About The Review and the process

Pensionlite Pension Reviews are carried out by specially qualified pension experts. They will obtain all of the available information about your existing pension arrangements, including details of the charges and investment performance. This information along with any special scheme benefits, rules and conditions will be compared to what is currently available within today’s Independent Pension Market place. Taking into account the scheme information and your personal views, concerns, attitudes and aspirations a tailored Review and Recommendation report will be produced and posted to you.

If the recommendations are to keep with your existing scheme and or make certain changes to what you already have then you will be told how and why. If the recommendations are to move your scheme you will be told why and where the adviser believes you should move it to. This advice will include not only why a particular provider has been selected but also what specific funds you should invest in to match your risk profile, age and planned retirement date. If you have several schemes each one will be reviewed separately and any recommendations will cover each individual policy.

Once you have received your Free, Independent, No Obligation Pension Review and Recommendation report the specialist adviser who compiled it will telephone you to ensure you fully understand it and are aware of what the likely implications are of following or not following the recommendations.

You are under NO OBLIGATION to follow the advice or recommendations.

In future years, with your permission, your pension policies and any new contributions will be reviewed and re-assessed to ensure they continue to perform efficiently and in line with you and your circumstances. Life moves on, things change and your pension must move with you.

• A Personal Pension
• A frozen Personal Pension
• A With Profits Personal Pension
• A Personal Pension with a company that may be overpriced
• A Personal Pension where the provider no longer sells new pensions
• A Company Pension with an employer who has ceased trading
• A Company Pension which is being closed or changed
• Been or getting divorced

With Profits Pensions - The Truth Of Why You Need To Act Now

With Profits personal pensions have generally performed even worse than the poor performing unit linked ones with little or no bonuses being added in recent years. Many of these funds have already ‘spent’ all or most of their reserves subsidising bonus rates declared to investors over the last few years when falling equity markets have resulted in negative returns to the fund itself.

Investment returns on many pension plans have fallen well short of what has been achieved in the open market. A recent Money Management review of personal pensions over the last 5 years showed the best average growth per year for 5 years, before charges, was 37%. During the same period the worst performer had averaged a miserly minus 6%. Yes minus 6% per year. In mathematical terms that means that if you had a fund worth £10,000, 5 years ago, at best and before charges it could be worth over £48,000 or as little as £7,500.

Company Pension Schemes

Final Salary Guarantees

It is important to understand that Company Final Salary Pension Scheme benefits are not "guaranteed". It is effectively a promise from the sponsoring employer to contribute enough money into the pension scheme now and in the future to provide the pension calculated at retirement. One of the more recent Final Salary disasters involved the ASW Pension Scheme. One member of the scheme interviewed on television explained how he had contributed to the scheme for nearly 30 years only to find that besides being made redundant the pension he had realistically expected at retirement was nothing like what he was going to receive. This case unfortunately highlights how an employer could underfund your pension without breaking the law. It is important to note that this is relatively unusual; most companies would choose to wind up their pension scheme before it reached this stage.

Final Salary Pension Scheme Wind Up

One of the main topical points at the moment is for companies to close their final salary pension schemes and change to money purchase schemes. The reason some companies have decided to change is due to a number of reasons. For example:

• In 1997 the government introduced 10% tax on dividends earned by pension schemes. These dividends are an important element of the schemes long-term health and this taxation has caused huge disruption.
• A new accounting practice ,FRS17, which has not yet been introduced but is likely to be in due course, has caused concern amongst company accountants as it requires employers to be more transparent about the pension schemes liabilities.
• During the last few decades, the age people are expected to live (average expectancy) has drastically increased. Pensions schemes will therefore have to pay pensions for a longer period of time.
• Companies no longer want the liability of operating a final salary pension scheme. Ongoing costs including running the schemes administration, paying employer contributions and absorbing the pension funds "ups and downs" on the stock market.
• If a company changes its scheme to a money purchase arrangement the majority of the issues highlighted above are removed, this ultimately saves the employer a lot of money.

Preserved or Frozen Pensions

Once an employee has left their employer they cease to be an active member of the company pension scheme. Typically, if you have been in a company scheme for more than two years you will be left with a "preserved" or "frozen" pension that will be looked after by the company pensions department until retirement age. Although the term "Frozen" is commonly used it is somewhat misleading as the pension will normally increase or revalue, as its correctly known, between the date you left and your retirement (this is known as the deferred or preserved period).

Money Purchase Pensions

Money purchase pensions will continue to grow in line with the underlying investments.

Final Salary Pensions

If you left a final salary company pension scheme after 31/12/1990 the law dictates that the pension scheme must increase it during this preserved period by the Retail Price Index (R.P.I.) capped at 5%. Some schemes, usually only the Public Sector (NHS, County Council), will be more generous than they are required to be by law and allow the members pension to increase in deferment at the same rate as the R.P.I. without imposing an upper limit of 5%. This is clearly very generous, especially in times of high inflation.

Contracted Out Schemes

Many company pension schemes are "Contracted-Out of SERPS, S2P". Essentially, this means that the pension scheme has decided to take responsibility for part of your State Second Pension, S2P previously SERPS. As of 6th April 2006 all Contracted Out Pensions are classed as Personal Pensions in terms of benefits and availability. This means you can take 25% of the fund as tax free cash. The earliest retirement age is 50 (increasing to age 55 in 2010).