The Bank of England’s decision to keep interest rates low means that many savers will now receive virtually no return from their money. As a result, many will be looking for alternative homes for their nest eggs. If you are considering building a portfolio of income-producing funds, your first priority should be to decide the level of risk you’re happy with and the investment term. Let’s consider some of the options available.
The key points at a glance from Chancellor Alistair Darling’s third Pre-Budget Report.
Economy
UK economy expected to contract by 4.75 per cent this year, with a return to growth in the fourth quarter.
At every stage in our lives, there are certain circumstances that stand out as important, but it is all too easy to put off planning in our earlier years. We have highlighted some of the important stages in life and the circumstances you might find applicable to your particular situation.
The introduction of Pension Simplification legislation on 6 April 2006 (A-Day) brought about the biggest change in pension legislation in a lifetime with the following aims:
Deciding on your options
There are three types of non-State pensions. Some are offered by employers and some you can start yourself. They are:
Your employer is required to offer you the chance to join a pension scheme. If an occupational pension is not provided then this would normally be a stakeholder or alternative personal pension.
Putting off your claim for at least five weeks
By choosing to put off claiming your State Pension you can receive an extra State Pension. You must put off your claim for at least five weeks. For every five weeks you put off claiming you can earn an increase to your State Pension of one per cent. Extra State Pension is paid on top of your normal weekly State Pension. It continues for as long as you are getting State Pension. Extra State Pension is increased each April in line with increases to your State Pension.
The basic State Pension is a government-administered pension. It is based on the number of qualifying years gained through National Insurance Contributions (NICs) you’ve paid, are treated as having paid or have been credited with throughout your working life.
– If entitled, you can receive the basic State Pension when you reach State Pension age. This is 65 for men born on or before 5 April 1959 and 60 for women born on or before
If you are over 65, you should check you are getting the correct personal allowance. The allowance for the 2009/10 tax year is £6,475, but if you were aged 65 to 74 on April 5 2009 it is increased to £9,490. If you were aged 75 or over on April 5 2008 the tax-free allowance stands at £9,640.
The state pension age is the earliest age at which you are able to claim your state pension benefits. For many years this has been 65 for men and 60 for women, but things are soon to change. And the age at which you can claim that state pension will be determined by when you were born. However, this could all change again under a new government following the forthcoming general election.