Financial
your choice Your pension,
As the end of the tax year approaches, it is always worth reviewing your tax position, says Alasdair MacDougall
I
f you are a contributing member of the 1995 section of the NHS Pension Scheme on or after 1 October 2009 you are eligible to make a one-off
transfer of your pension entitle- ments. The deadline for making this election is approaching – there is less than two months to make your decision. If you do not respond by 31 March 2011 then you will automatically remain within the 1995 Section. If you are eligible to move to the 2008 Section you will be given Your NHS Pension Choices Pack, which will include your personalised NHS Pension Choice Statement and Your NHS Pension Choice Guide, giving you more detailed information about the comparisons shown in your statement and the differences in the sections. This is a very important – and irre-
versible – decision for you and your dependents. You will need to decide whether to take the ‘all or nothing’ decision to remain in the 1995 Section or trans- fer past and future benefits to the 2008 Section. You cannot do a partial transfer, and the change is permanent, so it is cru- cial that you make an informed decision. There are a number of differences
between the two sections of the NHS Superannuation Scheme, such as the age at which you can draw your pension without it being reduced, ways in which your pen- sion builds up, and flexibility in drawing your benefits. These dif- ferences could affect your future lifestyle and retirement options. In making your choice, you should consider the age at which you plan
to retire; whether you need the flexibility to change the amount of the tax-free lump sum you will receive; and if you would like or will need to consider reducing your working hours and whether you may leave the NHS before retire- ment. If you haven’t always operated within the NHS, or have missing years of service, you may like to boost your pension by paying addi- tional voluntary contributions. There are other factors to be con- sidered, including the impact on your dependants, for example in terms of survivor’s benefits and death in service benefits. There are many issues to think
about before you make your choice. However, you should not look at each point on its own – you need to consider your overall plans for your future career and your retirement.
Your ISA allowance – use it or lose it Rock bottom interest rates over the past year have hit Cash ISA savers hard, with some savers earning as little as £5 over the last 12 months.
However, that does not mean that it is a waste of time utilising
“You cannot do a partial transfer, and the change is permanent, so it is
crucial that you make an informed
decision” Alasdair MacDougall
your ISA allowances. Savings rates have a crucial impact
on everyone’s finances. 5 July 2007 saw bank base rate peak at 5.75 per cent. From that time to 5 March 2009, the Bank of England’s Monitory Policy Committee cut the base rate nine times. Increasingly, inflation has become a major concern to savers. Official inflation – as measured by the Consumer Prices Index (CPI) which does not include mortgage costs – rose to 3.3 per cent in November
from 3.2 per cent in October. That means most cash ISAs have essen- tially lost you money, in real terms. As an alternative, for investors looking for long-term capital growth and an attractive monthly income, corporate bond and equity income funds are worth considering. For example, monthly high
income funds are currently available offering a distribution yield of 8 per cent. This type of fund and many oth-
ers can be accessed via a stocks and share ISA or cash ISA transfer, but hurry if this interests you, as your 2010/11 ISA allowance will be lost if not used by 5 April 2011.
®
Alasdair MacDougall is a Financial Services Manager with Martin Aitken Financial Services Limited. You can contact him at
amd@maco.co.uk and by telephone on 0141 272 0000. To find out more about Martin Aitken Financial Services Limited, visit
ww.martinaitkenfsltd.co.uk Martin Aitken Financial Services Limited is the sister company of Martin Aitken & Co, Chartered Accountants, who can also be found on the internet at
www.maco.co.uk The purpose of this article is to provide technical and generic guidance and should not be interpreted as a personal recommendation or advice. The content herein represents our interpretation of current proposed legislation and HMRC practice as at 24 January 2011. These may change in the future. Past performance is no guarantee of future returns. The value of a unit linked investment is not guaranteed on encashment and you may not get back the full amount invested.
Scottish Dental magazine 69
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