Posts Tagged ‘financial planning’

New rules to safeguard value for money in workplace pensions

Thursday, February 12th, 2015

From April, people automatically enrolled into a workplace pension will see their charges capped at 0.75%, unless they have chosen a more expensive option. The details are set out in draft regulations laid before Parliament on 4 February 2015.

For an average earner currently paying into a fund with a charge of 1.5%, this new cap could save them around £100,000 over the course of their working life. Over the next decade, the default fund charge cap will transfer around £200 million from the pensions industry to savers.

Minister for Pensions Steve Webb said:

Today is an excellent day for pension savers. It is vital that workplace pension schemes are run in the interests of their members and that their hard-earned savings are not eaten away by excessive charges.

Over 5 million people have now been automatically enrolled into a workplace pension and by 2018 millions more will be saving for the first time, or saving more. This is why we are building a pensions system that these workers can save into with confidence – and not see their money disappear in opaque charging structures.

There is an understandable buzz around what April will bring for those retiring now, with the unprecedented pension freedoms coming in. But these reforms show we are also determined to help the pensioners of tomorrow – people working hard and saving hard for their families’ future.

The next stage of the government’s work to ensure full disclosure of costs and charges throughout the value chain is also set out in the February paper – with the plan to publish a joint call for evidence with the Financial Conduct Authority in spring 2015.

Most of the updated draft regulations will come in to force on 6 April 2015, subject to Parliamentary approval.

This entry was posted on Thursday, February 12th, 2015 at 12:00 am by Slaters and is filed under Auto Enrolment, Buy to let, Landlords, Personal Pension, Property, Renting, Workplace Pension. You can follow any responses to this entry through the RSS 2.0 feed.

State Pension Changes

Tuesday, February 10th, 2015

Following our recent updates on the important changes to personal pensions which will affect those over 55 taking effect from 6 April 2015, we have some more news.

From 6 April 2016 the new flat rate State Pension will be introduced, which is expected to be around £150 a week. A person’s actual entitlement will depend on their National Insurance contribution record.

Those who have built up an entitlement greater than the flat rate amount due to paying SERPs or other additional contributions will receive that higher amount.

Individuals will need a minimum of 10 qualifying years and the full flat rate State Pension will only be given if they have 35 qualifying years (previously 30 years).

Those aged over 55 are encouraged to contact the Department of Work and Pensions (DWP) to receive a projection of their expected State Pension and check their contribution record. It is possible to make good any shortfall by making voluntary Class 3 contributions (£13.90 a week). Those who are self-employed will find it cheaper to make Class 2 contributions (currently £2.75 per week).If you are an employee or director, provided your salary exceeds the Lower Earnings Limit (currently £5,772 p.a.) then although no NIC is actually due you are deemed to have contributed for that year.

£150 a week may not seem a lot to live on but note that at a 5% annuity rate you would need a fund of over £155,000 to generate such an income.

This entry was posted on Tuesday, February 10th, 2015 at 3:49 pm by Slaters and is filed under Pension, Personal Pension, Personal Tax, Tax, Workplace Pension. You can follow any responses to this entry through the RSS 2.0 feed.