Women not making adequate investments - Published:07/11/07
Many women are not putting enough sideways in pension funds to adequately invest for their future, novel research has revealedAlthough women are increasingly self-governing in society, it seems that when it comes to investing for their retirement, less are squirreling cash away than their male counterparts, data for retirement fund firm Scottish Widows showedSome 36 per cent of women surveyed supposed they are unable to make any additional expenditure towards their future than they currently do; this compares with 30 per cent of menIan Naismith, head of pensions marketplace development at Scottish Widows, commented: "It has extensively been reported that women are disadvantaged in the labour marketplace in terms of earnings - what this report reveals is that as well as earning less, women are economy less for their futures than men"He added that women are also insertion a smaller proportion of their wages into a retirement fund than men, thereby investing less for an uncertain futureMeanwhile, at the other end of the scale, the Department for Work and Pensions has announced the creation of a new side which aims to stamp.
Read More:
Women Not Making Adequate Investments >>
Increase Your Pension Income By £1,000 - Published:14/09/07
Annuities have long been contentious, not least because poor pension tax are locking pensioners into ever lower levels of income But, in spite of strong criticism, annuities are by far the most widely used approach when it comes to taking pension reimbursementAnnuities certainly have their advantages They're relatively simple to understand and provide a secure, steady or increasing level of income for the rest of your life But, looking at it another way, this can make annuities inflexible since, once you've selected one, the income levels can't be adapted to set of clothes your changing circumstancesAnd, more worryingly, pension rates are unlikely to improve in the short term due to greater than before life expectancy combined with an expectatiofn that interest tax will remain low for the foreseeable prospect So, if you've already built up a pension finance, are there any alternativesIt's a complex business, so I'll just focus on one of your other options profits drawdown, or what is now called an Unsecured retirement fund (USP) USP fundamentally allows anyone up to the age of 75 to draw an profits from your pension fund while the rest remains invested (Drawdown after era 75 is now termed Alternatively Secured Pension -- ASP, although these are unhappily much more warning)USP has a lot going for it Because your pension finance remains invested there is continued potential for capital growth by custody it in the stock market longer And it remains within the tax-efficient environment that all pension money take pleasure in You can decide how your particular plan is invested instead of sacrificing it to an pension company, enabling you to retain greater control And the profits you draw can be varied, within the specified limits, to set of clothes your needs making it a far more flexible diagramUSP also appeals to many investors because of the more supple options on death Your chosen beneficiary can benefit from sustained USP (ASP if they're over 75) or they can employ the remaining fund to purchase an annuity Alternatively the fund can be rehabilitated to cash and paid out with a 35% tax inference Many investors have been put off annuities because benefits are usually misplaced on death but USP appears to have served up a solutionThese are all valid reasons for choosing USP, but perhaps the greatest benefit is the prospect of sketch a greater income than a conventional annuity can give Based on current limits the maximum annual income a 60-year-old male with a £75,000 pension finance can take from a USP plan is £5,850 But if he used his pension finance to purchase an pension instead, even choosing the most competitive annuity supplier available, he would still end up with around £1,000 lessDoes USP sound high-quality to you Well it can be, but not astonishingly it comes with several crucial caveats which I'll outline nowagreement suggests USP is better-suited to HNW (high net worth) individuals who drop into the 'sophisticated investor' group Typically you'll need to accumulate a pension fund of £100,000 plus to make USP feasible Unfortunately, this precludes most of us since the average pension pot is less than a third of that But USP is becoming more popular with the number of active tactics rising fastUSP is a much riskier strategy than just purchasing an annuity because your fund leftovers invested and therefore exposed to ongoing investment risk If the assets you select suffer poor asset returns, your USP fund may not be able to completely support your income withdrawals, chiefly if they're high Poor performance may force you to decrease the level of income you draw from the planIt's significant your fund achieves a critical yield, where asset growth allows the income drawn from USP to at least match the income that would have been produced by a conventional annuity if you had chosen that alternative at the onset Because of this, USP plans require ongoing reviews to ensure the worth of your fund hasn't erodedThe charges on USP are generally senior when compared with conventional annuities and therefore the investment go back from your fund will need to compensate for thatWith this type of arrangement you're still free to the same 25% tax-free cash lump sum that you're eligible for when purchasing an annuity But you must elect to take this when you move into USP There's no option to take tax-free cash at a afterward stageThere are limits set on the amount of income you can take from USP each year to ensure that your retirement fund pot is not depleted by making excessively far above the ground withdrawalsThe limits are based on USP tax calculated by the Government Actuary's Department (GAD) The GAD's tables show the USP tax, which are based on your age, gender and the current give way produced by gilts This shape is then used to work out the maximum income you can take For every £1,000 of your USP fund, you can take up to 120% of the GAD basis amountThe table below gives you an idea of the maximum income you can sketch if you've accumulated a pension finance of £100,000 and wish to take full tax-free money at 25%:GenderAgeFunds available for income withdrawalGAD factor (basis amount per £1,000pass with flying colors annual incomeMax monthly incomeThe GAD factor increases with age because your existence expectancy is lower the big you get The GAD factors are also lower for women as they are predictable to live longer than men (This is the same as with annuities) As you can see from the table, a 60-year-old gentleman with a USP fund of £75,000 can take a maximum yearly profits of £5,850 But there's no requirement to take an profits at all If you wish, you can opt to take a zero income and, of course, vary the amount you take between that and the maximumUSP surely has the potential to reward you with an enhanced height of pension income If you've built up a sufficiently large retirement fund fund and you want to take greater control of your departure planning, then USP could be for you But the better risks involved do mean it won't suit everybody In fact, I think most people are better off with the safer annuitiesunderstand writing more: Poorer Postcodes To Get Better Pensions | The Four-Step direct To A Comfortable RetirementCan't find what you require in Retirement And Pensions Try one of our other individual finance areas© Copyright 1998-2007, The Motley Fool Limited All human rights reserved This fabric is for personal use onlyPlace of Reg: England & Wales corporation Reg No: 3736872 VAT Reg No: 735 7818.
Read More:
Increase Your Pension Income By £1,000 >>
Poorer Postcodes To Get Better Pensions - Published:11/09/07
lawful & General (LSE: LGEN) caused a stir last week when it unveiled a pilot learn with Hargreaves Lansdown (LSE: HL) to use postcode data to determine annuity ratespopulace in not as good as areas don't tend to live as long, so the plan is to pay them a slightly senior pension to compensate for this While the pilot is captivating place (it's due to sprint for a couple of months) people in wealthier postcodes won't be affected and won't be offered inferior pensions But should the practice become formally adopted then richer pensioners are likely see their pension rates reduced to finance the higher expenditure being made elsewhereLegal & General has called this a usual evolution for annuities As it points out, annuity rates already take age and sex into explanation You can also get annuities that differ according to your medical history and take lifestyle factors such as the amount you drink and smoke into explanationTypes of insurance, such as home and car insurance, have extended used postcodes as a key factor in determining the amount we pay So this is nothing new and follows a new trend of innovation in cover products, with pay-as-you-drive schemes for car cover and health insurance contribution free gym membershipsAs you might expect, there have been some hysterical reactions in corners of the push, highlighting this as an attack on the middle classes But I believe it's more realistic to see this as redressing an inequity that has benefitted wealthier pensioners in the past It's also worth pointing out that it will only have an effect on money-purchase retirement fund schemes; retirement funds based upon final salaries would be unaffectedHowever, I must admit to being a bit surprised by the example given in lawful & General's press release which showed an uplift of just over 1% in the pension salaried out each year This is the utmost difference it anticipates paying out, but it seems rather low given that there can be differences of up to ten years in life expectancy between some areas The middle classes can respire easy for the time being it would appearRather than taking the radical step of relocating to a slum to boost your pension, there are other ways to secure a better pension rate This is crucial because, unlike now about every other financial manufactured goods these days, once you have chosen your annuity you can't switch it to another provider to get a better rate a few existence laterIt's estimated that only one third of us shop around to see if we can get an annuity from someone other than the company that has managed our pension This simple pace, known as the open market option, could increase your payout by up to 15%About two in five of us are eligible for what is recognized as an impaired life annuity, because we smoke or have a health condition that reduces our life expectation Long-term smokers, for instance, could get a pension income that is 20% senior Again, many of us fail to investigate what is available and miss out on these senior ratesMany people retiring now also have precious pension guarantees, setting a minimum annuity rate that is likely to be considerably higher than the current market rate This may limit the add to you can get from shopping around, but it's still worth looking nonethelessCan't find what you need in Retirement And Pensions Try one of our other personal finance areas© patent 1998-2007, The Motley Fool Limited All rights reserved This fabric is for personal use onlyPlace of Reg: England & Wales corporation Reg No: 3736872 VAT Reg No: 735 7818 01 Registered.
Read More:
Poorer Postcodes To Get Better Pensions >>
