Q. I have a pension through the employer I have just left, where there was a clause allowing retirement after age 50. I am attracted by this, and also the flexibility to draw more benefits early, as my other main defined benefit scheme is not accessible until age 60. Can I transfer to a flexible personal pension to draw the funds over the next 10 years?
A. Unfortunately not. The minimum pension age was increased to age 55 in 2010 for all but those with a pre-existing contractual right to an earlier retirement age as at 2006. If you transfer those benefits to a personal pension, you will give up that contractual right to earlier access, and you will then be unable to draw benefits until age 55. On this subject, please beware of a number of scams which can try to persuade people they can access benefits before age 55. These can potentially end up with at best a large tax charge and at worst someone stealing your entire fund. It is much better to stick with reputable providers who play within the rules and regulated advisers whose advice is covered by the Financial Services Compensation Scheme and the Financial Ombudsman Service.
Q. I notice that the government has recently reduced the protection for those with savings in deposit accounts from £85,000 to £75,000. Is this because it expects more banks to fail?
A. You are right that the Financial Services Compensation Scheme compensation limit has dropped from £85,000 (£170,000 for joint accounts) to £75,000 (£150,000 for joint accounts) and this happened on 1 January this year. Your suggested reason is perhaps not so accurate. The protection we enjoy is linked to the rest of the EU’s €100,000 guarantee. Every five years the exchange rate is examined, and this has happened again. As the pound has strengthened our protection has dropped. If you have savings in deposit accounts over £75,000, you can move some of your money to another UK regulated financial institution, thereby reinstating your protection. Care needs to be taken when doing this, so check that where you are moving your money to is actually a different institution with a different banking license. A full list of those banks and building societies that share a license can be found here on the web at https://www.savingschampion.co.uk/advice-guides/guides/fscs-licence-information.
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.
