Robert Burns BA (Hons), FCCA , Cert PFS

Director

Premier Pension Solutions SL

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By Robert Burns BA (Hons), FCCA , Cert PFS - Sun 2th Oct 2011

 

Tumbit Approved Partner

Has your pension fund fallen by 15% last month? August 2011 has been a month to forget for stockmarkets. Unless your pension fund was invested in Gold or Silver it will likely have taken a bath.

“Ahh,” I hear some of you say, “…no problem, as my pension is safe and secure in a defined benefit scheme, increasing by inflation each year before it becomes payable in a few years’ time when I’m 65.”

Not necessarily true anymore, unfortunately, because such schemes have changed their basis so that the future protection against inflation is now measured by taking the change in value of the Consumer Prices Index (CPI) instead of the Retail Prices Index (RPI). As the CPI goes up each year about 1.5% less than the RPI this is quite a serious attack on future pension rights and has been reflected in recent transfer values by as much as 20 %. This change will also significantly reduce pension benefits provided in the future.

ARE YOU TAKING STEPS TO PROTECT YOURSELF ?

If your pension fund is in a defined contribution scheme or a personal pension the chances are that you have no idea about how it is being invested. Stock markets have tumbled and in our view may well continue to do so - are you taking steps to protect your position ?

AND IT GETS WORSE

Annuity rates have fallen further in the last few months. When Stephen joined the pensions industry in 1976 a pension fund of £100,000 would buy a 65-year-old man a pension of £15,000 a year. This was, in those days, a substantial income. 35 years later, that pension fund will now buy a pension of just £6,600 a year, and if you want any bells and whistles like inflation protection or a pension for a spouse who survives you, well you can halve this figure.

The average UK pension fund by the way is just £30,000.

SO WHAT CAN YOU DO TO PROTECT YOUR LONG TERM INTERESTS ?

Well the first step is to evaluate properly exactly what you currently have. It may be a bit of a shock but no point in sticking your head in the sand. Then consider what can be done to protect and improve your current position.

These are all things we can help you with - after all pensions advice is what we do and have done for hundreds of clients in Spain and elsewhere over the last few years. Transferring your UK pension fund to a QROPS may be one answer. You may be able to access a capital sum which can be invested under your control and not by some anonymous pension trustees or insurance company.

If your fund is relatively small it may be better to access the capital now via a New Zealand QROPS rather than receive a paltry sum each month when you are 60 or 65. This opportunity is unlikely to be around indefinitely as a bill has been introduced in the NZ Parliament which will prevent such transfers in about one year’s time. So do not procrastinate, the time to act is now.

For further information about QROPS and Pension Planning opportunities please contact us today via clicking the link Here and leaving a few basic details on the form at the foot of the page.