People left frustrated by advisers' refusal to help them move "final salary" pension savings may be able to pursue them for compensation. The Financial Ombudsman, the arbitration service, has awarded £50,000 to a saver – known only as "Saul" – after the value of his pension dropped while he was awaiting a response from an adviser. Advisers have been shocked by the decision, as it had been thought refusing to work with a client gave protection against claims. More than a quarter of a million people have swapped final salary pensions – which pay a guaranteed income for life – for "defined contribution" plans. The latter offer greater flexibility, access to cash lump sums, and are more tax efficient... To continue reading this article Start your free trial of Premium Access all Premium articles Subscriber-only events Cancel any time Free for 30 days then only £2 per week Try Premium Access one Premium … [Read more...] about Why advisers who refuse to transfer your ‘final salary’ pension may owe you compensation
Tax free lump sum final salary pension
Pensions are still the most effective way of saving for your retirement – and with the success of auto enrolment many more people will be saving through their workplace. But what happens to these pension savings you’ve built up if you are unlucky enough to die before you are able to use them? Discussing death and money with your family can be difficult but here, with the help of experts, I explain the different types of pensions and what you need to think about. This not only depends on the type of pension scheme you have, but also much will depend on what your employer offers. Andrew Tully, pensions technical director at Canada Life, says: “Pensions can be complicated but it is important to know what type of scheme or pension arrangement you have. “This can make a significant difference to how your family or dependents are looked after if you die while you are still working or have begun to withdraw your pension.” How many times of pensions are there? … [Read more...] about Here’s what happens to your pension when you die
Answer: Looking at the regulations, a distribution from an ARF on death to a child is subject to income tax at a rate of 30pc or Capital Acquisitions Tax (CAT) at a rate of 33pc - depending on the age of the child. If the child is over the age of 21, income tax applies; if the child is under the age of 21, CAT applies. However, given the specific circumstances of your daughter, you are likely to have to make provision for her to receive assets from your estate through some form of trust structure which will require the trustees to manage her affairs for her lifetime. This is where, unfortunately, the ARF rules are not so advantageous. When a distribution of the ARF is made on death to a trust set up for a child for protective reasons, it is treated as a full distribution by the deceased in the year of death and the Qualified Fund Manager (QFM) must operate income tax at the marginal rate on the distribution. The distribution received by the trust is net of the tax deducted, which … [Read more...] about How do I protect my child from tax burden?
Most people in Britain consider owning their own homes as a higher priority than saving for retirement - but that doesn't mean you can't enjoy the best of both worlds when it comes to giving up work, according to Plymouth-based Coast Financial. Provided you've been able to pay off your mortgage, equity release is a fantastic way to use your property to help you live a more comfortable life in retirement. Martyn Burgess, independent financial advisor at Coast Financial, says: "Equity release can be used for a number of reasons: to provide you with an income; to give you a lump-sum payment; releasing money to help your children or grandchildren get on the property ladder; consolidating your outgoings (paying off a credit card) or perhaps even a holiday of a lifetime. "A lot of people are approaching retirement age and they cannot live on their state pensions, or whatever pensions they've acquired over the years, but they've been in a position to pay off their mortgages. You can use … [Read more...] about How equity release can free up money to enjoy your retirement
We know we need a pension to help pay for our life when we stop working – but did you know they can be too big? Back in 2006, the Government put a limit on how much people were allowed to save for their retirement – they imposed a tax of up to 55% for anyone that exceeded the allowance and then tried to withdraw a large part in one go. Worse, in the past few years they have significantly cut the amount you can save before it's taxed. And the result is that the amount of money the Government is pulling from people's savings has soared by an astonishing 1,000% since the limit was introduced. The Lifetime Allowance – how it works Pensions are mostly tax free while you save. But there is a limit on how much you can put away over your lifetime or in a single year. Any money over that amount would face punishing 55% tax if you tried to withdraw it as a lump sum, or 25% tax if you took the money as an income instead. At first this limit was set at £1.5million, that … [Read more...] about Massive 55% tax on people who have saved “too much”