Pension Release News from Grove
by Michael Ormond on December 23, 2009
Do you know how much you are entitled to when you retire? If you want to know how much you could be in line to receive when you retire, then look no further. Here is your quick guide to a ‘State Pension Forecast’.
What does your state pension forecast include?
- An estimate of your Basic State Pension
- An estimate of your State Second Pension (formerly known as the State Earnings-Related Pension Scheme – SERPS)
What will your state pension forecast tell you?
- The number of years you have been paying National Insurance
- An estimated value of your State Pension, based on your National Insurance record
- An estimate of the State Pension you are likely to receive at State Pension Retirement Age, based on what you have paid and future payments
- How much you could increase your State Pension by if you put off claiming for it
- How you can improve your Basic State Pension
- What effect a company pension or personal scheme will have on your State Second Pension
- Whether you can use National Insurance Contribution made by a late or former spouse or civil partner.
How can I get my State Pension forecast?
You must live in the UK, be four months from receiving your State Pension and not be widowed in order to get your forecast online. You can of course apply over the phone too or via post. Again, you must ensure that you live in the UK and are at least 30 days from State Pension age. In the case of applying over the phone or by post, if you are within the 30 days, your application will not be able to be processed.
What information do I need to supply?
As with sensitive information pertaining to finances, there are some details that you will need to supply in order to obtain your State Pension forecast.
Make sure that you have the following information to hand:
- Your National Insurance number – this is often on your payslip
- What type of National Insurance Contribution you are paying i.e.: are you employed or self employed
- Details of any marriages, civil partnerships or annulments
- Information on any periods you have spent working abroad
- Your current salary figure
If you want to find out more about your State Pension then contact Directgov: http://www.direct.gov.uk/en/Pensionsandretirementplanning/StatePension/StatePensionforecast/DG_10014008. You may discover that your state pension does not live up to your hopes and is not going to support you.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on December 22, 2009
UK pensions are the lowest of any G7 country. In terms of average national earnings UK pensions are worth a mere 31% .
The UK is right at the bottom of the pension earnings list compared to Italy where pensions are worth 68%, 51.2% in France, 41.2% in the United States, 39.9% in Germany and 34.4% in Japan. In terms of this state pension ratio benchmark Canadian pensioners are best off.
In spite of this grim status quo and a continuous trend away from occupational pension schemes, 64% of UK residents still intend to rely solely on their state pension in retirement.
Today’s youth does not show any major concern over pensions, retirement is still a lifetime away. With the demise of the once much envied UK company pension funds, saving for retirement is all too often quite simply forgotten about, but with the current ‘state’ of pensions everyone should be thinking about what they are going to do when they can no longer work..
The number of active members in occupational schemes has crashed from almost 11 million in 1991 to just under 9 million in 2007.
Another worrying trend amongst today’s youth is the belief that equity will provide support in the future. 18% of 25 to 34 year-olds believe they will be supported by equity in the future; an idea that seems almost absurd in the current housing market. Lending criteria is becoming tighter, mortgages are becoming less and less available and then there is the ever-present threat of falling house prices for those who already own homes.
Ultimately, the housing ladder is becoming harder to climb by the day and only 7% of 18 to 24 year-olds believe they will have any equity to provide support in the future.
With the almost epidemic spread of the ‘buy now, pay later’ philosophy nearly 2% of the population are left with outstanding debt other than a mortgage to pay off in retirement.
Furthermore, from 2024 the retirement age will increase to 66 and from 2024 it will go up to 68. Life expectancy is also on the rise, meaning that the number of years spent in retirement will also increase.
In the 1950’s, for example, the average life expectancy of a male after retirement was a mere ten years but by 2016 this is expected to increase to 19 years.
While the outlook is predicting a grim future for UK pensioners, it is believed by many that the introduction of personal accounts planned for 2012 may offer some relief to the situation, however, there is great uncertainty regarding the scheme’s implementation.
Individuals relying on state pension alone may benefit from making good any years in which they did not pay contributions. The pension an individual is assigned, is calculated based on the number of years national insurance contributions have been made.
180,000 women are due to reach state pension age next year and one in nine of these women could still ensure a full state pension if acting now. Thousands more could top up their entitlement by paying top-ups.
The Department for Working Pensions (DWP) urges ‘soon to become’ pensioners to request a state pension forecast and take immediate action . Forecasts can be requested by filling in form BR19 from the DWP website. Forecasts will reveal pension accrued to date as well as the possibility to fund possible shortfalls.
Full national state pension is £95.25 a week. Women need to have paid national insurance for 39 years to achieve this. This will be reduced to 30 years in April 2010. However, even with the planned reduction in qualifying years, women are still expected to fall short.
Up to six years of National Insurance contributions can be bought back at £626.60 per year and individuals with considerable life expectancy may benefit greatly. Individuals anticipating to qualify for pension credit, however, should tread cautiously as these top-ups may affect the amount they are entitled to.
With state pensions facing a cold winter for the foreseeable future and company schemes thin on the ground, anyone without a pension should be seriously considering their options. Bricks and mortar is not as ‘safe as houses’ anymore and so releasing your pension early could help you to really make the most of your retirement fund.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on December 20, 2009
MP Jenny Willot struggled to walk a mile in a UK pensioner’s shoes as part of a challenge proposed by AXA Insurance’s pension awareness campaign.
The 35 year-old Cardiff Central MP tried last week to live on the basic UK pension of £95.25 a week, a bid which saw her turn her heating down, sacrifice her much loved Starbucks coffee, avoid magazines and develop a new found appreciation for the challenges faced by UK state pensioners.
The Liberal Democrat MP shared her experience on Twitter where she expressed her frustration with eating the third same meal in three days; baked potato, cottage cheese and coleslaw, and a newfound “obsession” with food became evident.
Ms Willot explained that the experience had heavily reinforced her conviction that the country’s pension system needed a through revamp.
She found that while it was possible to survive from day today, buying Christmas presents or having your car break down were challenges she didn’t know how to overcome with the lack of “slack” offered by the meagre state pension.
Moreover, the experience helped the MP realise how big a sacrifice having a pet companion is for pensioners as her own cat “completely scuppered” her budget for the week.
The MP concludes that state pensions need to be improved and means testing for pensions should be abandoned to encourage people to save more and rely less on their state pensions.
The challenge undertaken by the MP is part of the AXA pension awareness campaign. She was one of 14 who took part and it certainly opened her eyes to the way that state pensions are letting down the UK’s retirement community.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on December 16, 2009
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on December 14, 2009
Labour is in trouble again after telling pensioners in the pre-budget report that state pensions would rise by 2.5% only for it to emerge that this will not apply to all aspects of the state pension.
The pre-budget report was pretty grim and the one area of the report that wasn’t, was the pensions pledge.
We have now discovered that Alistair Darling was using ’smoke and mirror’ tactics to get the public onside, during a time when pensions are suffering at the hands of the Labour Government.
The 2.5% rise will not count towards extras such as the State Earnings Related Pension (SERPS) which often make up a third of an individual’s state pension earnings and a quarter of married couple’s.
The exceptions to the 2.5% rule will save the Government £350 million a year but could cost people around £40 a year.
Those working in the pensions industry are shocked that only a small proportion of state pensions will be affected and that for the majority the 2.5% increase is hardly going to be felt.
Alistair Darling did not make these exemptions clear in his speech, which to many seems underhand. With so many of the UK’s pensioners already struggling and living in poverty, this is undoubtedly only going to exacerbate financial issues.
The pension’s spokesman for the Liberal Democrats, Steve Webb, has accused Mr Darling of attempting to cheat retired people out of income. He also said that the ‘reforms’ to the pensions that 2.5% increase would have encouraged now lie in disarray.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on
Alistair Darling has announced an increase to state pensions by 2.5% or 4% in real terms, because of the negative inflation rate.
A single persons state pension will then go up to £97.65 and a couple can expect to receive £156.15 a week. Those who are on low income will see a change in pension credits and can expect to receive up to £132.60 a week or £202.40 for a couple in income.
The state pension increase comes at a time when state pension buying power has been steadily falling for a number of years.
These changes won’t take effect until April 2010, just before the general election. It has been speculated that Labour are targeting those on low income who are typically Labour voters. Every Government uses the budget report to sway voters, but with Gordon Brown still stuck in the throats of many, it may all be too little too late for Labour.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on December 10, 2009
According to the Pension Protection Fund (PPF) final salary pension scheme deficits within the private sector are improving.
According to the recent research released last month, the shortfall of all pension schemes in the UK was improving due to an increase in equity markets.
Of the combined deficit of nearly 7,400 final salary schemes, the deficit fell from £97.6 billion to £92.5 billion. The total schemes registered as not being in a deficit has risen from £37.5 billion to £40.4 billion, showing that the deficit is beginning to shift.
The issue with pension deficits was registered in 2008 as £124 billion. Of all pension schemes 21% are in surplus, which does mean that 79% are still in a deficit and highlights the need to turn the problem around.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on December 9, 2009
UK Pension Schemes are turning away from private equity as they need a more reliable investment to ensure a solid income.
The shift in private equity, the allocation of funds has fallen from 2.5% to just 1%. Although the adjustment doesn’t seem like it will have much impact, it is likely to have longer term issues.
The UK pensions industry is in trouble and with so many well known companies at a deficit with their pension funds, it is no wonder that they are looking to stronger investments for pensions. Pension trustees are looking to maintain a high level of fixed interest assets in order to accurately predict income.
Pension funds are therefore reducing their potential investment returns on an annual basis in order to secure income.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on
Annuity rates have halved in the last 15 years, meaning that those who are facing retirement within the not too distant future, are looking at daunting prospects.
This enormous fall in annuity rates will mean that those about to retire will have to weigh up their options and rethink lifestyle and financial commitments.
The financial options for pensioners living in the UK are slim and include working beyond the ages of 60 and 70 and/ or selling the family home.
With worrying predictions for future pensioners, we are inevitably going to see more and more of them falling into the ‘poverty trap’. With UK state pensions facing real problems those who had planned to retire 10, 20 or even 30 years ago with the idea that annuity rates would have doubled, are going to have to re-evaluate their plan.
You cannot underestimate the problems faced by the UK pensions industry and those intending to retire sooner rather than later. It is also important to bear in mind that these issues might be here to stay for good.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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