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Page last updated at 18:58 GMT, Friday, 11 December 2009

State pension freezes exposed

Alistair Darling
BBC Radio 4's Money Box
Saturday, 12 December 2009 at 1204 GMT On Radio 4 and Online

The Government is to save more than £300m next year by limiting the rise in the state pension.

Although the basic pension will go up as the Chancellor promised, other parts of it will be frozen.

Alistair Darling announced on Wednesday that the basic state pension would rise by 2.5% in April. But the pensions minister Angela Eagle now says that rise will not apply to the additional pension called SERPS.

She told Money Box it was to prevent 'confusion and unfairness' because SERPS also affects the amount paid through company pensions.

The freeze will also apply to other parts of the state pension, including graduated benefit paid to 11m people over 60.

The extra amounts paid to people who put off their retirement could also be frozen. Government figures show that some individuals will miss out on more than £200. Savings could reach £350m over the year for the Government.

Related information:

Benefits align with women's pension age

The age at which people qualify for benefits such as free bus passes and prescriptions will rise from 6 April 2010. At the moment anyone over the age of 60 qualifies for these concessions.

But, tucked away on page 84 of the pre-budget report, the Treasury said this age threshold will rise gradually in the future. The threshold will follow the women's state pension age instead.

The same is true for the winter fuel payments. By April 2020 these concessions will be for the over 65s only.

How to calculate eligibility for free concessions:

To find out when you will qualify for these benefits in future, see the following link.

For the purposes of working out the date of eligibility for the bus pass using this tool, you should enter your gender as female (even if you are a male!). The date of state pension age calculated will be the date on which you become eligible for the concessionary bus pass.


A man born on 10 January 1952 will become eligible for his free bus pass on 6 November 2013 when he is 61 years, 9 months and 27 days old. This is the day when a woman born on the same date becomes eligible for her state pension. (Note that this same man would only become eligible for his state pension when he is 65 years old, 10 January 2017).

Not so flexible mortgages

Many NatWest customers with a flexible 'Foundations' mortgage are angry. The mortgage was marketed as being the perfect way to make overpayments but then to also be able to borrow again for large projects, such as a building extension.

But this week NatWest told some customers that following an annual review of their account, their borrowing facility has been cut.

Money Box has found the original press release from when the mortgage was launched, 10 years ago.

It says customers may 'borrow up to 90 per cent of their property's value and can raise raise the borrowing back up to that level at any time during the life of the mortgage'.

But borrowers appear to have been caught out by small print which in fact allowed NatWest to review their level of borrowing annually.

Money Box listeners Susan and Steve Hill have been told their credit limit has been cut by £60,000. They had used their savings to over pay their mortgage on the understanding they could draw on the funds again when they needed to.

They say they had intended to use the savings for the expansion of their small business, and to send their son to university. But now they do not have access to this money.

The programme talks to mortgage broker David Hollingworth from London & Country about who else might be vulnerable.

Related information:

Cash pension funds lose money

Low interest rates and high fund charges mean thousands of pension savers are losing money in cash funds that are supposed to be a safe haven from volatile stock markets.

Savers in the Standard Life Pension Managed Cash are losing money because the 1% annual charge is higher than the returns on the fund. But it's not the only fund suffering.

How can you ensure a better return on pension funds on deposit?

John Douglas from independent financial advisors Invesco explains.

Related information:

Savings bonds pulled

This week National Savings withdrew the last of it's chart topping Guaranteed savings bonds, even though the products were only launched in October.

The one year Guaranteed Growth Bond offered a 3.95% return. While two, three and five year bonds offered even better rates. But within three weeks the one and two year bonds had been withdrawn; this week the remaining ones disappeared from the market too.

Many customers were frustrated that they could not get through on jammed telephone lines to National Savings before the products were withdrawn.

When the bonds were launched Money Box spoke to Dax Harkins, Senior Savings Strategist at National Savings. This week Money Box asked him why the products have been pulled so quickly.

Related information:

Director share dealings

Some investors think that the way to make money is to follow not pundits or analysts but the activities of company directors. If you buy and sell shares in their company when they do, the theory goes, you will make money.

Of course, company directors can't act on inside information when they trade shares in their own firms. But they often do have knowledge that is legal to use - and new research shows they use it well.

Researchers at Exeter University have found that buying when directors buy can generate returns of up to 20% on top of what you would expect.

Money Box hears from one authors of the report Professor Alan Gregory. He says you have to first identify "value" and "glamour" stocks.

BBC Radio 4's Money Box was broadcast on Saturday at 1204 GMT and repeated on Sunday at 2102 GMT.

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