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Welcome to our tenth newsletter of 2009.
The next live online question & answer session is on Wednesday 9 December 2009 between 2pm and 3pm.
Click here for further information about the Live Q&A and view previous sessions.
TPAS Chief Executive, Malcolm McLean, regularly appears on BBC2's Working Lunch, answering consumers' pension questions. The questions and answers from his latest appearance, earlier this month, can be found on their website.
Click here to visit the Working Lunch website and view the questions and answers.
As part of the overall reform of the State Pension in April 2010, the payment frequency and day will be changing for new pensioners.
The State Pension is normally paid four weeks in arrears. But it is currently possible to choose to have it paid weekly in advance. This will continue for existing pensioners.
New pensioners from 6 April 2010 will not be able to choose payment in advance. Instead, they will only be able to have their State Pension paid weekly, fortnightly or four-weekly in arrears.
Currently, most pensioners are paid on a Monday, with some paid on a Tuesday or Thursday. This will continue for existing pensioners.
New pensioners from 6 April 2010 will be given a specific payment day depending on the last two digits of their National Insurance number.
Read more about State Pension reforms.
The earliest age that members of private pension plans can draw their retirement benefits is 50. However, from 6 April 2010, this minimum age is rising to 55.
There are some exceptions that would still allow some members to draw their retirement benefits before age 55 after 6 April 2010. Click here to read about those exceptions.
The vast majority of pension plan members though will have to wait until they are at least 55. Some, who are approaching 50, may find themselves having to wait a while to get their retirement benefits.
Pension Credit is a means-tested social security benefit. It is designed to provide those aged 60 and over with a minimum level of income and give extra cash to those aged 65 and over with modest incomes who have made savings for their retirement.
As Pension Credit is means-tested, all forms of income, earnings and savings (capital) are taken into account. The first £10,000 of capital/savings will be ignored. For capital/savings over £10,000, the Pension Service will deem people to have an income of £1 a week for each £500 or part of £500 over that amount.
The saving threshold was increased to £10,000 from £6,000 at the beginning of November.
Click here to read more about Pension Credit.
Voluntary National Insurance Contributions (NICs) can be used to boost a pensioner's Basic State Pension (BSP). There is a limited opportunity for some pensioners to do this.
Pensioners who reached their State Pension Age (SPA) on or after 6 April 1998, but before 24 October 2004, have until 5 April 2010 to pay voluntary NICs. After then, the chance will be lost.
Any affected pensioners who are interested in boosting their BSP should start the process as soon as possible to avoid disappointment. The Pension Service will be able to tell them what tax years can be paid and how much it will cost. In most cases, the cost can be offset against the backdated income (backdated to SPA), meaning little or no outlay.
The Pension Service can be contacted on 0845 600 6669.
We will soon be launching a voluntary NIC planner on our website. The planner will help users identify what past years can be paid and whether it is good value for money.
Click here to read more about paying voluntary NICs.
The Association of British Insurers (ABI) and the Association of Member Directed Pension Schemes (AMPS) have this month published a good practice guide for Self Invested Personal Pension (SIPP) providers. The guide gives examples of how to draft plan literature to ensure charging structures are clearly and accurately described.
Click here to download a copy of the guide.
The Pension Protection Fund (PPF) published its annual report earlier this month. The report, for the year to 31 March 2009, shows:
PPF Chairman, Lawrence Churchill, said: "The economic downturn has highlighted how vital PPF protection has been. None of us would want to go back to an era where people lost their pension as well as their jobs.
"We expected that this year's claims would be larger than our levy so we were not surprised by these figures which have been impacted by market volatility and low interest rates. "More importantly, the pension protection framework has proved resilient in testing times and our confidence that we can continue to pay our members the compensation they are due is undiminished. The liquidity of the PPF remains strong and we have kept our levy unchanged in real terms for next year."
PPF Chief Executive, Alan Rubenstein added: "We have benefited from our sophisticated hedging strategy which resulted in the growing portfolio achieving a return of 13.4 per cent on our invested assets.
"Our priority remains to maximise returns on our investments but without taking undue risk to make sure we continue to fulfil our obligations to our members.
"The lack of big claims and market improvements since March mean we estimate that, by the end of September, our deficit had fallen back below the £1 billion mark and our funding ratio had returned to more than 90 per cent. But, we cannot afford to be complacent. Our position could yet be affected by increases in claims or by future movements in the financial markets between now and next March."
In an interview with Professional Pensions a couple of weeks after the annual report was published, Alan Rubenstein predicted that the PPF should be fully funded by 2014.
Click here to read about the PPF.
The Pensions Regulator (TPR), the Pension Protection Fund (PPF) and the Pension Benefit Guaranty Corporation (PBGC) have signed a Memorandum of Understanding (MoU) to encourage and enable best practice in protecting pension benefits.
TPR said: "The MoU enables the sharing of market intelligence to develop shared understanding in an increasingly globalised market, reflecting the strict domestic controls which protect restricted information collected in the performance of regulatory functions."
Lawrence Churchill, Chairman of the PPF, said: "This agreement sends a clear signal that there is a high level of co-operation between the various national institutions charged with protecting retirement incomes in an era when many sponsoring employers have a global presence."
Over the past month, more firms have announced the closure, or planned closure, of their final salary pension schemes. They include Stroud & Swindon Building Society, Tate & Lyle (food manufacturer), Trinity Mirror (newspaper group), the Institute of Chartered Accountants in England & Wales (ICAEW) and ITN (the news broadcaster).
Over the next few months, we will be out and about, hosting stands at the following shows. We will be more than happy to talk to visitors about any pension-related issue.
The Retirement Show - 19 & 20 March 2010, Manchester Central
State Pension Ages are changing for men and women.
Between 2010 and 2020, the SPA for women will increase to 65 to ensure equality. Women born between 6 April 1950 and 5 April 1955 are affected by this change.
Between 2024 and 2026, 2034 and 2036 and 2044 and 2046, the SPA for both men and women will rise to 66, 67 and 68, respectively. Those born after 6 April 1959 are affected by these changes.
Click here to use our SPA Calculator and see when you will be able to draw your State Pension.
We're always keen to know how our website can be improved. Please therefore take a couple of minutes to fill out our feedback form.
Click here for further information.
TPAS is manned primarily by volunteers. We are always on the lookout for new volunteers so, if you work in the pension industry and want to give some of your spare time to helping people with pension problems, please let us know.
Click here for more information about volunteering.
If you have any pension questions, please feel free to contact us by calling our helpline on 0845 601 2923, emailing email@example.com or writing to us at 11 Belgrave Road, London, SW1V 1RB.
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