I often hear from grandparents that they would like to do something to help their children and grandchildren with building up a pension, so this month’s pension clinic runs through some of the things you need to be aware of if you are planning to help out in this way.
Regular readers will be aware that HMRC imposes both annual and lifetime limits on the amount of money you can save into a pension while benefiting from tax relief on contributions. What is much less widely known is that it is perfectly legal to exceed those limits, and that in some circumstances it can make good financial sense to do so.
One of the pension questions that I get asked most frequently relates to the impact on pensions of a change in marital status or living arrangements. The question will often come from someone in later life. Such people are often confused about the effect on their state or company pension of getting married, moving in with someone or remarrying after being widowed. I will try to cover the main facts they need to be aware of.
April 2016 saw the biggest shake-up in the state pension system in a generation, with the old system of a basic state pension plus an earnings-related top-up being replaced by a new “single state pension”.
One of the more complex areas of pensions relates to the rules around people who are married or living together as a couple, and what happens in the unfortunate event that one of them dies.
In the last couple of years more than 200,000 people have taken the big decision to transfer the rights they have built up under a final salary pension scheme into a different sort of pension arrangement. But how do you know if the amount of money you are being offered in exchange for your old pension is good value?
It seems that almost every day we read another story about how we are not saving enough for retirement. The government’s official figures suggest that about 12 million of us are not putting enough by to enjoy the sort of retirement we would want for ourselves.
In 2014, when the chancellor at the time, George Osborne, announced new pension freedoms in his Budget, there was a very positive reaction. No longer would people be forced to turn their modest pension pot into an income for life. Instead, they could choose from a range of options, including taking the whole pot as cash or continuing to invest their pension savings through their retirement.
One of the great advantages of automatically enrolling people into a workplace pension is that they haven’t really had to think about pensions to get there: unless they actively opt out, they start building up a pension pot. But the dilemma is how you turn a passive saver in their 30s and 40s into an engaged and informed saver in the run-up to retirement, able to tailor their retirement plans to meet their particular circumstances and needs.
Steve Webb explains why it’s right, more often than not, to stay in a final salary scheme.