一;summaries and explain the entitlement to UK SBP & S2P
1. The state basic pension is the foundation of most people’s pension income. It is
paid at a flat rate to everyone who qualifies for the full amount, by virtue of their national insurance contributions, and at a reduced level to those whose contributions fall short of this.
The state additional pension is an amount of state pension you may get on top of any state basic pension. Currently it is an ‘earnings- related pension’ because the
amount each person gets depends on their earnings while they were building it up- different people get different amounts. The state additional pension used to be called the State Earning Related Pension Scheme, but from April 2002 was changed to the State Second Pension (S2p).
2. Most employees provided they earn at least a minimum amount or are getting working tax credit. Self- employed people unless they have opted not to pay National Insurance contributions. People who are being credited with National Insurance, for example, while claiming state benefits during a period of illness, unemployment or maternity leave. People not in the above categories who volunteer to pay National Insurance contributions.
3. To get the full basic pension, generally you have to have paid or been credited with National Insurance contributions for at least 90 per cent of the tax years in your working life. If you state pension age is 65, your working life will be 49 years and you will normally need 44 qualifying years in order to get the full basic pension. If you do not have enough qualifying years for the full pension, you get a reduced amount. Working life is the tax years from the one in which you reach age 16 to the last complete tax year before you reach state pension age. Qualifying year is a tax year which counts towards you state basic pension because you have paid or been credited with enough National Insurance contributions. State pension age is the age at which you become eligible to claim your state pension. This is currency at age 65 for men and age 60 for women. In general, only class 1 contribution (paid by employees). Class 2 contributions (paid by the self-employed) and class 3 contributions (voluntary) count. For a year to count as qualifying, you must basically have paid a whole year’s worth of
4. In some situations you may get National Insurance credits. For the years in
thththwhich you had your 16, 17 and 18 birthdays if you were still at school and
were born on or after 6 April 1957. You should get these credits automatically. If the UK has a reciprocal agreement with the country in which you are working and you are paying contributions there. When you earn less than the lower earning limit and you are claiming working tax credit (or previously working families tax credit or disabled person’s tax credit). You should get these credits
5. Home responsibilities protection also helps you to deal with gaps in your contribution record. But, instead of providing credits to plug the gaps, HRP reduces the number of qualifying years you need in order to get any given level
of basic pension. You can get HRP if you can’t work because you are caring for
one or more children under age 16 for whom you get child benefit, and caring for someone who is long-term ill or disabled and various conditions are met. The year for which you get HRP are deducted from the normal number of qualifying years you need. But HRP can’t reduce the required number of years to less than
6. A married woman can have a basic pension based on her husband’s National
；50.50 a Insurance record rather than her own. The maximum wife’s pension is
week. If the wife has reached state pension age, this pension is paid direct to her. If the wife is under state pension age, it is paid as an ‘adult dependency increase’
to the husband.
二. Benefits of SERPS/S2P
SERPS was available only to employees with earnings at least equal to the LEL. You could not build up SERPS if you were not working. For example, because you were long- term sick or at home caring for children or someone who has disabled.
The SERPS is open to Employees earning at least the LEL; People caring for one or more children under the age of six for whom they are claiming child benefit; People who qualify for carer’s allowance through looking after
someone who is ill or disabled. Some people; Some people who are unable to work because of illness or disability provided they are entitled to long- term incapacity benefit or severe disablement allowance and they have been in the workforce for at least one- tenth of their working life.
Some people are not covered by the state additional pension, under both SERPS and S2P. These include self- employed people, employees earning less than the LEL, married women who have opted to pay Class. National Insurance contributions at the reduced rate and employees who are contracted out. Basically, the more you earn, the higher the state additional pension you can get. In practice, the high earners who would qualify for this level of pension have usually been contracted out for long periods, so the average additional pension actually paid out today is much lower.
Under S2P (but not SERPS), in any year, people who earn less than a certain amount, called the low earnings threshold, and those people who are not working but qualify for S2P (carers of young children and so on) are treated if they have earnings equal to the LET. When S2P was introduced in 2002, the government said that it intended eventually to make the scheme flat-rate with everyone who was in the scheme building up a pension based on earnings at the LET.
三;OPS-DC/DB as it relate to Robert
1. Occupational schemes offer a pension organized by your employer, who pays
into the scheme on your behalf, though you are usually required to contribute too. They are usually hard to beat as a way of saving for retirement. Employers are not obliged to offer occupational pension schemes. Many do as a way of attracting and retaining staff. You do not have to join, but membership of a good scheme is a valuable part of your pay package.
There are some benefits from a typical occupational pension scheme. The retirement benefits- from normal pension age, you can get pension and tax-free lump sum. Early retirement benefits- you can get reduced pension if you choose to retire early. Ill-health benefits- you can get the pension if you have to retire early due to illness or disability. Death benefits- you can get the pension for your spouse/civil partner if you die before or after retirement; the pension for children/other dependants if you die; the lump sum payable to anyone you nominate if you die before the age of 75.
An occupational scheme may be open to all employees or restricted to a particular group. New age discrimination laws will have on retirement ages from October 2006. Your employer will not normally be able to retire you before age 65 and must consider your request to work on longer if you want to. The legislation also applies to occupational pension schemes but will have little practical effect since most of the age-related rules that are part of occupational schemes design are exempted. Occupational schemes will continue to be able to set a normal pension age from which your full pension is payable and to specify minimum and maximum age at which you are eligible to join a scheme. 4. Money purchase schemes are the main alternative to salary-related schemes. The pension you get depends on how much is invested and how well the investments perform. They are easy to understand but offer no pension promise, making planning ahead for retirement unpredictable and risky. Money purchase describes any pension you get at retirement depends on the amount paid into the scheme, how well the invested contributions grow, the charges deducted, annuity rates which determine how much pension you get from the fund that has built up. Unlike salary-related schemes, with a money purchase scheme, your employer simply pays in a set amount in contributions. This means the employer knows just how much it will cost to provide the scheme and bears no risk of costs running out of control. If investment returns are poor or pensions become more expensive because people are living longer, you get less pension rather than your employer having to pay more. For these reasons, many employers are turning away from final salary.
5. Salary-related occupational pension schemes normally offer considerable benefits to their members. There are tax advantage as for all private pension schemes; Predictable pension benefits; some protection against inflation; employer pays some or all of the costs of providing pension and other benefits; employer might separately pay running costs; employer not you bears risks of poor investment performance and rising life expectancy. And there also have some cons of salary-related occupational pension schemes. It can be difficult to understand; you might lose out when changing jobs; Scheme might close if you
employer finds it too costly or risky; in worst case scenario, scheme might close
without being able to pay the promised pensions. The pension= Years in schemes
* Accrual rate * Final salary.
The pros of occupational money purchase schemes are tax advantages as with
any private pension schemes; employer pays some or all of the cost; employer
some sometimes pays running costs separately; simple to understand; easy to
transfer if you change jobs. And the cons of it are unpredictable amount of
pension and other benefits; employer tends to pay less of the cost than with a
salary-related scheme; no automatic protection against inflation.
Salary-related schemes are unlike most other types of saving and investment.
You are promised a certain level of pension in relation to your earnings
regardless of the amount you pay in. Most private sector schemes are funded,
which means the contributions paid in are invested to build up a fund from which
the promised pensions are paid. The amount you employer has to pay varies
depending in particular on how well the invested contributions grow, and the cost
of the pensions once they start to be paid. Your employer rather than you bears
most of the risk involved in saving for retirement.
四;Limits on contributions
If you are on track for a low pension from your occupational scheme, you have several options to improve the situation. These include making additional voluntary contributions (AVCs).
The three main ways of boosting your occupational pension are to pay extra contributions, start your pension later or consider salary sacrifice if available. In detail, extra contributions means that many employers run in-house AVC schemes which let you pay in extra to build up extra benefits, one of the ways they work in is money purchase AVCs. This is available with ant type of occupational scheme. Otherwise, in-house money purchase AVC schemes are essentially no different from any money purchase scheme. But there are some special features of an in-house AVC scheme that you should consider, such as charges and investment choice, matched contributions and taking the benefits. Furthermore, free-standing AVC schemes are basically personal pensions but designed specifically to top up the benefits from your occupational scheme.
Since april 2006 ' A Day ', you have a lot more freedom which makes it much easier to plug even a large pension gap. There is no limit at all on how much you pay into pension schemes each year but you will get tax relief only on contribution paid before age 75 and up to a basic amount of ?3,600, or if higher, an amount equal to your ' relevant earnings ' for the tax year.
五;ops/avc in relation to Robert
Pension benefits and limits will be different depending on the date of joining, approval pre-1987 employees who joined a scheme of their current employer before
17 march1987. The inland revenue limits include earnings cap, early retirement, late retirement and tax-free cash. Te maximum ‘working life’ which can count for this
thpurpose is 40 years, so that the maximum pension benefit is 40/60 of f final
remuneration. Where membership of a pension was held under post-1987 approval
rdconditions, it was possible for a 2/3 final remuneration benefit to be provide. There
is no monetary cap covering earnings for those subject to post - 1987 approval conditions.Early retirement provisions allow the drawing of benefits from occupational pension schemes at any time from the age of 50.
The formula is No.Of years actually worked
No. Of years from joining pension to the NRD
There are different options are available for the fund member who works beyond NRD. It is possible to take all benefits at NRD, when the Inland Revenue limits apply in the normal way. And it is possible for the fund member to defer all their benefits to any later date up to the date of the actual retirement, even if that means working past the age of 75.
Finally, the tax-free cash means the part of the benefits available from an occupational pension scheme may be provided in the form of a cash lump sum, which (at present) is free of tax. The cash lump sum can be up to 3/80ths of final remuneration for each year of service with no requirement to bring any retained benefits into the equation. The maximum period of service for this calculation is 40 years, which makes the maximum cash benefit 1.5 times final remuneration.
In this case, Iona has not at work many years, so she can pay a PPS by herself. The options available to those who need to make independent arrangements, because they are self –employed. And when you might use a personal pension, if you are
self-employed; if you are an employee but there is no occupational scheme; if you belong to an occupational scheme and want to top up the amount you save for retirement; if you are an employee who decides not to join a pension scheme through your workplace, or there is no workplace scheme; if you are an employee taking your own decision to contract out; if you are not working but want to save for retirement; if you are arranging a scheme for someone else.
The pension a money purchase scheme is depends on the contributions paid in; how well the invested contributions grow; the charges deducted.; annuity rates at the time you start the pension.
七;carry back and carry forward.
This facility allows relief on a contribution that is paid in the current tax year to be carried back to the immediately.
An election to carry back must be made. If that exists, the contribution is treated for tax purposes as if it had actually been paid in the previous tax year, and relief will be granted against the tax liability for the previous year.
An election must be made at or before the time the contribution is paid. The contribution must be paid by 31January in the tax year concerned. Therefore, carry back is not available for any contribution paid between 1 February and 5 April in any tax year.
An election could be made after the contribution was paid. The election to carry back had to be made before 31 January in the tax year following the tax year in which the contribution was paid.
Carry back was available for a contribution whenever it was paid during the year. A two - year carry back was allowed where there was no NRE in the immediately preceding tax year.