Q. My husband, who was 56, suffered a heart attack last year. His employer offers a Group Income Protection policy, so his income will continue to be paid while he is off sick, albeit at a lower level. Can he access his pension fund as well to boost our income.
A. Firstly, I am sorry to hear about your husband’s health, and I hope he recovers soon. A Group Income Protection Scheme is an insurance which pays out to an employer allowing them to continue to pay an employee during a period of absence due to illness or disability. However the insurer will not cover the full salary as they want to ensure there is an incentive to return to work. It may be possible to access a pension fund, or part of it, particularly in light of the new flexibility from April. However, you need to be careful, as some Group Income Protection policies may reduce the amount of the benefit they pay if a pension is in payment. I would check with the insurer, via your human resources department, if this is the case. It may be relevant if the pension relates to your current employment or a previous employment, which could have been taken while you were still working in any case. Different insurers have different rules, so you need to check it out.
Q. I have decided to leave school and have the promise of a job. I know that I will have to pay tax but how do I go about this?
A. Firstly congratulations on securing employment it is not always easy to do so. The answer to your question is that if you are employed you will fall under the Pay As You Earn system (PAYE). Your employer is required to deduct an appropriate amount of tax from your wages. As well as deducting income tax they will also be required to take off National Insurance contributions at the same time. Consequently what you are left with is your “net pay” which is what you have to spend. You are allowed to earn up to £10,000 per annum in this tax year before paying tax, but don’t worry about the calculations as they are done by your employer. If you can you should put some of your income to one side to cover emergencies.
Q. I have a mortgage which is just in my name. This is covered by a term assurance policy. Should I consider placing this into a trust to protect my family? I live with my girlfriend and children.
A. Yes, this is likely to be beneficial. The advantage of placing the term assurance into trust is that your partner would receive the sum assured fairly quickly, as probate would not normally be required. Therefore in the event of your death during the term of the policy the proceeds should be available to your partner within a matter of days and this would not form part of your estate.
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
