can rely on the Government to give you accurate and impartial advice on pensions then go to SERPS).

What can you do to safeguard your future?

Rely on yourself. It’s as easy as that. The information we provide on this site is free, impartial and accurate. Pensions are blighted by misleading information, hard to understand figures and profit, theirs not yours, motivated selling. Did you know that your government does not have a pension fund. (Brief History of the State Pension). Have you seen what’s happening to Final Salary Schemes (Defined Benefit (DB) Schemes). Ok so you are in the other main company scheme Defined Contribution Scheme (sometimes called Money Purchase Schemes), we do not want to scare you, but take a look. (Defined Contribution Scheme). Never mind you can always full back on your Individual Pension (Individual Pension).

Start sorting out your retirement

Whether you are in or around your fifties you probably should have done something sooner, that also applies to those who are in their 20`s, 30`s & 40`s. Time is moving on. If you are careful it is not too late.

Step 1

Track down old pensions

People change jobs, employees change names, we all forget things. So it easy to lose track of pensions you have paid into. If you do not look for them, they certainly won’t come looking for you.

We can access The Pensions Scheme registry which holds details of around 200000 schemes. We can also obtain your work and contribution record. The more information we can give, the more chance you have of being reunited with the pension you paid for.

Of course, when you left that old job you may have taken your contributions out or moved them to another scheme. So there may be nothing there. However, it is always worth a search. We can also access the register for details concerning personal and stakeholder pension.

For more information call 0871 200 1491.

Step 2

Check your state pension

Your state pension won’t be worth a fortune, but it can be worth more than £200 a week if you get the maximum amount of SERPS/Additional pension paid on you contribution record on top of your basic pension (SERPS the State Earning Pension Scheme brought in on the 05.04.1978).

The majority of people get less than that. The present level of basic State Pension, for both Category A and Category B for a widow/widower is £79.60. To get that you need to have paid full national insurance contributions for 44 years. If you paid for fewer years you get a smaller pension. However, some people qualify for Home Responsibilities Protection, and the amount of qualifying years is reduced accordingly. (See below to see how to acquire if you have any HRP credits) The reduced contributions paid by many married women in the past do not count towards the pension at all.

You can pay any missing contributions back as far as April 1996. It will cost around £350.00 a year to fill the gaps and each year will boost your pension by around £100.00 per year. (Circumstances vary but individuals can calculate their own requirements if they obtain RD 170 from the Inland Revenue).

Most people will also get some additional earnings-related pension (SERPS- or State Second Pension). The maximum is £140 a week but the average is around £16.00. There may be some more money from the graduated pension paid for by contributions paid before 1975.

For more information on how to get a Forecast, BR 19, go to Forecast or email us at forecast@incipit.co.uk, or ring 0871 200 1491.

Step 3

Check your private pension.

A lot of jobs come with some kind of pension scheme. If you are in one, find out what your pension will be worth. If your employer has one that you have not joined, then join immediately.

Salary related schemes promise you a pension which is a percentage of your pay and related to the number of years you have paid in. If you pay in for the full 40 years you will generally get a pension of half your pay plus a lump sum of three times your annual pension. Some are less generous, a very few are better. The people who administer your scheme will tell you roughly what you can expect. These schemes offer the best pensions, but if your employer goes bust you may find there is not enough in the fund to meet the promises in full.

Money purchase schemes are different. They save up all the contributions you and your employer pay in, and invest them in a pension fund. When you retire you can take a quarter of the fund as a tax free lump sum. The rest has to be used to buy a pension for the rest of your life –an annuity.

Other sorts of pensions – such as personal, stakeholder, or additional voluntary contributions (AVCs) – are all money purchase schemes. Normally, only you will have paid into them so the fund will be smaller than the employer’s scheme.

The value of the pension from a money purchase scheme depends on the investment returns, life expectancy and interest rates when you retire. You will be sent a statement each year saying what your pension will be – but they are only an illustration and will almost certainly be wrong.

Step 4

Boost your pension

Whatever scheme you are in, it will not be enough. You can boost your pension by taking out another one. If you are in a salary related scheme, you can attempt to buy added years. You need to contact the people who are holding your pension. They are the best deal, although they can be expensive. If you are in a money purchase scheme then you can take out a stakeholder pension or put extra into voluntary additional contributions (AVCs).

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