Pension schemes never sit still, or at least that's the way it has seemed in the past year, as the government proceeds with its general review of 201-01the pension saving sector.So what might 2011 have in store, for those pension savers among us, still labouring at the millstone, but looking forward to a pension-funded retirement at the end of our working lives?
It may be several years yet before the dust finally settles, but here are some of the key points of government thinking that have emanated from the hallowed corridors in recent months.
Basic State Pension
A plan may be afoot for a general basic state pension of £140 per week, for all retired citizens of the UK. This would do away with the system of pension credits, which are means-tested and have in the past been called a disincentive to private saving for retirement.
Public sector pensions
Plenty happening here, as government looks at ways of cutting the costs of the huge civil service and public sector schemes it has described as 'unaffordable'.Sources close to the bottom of the barrel indicate that public sector employees may have to pay more into pensions that are less secure, as final salary pensions are gradually closed to new members. Pensions may be based on your average salary over your whole career, rather than your final salary - leaving teachers, firemen and nurses disgruntled (and possibly on strike) as their pension schemes are downscaled.
Personal and company pensions299-01
The good news is that, when you retire, you are no longer bound to hand over your savings to buy a pensions annuity, as in the past. This means that it is possible to retain ownership of your pension pot, and even leave what is left of it to your loved ones, in your will.The bad news is that government wants a bigger bite of it, if you do, with tax on such funds rising from 35% to 55% in the near future.
Annuities - for those who still need one
The option not to buy an annuity is likely to suit only high earners with pension pots well in excess of £100,000. For the rest of us, pensions annuities will still be the way to go.Annuity rates have been falling steadily over the past decade, however, as returns on gilts have declined. This means lower monthly income in retirement 9L0-809for the average man and woman on the street.New EU rules under the Solvency II initiative demand that pension companies hold more cash in reserve, and are expected to push annuity rates even lower.
It may be several years yet before the dust finally settles, but here are some of the key points of government thinking that have emanated from the hallowed corridors in recent months.
Basic State Pension
A plan may be afoot for a general basic state pension of £140 per week, for all retired citizens of the UK. This would do away with the system of pension credits, which are means-tested and have in the past been called a disincentive to private saving for retirement.
Public sector pensions
Plenty happening here, as government looks at ways of cutting the costs of the huge civil service and public sector schemes it has described as 'unaffordable'.Sources close to the bottom of the barrel indicate that public sector employees may have to pay more into pensions that are less secure, as final salary pensions are gradually closed to new members. Pensions may be based on your average salary over your whole career, rather than your final salary - leaving teachers, firemen and nurses disgruntled (and possibly on strike) as their pension schemes are downscaled.
Personal and company pensions299-01
The good news is that, when you retire, you are no longer bound to hand over your savings to buy a pensions annuity, as in the past. This means that it is possible to retain ownership of your pension pot, and even leave what is left of it to your loved ones, in your will.The bad news is that government wants a bigger bite of it, if you do, with tax on such funds rising from 35% to 55% in the near future.
Annuities - for those who still need one
The option not to buy an annuity is likely to suit only high earners with pension pots well in excess of £100,000. For the rest of us, pensions annuities will still be the way to go.Annuity rates have been falling steadily over the past decade, however, as returns on gilts have declined. This means lower monthly income in retirement 9L0-809for the average man and woman on the street.New EU rules under the Solvency II initiative demand that pension companies hold more cash in reserve, and are expected to push annuity rates even lower.
