Q. I am a consultant surgeon and a member of the 1995 NHS Pension scheme. As I am more than 10 years from retirement I will be joining the new 2015 NHS scheme on 1st April next year. I have been sent a letter with my payslip about a “Choice 2” exercise, where I can switch my existing benefits from the 1995 scheme to the 2008 scheme. I had this choice a few years ago, why do they keep asking me?
A. The NHS Pension scheme was changed for new entrants in 2008, and it is being changed again in April, this time for all members, except those close to retirement who are “protected” from the changes. The 2008 changes extended the normal retirement age from 60 (55 for some) to 65, and the 2015 scheme extends this again to State Pension age, which for those affected could be 67, 68 or even beyond. The benefits awarded are more generous, due to the later payment date. Shortly after the 2008 changes were introduced, existing members were offered the opportunity to switch to the new scheme, which might be beneficial for those intending to work to 65. Not many elected to take up this offer, as the majority seem to want to retire earlier, and the benefits are only improved after around 63 or so. Now that benefits accrued after 2015 are not going to be paid until State pension Age, the Choice exercise is being re-offered, as this may influence the decision. There is a very important factor to take into account for those on high salaries, however, which is the impact of the annual allowance. Switching your historic service to the 2008 scheme increases the value of your benefits at the end of the 2014-15 scheme year, which could cause a tax bill called an Annual Allowance Charge for high earners with reasonable length of service, such as consultants, or anyone who has received statements of the annual allowance used in the past, who will tend to have higher benefit levels. Surprisingly, this issue does not seem to have been mentioned in any of the literature sent to members. I strongly recommend that you speak to a Chartered Financial Planner with specific expertise in the NHS Pension scheme who can help you understand the potential costs involved.
Q. My father who was a widower died over a year ago and I thought I had got his estate sorted out. He was a real hoarder and gradually I have been going through boxes of paperwork including cheque stubs from many years ago and I have found one from 1978 which just says Premium Bonds £1,000. I have not found any certificates or any other reference to them. How can I check to see if these are still invested?
A. There is of course no guarantee that the Premium Bonds remain in force as your father may have cashed them in during his lifetime. However there are millions of pounds lying in dormant Bank, Building Society, National Savings and Insurance Company investments. If you think you may have dormant savings or investments in banks, building societies or National Savings, just visit mylostaccount.org.uk. This is designed to make searching for lost accounts quick and easy and this free service brings together the three existing schemes from the British Bankers’ Association (BBA), the Building Societies Association (BSA) and NS&I. There’s a simple online form to be completed by the account holder or a nominated representative and this information only needs to be provided once before being passed securely to the bank, building society and/or NS&I. Alternatively in your case you could download and complete a tracing form from the NS&I website. Remember to search not only in your fathers name but also in your late mothers name and your name in case he invested them for you or your mother.
Q. I have started to take an interest in investment and I often hear of the FTSE 100 Index but also of the All Share Index. What is the difference?
A. Firstly, FTSE stands for Financial Times Stock Exchange. The FTSE 100 is a share index of the 100 companies listed on the London Stockmarket with the highest Market Capitalisation. Market Capitalisation is calculated by multiplying the number of shares issued by the current share price. So in other words the FTSE 100 is the 100 biggest companies listed on the London Stock Exchange. The index base date is 3 January 1984 at the base level of 1,000.
The FTSE All Share Index attempts to represent at least 98% of all companies listed on the London Stock Exchange on a Market Capitalisation basis. There are approximately 700 companies (including the top 100) included in this index. The index base date is 10 April 1962 at the base level of 100.
Constituents of the Indices are reviewed periodically with some companies falling out of the index and being replaced by others.
If you have a question you would like Trevor to answer, please email it to: yourmoney@rwpfg.co.uk or post it to Your Money, Rutherford Wilkinson Ltd, Northumbria House, 21-23 Brenkley Way, Blezard Business Park, Newcastle upon Tyne, NE13 6DS.
0191 217 3340
