Pensions, Benefits and Care Costs

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General disclaimer

As my page on Savings had become very long I have decided to split off this one, which will be solely devoted to Pensions and Benefits.

NOTICE : I understand that the Financial Services Authority do not like unqualified people giving financial advice.  I would like to state that none of the following should be considered as advice.  I just like to point people in the direction of useful information. To find an Independent Financial Adviser (IFA) try www.unbiased.co.uk. Details on this page are, to my knowledge, correct at the time of uploading but are supplied as information only and in no way implies advice and the author cannot be held responsible for any actions which you take as a result of what is written. Also, as interest rates and investment charges can change at any time, it is imperative that, before acting on the information below, you check with the organisation concerned. If you find any of the rates are inaccurate, please email me by clicking Here

n.b Links on this page change rapidly. Apologies if you get a 'Page not found' error. It is often because a web author has moved the page. Please let me know.

Retirement cartoon

The complex (and ever moving) story of state pensions (and annuities) is covered in articles in the Daily Mail at http://www.dailymail.co.uk/money/pensions/article-1585713/Pension-credits-guide-claiming.html It is important to read this if you think that you be affected - and most people will.

AgeUK have done a cartoon type video offering their help with benefits.  Click http://www.youtube.com/watch?feature=player_embedded&v=o411j51WxNg#!

AgeUK also have a series of videos by a financial advisor dealing with debt, annuities and retirement.  See http://www.ageuk.org.uk/money-matters/

Claiming benefits. In a case taken up by AgeUk on behalf of an 80 year old man looking after his 78 year old wife, they managed to get him an increase of £32.93 a week PLUS Council Tax (£1300 per annum) and backdated arrears of £565.If YOU think that you may not be getting benefits to which you are entitled, do not hesitate to get in touch with AgeUK 0800 169 29 39 (free phone)

The latest idea from the government 'think tank' on the looming pension crisis for private sector workers (as the final salary schemes of large companies are shot down one be one by their accountants) is to persuade companies to replace such schemes with more affordable ones.  Basically, this means getting everyone to contribute more so their pension pot buys a bigger annuity to keep them going until they drop.

There is news that the government might consider taxing all pensions at source, even though the recipient is below the tax band.  They would then have to apply for their tax back. This appears to be another hare-brained scheme, which would create more work for the 6 million currently below the tax threshold.  We can only hope that this idea sinks as dramatically as the Titanic.

Pensions and Benefits from 9th April 2012 This is quite complicated but most benefits (including any SERPS element) rose by 5.2%, which, at least is ahead of the current inflation rate. The Basic State Pension increases from £102.15 to £107.45 per week.  But see Contracted Out Deduction. You can defer taking your pension in order to build up a bigger one (or lump sum) but you will not build up any extra if you or your partner get one or more of the following : Carer's Allowance, Unemployability Supplement, Widow's Pension, Widowed Mother's Allowance, Incapacity Benefit, Income Support, Pension Credit, Income related Employment and Support Allowance or Income based Jobseeker's Allowance. In addition to the State Pension you may receive The Guarantee Credit or a Savings Credit.  Please check the link above for these.
For those unfortunate to be earning over £100,000 per annum the government gave a smack on the wrist. Their personal tax allowance will be reduced by  £1 for every £2 earned over that amount. So, if they earn £116.210 in a year they will get no personal allowance. And they will still be paying 50p in the pound in taxes.  But all is not lost!  Hargreaves Lansdown points out to these, newly impoverished, people that there is a way round both 'problems'.If they tuck away anything over £100,000 in a pension scheme this mean ol' government will  let them keep their tax allowance, complete ! And if they manage to 'defer' their income until April 2013 (how does one defer one's salary?) their tax r)ate will reduce to 45% ! And,, they say, the same 'technique' (stuffing their pension fund) applies to those poor souls who blatantly earn over £50,000 p.a. and lose their (untaxed) child benefit.  So, you see, poor (taxable) pensioners, you are not bearing your hardship alone ! Make your extra fiver a week go a long way.

The March 2012 Budget.   As is usual, the fac ts of the budget are dribbling out. One of the most important features is to be the (eventual) change in basic state pension to £140 per week for everyone, whether they have a full national insurance record or not (currently as little as £64.40 per week). But this is still subject to the terms of a White Paper to be placed before the House shortly. But, as the Chancellor expects to SAVE £3billion in the coming years, do not anticipate that he is being generous.  In fact 1.5 million pensioners currently get at least £150 a week - mainly those who opted to pay for an extra second state pension under the SERPS (Now S2P) scheme. It has not been decided what happens to those extra funds, but I could guess. Some of the cash to increase the pensions of those who, for one reason or another, didn't get around to paying full contributions, will undoubtedly come out of the savings from what has come to be know as the 'Granny Tax".  This is the additional allowance (which was introduced by Winston in 1926!) which is given to the over 65s and over 70s. At present, this is worth between £1395 and £1495 per annum (free of tax) This will be frozen at the current rate.  If this is finally lost, pensioners will have to pay (@ 20%) as much as £279 or £299 per annum more tax. That said, the starting level for tax for everyone will rise in April 2013 by £1,100 to £9,200, which will take quite a few people out of tax altogether. Nevertheless, there has been a strong reaction against this decision to tax older people more (and I wonder if they will have to do a U-turn on this).

Among the confusing messages emanating from the DWP are letters indicating that parents with income over £26,000 p.a will lose Child Tax Credit. This may be the case if they have just one child but the credit is still paid to people with an income up to £32,000 who have TWO children.  And this is raised further for parents of more children.  Worse than this, the department has been giving people incorrect information and only correcting this when challenged. People in this situation should get in touch with DWP. See HERE  A 'child' can be up to 20 years of age if they are on an approved course (even certain unwaged apprenticeships).

Even the rise in the initial tax level has disadvantages for some as, this year, employers must offer company pensions schemes for every employee who pays taxes. Non tax payers will not automatically be offered participation in the scheme (and will not have to pay the required percentage of their wages)

Child Benefit was frozen at the 2011 level. From 2013 households where one person earns over £50,000 will progressively lose Child Benefit.  Over £60,000 p.a. no Child Benefit will be paid.  My heart bleeds for families where a couple is earning £120,000 p.a.

New Benefit rates from April 2012 are at http://www.direct.gov.uk/en/Nl1/Newsroom/DG_200634  The basic contributory pension rate goes up to £107.45 per week (£5587.40 p.a.). The non contributory rate, based on a spouse, rises to £64.40. (£3348.80 p.a). There are also rises in various other benefits

I was surprised to find that I had not got a link to http://www.carersuk.org/ one of the principal organisations which help Carers.  

January 2012. Housing Minister Grant Shapps has announced more cash will be given to enable older people remain in their own homes.  See the Mabels article at http://www.mabels.org.uk/forum/viewtopic.php?f=17&t=2435  This includes cash for home improvements, disabled facility grants as well as advice via http://www.firststopcareadvice.org.uk/  

The government is sustaining some embarrassing defeats in the Lords on their Benefit Cap proposals.  The Lords threw out the proposal to include child benefit in the cap of £26,000

At the same time the government is having great difficulty with the efforts to reform the disability benefit system (in order to reduce the numbers and cost). They have huge opposition from cross party members, in the Lords and from disability groups and are repeatedly being defeated and having to amend the proposals. Tough (and embarrassing) for the government.  But that is what democracy is all about

Shapps is also suggesting to local authorities a scheme whereby older people in large houses would be encouraged to move to smaller houses (downsize).  The local authority would then take over (maintain) the house and rent it to a family. Surplus rent would then be paid to the original owner.  Sounds good in principle but one does wonder whether this will be taken up by the local authorities or the individuals.  See  Mail article HERE:

In another bid to save the spiralling cost of care there are plans to almost double the cost of care to individuals. The elderly may be required to pay up to £60,000 - £25,000 more than the current Government cap on fees - for a place, ministers said. That would mean a couple could be forced to find £120,000 to pay for the cost - with few having any other choice but to sell their houses. Currently people with assets greater than £23,000 must fund their own care.  See Mail article  HERE:  (this is the same link as the one in the last paragraph)

The AgeUK magazine suggests some pointers if you are considering a move to a care home :

1st December 2011 The Chancellor's mini budget held some surprises.  Whilst the politically popular moves against public sector workers continued, he considered it unacceptable to renege on the promised inflation-linked rise in state pensions and benefits.  This will result in a 5% all round increase in April, costing the Treasury an extra £1.8 billion. This was welcomed, especially by pensioners and disability organisations, but less enthusiastically by the Taxpayers' Alliance.  And the 5 million families claiming claiming tax credits will also find that it is restricted to inflation, rather than a recently promised additional amount. On top of this, lower income families will see working tax credits frozen. Higher rate tax payers are also hit, as they will lose child benefit. But despite the dire warnings from the Chancellor and the Governor of the Bank of England the stock market is remarkably buoyant, apart from the banking sector which looks forward with horror and the unfolding Euro catastrophe, with the real possibility of their not getting their cash back from Greece, Ireland, Portugal, Spain and even France.

2th November 2011 Ageuk have a fleet of 26 'Handyvans' around the country. They provide a service to people over 60 whose savings do not exceed £20,000. They are available to do the small jobs around the house, such as fixing smoke alarms, curtain rails, safety handles, light bulbs etc.  If you wish to find out if there is one in your area  and find out if you're eligible to receive the service - just call 0845 026 1055 or email handyvan@ageuk.co.uk. For more detail see www.ageuk.org/handyvan

13th October 2011 News Flash !  http://www.bbc.co.uk/news/uk-politics-15289798  Plans to raise the state pension age  for women to 66 in 2020 will be delayed by six months to address concerns thousands of women will be unfairly disadvantaged.  But it is still intended that the age will rise to 65 by 2018.  
A damning report by the Care Quality Commission has found half of 100 hospitals inspected are neglecting elderly patients in the area of dignity and nutrition.  A list of the worst hospitals is published by the Guardian at http://www.guardian.co.uk/society/2011/oct/13/nhs-hospitals-care-of-elderly

Disabled Living Allowances there are some useful explanatory  (government) films about these with sound, subtitles and BSL  They can be downloaded or a DVD can be obtained  : Click HERE

8th October 2011 News is filtering through about a scheme for energy suppliers to give £120 to households of pensioners and also those with a disabled person and some low income families with children. See http://www.direct.gov.uk/en/Pensionsandretirementplanning/Benefits/BenefitsInRetirement/DG_185940 The scheme seems to have been ill thought out, with some companies saying they will limit the total amount, so it will be ‘first come first served’. If you wish to apply you should get in touch with your supplier. But, I gather, in the chaos of maladministration many of their call centre staff do no know what to say. But it is worth trying to get in touch – preferably on line if you don’t want to spend a fortune on the phone call. While Scottish and Southern say it will be a limited scheme I gather British Gas will not have a limit. For more detail see http://www.bbc.co.uk/news/uk-15225686

The LaterLife site has produced a page on pensions at http://www.laterlife.com/retirement-c5/Retirement-Pensions.htm.  Follow he links therein.

October 2011 The new Welfare Reform  Bill http://www.bbc.co.uk/news/education-15206416  This article from the BBC points out that The Childrens Society reckons that 4 out of 10 disabled children already live in poverty. The Welfare Reform Bill plans to REDUCE their benefit by up to £27 and urges the government to look again at this provision. I think this will become a hot potato before the bill is passed.

September 2011. The confusion about State Pension Reforms continues, with parts of the recommendations still dependent on 'affordability'.  These days this probably means they will be delayed.  I recommend a good read of the site at http://www.pensionsorter.co.uk/ There is so much happening (with ages, amounts, the rate of increases, additional schemer, the number of contributions required etc) that it would fill a whole page.

Pension increases are a complex subject. If you are intrigued please click on http://www.opalliance.org.uk/increases.htm, which is an explanation by the Occupational Pensions Alliance

SIPPS (Self Invested Personal Pension Schemes) are explained at http://www.halifax.co.uk/sharedealing/our-accounts/self-invested-personal-pension/ and they have a downloadable guide at http://www.halifax.co.uk/filestore/SIPP_Guide.pdf  They are particularly useful for people paying taxes.

Women aged 56 and 57 may be affected by the Pension Bill, which proposes to increase the pension age for all to 66 by 2020 (and to 65 by 2018) The State Pension is also to be raised to around £155 a week for everyone by 2016. So, deferring when women get it would cost them at least £5000 a year.  Saga and a number of MPs have asked the government to rethink this.

10th January. The Mail suggests the following links for financial help :  As a rule Org Uk addresses are 'not for profit'

n.b  Annuity rules changed in April 2011, allowing more flexibility. Under the new rules, someone retiring will not be forced to buy an annuity by age 75 but will be able to invest their pension pot under the new "capped drawdown" rules. They can still take out 25% as a tax free sum (as before). But for the better off (well, this is a 'blue' government), they can draw any amount from their fund providing they can prove a secure (pension) income of not less than £20,000 p.a. (although they will have to pay tax (at 55%) on amounts withdrawn). Cash taken into account towards the £20,000 must be from State and Occupational Pensions plus any annuity income. The big difference is that when someone dies with money left in their pension, this can be used to provide and income for dependants or taken as a lump sum.  Previously, on death,  all annuity cash has been taken by the company providing the annuity,

From the Financial Times : The new rules allow pensioners, or those who die unexpectedly early and still have money in their pension fund, to leave some of the unused cash to their families. At present, anyone who keeps the money in their pension instead of using it to buy an annuity is subject to tax on their pension fund when they die. This 82 per cent tax (!) includes 70 per cent of “unauthorised payment charges” and a further 12 per cent in the form of inheritance tax (IHT) on the remainder. Under the new rules, these assets are only subject to a 55 per cent tax, called a “recovery charge”, when passed on after death. There will be no liability to IHT

Of course one of the most tax efficient ways for under 75s to 'put something away' is via a SIPP (Self Invested Personal Pension). The contributions are invested in a variety of Stocks and Funds. Until April 2011 it has been be possible for the rich to contribute up to £255,000 per year and this has tax relief up to the individual's tax rate. But complicated rules about this tax relief were introduced in April 2008.  Non earners can contribute up to £3000 p.a.  For the 2011-2012 tax year this has been reduced to £50,000 per annum with tax relief on the full amount. But you will be allowed to carry over any unused allowance for three years.  The non earners allowance goes up to £3600.  When they refer to tax relief they really mean that, if you have paid tax on the amount as it has been earned, the government adds it back to your pension pot.  So someone who pays £16,000 into a SIPP and is on the basic 20% tax rate actually has £20,000 invested in the fund. And the higher their tax rate the more they get back.  With tax relief the highest rate tax payer actually only has to pay £10,000 to add £20,000 to his pension pot ! (extracted from Hargreaves Lansdown magazine SIPP Times See www.H-L.co.uk)

Sunday Mail 27th November 2011 Entitled "Retirement Income Options" : See also thisismoney.co.uk/drawdown  It suggests that the vast majority of people converting their pension fund into a lifetime income (an annuity) just request it from their insurer.  They say this can be MUCH less (for life) than they can get from shopping around. But there are many alternatives to a standard annuity.  For instance, someone who is a smoker or who has other health issues may get considerably more.   Obviously the age of the person at commencement is an issue.  But also

Naturally any annuity that increases the financial commitment of the provider will reduce the amount received each year.  

So, as you can see, there is need for impartial advice when taking this important decision.
http://www.saga.co.uk/money-and-finance/campaigns/annuity.aspx
Annuitydirect
Better Retirement Group
Key retirement Solutions
Retirement Angels
Money Advice Service (Government booklet "Your Pension - It's Time to Choose")

November 2010  The Gifted Housing Service. See http://www.ageuk.org.uk/home-and-care/housing-choices/gifted-housing/. Basically you gift your house to  the AgeUK charity in return for receiving :

November 2010 Care of the Elderly. This article (from the Thisismoney site) is too long to add here but anyone who needs information about the minefield which is the present state of Care of the Elderly in Britain should refer to this http://www.thisismoney.co.uk/pensions/article.html?in_article_id=517596&in_page_id=6&ito=1565  Along with Pensions this is going to be one of the thorniest problems which face most of us.

14th November Under the Budget (2011) The  total assets of people who qualify for free care is frozen at an amount not exceeding £23,250.(Daily Mail)  Residential Care The rules vary from place to place, especially between Scotland, Wales, Northern Ireland and England. Care linked to a severe medical condition is supposed to be free under the NHS. All areas have a means tested arrangement on the basis of assets, though the levels vary. Assets include cash and the value of a house, unless it is still being lived in by a spouse or close relative over 60. Anyone in England Northern Ireland with assets over £23,250 pays the whole cost of their own care (whether in a care home or not). If they have more than £14,250 they still have to contribute.  The amounts are slightly lower in Scotland and in Wales there is just one level (no sliding scale) of £22,000.  However, they may receive and Attendance Allowance of up to £71.40 a week (which is not means tested). If you require nursing care within the home, there is an extra nursing allowance which (for some reason) varies between £71 in Scotland and £120.55 in Wales. But with care homes costing over £500 a week many people have to sell their house to pay until their assets are less than the set amounts. There is a Commission on Funding of Care and Support, which is expected to report back in 12 months.  But any proposals are unlikely to take effect before 2014.

6th November 2010 Heralded as the biggest reform of State Pensions in 50 years the government is proposing a universal payment of £140 a week for all regardless of contributions. This would replace the patchwork of payments, which are expensive to administer.  Currently the basic pension is £97.65 per week for a single person, providing they have a 30 year record of contributions, plus, in some cases an additional State Pension (used to be called SERPS), which can add as much as £130 (although the average is just £24 a week).  For people who have not built up enough contributions the government pays means tested credits.  This guarantees a single pensioner £132.60 and a couple £202.40 a week.  An estimated 1.2 million people fail to claim this. When will the new system arrive? This is not certain but certainly not before 2015. Who would be affected ?  Women, especially those who have not been able to build up a full contribution record will benefit as they would get a pension in their own right.  Currently many depend upon their husbands contributions and get very little. People who are getting a SSP (Second State Pension) because of higher contribution in the past may get less  if they were only given the £140. But this is complicated by the fact that some contracted out of this at an earlier date. No decision has been made as to how to fairly adjust pensions contracted in and out employees. Also, the new scheme could result in people retiring later getting more than people who are already retired. So the dream of a simple State Pension is not yet a reality.

But another change is afoot which will affect women adversely.  From 6th April THIS year, the age of retirement for women is rising, affecting those who had hoped to retire at 60. The age will increase more rapidly between April 2016 and November 2018 when their pension age will reach parity with men (65). Both men and women's pensionable age will rise to 66 by 2020

A useful question and answer site on this very complex (and in many aspects still undecided) issue is at http://www.bbc.co.uk/news/business-11708875 Many of the answers still say that we will have to wait until the Green Paper on pensions is issued - and when it becomes law.

Yet another change proposed at the same time is that people earning more than £43,875 would not receive Child Benefit. On the surface it seems fair that wealthier people should not get a tax free Benefit (when most pensioners have to pay tax on their lowly pensions). There was an immediate storm on this decision as the amount chosen for a cut off was for the earnings of one person in the household. They overlooked that fact that two or more people in the household might each be earning just below that amount and still the benefit would be paid. Also people promoted just above the threshold would finish up receiving less because of the loss of the benefit.  It would have been far simpler to merely make the benefit taxable, thus getting 20, 40 or 50% back.  Instead they are talking about fining people who don't come clean about their earnings and still receive the benefit.  Another administrative nightmare, impossible to carry through.

28th October 2010. A row has broken out within the ranks of the Coalition over Housing Benefit.  Housing Benefit is paid on a 'means tested' basis to enable people to afford to live in a house. The public has been stirred up regarding stories of people (working or not) receiving as much as £2000 a week in this benefit. The government is proposing to limit this to £500 a week. If you live in many parts of the country this sum would be quite adequate to house even quite a large family.  The anomaly is cause by the cost of housing, especially in parts of London, where this might get you a one bed flat. If the cap becomes £500 a week many families will have to move to cheaper accommodation, especially in Central London, regardless of whether they could get a job anywhere near or whether they have grown up in an area and have nearby relatives, for which they might have a caring role.  And their children would have to change schools. It would certainly mean a major disruption in people's lives.  Many people working in central London do not have high salaries and jobs on the minimum wage would go unfilled, resulting in disruption in such areas as street cleaning, rubbish collection, services, hospital orderlies, shop assistants, catering workers. There are strong arguments on both sides. We cannot afford the huge housing benefit bill but bringing in a measure such as this too rapidly could lead to mass evictions and major disruption.    

22nd October.  The Spending Review. Unless (or until?) the services for older people dry up or they are affected by the above Housing Benefit cap, OPs came off quite well. They SHOULD get an inflation proofed increase in pension in April. If this is based on the September inflation rate it should be around 4.5%. In September 2009 the inflation rate was very low and pensioners suffered accordingly. Most of us are not directly affected by increased National Insurance payments, increased unemployment, reduced child benefit or higher taxes on those earning £45,000 (though my heart bleeds for them). Most benefits for the not-so-well-off are untouched (Child, Nursery Education, council tax, mortgage interest). And it wasn't much of a shock that I am only able to stache away £50,000 a year tax free in a pensions fund (instead of £250,000). But there are major concerns that Local Authorities will have to cut back on the Home Help services which enable many people to carry on living in their own homes. And yet the cost of residential care is much higher and it is unlikely there will be sufficient provision either by local authorities or by the private sector.

The Budget. A VAT rise to 20% from 4th January 2011 Pensions will be linked to wage rises (but not those of bankers - sorry) and not less than 2.5%.  However, this does not affect the SERPS element of the pension. Personal income tax allowance is to be increased by £1,000 in April 2011 to £7,475 - worth £170 a year to basic rate taxpayers. Housing, Tax Credits and Disability Benefits are all likely to be reduced.  But households getting less than £40,000 may get more. That'll be a nightmare to administer.  Is young Johhny part of the household or not ? Maybe he will be kicked out at last !

Purchased Life Annuities (Article extracted from www.thisismoney.co.uk 2010) See more recent paragraph above, Nov 2011. Hard-pressed savers were given no cheer last Thursday when the Bank of England base rate was kept at 0.5% for the 15th successive month. Continuing low interest rates are forcing savers to consider new ways to generate the income they need. And, for older people, the returns from Purchased Life Annuities (PLAs) have put them on some savers' agenda. A PLA involves handing over capital in exchange for a regular income. While the cash cannot be recovered, unlike a bank or building society savings account, the income is guaranteed for life. Buyers also gain from the unique tax rules surrounding a PLA.  A large part of the regular payment is treated not as income, but as a return of the buyer's capital. This element is not taxed.....
Take the case of a man aged 70 who buys a £20,000 purchased life annuity. The gross annual income from this is £1,444. But £1,194 of this income is called the 'capital content', so the buyer is taxed only on the remaining £250. This means a net income for a 20% taxpayer of £1,394. To earn the same after tax, he would need to find a savings account paying 8.7% gross. The equation improves with age. The same £20,000 earns a man aged 80 an income of £2,260 a year after basic-rate tax. Matching this requires an account paying an improbable 14.1% gross. Annuity rates are slightly lower for women because they have a longer average life expectancy. A woman aged 70 investing £20,000 would receive £1,376 a year and an 80-year-old would get £2,099. But people with health problems may be able to get an even better deal.  These rates may have fallen since 2010. See rates at http://www.sharingpensions.co.uk/annuity_rates_purchased.htm

My ex employers pointedly mentioned that if I (as a consequence of getting a nil rise in my pension for 2010) had any money worries I could contact 0800 012 1656 or visit http://nowletstalkmoney.com, the site set up by the Dept.of Work and Pensions for people in distress. Worth knowing !

24th March Budget.  Not a lot for oldies. Winter Fuel Allowance : If you were born on or before the 5th July 1950 you should apply.  Over 65s will  continue to receive £250 while the over-80s will get £400 next winter. See HERE

Winter Fuel Allowance 2010 http://www.direct.gov.uk/en/Pensionsandretirementplanning/Benefits/BenefitsInRetirement/DG_10018657A Winter Fuel Payment is an annual payment to help people aged 60 and over with the costs of keeping warm this winter. If you are aged 60 to 79 and you are entitled to receive a Winter Fuel Payment, this year you will get either £125 or £250, depending on your circumstances in the qualifying week (21 to 27 September 2009). If you are aged 80 or over and you are entitled to a Winter Fuel Payment, this year you will get either £200, £275 or £400, depending on your circumstances in the qualifying week. You do not pay tax on Winter Fuel Payments. They will make automatic payments over a number of weeks from early November 2009 until Christmas 2009. If you have not received your automatic payment by Christmas 2009 you should call the office that pays your benefit or call the Winter Fuel Payment Helpline 08459 15 15 15 (0845 601 5613 for textphone users) or complete the form on line.
N.b. Men who reach 60 by the qualifying week should apply for the payment as they are not registered as pensioners and could miss out

A good site that deals with GRANTS of various kinds is at http://www.moneysavingexpert.com/protect/grant-grabbing Check for the latest Benefits, Pensions and Jobs at Department of Works and Pensions page.

Equity Release Schemes.  These are the ones where people agree a loan on the equity of their house.  But the interest on the loan, which can be at 7.34% (e.g. Aviva) or as much as 16%, compound, is usually added to the mortgage (this is termed a 'roll-up equity release'). So, if the loan is taken out when someone is around 55 it can grow ever more rapidly until it equals (or exceeds the remaining value of the house (especially at times when house prices have fallen).  Even if house prices rise slowly the value of the house may not equate to the loan by the time the borrower reaches 85. At such a time the lender may try to evict the householder and sell the property to regain their cash. To quote the well known financial adviser, Mark Dampier "These deals should be an absolute emergency, a last resort, and even then only for the very elderly"

**IVPPs  Hargreaves Lansdown sent me information about Immediate Vesting Personal Pensions (IVPP) where people under 75 can arrange an annual pension payment at a far higher rate than is now available from savings. There is a limit each year that you can put away and the money is lost on death but, as an example a man of 74 would receive as much as £211.21 a year for the outlay of  less than £2000, which is over 11%. Younger people and women would get less but even at age 50 a woman would get over 6% for the rest of their lives.  The pension is taxable and, once committed cannot be withdrawn. But, if you feel you will beat the odds and expect a long life, this is where an IVPP would pay off handsomely !

Married Couple's Allowance  Click on http://www.hmrc.gov.uk/incometax/married-allow.htm You should be getting this tax allowance where at least one of a marriage or civil partnership was born before April 6th 1935.  For marriages before December 5th 2005 the allowance goes to the husband. (For marriages on or after that date the allowance goes to person with the higher income. The maximum allowance (2009 - 2010 is £6,965 but this is reduced if the person claiming it is has an income in excess of £22,900. BUT the actual tax saving is only 10% of the allowance i.e. £696.50 (less for high earners). If you do not pay tax and your spouse does then you can transfer any unused allowance. If you think you are not getting this allowance you can write or phone your tax office. Claims can go back as far as the 2004/5 tax year

Did you know that under section 187 of the Social Security Administration Act 1992: it an offence for banks to take bank charges out of the accounts of people who are on social security benefits. So, if your bank has taken charges out of your Benefits eg: if you are in receipt (and totally dependent on) of any of the following benefits.

.The Financial Services Authority has a useful site at http://www.moneymadeclear.fsa.gov.uk/dealing with many different financial matters. This service, which can be accessed on 0300 500 5000 will give free advice on money matters and may also be access via the Citizens Advice Bureaux.

There is a useful site at http://www.taxvol.org.uk/retired.htm/ (free tax advice to older people by volunteers)Tel. 0845 601 3321 email taxvol@taxvol.org.uk. They may even make home visits for disabled peohttp://www.direct.gov.uk/en/MoneyTaxAndBenefits/index.htm ple

The (official) Financial Services Authority has a new site at http://www.moneymadeclear.fsa.gov.uk/

The current tax allowances can be seen at http://www.hmrc.gov.uk/rates/it.htm  (IHT, Income etc)

For older people a good site is the AgeUK site  or phone their SeniorLine on 0808 169 6565 for free advice on financial matters.

OTHER BENEFITS (extracted from the Mail on Sunday 1st August 2010)

Housing Benefit. Two types : 1) The GUARANTEE CREDIT that tops up weekly income of pensioners to a minimum of £132.60 or £202.40 for couples.  Then 2) There is the SAVINGS CREDIT, which is paid to over 65s and rewards those who have modest savings but live on a low income. See http://pensionsdirect.gov.uk  Free phone 0800 991234. Anyone who gets the guaranteed element of pension credit should automatically get COUNCIL TAX BENEFIT.  Other pensioners with less than £16,000 in savings may also be eligible.  Get a claim form from your local council. Council Tax Benefit for over 65s in need of of assistance with personal care is NOT means tested

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EQUITY RELEASE You can get a free booklet on this subject. The Mature Times guide, produced in association with In Retirement Services, is the first step to finding out. Call freephone 0800 082 65 70 quoting MATN080507.
Equity Release is where you release part of the value of your house but still remain in it. The money is then used for living or invested to produce income. No repayments have to be made until the person dies, when all the cash and rolled up interest is taken from the value of the house.  This would not be done whilst the spouse still lives in the house. The cumulative interest can mount up considerably over a period of years but the total sum will not exceed the full value of the house (so beneficiaries of the will will not be left with a debt)  It may be particularly suitable for people without dependents and who do not have children to which they wish to will the property or for single people who wish to reduce their IHT liability (see above). People on means tested benefits should be aware that these would almost certainly be affected.  Two alternatives to releasing equity are downsizing to a cheaper property and/or taking in a lodger.
Financial Mail also has a free guide called Home Truth  (Tel 0800 068 6065) .  The government's Financial Services Authority (FSA) also have one called Raising Money from Your Home  (0845 606 1234 or www.fsa.gov.uk) And IFA (Independent Financial Advisers) can put you in touch with members on 0800 085 3250 or www.unbiased.co.uk   Norwich Union (Aviva) has launched an informative film (available in VHS or DVD format) available to consumers and intermediaries alike. To request a copy consumers can call 0800 404 7137.

Age Partnership is the UK's leading over-the-phone specialist in equity release.
Some equity release plans impose an early-repayment charge, so you could incur charges should you wish to pay them off before your death. However, like a standard mortgage, these will vary from plan to plan, reinforcing the benefit of Age Partnership’s specialist equity release advice before you proceed

Compare the entire Equity Release market at Key Retirement Solutions, the UK Equity Release specialists. They do a booklet about remortgaging to release money called Home Truths. Phone 0800 531 6027. But they ARE in the business and you may be also offered a 'no obligation consultation'. A basic consultation is free but if you require an in depth one they will charge and they will charge a percentage of any loan raised.

http://www.surf4finance.com/. This site provides links to useful sites dealing with Debt Management, Mortgages, Insurance, Bank charges etc.

Check for Benefits, Pensions and Jobs at Department of Works and Pensions page.  

 A useful article  on you liability to pay for care is at http://www.caredirections.co.uk/

For other home care options see http://www.ageuk.org.uk/home-and-care/housing-choices/

Pensions :

An Independent Financial Adviser specialising in pension advice can be found at http://www.pensionlite.co.uk/

State Pensions The many benefits available are very complicated to describe.  The best document for this is at http://www.thepensionservice.gov.uk/pdf/pensionersguide/pg1june06.pdf.  You will need to download a PDF file reader to read this. The document deals with most benefits such as Pension Credits, Council Tax Benefit, Carers allowances and even Child Benefit and Tax Credits.

http://www.pensionsadvisoryservice.org.uk/women--pensions/basic-state-pension  You MAY be able to pay additional contributions to improve your basic pension but the rules are complex and you should study the above page and subsequent pages, especially " What if I have a gap in my qualifying record.? In some circumstances payment can be accepted for years as far back as 1975

Anyone deferring drawing their state pension can get increases equivalent to 10.4% for every year that they wait, OR you can get a lump sum instead.  At current estimates this could be as much as £30,000 for five years' delay.  But be careful. Two out of every five people don't make it to 70 ! And, in some poor areas of the country this is as much as three out of every five. For longevity live in Cornwall !  

SOME PENSIONERS ARE MISSING OUT  http://www.pensionsadvisoryservice.org.uk/women--pensions/basic-state-pension  You MAY be able to pay additional contributions to improve your basic pension but the rules are complex and you should study the above page and subsequent pages, especially "What if I have a gap in my qualifying record.?" In some circumstances payment can be accepted for years as far back as 1975. Do you think that your National Insurance contribution record might be incorrect ? Look at this site for an explanation as to what might have happened http://nirs2.atspace.com/index.htm  In fact, because people may now have paid into multiple pension schemes it is easy to lose track of them. The Pensions Service 0845 6002 537 www.thepensionsservice.gov.uk offers a free pension tracing service. They have a database of over 200,000 pension schemes.

People who did not manage to pay sufficient National Insurance contributions to get a full state pension may be able to top up their contributions for the period 1996 to 2002. Unfortunately this does not apply to women who elected to pay the married women's reduced rate for the whole of any tax year in question.  But for someone who can increase their contributions to over the 25% necessary for a state pension, they are likely to benefit quite substantially. The rule mainly applies to women born after 5th April 1938 who reached state pension age after 5th April 1998. Amounts payable would be backdated.

The government reports that there is £2.5 billion in pension aid which pensioners are not taking up. In fact there were 33,000 FEWER claims for pension credits this year. The pension credit scheme aims to ensure that no pensioner over 60 receives less than £130 a week (£6,760 per annum) and that no couple receives less than £198.45 per week (£10,319.40 per annum) Over 65s with modest additional pensions can claim even more, even if a couple is already receiving over £13,800 per annum. Certain household payments, such as mortgage interest, may increase the amount you can get. Are you SURE you are getting your share ?  Because apparently one third of those eligible are not claiming. For more information call the free phone line at Age Concern (now called AgeUK) on 0800 169 65 65 or the government Pension Credit helpline on 0800 99 1234 The Textphone number for deaf people is 0800 169 0133

The rules on Pension Credits are a little complex.  e.g. the description of what constitutes a partner.  The partner does not necessarily have to be over 60.  In addition benefits may be payable to people who have additional pensions such as annuities. One can get an estimate of how much you could claim (and get an application form) from http://www.direct.gov.uk/en/MoneyTaxAndBenefits/index.htm But don't delay. Back pay can be claimed but only up to a year before a claim.

Many disabled and elderly people are not claiming State Benefits which are theirs of right. Virtually all those in care homes will qualify for Attendance Allowance. Those needing help at home overnight, too, get a higher rate (and this is NOT means tested). In England, people with recognised medical need also qualify for a weekly payment from the NHS towards care costs.  It is in three bands (see the link below). The level of payment is very different in Wales, Northern Ireland and Scotland.  So much for a United Kingdom !  See a leaflet HERE for more details

COUNCIL TAX BENEFIT  In addition, between 2.27m and 2.95m people who are entitled to don't claim the Council Tax benefit, are missing out on combined savings worth between £1.3 billion and £1.8 billion a year. You may qualify for council tax benefit if you pay council tax and your household income and savings and investments are £16,000 or below. The amount your bills will be reduced by depends on circumstances such as your age, the ages and size of your family. If you have income or savings of over £16,000 you can't normally get council tax benefit, unless you're aged 60 or over and getting the 'guarantee credit' element of the pension credit.

The total of unclaimed benefits (excluding care allowances etc) is therefore around £4 billion !

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Another very useful set of links on pensions is provided by http://www.thinkmoney.com/tag/pension/ In addition Thinkmoney deals with Debt problems, Insurance, Car purchase, Banking, Mortgages and Loans. See  http://www.thinkmoney.com/

From 2012 everyone in employment will have the equivalent of 7% of their salary saved into a pension scheme, 4% of which will come from the employee. A problem for the government is whether this will be a disincentive to work and save.  As is the case now, people who saved hard for their retirement are penalised when it comes to means-tested benefits (from additional pensions to household expenses such as central heating installation and in many other ways). It has been the same since the introduction of the 'Welfare State' : if you waste your money during your life someone else will hopefully keep you in old age. I realise, however, that there are many people who have NEVER been in a position to save, even living frugally. This problem will never be resolved. One cannot, in a modern society, let people starve because they were not wise savers during their lives, as Malthus suggested. Our local workhouse still exists, but has been turned into modern flats !

See more on pensions, including SIPPS lower down

The endowment policy mis-selling scandal. Recently some very large organisations have had their knuckles rapped because of the 'shambolic' way in which they have been dealing with people who believe they were mis-sold endowment policies. In April 2011 the high court ruled that the banks must take responsibility for this mis-selling. They are bound to appeal as the cost runs into billions.  But it does seem likely that the majority of cases will be in favour of the customer 

If you think you were mis-sold an endowment policy e.g. one that was supposed to cover your mortgage, you can ask an Endowment Investigation Company to take up your case for you.  But they will charge a percentage of what you are awarded. This can vary between 10% and 50%!  Or you can follow the procedure suggested in Financial Mail.

The Financial Ombudsman  If you feel that you have exhausted all possibilities when dealing with a financial organisation you can consider complaining to the Financial Ombudsman at www.financial-ombudsman.org.uk

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Pension books are being phased out and people receiving state benefits will have money paid either into a bank or building society account or, if they cannot be persuaded to open one, will receive a Post Office Card account. Money will be paid out by the counter clerk 'swiping' the card.

Remortgaging  Impartial booklet from http://www.moneysavingexpert.com/mortgages/remortgage-guide
The cheapest way to borrow money - for house owners - is still to re-mortgage. Vast sums are being borrowed in this way (mortgages represent the vast majority of the trillions that we owe in the UK). A number of Building Societies will lend money to Owner Occupiers at reasonable rates, keeping the same rate for a year or so. But see the Sunday Telegraph or Mail for the fees charged and whether there is a tie-in period ('redemption penalty') after this initial low rate. Those which don't tie in may still charge a low rate. But compare this with other forms of longer term borrowing and you can see the advantage of remortgaging.  With deals like Intelligent Finance  (Halifax) , Natwest or www.oneaccount.com (RBS) you can reduce mortgage payments even further by linking your current account to the mortgage, so you only pay interest on the balance. It is a question of whether you are prepared to put the house up as collateral or are keen to keep the house value intact.  There may be an arrangement fee, which would make it uneconomic if you are borrowing a smaller amount.  It is difficult to imagine why ANY house owner would borrow large sums on credit card and store cards at their high rates.

Independent Financial Advice?  It may be independent but it isn't free.  Advisers have to earn a living and they will want you to buy something that pays them a commission. Purchasing Unit Trusts, for instance, involves initial charges and it is from these that the adviser gets his cut. Try  www.unbiased.co.uk   Other sites well worth a look are www.fool.com  and www.moneyextra.com. Free investment guides are also obtainable from www.share.com  

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Annuities  Anyone who has to buy an annuity should shop around for the best Annuity Rates. Find the best Annuity Rates on the market by using this free annuity information and comparison site.  Another useful site which specialises in this field is http://www.simplyannuities.net/

From October 2012 employers and employees will have new pensions options.  The government is introducing Personal Accounts to try to boost the savings of the 40% of workers who are not paying into any kind of pensions scheme (apart from the State one). Staff will be automatically enrolled into the new scheme, to which employers MUST contribute, although it will still be possible for employees to opt out. The intention is that all those with Personal Accounts will save 8% or earnings between £5,000 and £33,500. of which 3% will be paid by the employer and 5% by the employee.  But the value of the schemes will still be dependent on th vagaries of the stock market.  As at present employees will still be able to access the money at age 55 and take 25% tax free lump sum at that time, using the rest to provide an income. The scheme will be introduced to the largest companies first, the rest joining over the following two years.   

But annuities are a really complicated subject.  The government booklet on  and other subjects it is displayed at the Financial Services Authority Money Made Clear Site,e providing you have Acrobat (or Foxit) Reader. As things have changed since April 06 I recommend that you read it thoroughly
The law says that, at present, you must convert your company pension fund into an Annuity by the age of 75. Much greater flexibility is being allowed with company and contracted-out personal pensions.  After that date you were be able to take as much as 25% in tax-free cash (which might be used to pay off a mortgage, for instance) or the whole amount if your fund is less than £15,000, although only 25% of this is tax free ! If you convert a lump sum to an annuity, however, that income could be taxable. In addition to this change it is be possible to make a much larger contribution into a scheme just prior to retirement, if that benefits the retiree.  What is more, this lump sum will be added to by the government because of the tax relief allowed on pension contributions and the contributor can then draw out 25% tax free a week later ! What is even more confusing is that you can reinvest the 25% tax free lump sum in what is called a Lifetime Annuity and this has some advantages over an annuity bought with the whole of your pension fund.  I am beginning to sink in this quagmire. Help !

An annuity provides a regular lifetime income paid to you monthly, quarterly or annually from a lump sum, which is then lost on death..There are two main types.

(A) The CPA or Compulsory Purchase Annuity, which is bought from your company pension fund.
(B) The PLA or Purchase Life Annuity, where you pay cash in order to receive regular payments in return.

The money is invested in fixed rate stocks (government funds) by the annuity company.

The main distinction between these two is one of taxation. In the case of the CPA the whole of the amounts received will be taxed as normal income - providing you are in the taxable range - whilst the PLA is made up of returns of your capital plus interest on the investment. In this case only the interest is taxable because the capital is being returned to you.

Beyond this distinction there are options which allow a guarantee period for surviving relatives. Also there are annuities which increase payments over time to keep up with inflation. Generally, the latter will pay much less at the beginning but will overtake the set payments after about ten years.

Also there are annuities which are joint and will pay a spouse a proportion of the income after the death of the other annuitant.

The amounts received in respect of a fund of say, £10,000, vary enormously depending on which of the above schemes are arranged and upon the age at which it is arranged and also whether it is for a man or woman. This is one case when it pays to be older (or sicker!) when you start . It even pays, with some companies, to be in poor health or a smoker because the shorter your life expectancy the more you will receive each year. It also pays to shop around as benefits do vary from one company to another. Incidentally, you are not bound to convert your company fund to an annuity offered by the insurance company it is with. But once you have committed yourself to one pension provider you are stuck with it for life. Despite this only about one third of annuity buyers actually shop around for a better deal and often lose out for the rest of their lives.

Because the rates vary so much I will not attempt to include them here but refer you to BBC 2 Cefax Pages 262 onwards, where the rates by various companies are usually displayed. No doubt there are also Internet sites giving this information. But as an example, in 2008, a Male aged 70 putting £10,000 into a Single Life Level Annuity with the Norwich Union would have received £724 per annum but a couple, where the last survivor would continue to get the pension, might receive £551or even  as little as £255 if it had a 5% per annum cumulative escalator (to take care of inflation).  Under a fiver a week for £10,000 doesn't seem a lot !  More up-to-date rates may be found at http://www.h-l.co.uk/pensions/Annuity-rate-best-buy-table

Smokers  This is the only time smokers really win. Because actuaries say their chances (of living to a ripe old age) are less, some companies will give them a better annuity (as much as 20% better) than a non smoker. Search for the 'Just Retirement' site.

Postcodes :  Although Legal and General will not advertise which areas qualify they say they will take where you live into account when calculation an annuity.  This is because the average life expectancy in certain areas is so much less than in others, so they may pay more if you retire to the Gorbals......

A guaranteed income for life ? The government is so keen on you making provision for your old age (so they can opt out at a later date !) that they will GIVE you money.  No kidding. This is the STAKEHOLDER pension scheme. Say you are 70.  If you use the following scheme you can pay £2,808 each year. The government adds £792 in tax relief, even if you are not a taxpayer. The scheme immediately pays out the 20% tax. The annual return you get at 70 would be £238, taxable (a bit less for a woman) and the first payment is made to you immediately.  So your actual outlay is only £2808 - £900 - £238.  That is £1670. The annual income (£238) is 14% !  Mind you, if you pop your clogs you don't get anything back, so to make a profit on this you had better be healthy. Again, this is a way to reduce inheritance tax whilst enjoying a higher income during your lifetime. Check with  www.opas.org.uk  www.thepensionservice.gov.uk  or  www.hargreaveslansdown.co.uk (which is a Financial Advisor/Stockbroker)

SIPPS  (Applies to under 75s) A Self Invested Personal Pension. This is another method devised by the government to encourage people to save towards a pension. The encouragement is that you receive tax relief on the sums invested. This means that for every £100 invested by a standard rate taxpayer it only actually costs you £78 (and higher tax payers only £60). People on a salary can invest up 100% of that every year, whilst people who do not receive a salary can still invest £2,808 per annum (which is bumped up to £3,600 with the tax relief) Although you can put your existing company pension into a SIPP you should take advice on whether this is wise. It is not just cash which can be put into a SIPP. In addition, investments in property, shares and other funds can be added in. You can take out the resulting pension any time between the ages of 50 and 75. When you decide to opt to take your SIPP pension you can take 25% of the fund immediately as cash lump sum. The rest could be used to buy an annuity (see below) or you can take 'income drawdown', which means you can take regular income from the pension pot, whilst leaving the rest to accumulate interest (or, hopefully, make stock market gains). You can bequeath anything remaining, whereas an annuity continues until you die and then is wound up. However, if you opt for 'drawdown', when it's gone, it's gone.

GARS ? Another guarantee to mull over.  During the 70's and 80's, when insurance companies were rich and optimistic (and people were not stubbornly living to 84 and 87) hundreds of  thousands of policies were sold on the basis of a GAR or Guarantee Annuity Rate with a minimum lifetime income promised. Although at least one insurance company tried to wriggle out of its contract (and was slapped down in the High Court) other companies are only giving policyholders a limited period in which to claim their GAR, resulting in a substantial loss of income for life if they fail to reply.

Life Insurance (generally for younger people). This is  another area where it pays to shop around. A broker, such as Cavendish Online may find you a better deal than going to one particular company. In fact it can save you thousands over a period of 20 years.

Cashing Endowments
If you are thinking of cashing in an endowment policy and it is worth over £2,000 you will find that you get a better deal by selling it as a 'going concern'.

AAP (link to http://www.aap.co.uk) is the largest endowment policy buyer & seller in the UK. Find out all you need to know about endowment surrender, selling endowments & cashing in policies with

Also have a look at  www.policyplus.com (0845 20 20 200).  But not all policies are easily sold.  You need to shop around and it may be worth considering 'freezing' the policy rather than just cashing it in, which almost inevitably results in a poor deal.

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