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MONEY BOX LIVE

Presenter:	PAUL LEWIS


TRANSMISSION:	3rd APRIL 2006        3.00-3.30pm        RADIO 
4



LEWIS:	Hello.  Monday, Tuesday, Wednesday, A Day.  
Yes, Thursday is A Day, the day when 50 years of rules and restrictions 
about pensions are swept away and replaced by well lots more rules.  
It’s possibly the most complex simplification ever.  But at its heart 
things will be a lot more straightforward.  The one simple rule from 
Thursday is that you can put just about as much as you can afford into a 
pension or several pensions.  You can pay in up to the amount you earn 
in a tax year with an upper limit of £215,000 and get full tax relief on 
the lot - so for most of us, whatever we can afford.  And at 50 there’ll 
be more freedom to take money out of your pension either in cash or as 
an income and more freedom how that income is derived.  So today 
we’re taking your questions on pensions and A Day.  Just how much 
can you have in a pension fund?  How will the new rules affect existing 
pension arrangements?  What about company schemes – how will they 
change?  What are Sipps and just what can you put into them now?  
And why is life insurance suddenly being sold with tax relief?  Oh and 
what is a benefit crystallisation event?  Well you can e-mail us, 
Moneybox@bbc.co.uk.  With me to answer your questions are Patrick 
Connolly, who’s a certified financial planner with JS & P; Claire Court 
who’s head of self-administered pensions at independent financial 
advisers Origen; and Malcolm McLean, chief executive of the Pensions 
Advisory Service.  And just before we go into the questions, can I ask 
each of you in turn for your one big tip – the important thing you 
think’s happening on Thursday?  Patrick first.

CONNOLLY:	Yeah, a major positive of the new rules is one 
that you’ve just mentioned there actually, which is the simplifying of 
contribution limits.  It means that everybody can get tax relief up to 
100% of their UK earnings on their pensions contributions up to 
initially £215,000 per year.

LEWIS:	So we no longer have to worry about 15% of 
this or 17.5% of that?  That is a big change, isn’t it?  Malcolm McLean?

MCLEAN:	Well following on from that point really, it’s the 
flexibility that this change will afford you.  It will mean, for example, 
that instead of having to start a pension at a stage of your life when it 
just isn’t possible for you to make pension contributions, you can 
actually wait until much later on and then make good the shortfalls by 
taking advantage of these higher limits and, assuming you’ve got the 
earnings to back it up, put the money in at that stage.  It will also be 
possible, for example, to save in a slightly different way.  You can put 
money into an ISA or a savings account in the early years when you 
might want to draw on it, but if you don’t then at a later date you can 
then transfer it across into a pension.  So flexibility’s the name of the 
game now.

LEWIS:	Flexibility.  And Claire Court?

COURT:	I think my point comes at the other end of the 
retirement spectrum.  Individuals will no longer be required to purchase 
an annuity at age 75 with their pension funds and instead can draw their 
pensions from their fund until they die; and when they and their spouse 
die, they can leave their pension fund as a fund for their families.

LEWIS:	Right.  And before 75, they’ve more flexibility 
than they had previously.

COURT:	Absolutely.

LEWIS:	Without this sort of complicated draw down 
business, you can just take money out of your pension and even take 
nothing out if you want.

COURT:	That’s right.

LEWIS:	Which is a big thing, isn’t it?  Okay, well I’m 
sure we’re coming back to some of those points.  Let’s move onto the 
calls and our first caller is Terry in Castleford.  

TERRY:	Hello. I’m 50 years old in September 2009 and I 
know the laws are changing regarding when you can take your pension 
from the age 50 to 55, so I want to know how it affects me and if at all 
it does affect me, or can I just take my pension at 51 or 52?

LEWIS:	Claire Court?

COURT:	Hello, Terry. You can draw your pension from 
age 50 until 6th April 2010.  At that time, the minimum retirement age 
will go up to 55, so in your circumstances you will be able to draw your 
pension when you reach age 50 but there’ll come a point when you’ll 
have to wait until you’re 55.

TERRY:	I see.  So if I retired on 4th April 2010, that 
wouldn’t be a problem?

COURT:	That’s right.  But if you wait until say 7th April 
2010, you’ll actually have to wait until you’re 55.

TERRY:	Okay, that’s great.  Thank you very much.

LEWIS:	Right, I think what your retirement day is going 
to be, Terry.  (Laughter)  Thanks very much for your call.  And just 
before we leave that – Patrick, this must mean some people, as Terry is 
almost, I mean someone 6 months younger  than Terry is not going to 
have that choice, are they?

CONNOLLY:	That’s right.  I mean the problem with deadlines 
is you’re always going to get people on either side and, exactly as you 
say, there are people who are perhaps a little bit older than Terry that 
will have to wait another 5 years before they can access their benefits.

LEWIS:	So that’s a bit tough.  But anyone of that sort of 
age should certainly think before 6th April 2010.  Judy in West Sussex, 
what’s your question?

JUDY:	My question is about trivial pensions.  And I 
know that I can take 25% of the trivial pension tax free, but I’ve heard 
that the remainder is subject to basic rate tax.  Well my annual income 
is considerably less than my tax allowance, so am I still subject to the 
whole of the 75% at the basic rate?

LEWIS:	Right.  I think it may be slightly more 
complicated than that.  But Malcolm McLean, just remind us first at 
what level you can take a trivial pension from 6th April.

MCLEAN:	Yeah, the rules change quite substantially from 
6th April compared to what they are now and the new rules say that if 
the total of all your pension pots are less than £15,000 and you’ve 
reached minimum age 60, then it is possible to actually take the money 
in cash instead of the more conventional way of having to use most of 
your fund to purchase an annuity and taking some of it tax free.  So it’s 
£15,000 and that £15,000 consists of all your pensions, including any 
pensions that are in payment.  Now if you’re actually drawing an 
occupational pension, then it’s not the pension that you’re drawing 
that’s used for the comparison purpose.  It’s that figure, the annual 
figure of the pension you’re drawing times 25.  So there’s a certain 
amount of valuation to be done, but, assuming everything comes below 
£15,000, then you are entitled to cash them in providing you do it 
within a period of 12 months.  Now, as Judy rightly says, 25% of that 
money is tax free and the rest of it is then treated as taxable income in 
the year in which you make the encashments.  And a good tip here to 
bear in mind is that if that’s going to bring you into cash, into the tax 
bracket, then what you might be able to do is to sort of stagger it within 
that 12 months so that some encashments are taken in one financial year 
and the rest of them in another financial year, so you get the benefit of 
two tax allowances.

LEWIS:	You can only do that if you’ve got more than 
one pension fund within the trivial amount.

MCLEAN:	Absolutely.

LEWIS:	And Judy, What’s your income at the moment?  
Are you paying tax?

JUDY:	No, I don’t pay tax.  My income is round about 
£2,700 a year, so it’s quite a lot less than the annual tax allowance.

LEWIS:	Right.  So Patrick, correct me if I’m wrong, the 
effect of that will be to add the trivial pension onto that £2,700 and then 
in that year that would be taxed as if all that was income in that year?

CONNOLLY:	That’s absolutely correct.  Just one more key 
point on that.  The figure of £15,000 is relevant now.  That particular 
figure will increase over the course of time.  It will go up.  By 2010-
2011, it will go up to £18,000.  It will increment over time.

LEWIS:	So it goes up slowly each year.  Claire?

COURT:	I think also a point to note is that Judy you’ll get 
25% of your pension pot as a tax free lump sum.  It’s only the excess 
over the 25% that will be taxed.

LEWIS:	So you’ll be paying tax on some of it at the 
basic rate from what we think, Judy.  Is that much what you were 
expecting?

JUDY:	That’s fine.  I had misunderstood possibly that it 
would all be subject to the 22% basic rate tax, so the 75% would all be 
at the basic rate tax, so that’s good news.

LEWIS:	No.  Yes, it’s added to your income and 
obviously you can take off the balance of your tax allowance before 
you work out the tax.  So good news for Judy.  Let’s hope we can bring 
good news to Anita who’s calling us from Norwich.  Anita, your 
question?

ANITA:	Hello.  I have two pensions: one is a private 
pension worth about £154,000, and a small company pension worth just 
over £22,000.  My first question is can I take the lump sum and keep 
the funds invested?

LEWIS:	Well I think the answer’s yes.  Patrick, this is 
one of the new freedoms, isn’t it?

CONNOLLY:	It is, yeah.  With the private pension, that 
shouldn’t be much of a problem, bearing in mind obviously you need to 
be the right age in order to do that.

ANITA:	Yes, I’m 54.

CONNOLLY:	Fine.  In terms of the company scheme, in 
theory the answer is yes, but really it’s going to boil down to your 
scheme administrators and whether they have the facility to do that.  I 
would guess most companies at the outset … In fact I wouldn’t guess.  I 
know that most companies at the outset will not be in a position to do 
that, so what I would suggest is you speak to them and find out if and 
when they think they’re able to do that.

ANITA:	Yes.  And another question.  My private 
pension, I have £24,000, just over of that is contracted out.  Can I now 
get part of that as the tax free cash sum?

LEWIS:	Claire?

COURT:	Yes you can.  From 6th April, 25% of your 
protected rights funds, which is what the contracted out part is called, 
can be paid as a tax free lump sum.  Now that again, going off on 
Patrick’s point, means that the insurance company will have to adopt 
the new rules and not all insurance companies will be prepared to do 
that.

ANITA:	Oh right.

LEWIS:	And just to be clear about this.  If you draw 
your lump sum, in effect you are retiring or having what they now call 
this benefit crystallisation event – you’re actually taking your benefits.  
So you take your lump sum, as you’re entitled to do, and the rest of it 
you just leave there as a pension.  That just sort of accumulates as a 
pension fund, does it?

COURT:	Not quite.  If you draw your tax free lump sum, 
you are, as you say, drawing benefits, and you will have to draw an 
income from the remaining fund.  Now drawing an income can be one 
of two ways: it can be by annuity purchase, which means you secure 
your income from an insurance company …

LEWIS:	So you’d use the rest of it to buy an annuity if 
you wanted to?

COURT:	Yuh, that’s right.

LEWIS:	But you don’t have to do that, the point you 
made earlier.

COURT:	No.  The alternative is to use the old name is 
income draw down, the new name is unsecured pension, and the 
flexibility that unsecured pension gives you is that you can choose 
within certain limits how much income you draw.  There’ll be a 
maximum pension that you can choose from and the minimum is zero, 
so the way to achieve what you want to achieve here is to take your tax 
free lump sum and a zero income from the remaining fund.  I do 
recommend that you take advice though because it’s a really 
complicated area.

LEWIS:	Yes indeed.  And are there likely to be any 
charges for doing all that, Patrick, if you say you know you want to 
draw a bit of your fund or draw all your fund? 

CONNOLLY:	In terms of taking the tax free cash, then there 
shouldn’t be any charges for that.  But in terms of the money will still 
be invested afterwards and so there’ll be the ongoing charges as you 
would expect.

LEWIS:	Just the normal charges that you’d be paying?

CONNOLLY:	I would expect that largely to be the case.

LEWIS:	Okay.  Thanks very much for your call, Anita.  
Let’s move onto Terry now from Northamptonshire.  Terry, your 
question?

TERRY:	Good afternoon.  Moving on from the last 
question about protected rights, many years ago I transferred a company 
pension into a personal pension and I wondered how in other ways the 
protected rights will be affected.  I’m told for instance from one annuity 
provider that if I take a joint pension with my wife, I’m only allowed to 
preserve 50% of my pension when I die for her.

LEWIS:	Okay, well there’s some dispute on the panel, I 
think, about this one.  Malcolm?

MCLEAN:	Yeah, when you say you’re taking a pension 
with your wife, Terry, I don’t quite understand what you mean by that.

TERRY:	It’s a joint annuity where when I die you can 
protect 50%, 67% or a 100%.

LEWIS:	I suppose the point is that if you just have a 
pension fund, you can choose any proportion you like, can’t you?  You 
can say when I die, my wife will get 50% or 75% or 100%.  Claire?

COURT:	Well at the moment, before A Day, the rules on 
how you draw benefits from protected rights are actually laid down.  So 
depending on whether they’re pre or post 199… - Help me here, guys! 
– 1998, you have to draw them a certain way with a spouse’s pension or 
even escalation in payment.  That all goes from 6th April and instead 
you can choose the level of spouse’s pension that you include for your 
wife.

LEWIS:	So it sounds, Terry, as if you might have been 
told what we will now be able to call the old rules from Thursday, but 
which are the current rules today.  So it sounds as if you’ve been told 
the old rules, but in fact from Thursday those rules are going.

TERRY:	I asked that, but I shall go back again.  Thanks 
for your help.

LEWIS:	Go back again armed with that information.  I 
have to say it does take everyone a long time to get used to all these 
changes, but they on the whole are positive, I have to say.  Let’s move 
onto Morecambe in Lancashire where Robyn has a question.  Robyn, 
your question?

ROBYN:	Oh hello.  My question is about the state 
pension.  I received my state pension forecast in 2003 and they are 
giving me 33 years, which is equal to 85%.  I spent the first 10 years of 
my married life not working and didn’t start full time work, paying my 
national insurance, until I was 27.  I was then divorced and wasn’t in a 
position to pay contributions to make up the deficit and I’m wondering 
if it’s too late now to make up any voluntary contributions.

LEWIS:	Malcolm?

MCLEAN:	Yes, Robyn.  It may be too late.  It depends 
which years you’re actually talking about here.  Can I just explain the 
rules about qualifying for the basic state pension?  For a woman, you’ve 
got to have what are known as 39 qualifying years.  That means to say 
that 39 years of your working life are covered by sufficient national 
insurance contributions to make each year a qualifying year.  Now 
you’ve got 33 years by the sound of it, so you’re 6 years short.  Now 
there is provision for paying voluntary contributions to plug gaps in 
your record and it’s normally a good thing to do if you can do it to 
make good that deficit and build up your pension entitlement 
accordingly.  The only snag is they will only allow you normally to go 
back 6 tax years from the date from when you want to do it.  Now I 
think this is wrong, quite frankly.  I mean I’d very much like to see a 
change where we have the sort of flexibility we were just talking about 
a few minutes ago with the private pensions brought into the state 
scheme and allow people to make good gaps in their record for any 
period.  But unfortunately that is not the law at the moment.  You can 
only go back 6 tax years.  So if the gaps in your record have occurred 
during the last 6 years, then I would find out what you have to pay and 
seriously consider paying it.  If it’s beyond 6 years, then I’m afraid you 
can’t do anything about it.

ROBYN:	It’s well beyond 6 years.  We’re talking about 
late 60s, early 70s.

MCLEAN:	Right.  Well a lot of people are in the position 
you are and, as I say, I think it’s something the government really needs 
to think about.  

LEWIS:	Yes, I suppose the other point to make, Robyn, 
is are you married? 

ROBYN:	Yes, I am.

LEWIS:	Is your husband retired or approaching 65?

ROBYN:	Not yet.  We’re both approaching the time.

LEWIS:	Right, so when he reaches 65 you can claim a 
reduced pension on his contributions, although I expect you know …

ROBYN:	Right.

LEWIS:	… once you’re 60 and once he’s drawing his 
pension.

ROBYN:	He already is.

LEWIS:	He already is.

ROBYN:	He hasn’t actually retired, but he’s over 
retirement age.

LEWIS:	Oh I see.  Well it’s when he draws his pension, 
he can then get more for you if you’re under 60, and if you’re over 60 
you can get your own pension, which is tax free.

MCLEAN:	But you can’t get both of course at the same 
time, Robyn, which I’m sure you appreciate.

LEWIS:	No.

MCLEAN:	So if you’ve got 33 years, the chances are that 
the pension you’ve built up in your own right is probably going to be 
more than the pension you would claim off your husband’s 
contribution, but it’s certainly something to look at.

LEWIS:	Yeah.  But things like graduated pensions, she’ll 
get on top of that a small amount?

MCLEAN:	Yes.

LEWIS:	Okay, well let’s move onto an e-mail now 
because there’s a very complicated e-mail from Glynn and he has a 
company pension and he has AVCs, these extra amounts that he’s been 
paying in.  And he wants to know how he can work out what lump sum 
he can get from this pension as tax free cash and how he converts his 
company pension into a sort of fund, if you like, so he can work out the 
25%.  Patrick, I know this is very complicated.

CONNOLLY:	It can be complicated, yes.  I mean in terms of 
the company scheme, it depends what sort of scheme it is.  I’m 
assuming it’s a final salary scheme.

LEWIS:	It appears to be, yes.

CONNOLLY:	So what the caller or e-mailer will know is that 
they’ll be due to get a benefit of x pounds per year in retirement.  The 
calculation to make in order to put that into a value is to times that 
amount by 20 and that will give in effect a cash value in terms of these 
types of calculations.  The AVC, again I don’t know whether that’s an 
in-house AVC, which is adding to those benefits, or whether it’s a 
separate ..

LEWIS:	It is an in-house AVC. 

CONNOLLY:	Fine.  In that case, that will need to be included 
in that calculation as well rather than a separate one.

LEWIS:	Right.  And then he’ll be able to take a quarter 
of that when he’s done those calculations roughly.  Claire?

COURT:	Well the new rules say you can take 25% of 
your fund, but because it’s an occupational pension scheme it would 
depend on what the trustees say you can do.  Now historically in final 
salary schemes, there’s a method of calculating tax free cash that is 
linked to salary and service.  I know a lot of schemes are keeping that 
calculation, so even though the new rules say you can do this, you 
actually have to look at what the scheme rules say.

LEWIS:	Right.  So even though the law has changed, it’s 
up to each scheme to decide its own rules …

COURT:	Exactly.

LEWIS:	… as long as they’re no more than the law will 
allow?

COURT:	That’s right.

LEWIS:	And that’s going to be a big problem for people, 
isn’t it, because they’ll listen to programmes like this or they’ll read the 
newspaper and think oh I can do this and their scheme trustees will say 
sorry, we’ve not changed the rules?

COURT:	It’s happening already.  Yes, that’s right.

LEWIS:	Do you think Malcolm we’re going to see a lot 
of schemes changing their rules to accommodate these new freedoms?

MCLEAN:	Well there is a worry about how far employers 
are prepared to go to accommodate flexible retirement.  Now this is one 
of the most important aspects in my view of the changes – the ability to 
actually phase down your retirement, as it were.  Instead of having this 
cliff edge effect of suddenly in work one day and then retired the day 
after, the new rules afford the possibility of actually taking some of 
your pension and working part time and gradually phasing yourself out.  
Now it is a slight worry to me, the fact that I think a number of 
employers find this rather complicated and for other reasons are not 
willing to do it, so I think that is an area that really will be very 
disappointing if more employers don’t take it up.

LEWIS:	Yes.  I suppose it’s worth saying though that 
every scheme has trustees and among the trustees are member trustees, 
so it’s up to them to start agitating at their meetings to bring about these 
changes.

MCLEAN:	Absolutely, yes absolutely.

LEWIS:	Okay, let’s move on.  Derek is calling us from 
Carmarthen.  Derek, your question?

DEREK:	Hello and good afternoon.  My problem is that 
at the moment I’m 66 years old.  My original pension retirement date is 
at the age of 62.  My insurer, my pension provider converted my 
pension into a cash fund back in 1962.  

LEWIS:	When you were 62 you mean?  Not in 1962, 
Derek.

DEREK:	Sorry.  

LEWIS:	(Laughs) Sorry, we had some puzzled looks 
here for a moment.

DEREK:	1992.  So now I’m faced with drawing a 
pension where the annuity rates are very low and I believe they’re the 
lowest rates for forty years.  I’ve got quite a substantial fund and I’m 
just wondering whether it is better to go for a pension draw down or 
just to go for the annuity.

LEWIS:	Right, so you’re in a draw down scheme at the 
moment in effect, are you?

DEREK:	No, I’m not, no.  I haven’t touched my personal 
pension.

LEWIS:	Oh I see, it’s still there.

DEREK:	It’s still there, yeah.

LEWIS:	But now you think after Thursday, you might 
want this new freedom.  Patrick?

CONNOLLY:	Yeah, there are different ways we can go with 
this one.  You’re right in terms of annuity rates.  I mean the main 
determinants of annuity rates are the yields on gilts, which at the 
moment are not particularly attractive, and also mortality – i.e. how 
long are people going to live.  And we have an ageing population of 
people who are living longer, so those two main factors are dragging 
rates down.  We also need to look after A Day and say is anything 
going to change, and the answer to that is potentially they will because 
if people have more freedom not to buy an annuity then there’s more of 
a likelihood that people who are in poor health will delay buying an 
annuity.  Either they’ll buy a form of protected annuity, which pays 
them back some of their fund if they were to die, or they won’t buy an 
annuity at all.  So what that could mean is that the life expectancy of the 
annuity pool goes up and as a result the rate goes down.  The bottom 
line to that answer, after all of that waffle, is really whether you have an 
annuity or whether you have draw down is largely going to depend on 
whether you want risk or no risk.

DEREK:	Right, okay.  Is there likely to be a pent up 
demand for annuities with people delaying until they can draw the 
maximum in tax free cash?

LEWIS:	I think probably you’d have to wait and see.  
Claire?

COURT:	I think there are a number of people who are 
waiting for the rules to change.  Certainly from my own clients, a 
number are waiting to draw benefits in the next month because they can 
get a bigger tax free cash sum.  But I think, going back to Patrick’s 
point, Derek, whether or not you buy an annuity really does depend on 
what income needs you have in retirement.  Will you need a certain 
level of income?  Will you need a guaranteed level of income?  And we 
may find that an annuity might be the right thing for you to do.

LEWIS:	Because in a sense – I mean I often this and it’s 
not always very popular – but annuities do represent what the market 
thinks that money is worth over the rest of your life, so in a sense they 
give the right answer to that question.

COURT:	And we’re all living longer as well.

LEWIS:	Yes indeed.  And if you draw it down or 
whatever – unsecured pension, whatever it’s going to be called from 
Thursday, well unsecured pension at 55 or whatever, 60 - then you can 
draw 120% of what you would have got from an annuity roughly 
speaking, though it’s done by tables.  I know it’s not quite that simple.

COURT:	Not quite because the way it’s calculated is 
based on the government actuary department annuity rates.  When you 
multiply them by 120%, you actually get broadly to what a single life 
annuity might give you – the top end of a single life annuity.

LEWIS:	Right.  So it’s not as generous as it sounds.

COURT:	But of course the added complication and the 
added risk with drawdown is that you have to invest your fund to 
support that level of income and if you’re drawing what is basically a 
single life annuity equivalent from your fund, that may be for a 60 year 
old 6%, 7%, your fund has got to grow by that much and then some to 
take into account things like costs.

LEWIS:	So in a sense you’re pitting your skills against 
those of the insurance companies who are doing this all the time and 
you’re probably not going to do it as well.

COURT:	Yes.

MCLEAN:	It really is imponderable, Paul, trying to predict 
which way annuity rates will go.  I mean I heard what Patrick said and I 
hope he’s right about that, but I know a number of people who’ve gone 
for income drawdown and have actually lost out quite badly because of 
the way annuity rates have dropped in recent years.  So I do urge people 
if you’re going to go for a drawdown or unsecured pension or whatever 
it’s now going to be called, think very carefully about it and take 
professional advice.  You could very easily get your fingers burnt.

LEWIS:	Yeah, okay, and perhaps from two or three 
people because some of them might have an interest in encouraging you 
to do it, which is always my fear.  (Laughs)  Anyway, let’s move on.  
Rosamund is calling us from Harrow.  Rosamund, your question?

ROSAMUND:	Hello.  I wanted to ask your advice about 
private pensions because obviously, as you know, you can contribute to 
a company or a private pension from the age of about 18 plus.  Now if 
somebody’s left it rather late, at least 10 years too late - I’m not giving 
information about my chronological age, that’s a bit cheeky – but if 
somebody has, could you give me some good advice perhaps about a 
good company to go for for a private pension?

LEWIS:	Right, so you want to put money into a pension 
and this is obviously for a friend who happens to be 28, is that right?

ROSAMUND:	(Laughs) It could be.  Yeah, that’s right.

LEWIS:	Yes, yes.  Patrick?

CONNOLLY:	Is there any point doing it?  The answer to that 
is very much yes.  I mean we would certainly advise people to be 
investing in pensions and investing longer term whatever their age.  I 
mean there is an argument that actually as you get older means tested 
benefits may mean it’s not beneficial, but whether you or I know what 
state the state pension system’s going to be in when you get to 
retirement is a different scenario.  So yes you should do it.  In terms of 
picking a provider, the way we operate, we don’t really tend to pick 
providers.  We tend to manage clients investments ourselves, so I’ll 
pass that to Claire and see if she has an answer for you.

LEWIS:	Claire?

COURT:	I think the only advice I’ve got is to speak to an 
independent financial adviser and the key word there is ‘independent’ – 
somebody who will choose a provider that is right for you.

ROSAMUND:	Right, yeah.

LEWIS:	But is the point you’re trying to find out, 
Rosamund … I mean if you’ve got savings, you can now – as we said 
earlier – you can now put the whole lot in a pension as long as it’s no 
more than you earn in a year.  Is that the point you’re trying to get at?  
Because you can save up and have that money flexibly and then at some 
point put it into a pension fund.

ROSAMUND:	Oh no, I’ve always thought it was a good idea to 
save and so forth.  I mean I did this sort of thing when I was in my early 
teens.  But I’m just talking about you know a good company who 
provides independent advice and who’d provide a private pension 
which would give you a nice income at some stage.

LEWIS:	Right.  Well the two things are separate.  You 
go for advice to an independent financial adviser and they then put you 
in touch or put your money with the company they’ve recommended, so 
it’s a two-stage process.  Or of course you can look at adverts on the 
Internet and do it yourself, though that’s perhaps slightly more hair 
raising.  Malcolm, any thoughts on that?

MCLEAN:	Well just without wishing to specify the name 
of the provider, can I just put in a plug for stakeholder pensions here?  
Stakeholder pensions are a cheap and cheerful type of personal pension 
and the charges should be lower than a personal pension.  So unless you 
particularly want a more exotic type of investment vehicle, then a 
stakeholder pension might be the right vehicle for you, so have a look at 
those.

LEWIS:	And they’re not changing under the new rules.  
They’ll still be called stakeholders?

MCLEAN:	They’re still called stakeholders and they are 
effectively, as I said, a cheap and cheerful type of personal pension. 

LEWIS:	Yes.  And you can put in, as we said, up to 
100% of your salary in the year, or if you earn a great deal of money up 
to £215,000.  And if you earn nothing, you can still put in up to £3,600.

MCLEAN:	Correct.

LEWIS:	So very well worthwhile.  What do you find 
though Malcolm on your help line people are asking?  What’s the sort 
of one key question in five seconds that people are asking?

MCLEAN:	Really a range of questions on the complexity of 
some of this.  As you said right at the beginning, this is described as 
simplification.  It isn’t that.  It’s flexibility, but it’s not that simple.

LEWIS:	And 3,000 pages of guidance on the Revenue 
website.  That’s all we have time for.  My thanks to Malcolm McLean 
of Pensions Advisory Service, Claire Court of Origen; and Patrick 
Connolly from JS & P.  Thanks to you for your calls.  We’ve had an e-
mail saying is there a transcript.  There will be a transcript on our 
website, bbc.co.uk/moneybox in a couple of days.  And our Action Line 
0800 044 044.  I’m back at noon on Saturday with Money Box.  Back 
here next Monday afternoon on Money Box Live.



 
	
  


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