Here are the top 5 tips for pension transfers. If you are considering a pension transfer then you would be wise to study these simple but effective tips.

1. Find an Independent Financial Adviser

The pension reform has made pension legislation so complicated that you really do need to seek the advice of an independent financial adviser and preferably one that specialises in pensions.

2. Pension Charges

Make sure you carefully check the charges on the contract you are being offered. How do they compare to other similar contracts? The growth of the plan is affected by the charges. Are they upfront or spread over a term. It does make a significant difference to the end fund size.

3. Retirement Age

If you have less than 10 years to retirement you probably need to think carefully about whether or not the pension transfer is a viable option. Can you make up the cost of the transfer charges?

4. Beneficiary Nominations

You have the right to nominate beneficiaries that will receive the pension benefits should you die before retirement. Make sure your hard saved pension fund goes to the people you want it to go to.

5. Contact Us for Specialist Pension Transfer Advice

We are independent pension transfer specialists and will give you unbiased advice about whether a pension transfer is suitable as well as the alternative options you could consider. Contact us today for advice

How pension tax relief on pension contributions works

The way you get tax relief on pension contributions depends on the type of scheme you are a member of.

Company or public service pension schemes

If you are a member of a company or public service pension scheme the your employer will take the pension contributions from your pay before deducting tax (but not National Insurance contributions). You will then only pay tax on what’s left. So this means if you are a basic or higher rate tax payer you get the full pension tax relief straightaway.

Personal pensions

You pay Income Tax on your earnings before any pension contribution, but the pension provider claims tax back from the government at the basic rate of 20 per cent. In practice, this means that for every £80 you pay into your pension, you end up with £100 in your pension pot. If you pay tax at higher rate, you can claim the difference through your tax return or by making a claim to HM Revenue & Customs (HMRC) by telephone or letter.

What happens if you don’t pay tax?

If you don’t pay tax you can still pay into a personal pension scheme and benefit from basic rate tax relief (20 per cent) on the first £2,880 a year you put in. In practice this means that if you pay £2,880 the government will top up your contribution to make it £3,600.

There is no tax relief for contributions above this amount.

Limits on tax relief

You can save as much as you like into any number and type of registered pension schemes and get tax relief on contributions of up to 100 per cent of your earnings (salary and other earned income) each year, provided you paid the contribution before age 75. But the amount you save each year toward a pension is subject to an ‘annual allowance’.

For the tax year 2009-10 the annual allowance is £245,000 and for the 2008-09 tax year it was £235,000. You pay tax at 40 per cent on any contributions you make that are above the annual allowance.

Other tax advantages of pensions

The pension fund doesn’t pay tax on any capital gains or investment income.

Also, when your pension matures you can take up to 25 per cent of it as a tax-free lump sum, provided your pension scheme rules allow it, you are under 75 and your total savings are within the ‘lifetime allowance’ for the year in which you take your benefit. For the tax year 2009-10 the lifetime allowance is £1.75 million and for 2008-09 it was £1.65 million.

Lump sums or income drawn from savings above the lifetime allowance will be subject to tax charges.

Repaying tax if your pension contributions are refunded

You can usually only get your pension contributions refunded if you withdraw from a company scheme within two years of starting payments. Certain events might shorten the time limit. Tax is deducted at 20 per cent for refunds of up to £10,800 and at 40 per cent on any excess above this. The scheme administrator deducts the tax before making the refund.

By: Kevin Stelfox

In General there are two types of Company Pension Scheme in the UK:

Salary Related Pension Scheme

This is where your retirement income will be based on the amount of wage you receive at the time you retire and the number of years you have been in the scheme.

Money Purchase Scheme

This is where your retirement income will be based on how much has been paid into the scheme and how well the money in the scheme has been invested. On your retirement the fund that has accumulated is used to buy an annuity which is a regular income for life.

Company Pension Plans can be funded by both the employee and the employer. Some Company Pension schemes are non-contributory, which means that the employer pays into the scheme and the employee is not expected to contribute.

Access to Schemes

Employers do not have a legal obligation to provide access to an occupational pension scheme. They do however, if there are 5 employees or more have to offer employees the chance to take advantage of a stakeholder scheme if you are not offering an occupational arrangement. Even in these cases, however, there are a number of exemptions.

Primarily, employers with fewer than five staff are not obliged to offer a stakeholder pension scheme. Similarly, rather than offering a stakeholder scheme you may prefer to provide access to a personal pension plan. However, in order to qualify for the exemption provided in law, you must make contributions to this personal plan, at a rate that is equivalent to a minimum of 3% of each employee’s salary.

Personal accounts

Due to be implemented in 2012, Personal accounts will be a universal, government-backed pension scheme whereby all employees will be automatically enrolled into a company pension scheme, unless they tell their employer they do not wish to join.

This new pension scheme is aimed at low-to-medium earners who do not currently have access to a good company pension scheme.

Employers who already offer a good pension scheme, with an employer contribution of at least 3 per cent, will be exempt from having to enroll workers into personal accounts.

Employees will be required to pay in 4 per cent of band earnings and together with the employer’s contribution of 3 per cent and 1 per cent tax relief from the government, the scheme will provide a total contribution of 8 per cent.

A Personal Accounts Delivery Authority (PADA) is currently working on the implementation of personal accounts, scheduled for 2012, so full details of the administration, charges and the range of funds that will be offered are not yet available.

There is some concern that employers offering good company pension schemes will be tempted to ‘level down’ to contributing only 3 per cent of their employees’ salaries because this will be the statutory minimum.

Group Sipps

Another type of company pension are found in certain circumstances. Group self-invested personal pensions (Sipps) are a new development in the self-invested personal pension market and are set up as very small occupational pension schemes, typically for small owner/managed businesses, or family businesses. They can be useful as the pension fund can be used to purchase commercial property which is used by the business. This is tax-efficient and the SIPPs can also make loans to companies.

About the Author

Based in the UK, Pension Solutions act as introducers to Independent Financial Advisers (IFA) who give specialist advice on Company Pensions and starting a Company Pension Scheme – For Specialist Company Pensions Advice call 0800 043 6701

(ArticlesBase SC #1959122)

Article Source: http://www.articlesbase.com/ – Uk Company Pension Schemes – A Quick Guide

With the end of the tax year fast approaching here are some tax saving ideas to consider.

ISAs

Use your annual ISA allowance which is currently £7,200. From the 2010/11 tax year this will increase to £10,200 as it is currently for anyone aged over 50. Get Independent Financial Advice.

Pension Contributions

Maximise pension contributions to obtain the tax relief available

Inheritance Tax Planning

Make use annual exemptions such as the £3,000 annual allowance and regular gifts out of income. Consider IHT reliefs such as agriculural or business property relief, and the nil rate band.

Review Wills and Life Insurance Policies

Always important to keep wills and life insurance up to date and ensure any life insurance is written into trust where appropriate. Speak to your Independent Financial Adviser if unsure.

The end of the current UK tax year is 5th April 2010. There are some changes in tax rules so keep looking out for these.

One in particular that will hit thousands of people between the age of 50 and 55. The age at which you can retire is changing to age 55. It is currently age 50 when you can take benefits from your pension schemes.

Visit tax flash for latest updates on tax issues.

Cash ISAs can include:

• cash deposited in bank and building society accounts
• National Savings and Investments products that are specially designed for ISAs (but not other National Savings and Investments products such as the Investment Account, Savings Certificates or Pensioners’ Guaranteed Income Bonds)
• alternative Finance arrangements, such as Shari’a compliant products
• shares in companies and collective investment schemes that fail to meet the qualifying conditions for stocks and shares ISAs
• life insurance policies that fail to meet the qualifying conditions for the stocks and shares ISAs
• the stakeholder cash product
• stakeholder medium-term products that fail to meet the qualifying conditions for stocks and shares ISAs

For Independent Financial Advice on ISAs call 0800 043 6701

With London NHS hospital queues still growing, private medical insurance is an appealing buy.

And what you pay for is what you get. Premiums are worked out on the basis of age and the type of cover required. And there are a wide range of different insurances to choose from.

At the basic level PMI clicks in when you need specialist treatment or you need to go into hospital. Some policies cover you if the NHS cannot provide treatment within a certain period of time.

At the luxury end of the market there are policies that cover a wide range of medical services such as dentistry, eye care and even spectacles, although the more a policy covers the higher the premium will be.

PMI is complicated for those approaching it for the first time. In order to make sure the policy you choose is the right one to meet your needs it is worth speaking to an adviser who has specialist knowledge in medical policies and can guide you through the maze of different offerings on the market.

Get advice on Health Insurance in London call 0800 043 0725

If the value of your funds from all your registered pension arrangements is less than 1% of the Standard Lifetime Allowance (SLA) (£17,500 in tax year 2009/10) you may be eligible to take your benefits as a lump sum on the grounds of triviality.

Annuity Calculator

Rather than take an annuity, you are eligible to commute your pension arrangements if you can say yes to all of these conditions:

• You are aged between 60 and 75.
• You are including all of your registered pension arrangements for the purpose of calculating whether they fall within the rules and can be commuted. Please understand that when we say all, we mean for example registered pension arrangements with any insurance company, deferred company pensions, any existing company pension (this is not an exhaustive list).
• You are applying for commutation of your registered pension arrangements within a single 12-month period. (It is important that you realise you do not have to commute all of your benefits from all of your registered pension schemes. However, benefits that are part of the same registered pension scheme must be taken at the same time.)
• The value of your funds from all your registered pension arrangements are not worth more than 1% of the Standard Lifetime Allowance (SLA) at the Nominated Date. (This DOES include all benefits which have been contracted-out with a pension provider. This does NOT include any benefits under the Basic State Pension OR the State Second Pension (S2P), formerly called the State Earnings Related Pension Scheme (SERPS) which will be paid by the state, any widow(ers), civil partners or other dependant’s pensions.)

For Independent Financial Advice on Triviality Rules or Annuity and Income Drawdown Advice, call Independent Financial Advisers, Retirement Solutions on freephone 0800 043 6701