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When the new single-tier pension comes into effect in 2016 any derived benefits will cease to exist, meaning that spouses can no longer be guaranteed the yearly state pension of £3,500 which was based upon their husband or wife’s National Insurance contributions.
The policy has been bought in to end the practice of overseas non-British spouses claiming the pension when they married British citizens. However, Whitehall has said that as well as overseas spouses missing out on the income, there will be approximately 30,000 women living in the UK who will no longer be eligible for this payment in 2016.
The chair of the Work and Pensions Select Committee, Dame Anne Begg MP, has called upon the coalition to bring in a lengthened period of time in order for women close to state pension age, who would previously have qualified for the married person’s allowance, to still be eligible for the payments.
Dame Begg said: ‘These women had a legitimate expectation under the old system that they would be able to rely on their husband’s NI contributions to give them entitlement to a basic state pension.
The select committee has asked that the Government allows people who are within 15 years of retirement to claim the pension.
There are approximately 1.7 million people in Britain who claim the married person’s allowance, compared to 220,000 based in other countries. However, whilst the number of claimants in Britain has been on the decline over the last ten years with more women building National Insurance contributions for themselves; the number of foreign claimants has grown.
When the new flat-rate pension of £144 a week comes in to effect in 2016, only those who have the requisite number of years of National Insurance contributions will be allowed to claim the state pension. Therefore, spouses won’t be eligible to draw a pension based on their partners National Insurance record, nor will they be allowed to inherit the pension should their partner die before them.
From 2016, to qualify for a state pension a person will need to have paid at least 35 years’ worth of National Insurance contributions, whereas at the moment it is only 30 years. However, people who have spent time away from the workplace to bring up children or care for family members will have those years counted towards their NI contributions.
For people who reach state pension age before 2016 will still be allowed to claim the weekly married person’s allowance of £66. In addition, women who have been paying reduced NI contributions via the married women’s stamp will still be entitled to claim a state pension equal to 60% of their husband’s.
The Government has responded to the committee’s suggestions saying that the changes brought in will mean that only a small amount of people will be affected by the scrapping of the married person’s pension.]]>
Arrests have been made by the City of London Police, as well as forces in Cheshire and Scotland and a call centre was raided where computers and documents were seized.
An awareness campaign was launched in February by the Pension Regulator to warn the general public about pension liberation schemes.
Not all pension liberation schemes are illegal, but if people are being misled about any tax consequences that may happen if you cash in your pension early, then the scheme becomes unlawful.
Pension liberation schemes tempt those who are short of money to access some or all of the money in their pension schemes before they reach 55. However, many of the schemes run do not fully explain how the administration fees and tax implications will vastly reduce how much money a person actually receives.
Industry experts estimate that approximately £400 million has already been released via pension liberation schemes.
Operators of these schemes often use spam methods to promote their products, namely cold calling and text messages, although some use websites promotions to tempt people to access their pensions early.
The schemes work two different ways, firstly by the person taking a loan from the provider which is then secured on their pension, or secondly by transferring money from the original pension scheme into an unregulated investment which is usually based overseas and offers no financial protection to the client.
The operators of the pension liberation schemes usually charge fees of anything from 10% to 20% of the amount of money transferred.
However, what many people don’t realise, are the tax implications a person faces if they cash in their pension early. Pension savings are tax privileged, but only if they are left untouched until a person reaches 55. If a person releases cash from their pensions before their 55th birthday, HM Revenue and Customs can tax the amount released by up to 55%
These types of schemes have been on the increase recently and the Information Commissioner’s Office—the regulator of telemarketing and text messages—has reported that spam text messages for pension liberation schemes have more than trebled over the past six months.
The ICO estimated that out of all the spam text messages sent to UK mobile phones in March, one in eight was related to pension release, with a similar number of cold calls reported.]]>
The study published by the insurance company, Prudential, has found that approximately 11% of this group were giving their kids over £500 every month and potentially putting their own income in risk when they retire.
Head of Business Development for Retirement Income for the Prudential, Vince Smith Hughes, said: ‘If they can afford the support there’s no issue, but with expected retirement incomes at a five-year low, any additional outgoings could cause financial strain.’
In the Prudential survey, one in seven still had children living under their roof who were older than 25. In addition, nearly a third of people surveyed will retire with one or more dependant staying with them, some of whom will be grandchildren.
This increasing use of the bank of ‘gran and granddad’ is happening at a bad time for pensioners as they are hit by lower annuity rates along with changes to their tax-free allowance and low interest rates on savings.
The Prudential report says that a person retiring in 2013 will have a retirement income of an average of £15,300 a year— they would have got around £3,400 more if they had retired in five years ago.
Most would-be retirees are helping out their family’s finances by paying for everyday costs such as travel expenses, utility bills and food. However, many are also paying for luxury items, with holidays, electrical appliances and cars being purchased for their children.
The survey found that pending pensioners are more likely to be helping out their children financially in London, although there are high numbers in the West Midlands and Wales also.
Surprisingly, almost half of the people questioned who were supporting their children financially, said that they would still be leaving them a sizeable inheritance. Which is good news for their families, as 37% also said that they thought their children were expecting to receive an inheritance on their death.
For those questioned who were no longer having to financially support their families, 30% didn’t have any dependants and a further 30% were not giving any money to their children.]]>
Transport costs to get to hospital and doctors appointments, parking fees at hospitals and increased fuel bills because they have to spend more time at home all add up to what the Macmillan Cancer Support charity calls a ‘cancer tax’.
The charity found of the more than 300,000 newly diagnosed cancer patients each year, approximately 80% face extra costs that average out at £570 a month
Macmillan estimate that in 2012, 269,000 people in the UK will be diagnosed with cancer, on top of the worry about their health they will also have to deal with the financial implications of getting the disease.
The chief executive for Macmillan, Ciarán Devane, said: “Cancer comes with a whopping price-tag for many patients. Combined with the current recession and with welfare cuts, the cost of the disease is hitting the most vulnerable hardest.”
Most people will be hit immediately with the costs, as currently cancer patients have to pay for hospital parking. Hospital parking costs affected cancer patients £38 on average each month, or £456 if they need treatment for a year.
Whilst only 40% of cancer patients have to pay for hospital parking, 70% have to pay for travel to and from appointments. This averages £170 a month, or a staggering £2040 a year.
Approximately 85% of cancer sufferers find their monthly expenses rise by £270 on average each month, day to day expenses can add up to an average of £63, and £8 a month is spent on prescription and over the counter medicines.
Many also face higher fuel bills, particularly in the winter, totalling an average of £288 a year as they have to spend more time at home. A further one in 20 will need to have either home help or some live-in support whilst they are very sick, costing an average of £56 a month.
However, the loss of income will be the biggest financial shock to most. Almost a third of cancer sufferers have to stop or cut down on work which loses them £860 on average a month in earnings.
The Macmillan charity is urging the NHS and the Government, along with businesses to help to ease the financial burden cancer sufferers have to go through.]]>
The test can tell the different between general forgetfulness and more significant lapses in memory that could signal the onset of dementia.
If the disease is diagnosed early enough, patients can take drugs which would dramatically help them to live more independently for a longer period of time.
The CANTABmobile test was developed by Barbara Sahakian who is a professor at Cambridge University. She said the test should be offered to everyone in the country over the age of 65 to catch the disease before a person’s brain becomes too badly affected.
Patients would take the test on either a touch screen computer or tablet. The six memory tasks involve memorising an object’s location and then remembering where it was moments later.
Routine questions should also accompany the test to establish how the patient’s everyday life is, and to ensure that the patient isn’t suffering from depression rather than dementia.
The simple test has been designed to pick out the types of lapses in memory that happen in the early stages of dementia and Alzheimer’s. Results for the tests are produced on the spot so patients are not left waiting and taking up doctor’s time with repeat appointments.
The score given to patients will factor in their gender, education level and age and will establish whether they need to be referred onto specialist clinics for further tests or treatment.
Research on the test shows that the results are highly accurate at pinpointing patients who have early stages of dementia or other memory loss illnesses such as Alzheimer’s, and there were only a handful of incorrect diagnosis’ recorded.
The software for the test will cost each GPs surgery just £250 a year. Currently the NHS trust in Walsall is the first to pilot the test and is looking to put the software into all of its GP surgeries as soon as possible.
Elsewhere, other scientists in the UK have devised a different test that can done at home over a personal computer and other research work is being carried out on a blood test that can detect Alzheimer’s disease early.]]>
In comparison, the Department for Works and Pensions (DWP) didn’t pay anything out in this benefit in March last year.
People who are entitled to claim Pension Credit along with some other income benefits are eligible for the payments. The £25 payments are paid out automatically for every seven days of freezing temperatures.
Currently large areas of the country are still under snow with warnings of more snow and freezing temperatures to come.
The DWP is responsible for administering the cold weather payments. The £25 per each seven freezing days is to make sure that elderly people feel that they can afford to put their heating on when the weather turns bad.
Areas across Scotland, the North of England, Wales and Staffordshire have all had payments made in the past week.
The cold weather payments take 10 days to reach a person’s bank account once they have been triggered by the adverse weather. However, there is a cut-off date for the payments of March 31st, so if they bad weather carries on into April no more cold weather payments will be made.
There is some concern that not all eligible pensioners are receiving the cold weather payments. Approximately 1.5 million elderly people should be claiming Pension Credits due to their low incomes, but are unaware that they are entitled to this benefit. Because you need to be claiming Pension Credit to receive cold weather payments, there is concern that many vulnerable people are not turning their heating on due to financial worries.
This unusually cold winter has seen almost 3.3 million households receive benefit payments of £138.5 million so far. Whilst this is higher than the £129 million paid out last winter, it is much less than the £430 million paid in the 2010-2011 winter.
Steve Webb, the Pensions Minister, was keen to reassure pensioners that the cold weather payments would help them to efficiently heat their homes during this cold spell.
He said: “Cold weather payments of £25 provide real help when the weather bites. With more cold weather expected in the next week people should not have to worry about turning up the heating when temperatures plummet.”]]>
The Chancellor appeared on the BBC’s Andrew Marr Show at the weekend to announce his decision that the new state pension will now come into effect a year before planned, in 2016.
Head of pension research at the finance company Hargreaves Lansdown, Tom McPhail, said: “This will be welcome news for the tens of thousands of women who would have missed out on the higher state pension as a result of reaching their state pension age just months before the introduction of the new terms.”
He went on to say that there will be some negative consequences of the announcement as many final salary pension schemes will now see adjustment to their pension terms 12 months earlier.
Pension providers have warned that bringing the new flat rate state pension in a year earlier could help speed up the rate of final salary pensions disappearing, as the new state pension will be financed by not allowing people to contract out of the Government system. This will lead to both companies and employees with workplace pensions having to pay more in National Insurance contributions.
Businesses had been told back in January that none of the proposed reforms would be put into effect until at least 2017, to give them enough time to prepare members for the changes.
In other news for pensioners, the proposed cap on care costs which was scheduled to be introduced in 2017 at a threshold of £75,000 has also been brought forward a year, although at a slightly reduced cap of £72,000.
George Osborne commented that the decision would help protect vulnerable elderly people from having to sell their properties to fund any social care costs they might need in later life.
He explained that those needing social care would have to fund their own care bills up to £72,000, but any costs incurred after this threshold would be met by local authorities.
Whilst most people welcome the cap as recommended by the Dilnot report, many feel that the cap doesn’t go far enough to safeguard people’s homes.
Liz Kendall, the shadow minister for care and older people, said: “George Osborne is still failing older people and their families. Today’s minor adjustments to the government’s plan will still leave far too many selling their homes to pay for care.”]]>
The pension company Standard Life’s report shows that it isn’t just the younger generations who need to be concerned about saving for retirement. 20% of people aged over 55 who were questioned for the survey admitted that their main money regret was not saving adequately for retirement.
In addition, a quarter of the people surveyed across all the different age groups who are currently contributing towards a personal pensions instead of a company pension, said they regretted not saving towards retirement earlier.
Julie Russell, a spokesperson for Standard Life, pointed out that younger generations can learn from the hindsight of today’s baby boomers regarding pension savings. She said: ‘If 20 per cent of baby boomers who are retiring or are already retired say they wish they’d started saving for their retirement earlier, then we would be foolish not to take their advice.’
Amongst other money regrets listed by those taking the survey, debts on store and credit cards, hanging on to items they had no use for instead of selling them, and spending so much money on socialising featured highly.
For those who still contribute towards the more generous defined benefit pension schemes, which is currently approximately 60% of all UK company pension schemes, only 13% were unhappy with how much they were saving towards their pensions, in comparison to 25% of people who had non-workplace pension schemes.
The pension company said that contributing £100 a month towards a pension when aged 25 would mean an extra £1,500 income each year from an annuity, than if you started saving the same amount each month once you’d turned 40.
Ms Russell’s advice for those who don’t feel they have saved an adequate retirement income is that they should take measures to bolster their savings by putting away as much as possible into high interest savings account or ISA.
It is likely that more and more adults will feel this way in the future as a recent report published by Scottish Widows found that nearly 15 million people in Britain were not currently saving anything towards their retirement, with most citing lack of money as the reason they were neglecting their financial futures.]]>
The new codes comes in effect today and means that all insurance companies must let their clients know that they can shop around for the best deals on annuities and other products.
Industry experts have long criticized the fact that a lot of pension providers do not advertise the fact that customers do not need to buy their annuity from them and do not advise them to shop around and buy it elsewhere.
In 2012, 55% of pension policy holders purchased annuities from the same company who looked after their pension.
In a bid to encourage people to shop around for the best annuity deals, insurers will no longer put application forms for annuities in the information packs they send out to people coming up to retirement age.
All insurance companies that are members of the ABI and provide pensions must adhere to the code. Currently, approximately 95% of insurers who provide defined-contribution pensions are member of the ABI.
In addition, the ABI is also going to publish information about the different annuity rates that are currently available to help pensioners get the best deal for their money.
Other practises that have been included in the code are:
Sending out information packs about retirement options two years prior to a person coming to state pension age, to help them to find the best retirement solutions for them.
Following up this with details of how to combine smaller pension pots, six months prior to retirement and then again 6 weeks before a person is due to retire.
Explaining to clients that ill health and lifestyle choices may mean a customer can get a better deal on their annuity.
However, some pension campaign group worry that the code of practise could go much further.
With almost 400,000 annuities with an average value of £28,000 sold to pensioners in 2012, campaigners want to ensure people get the best information possible before they invest their money.
Director General of the ABI, Otto Thoresen, said: “The timely, clear and relevant information provided under the code will significantly increase the number of people reaching retirement with the confidence to make the right pension decision.”]]>
The ONS data collated just before the launch of the automatic enrolment workplace pension scheme shows that just 46% of workers in the UK now have a workplace pension, the lowest figure since 1997 when it began recording the numbers.
The number of memberships of final salary schemes continues to fall, with just 28% in operation in 2012 compared to 46% back in 1997. The decrease in final salary pensions has been felt most within the private sector, where due to their increased cost to the employer, many companies have now closed the schemes to new employees.
The figures reveal a huge difference between the private and public sector when it comes to having final salary pension schemes. In the public sector, 91% of employees with a workplace pension scheme contributed towards a final-salary pension compared to only 26% of private sector employees.
The report relates to early 2012 and the data shows that most of the final-salary pension schemes that have closed were replaced with either defined contribution pension schemes or the more risky stakeholder schemes, where pension pay outs rely on the performance of the stock market.
Again, the private sector pension take up was more in the public sector, with the ONS saying that 83% of employees in the public sector contributing towards a workplace pension last year, compared to 32% of private sector employees.
Not only was there more workers in the public sector paying into pension plans, the contributions made by both employers and workers were higher than the private sector. 94% of public sector workers with pension schemes received pension contributions from their employer of 12% or over of their wages. However, in the public sector, 61% of workers in a pension schemes received employer contributions of 10% or less of their salaries.
There were higher contributions from employees in the public sector with 37% of workers contributing over 7% of salaries, compared to 15% of private sector workers.
Steve Webb, the pensions minister was quick to address the data, he said: “The scale of the challenge is clear – too few people are saving for their retirement, which is why our pension reforms are so crucial.
“Last year we acted to make sure all workers will have access to a workplace pension. Firms employing over a million people have already started enrolling their employees into pensions, finally reversing the downward trend.”