Prudential: Women in pensions "underclass" by Finance News Bulletin
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Published: 24/05/07
Women are not managing to save efficiently enough for their pensions, new research approved out by Prudential has foundThe group has found that some 60 per cent of working age women are not contributing to a work or individual pension system, compared to less than half of menWomen who are saving for their financial futures are organization to keep back an standard of £23654 a month, compared to £304
56 for menOn this basis, Prudential has calculated that the standard women will accrue £42,577 over their working existence, which will provide an predictable annual income of £3,000 in retirementPrudential figures also estimate that one in five women have no extra means of saving for their departure, compared to just one in ten of womenGary Shaughnessy, managing manager of Prudential retail life and pensions, described women as being in an "underclass" when it came to pensions
"Women clearly play a very important role in the workplace but this is not being reflected in the pensions they can wait for," he saidHe added: "However, this doesn't mean everyone should forget about saving and preparation for their retirement as it's never too late to create saving for
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BT pension 'help' facing EU probe - Published:04/12/07
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Read More: Bt Pension 'Help' Facing Eu Probe >>How To Get More Out Of Your Pension Fund - Published:19/10/07
Deciding how to take your retirement benefits can sometimes sense like being caught between a rock and a hard putPerhaps you don't feel comfortable with the asset risk of income drawdown where you withdraw cash from your pension fund as profits for a period of years prior to buying an annuityOr maybe the declining, although guaranteed income, generated by a lifetime annuity doesn't actually appeal to you either If this sums up your dilemma, is there a improved solutionOk, I wouldn't ask the query unless I had an answer in mind Today I want to write about a new diagram which has recently come to my attention that may interest you if you feel similar to your options have already run outThe Living Time diagram could be described as bridging the gap between profits drawdown (now known as Unsecured Pension, USP) and lifetime annuities Here's how it works: the pension finance you've built up throughout your working life is second-hand to buy a Living occasion Plan which provides you with an income for at least five years, but must stop by the time you reach 75 You can still take 25% of your fund as tax-free money and move the balance into the diagramPut simply, when the diagram matures you'll receive a Guaranteed Maturity Amount (GMA) The GMA must then be used to buy a new retirement manufactured goods which is suitable for you at that time such as a lifetime annuity or an Alternatively Secured retirement fund (ASP - basically income drawdown beyond the age of 75)The plan allows you to keep your options open for longer by avoiding an immediate, enduring promise to an annuity, while steering clear of the investment risk which is inherent in USP Here are a few more key benefits:You'll know frank how much income you'll receive and the GMA on maturity so there's no investment dangerThe income you receive is certain but it must fall between nil and the maximum allowed by legislation which is 120% of the income from an equal annuityIf you die during the term, your plan won't expire with you You can elect for your spouse/civil associate to receive an income or lump figure if he/she survives you Or it may be possible to propose a beneficiary to receive a lump sumCrucially, you may be able to benefit from a potentially senior profits in the future if your health has deteriorated during the term on the planThe illustration below should give you an idea of the benefits the Living Time Income diagram could provide:Pension Fund ValueTax-Free money @ 25%BalanceAnnual Income For Five YearsGMA Returned On MaturityEquivalent Annuity IncomeSource: Living occasion as at 4th October 2007 The information are based on a joint life policy for a 65 day old male with a wife three years younger It pays monthly in go forward for five existence with no escalation Equivalent annuity figures are based on an average of top quartile pension ratesAs you can see, the Living Time plan only generates a slightly higher profits than an equivalent annuity But more interestingly, in this example, the total income withdrawn over the five day word is £30,794 but a GMA of more than 91% of the original finance is preservedThe plan might look as if it's doing nothing more than delaying the inevitable instant when you'll effectively be compulsory into buying an annuity But this delay could potentially harvest huge rewards We all know life expectancy is improving but it's an entirely different image for healthy life expectancyAccording to the place of work for National Statistics (ONS) in 2001 healthy life expectation at birth was 67 existence for males and 688 existence for females If you by an annuity at normal departure date (NRD) ie 65 years, the odds are you'll still be healthy and therefore only qualify for standard annuity ratesBut a five year holdup to 70 years means many more of us will have suffered physical condition problems This means you could qualify for an enhanced/impaired life annuity Naturally if you're in deprived health your life expectancy is abridged and therefore it's likely an annuity will only be required to pay out an income over a shorter periodBecause you're then less of a risk to an annuity company, in credit they may pay higher annuity tax In some cases the difference between standard and enhanced annuity tax can be as high as 40% This could provide far improved value than the lower rates often paid at NRD by standard annuities letter there are several companies which specialise in providing improved and impaired life annuities)The GMA you receive on maturity will be determined by the amount of profits you have selected and any death benefits The more income you take, the lower your GMA will beIt isn't possible to take your GMA as money You must use it to buy a life annuity or ASP by 75 as necessary by government legislationMost importantly, if you purchase an annuity after the plan has matured, the amount of income you receive will depend on pension rates at that time Consider this carefully; if tax decline over the term of your plan then the income you receive could be less than if you had selected an annuity at outset and you could be worse offBear in mind the diagram isn't really appropriate for those of you who would like a guaranteed, fixed income for the rest of your existence without needing to create further decisions Lastly, it's worth pointing out the plan is only available through monetary advisers but I think this is no bad obsession Getting the decision correct is crucial and discussing it with a professional first is a sensible moveCan't find what you require in Retirement And Pensions attempt 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 Company Reg No: 3736872 VAT Reg No: 735 7818.
Read More: How To Get More Out Of Your Pension Fund >>Age rules on pensions postponed - Published:21/12/06
The government has postponed part of new laws against era discrimination that tell to pension schemesRules outlawing ageism start on 1 October, but those affecting retirement fund schemes will now start on 1 DecemberThe government says it wants to give employers and their pension schemes more occasion to digest the changesOverall the novel laws will ban age discrimination in recruitment, employment and tuition and will stop most enforced retirement before 65James Purnell, the minister for pensions reform, supposed the delay to the parts affecting retirement fund schemes was to give them more time to adjust"We have listened cautiously to the concerns voiced by employers and decided to grasp off on implementing the pensions aspects of the legislation to allow more occasion for the industry in the direction of get in the direction of grips with the changes," he saidThere will now be further consultation with the pensions industry, which could lead to changes in the method they affect pension schemesThe CBI welcomed the hold-up to allow for more consultation on the matter, adding the government needs to put out any changes as soon as likely"We are pleased that the government has responded so completely to our concerns and look forward to considering the amended regulations soon," said CBI deputy director general John Cridland"The system were badly drafted, often contradictory, and would have been bad information for employers and employees alike"Shadow Work and Pensions Secretary, Philip Hammond, supposed: "This means people who thought that they would be secure from compulsory retirement before 65 may now find they will be out of work, as a consequence of these changes"Postponing seems very unfair and we will be asking the government, as a matter of urgency, to address the place of this group of persons"Many employers and pension schemes had made it clear they were not prepared to comply with the new laws, after dealing with considerable administrative changes brought about by the simplification of pension system tax rules (A-Day) earlier this yearSo the administration has already provided schemes with a long list of exemptions from the law so they can keep in force as normalBut, it has become clear the rules will still need careful scrutiny and following changes to comply with the new regulationsPension experts have also challenged the government's leadership, first in print in April, that suggested staff could demand to be paid their full pension if they chose to labour beyond a usual retirement age of 60The government says employers will have to have the same opinion to such requests; pension lawyers say pension schemes can choose to refuse such a request under the new systemOverall, the new laws against age discrimination will be some of the most profound law-making changes affecting the workplace since laws were brought in prohibition discrimination on grounds of sex and raceThe laws ban direct and indirect era bias unless it can be "objectively justified" and they also make it against the law to harass or victimise anyone because of their ageThe driving force for the changes has been the government's obligation to incorporate in UK rule the European Employment Directive of 2000 which has to be implemented by the end of this yearThe government also sees the novel laws as a lever to assist more older workers to stay in employment, thus plummeting the burden of paying pensions on.
Read More: Age Rules On Pensions Postponed >>