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Page last updated at 11:34 GMT, Friday, 9 July 2010 12:34 UK

You ask the pensions expert

Malcolm McLean
Malcolm McLean knows plenty about pensions

Find out if you're making the most of your pension with our expert Malcolm McLean, from Barnett Waddingham consultants.

Click on one of the questions in blue below to skip straight to that answer, or scroll down the page to read them all.



1. Is there any way I can take the full amount of my pension fund as a lump sum to pay off my mortgage?

It is possible that you may be able to draw the full amount of your pension as a lump sum under what are known as the "triviality" rules, but subject only to you being aged between 60 and 75 and where the aggregated value of all your non-state pensions does not exceed £18,000.

2. I'm 75 next January. Will I have to purchase an annuity - a lifetime policy - at that point?

Until recently, there was an effective obligation to take an annuity at age 75, although the government now intends to introduce legislation to scrap or extend this. Full details are still awaited. As a temporary measure, the age has been extended to 77, so your wife will not have to purchase an annuity next January if she doesn't wish to do so.

3. I've been diagnosed with motor neurone disease. Are there special arrangements in place for those with terminal illness, regarding drawing pension early? Will it affect the pension value transferable to my wife?

As regards early payment of your pension, in cases like yours it is often possible for the scheme to pay out the whole of your pension entitlement in the form of a cash lump sum. The scheme, however, will probably need evidence from a registered medical practitioner that your life expectancy is less than a year. There would normally be no tax charge on the lump sum.

4. Is the government's decision to use CPI rather than RPI to calculate future rises in public sector pensions actually legal?

From April 2011, public sector pensions already in payment will also be increased in line with CPI inflation rather than, as happens now, RPI inflation - which will probably result in substantially lower pension increases over time. The government will have satisfied itself that it is legal to make this change. It will not apply to pension benefits already put into payment.

5. What does the recent budget mean for SERPS? (The State Earnings Related Pension, now known as the State Second Pension)? And how do I find out how much I am entitled to?

SERPS or S2P received no increase in the last labour budget, despite a rise in the basic state pension of 2.5%. Osborne recently announced that SERPS/S2P will rise inline with CPI from April next year. To find out how much SERPS / S2P you might be entitled to, you should ask the Pension Service for a State Pension forecast (0845 300 0168).

6. Which is better - drawing down your income from your pension fund, or swapping it for an annuity that pays out over the rest of your life?

Income draw down is complex and not suitable for everyone, for example if you have a small pension fund and no other assets or income to fall back on. It does however give you more flexibility than purchasing an annuity. Even with a large pension fund, and other assets or income, income withdrawal may still not be suitable. If investment returns are lower than expected, your fund may fall in value, depleting the fund and lowering your future income. Speak to and Independent Financial Advisor.

7. I'm affected by Equitable Life - how will I be contacted about my compensation? Is there an authority I should notify if I plan to move address or retire abroad?

In the recent Queen's Speech, the new coalition government announced an Equitable Life Payments Scheme Bill in the next session of parliament, giving the Treasury power to make compensation payments to Equitable policyholders. A very different position from the previous government, but beyond this, further details are still awaited.

The views expressed are those of Malcolm McLean not the BBC.

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