Page 69 - Phonebox Magazine April 2012

Finance Matters
brings you
‘Contracting Out’ comes to an end
Although the first State Pension was introduced by Lloyd personal pension provider. This allowed individuals to build George with the 1908 Old Age Pension Act (payable at 70 up a pension pot that they had control of, in lieu of SERPS and means tested!), it was not until 1961 that the concept of benefits paid by the State.
an element of the State Pension being linked to earnings was
introduced. The Graduated Scheme, as it was known, was a complex scheme in its day and did not provide a great deal of pension.
In 2002, the State Second Pension replaced SERPS with the aim of skewing benefits to be more in favour of the lower paid.
Along with the Graduated Scheme came the notion of Contracting Out (C/O), which allowed company schemes to replace the Graduated Scheme with the State only paying the flat rate portion. This was achieved by part of the National Insurance Contribution (NIC) being paid to the company scheme rather than to the government.
From April 6th 2012 C/O will no longer be possible for Money Purchase Schemes (basically all pensions other than Final Salary schemes). If you have built up benefits via C/O then the various restrictions around how you take benefits are also being removed and, from now on, they will be subject to the same rules as Personal Pensions, thereby making them more flexible.
The Graduated Scheme ended in 1975 and, after a 3 year gap, the State Earnings Related Pension Scheme (SERPS) was introduced in 1978. This also allowed for C/O, but only for Final Salary Schemes. However, the biggest change occurred in 1987 when C/O was introduced for individuals who could take out was known as a ‘Rebate Policy’. NICs were paid at the usual rate but a portion was then paid to the
Whether you are looking to start a pension, need a review of your pensions or are planning to retire in the near future, Advison can help you achieve the most of your pension. if you would like to discuss retirement planning opportunities that may be available to you then please call us for a free initial meeting. see our advert below.
For a happy ending
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...in 1901 the life expectancy for a boy was 45 years and for a girl it was 49. By 2010, these figures had risen to 78 years and 82 years respectively. That is an increase of 73% and 67% in just over a century.
For every year that life expectancy increases, pensions have to fund a year more of income, putting ever greater pressure on both private and public pensions.
If you wish to review your pension arrangements or you are approaching retirement, why not contact Advison and see how we may be able to help you. Remember – initial meetings are always without cost or obligation.
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Speak to Advison
Call us now on 01908 285690
Advison specialises in Investments, Retirement Planning and Protection. We offer a return to the traditional values that only a smaller company can offer, a service we find is appreciated by the more discerning client.
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Advison Ltd is an appointed representative of IN Partnership the trading name of The On-Line Partnership Limited which is authorised and regulated by the Financial Services Authority. Registered (England) No. 5009271
Phonebox Magazine 69