10 min Read
16 Aug 2011

Written by Damien

Damien is one of the most widely quoted money and investment experts in the national press and has made numerous radio & TV appearances. He created MoneytotheMasses.com while working in the City when he became disillusioned with the way the public were left to fend for themselves because they could not afford financial advice.

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Readers’ Surgery: Transferring Protected Rights, State Pension age changes, Tax on taxis from work & finding lost pensions

Red first aid boxToday’s Readers’ Surgery covers transferring Protected Rights, State Pension age changes, tax on taxis from work & finding lost pensions

Reader Question 1:

How much notice was given for a woman born on 16 July 1952, that her pension age would rise from 60 to 62 and 3 months?

My response:

The Pensions Act 2007, which became law on 26 July 2007, brought in the gradual increase in state pension age for men and women until it reaches 65 in 2020. Since that time the current government has reviewed the timetable for these changes and is looking to speed this up. See my article 'Accelerated rise in women’s state pension age approved by MPs' for more details.

How much notice was given to people affected? Unfortunately the system doesn’t work like that. Before any proposed changes become Acts of Parliament (and thereby law) they start life as proposals (or white papers) which then go through a series of revisions and readings before the House of Commons and the House of Lords. Eventually after much debating and possible amendments they are given Royal Assent.

It is during the sometimes lengthy consultation process that the issue is usually brought into the public arena and debated – hence the recent protests by women affected by the latest pension proposals. In the case of the Pensions Act 2007 the original white paper on changes to state pension ages was published in May 2006 and the Act was passed over a year later.

Given that the first people to be affected by an increase in their retirement age were those that retired after 5th April 2010 you could argue that the they were given around 3 years notice, as long as they kept up with the latest pension news.

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Reader Question 2:

I have contracted-out of the State Second Pension (sp2) and will not get any more rebates next year. What is the best thing to do in regards of keeping the policy with the company I have it with or is it better to transfer it somewhere else? I am 46 years of age so I can't get at it for some time.

Thanking you in advance.

My response:

For the benefit of other readers the additional State Pension or State Second Pensions (formerly called SERPS) is provided by the government. It can give you extra money on top of your basic State Pension and is based on your National Insurance record and earnings.

However it is possible to contract out of the additional State Pension via a pension plan or an employer's Contracted Out Pension Scheme. So rather than pay full National Insurance Contributions (NICs) some of these contributions are rebated back into a pension plan. This Protected Rights fund will provide you with a pension in retirement.

It would appear that you have contracted out via a personal pension arrangement. Previously your investment choices have been fairly limited – such as a basic appropriate personal pension with a few funds. But since October 2008 you can now move your Protected Rights fund into Self Invested Personal Pension (SIPP), opening the door to a whole range of investment opportunities. However with increased investment flexibility often comes increased expense, in the form of charges. Whether you will be better off transferring your Protected Rights plan into a new pension arrangement (such as a SIPP) will depend on your wider pension (have you other pension plans?) and personal circumstances as well as what product your Protected Rights are currently held in. Unfortunately there is no one size fits all answer. I suggest that you speak to a financial adviser in the first instance.

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Reader Question 3:

My father died some years ago now. How can I find out if he had a pension at his previous employment?

My response:

The easiest way is to contact the employer directly and ask to speak to their Human Resources department. They should then be able to direct to the Trustees/Administrators of the company pension scheme to whom you can direct any requests. Usually the executor/administrator of your father’s estate can then contact the scheme/s and ask whether:

  • death benefits are payable
  • there is a pension for a spouse, civil partner or children
  • any of the investment has become part of your father's estate under a self-employed pension scheme

If you do not have the details of your father’s previous employers then help is at hand in the form of the Pension Tracing Service (PTS). The Pension Tracing Service (PTS) can help you trace a ‘lost’ pension even if you're not sure of the contact details of the original pension provider/trustee. The PTS has access to information on over 200,000 pension schemes and will search their database, free of charge, with the aim of providing you with the ‘lost’ pension scheme’s current contact details. You can then use this information to contact the scheme and find out about any pension entitlement.

The more information you can give the Pension Tracing Service, the more likely you will be to get an up-to-date contact address for the pension scheme you're tracing.

The great news is that you can complete an online form, with the few details you know, and the Pension Tracing Service will immediately start tracing any old pension for you! The online form can be found here

Alternatively you can contact the PTS by post or phone:

Pension Tracing Service

The Pension service

Tyneview Park

Whitley Road,

Newcastle Upon Tyne

NE98 1BA

Tel: 0845 6002 537 (lines are open 8.00 am to 6.00 pm), from overseas +44 191 215 4491, or by textphone call 0845 3000 169.

For more details on the Pension Tracing Service click here.

Also read my post Money tip#76 - How to find your (or deceased relatives') lost assets and get an expected windfall for details on how to locate old current accounts, premium bonds and investments your father might have had.

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Reader Question 4:

What are the tax implications if my employer pays for a taxi for me to and from work every day

My response:

Where an employer pays for the travel costs of an employee for a journey between home and work this is normally a taxable benefit in kind for the employee.

But there is a rule whereby late night taxis used when an employee is required to work late (i.e. past 9pm) can be tax exempt. To quote HMRC guidance on non-taxable payments and benefits:

Where an employee is provided with a taxi paid for by his employer for a journey from work to home, this represents a benefit unless:

  • the four late night working conditions are satisfied, and
  • the number of journeys is no more than 60 a year.

Consequently an employee provided with a taxi from work to home once a week (52 times in a year) does not qualify for this exemption unless all the late night working conditions are satisfied, even though they have been provided with a taxi on fewer than 60 occasions in the year.

The late night conditions that must be satisfied are:

  1. the employee is required to work later than usual and until at least 9pm
  2. such late night working occurs irregularly, and
  3. by the time the employee stops work, either public transport has ceased or it would not be reasonable to expect the employee to use it, and
  4. the transport provided is by taxi or equivalent road transport.

Note: this exemption is due to be removed next year.

I  hope that helps

Best Wishes

Damien

The material in any email, the Money to the Masses website, associated pages / channels / accounts and any other correspondence are for general information only and do not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation. See full Terms & Conditions and Privacy Policy

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Comments

  1. graham croyden August 16, 2011 at 7:37 pm

    i would just like to say thank-you very much for your advise regarding question (2), i will now seek a financal adviser and proceed from there.