More women in the UK are working past the age of 60, according to a report out today which takes a look at trends in the job market over a two-year period.

This development is thought to be due to changes in legislation which mean that women have to wait longer until they can claim the state pension, according to the Institute for Fiscal Studies (IFS).

Since April 2010 the age at which women can first receive their state pension has been rising from 60. The state pension age for women currently stands at 61 years and five months and is due to rise to 66 by 2020.

Among those women directly affected by the reform, employment has increased. Moreover, the change has also impacted on the retirement age of some of the husbands of the affected women. The IFS says that this may be because they are delaying their own retirement so that both partners can retire together, or to cover their wives’ lost pension income with additional earnings.

Figures from the IFS report show that employment rates among 60-year-old women increased by 7.3 percentage points following the one-year increase in the female state pension age, from 60 to 61, between April 2010 and April 2012. This means that in April 2012 there were 27,000 more women in work than there would otherwise have been.

Over the same period, employment rates among the husbands of these women increased by 4.2 percentage points, which resulted in 8,300 more men staying in work. Taken together, there were around 35,000 more men and women in work as a direct result of the increase in the female state pension age from 60 to 61, despite the weak performance of the UK economy over that time, said Jonathan Cribb, a research economist at the Institute for Fiscal Studies and a co-author of the report.

Cribb also highlighted the fact that more than half of women aged 60 are now in paid work for the first time ever.

The IFS concludes that as a result of these changes in the working population the UK’s public finances have been strengthened by around GBP2.1bn.

Foreign workers in the United Arab Emirates are finally able to invest in a competitive, locally-based pension scheme – thanks to the National Bank of Abu Dhabi. The Telegraph is reporting that expats in the country can now invest in corporate trust solutions that are designed to discourage overseas workers from sending the lion’s share of their salaries back home. The Wealth Builder Plan will be administered by the Jersey-based NBAD Trust Company, and it is hoped that the move will attract more people to an economy that is in great need of skilled labour. However, what benefits can expats realistically expect to enjoy from these innovative offshore pensions?

How the New Scheme Will Revolutionise Offshore Pensions

Expat employees will be able to choose from a range of investment fund options according to their appetite for risk. The new pension scheme is, essentially, a packaged portfolio of corporate investments – something that foreign workers in the UAE have hitherto been deprived of. The UAE is one of only a handful of leading financial centres that doesn’t currently offer a government-backed pension facility, so this new initiative is expected to be hugely popular. Each plan will be tailored specifically to the needs and income of the individual and the employee will also have the option of topping up the contributions made by the employer.

The Benefits of the New Pension Scheme

Current UAE laws stipulate that foreign workers only receive an indemnity at the end of employment – awarded according to the employee’s length of service. The new scheme is expected to be a far more lucrative proposition than the current cash lump sum, paid at the end of employment. This is the first serious scheme in the country that seeks to distribute the burden of expats pension contributions between the employer and the employee, and local government officials are hoping it could persuade more skilled foreign workers to make their home in the fast-growing country. Expats will be further encouraged by the announcement that investments can be tracked on a daily basis through the use of secure web portals. Customers will have access to real-time data on their account as well as the plan’s overall performance. The flexibility of the new scheme will also allow expat investors to change their overall contributions in line with the performance of their plan, or a change in their own circumstances.

According to Trade Arabia, all investment funds will be managed by the trustee, the NABD Trust Company in Jersey. This means that a trust structure will be developed that is completely independent from employers. This groundbreaking announcement is all the more impressive because of Jersey’s involvement, and it will put people at ease with such a new pension product. The island has a world-renowned financial regulatory system that provides a safe haven for investments from all over the world. The UAE is a country where around 90 percent of the population is from overseas; this news will be almost universally welcomed – and it should result in increasing numbers of foreign workers arriving to do business.

Company Profile:

Which Offshore is an online consumer resource for those seeking information and advice pertaining to matters related to expatriate life and offshore finance. For more information, please visit – http://www.whichoffshore.com/

Thousands of people make the decision to relocate to the USA from the UK every year, yet there are many who make the decision without being in possession of all the facts surrounding the taxation of their pension funds. The decision to leave the UK to enjoy retirement in a country that offers a better quality of life is often driven by the heart. However, retirees need to be absolutely certain that their pension will cover the entire length of their retirement. Leaving the UK to enjoy the latter years of life will remove the safety net of the British welfare system, and that can have devastating consequences.

Unfortunately, QROPS pension rules in the USA are more complex than in most other countries in the world, and this means that a foreign-based pension fund cannot simply be ‘plugged in’ to the American system. However, recent changes to the regulations mean that QROPS USA is now live, and there are a number of schemes that have recently been brought to the market. Several US 401K pensions have now been officially registered with Her Majesty’s Revenue and Customs (HMRC), but there are still various compatibility problems seem to originate in the USA.

Problems of incompatibility arise when USA residents have accrued their pension funds in the UK or another foreign jurisdiction. Foreign pension funds are not recognised by the American government, so contributions and investment growth may be subject to taxation from the Inland Revenue Service (IRS) in the States. The IRS has extremely stringent guidelines governing the reporting of taxation issues, so a new breed of QROPS is needed specifically for expats living in the USA. Thankfully, there are now pension products that comply with the reporting requirements of both the HMRC and the IRS.

The benefits of transferring pension funds to a QROPS pension with American compatibility are wide-ranging, but the most significant involves the protection of investment growth from US Federal Income Tax. This type of overseas pension fund will also enable people to draw a tax-free initial lump-sum of up to 30% of the fund’s value. USA residents can also be confident that their pension incomes are not subject to UK taxes, and that is an issue that can allow people to plan their financial future accurately. The advantages and benefits of QROPS USA are extensive, but both the HMRC and IRC websites contain detailed information for fund-owners.

Under the British taxation system, a 55% charge is levied on unused funds that still remain in a pension fund; however, American-compliant pension funds incur absolutely no charges. This type of pension scheme incurs no tax on funds that pay regular benefits, and funds which aren’t in drawdown are also free from taxation. A QROPS also falls outside of UK inheritance tax laws, so there really are several benefits to setting up such a pension arrangement.

A Qualifying Recognised Overseas Pension Scheme is open to foreigners wishing to reside in the USA, American nationals who have been working outside the USA and American nationals who currently live outside the USA. It allows retirees to take control of their finances, as they can protect their pensions from the unfair or unnecessary tax burden imposed by the country of their origin. For more information, please visit – http://www.whichoffshore.com/qrops

If you’re in your 50s or 60s you’re probably quite looking forward to the day where you can stop working. However, it’s worth asking yourself if there are any particular financial aspirations you wish to achieve before you leave the world of work and enjoy your golden years. Should this be the case, you might wish to think about releasing money from a pension fund in advance.

Doing so could enable you to obtain a sizeable proportion of your retirement savings while you’re still in work, which in turn could provide you with the scope to meet a great array of financial goals. With that in mind, here are some of the things that an early cash withdrawal from a pension fund can be used to achieve.

Create an additional source of revenue

Although working fewer hours prior to retiring altogether may be an enticing proposition for many older people, it’s worth remembering that becoming a part-time employee will result in a drop in income. Releasing cash from a pension fund can help to bridge this gap, however, and the money that is taken out can be converted into an additional source of taxable income.

Alternatively, withdrawing money from a pension could be used to pay for one-off things that demand a substantial expenditure upfront. Whether consumers are looking to improve their property or go on an unforgettable holiday before they retire, releasing pension money in the form of a lump sum will give them the scope to meet their financial aspirations.

Of course, it is possible for older people to obtain the cash required to do these things by applying for a bank loan. However, it’s worth remembering that as such consumers are likely to be giving up work in the relative near future that they are unlikely to earn a vast sum of money from their job. As this debt is likely to be paid with cash from their retirement pot, it might make a greater deal of sense to use pension money directly to meet such expenses.

Consolidate debts

Releasing a portion of a pension fund early is also a great way for those approaching retirement to reduce or pay off any debts that are looming over them. As it’s possible to take out up to 25 per cent of a pension ahead of retiring, consumers ought to find that they can quickly settle bills for loans and credit and store cards.

This means that when the point comes for them to retire completely, people can do so without having to worry about how you will manage to repay their debts.

Frees up money to invest in other areas

Withdrawing money early can also be a good option for those who believe their cash would be better off invested in other areas than a traditional pension. The global economic crisis of recent years has meant that many pension schemes do not offer as high returns as they once did, so if you feel your current plan will not provide as much money as you hoped, it’s worth taking some cash out to reinvest in other assets. Whether you choose to place such cash in property, ISAs, bonds or other products, taking this route offers the chance to generate a significantly higher pension income.

If you’re thinking of releasing cash from a pension early, what do you plan to use the money for? Please leave a comment below and let us know!

The government is considering easing restrictions to a pension scheme specifically designed to help the low paid.

The surprise move comes just three months after a Bureau investigation suggested intense lobbying from the insurance industry left the National Employment Savings Trust (Nest) ’fighting with one arm behind its back’.

The Department of Work & Pensions yesterday opened a consultation on whether restrictions imposed on the Nest should be lifted.

In July, senior insurance executives, two Whitehall sources and a number of pension campaigners told the Bureau that a low-cost, flexible pension scheme was watered down by the last Labour government.

Senior insurance executives admitted to the Bureau that they successfully won government concessions because they feared the introduction of Nest, which launched last month, would provide ‘unfair competition’.

No savings
Nest was established following Labour’s 2008 Pensions Act. It was formed to provide pensions for lower paid workers in permanent or temporary employment. Two-thirds of the UK’s private sector employees do not have a workplace pension, according to data from the Office of National Statistics.

It was hoped companies would automatically enroll their staff into Nest unless their employer chose to make alternative approved arrangements. This in turn would provide employees with a portable, single pot of savings they could take from one job to the next.

But the government withdrew proposals to introduce default enrolment into Nest despite clearance from Europe.

Insurers also successfully persuaded the last government that savers should be prevented from transferring any  pension savings they may have built up elsewhere. This ensured pension companies did not lose revenue. The decision also had the effect of denying Nest scale.

Additionally, the government also imposed a £4,400 anniual cap on the combined contributions employers and employees can make to Nest. This means most employers have to administer two separate schemes when providing workplace pensions for high and low earners.

Lifting restrictions
The government is now considering ditching the transfer ban and the limit on contributions and is inviting responses to a consultation.

Pension minister Steve Webb said: ‘We are already seeing the positive effect that Nest is having on the world of pensions.

‘Workers are being signed up for workplace pension schemes at much lower charges than in the past and firms have much more choice of provider than in the past. But we need to make sure that this continues as automatic enrolment moves on to smaller firms and that the constraints on Nest are not a barrier to good consumer outcomes.’

In times of economic uncertainty it is important to know you are in full control of your finances, especially if you live abroad and have a UK-based pension. The Qualifying Recognised Overseas Pension Scheme (Qrops) does exactly that by letting you transfer your pension and choose where and how your hard earned money is invested.

The scheme has significant financial benefits for anyone with a UK pension who has moved abroad or is intending to do so in the near future. With the help of professional financial advice it can be possible to pay less tax at source or even to pay none at all. And, unlike UK pension funds, any assets that remain after your death can be passed on to your family.

Control over assets

The key principle behind Qrops pensions, and the one that makes them so attractive to investors, is that your money belongs to you and you retain full control over it. Whereas a UK pension requires an annuity to be purchased on retirement, which cannot be left to your children, Qrops pensions are based on an asset management plan which can be personally designed to suit a person’s lifestyle and expectations.

Under the terms of Qrops a UK pension can be transferred to a recognised scheme in a jurisdiction of your choice. In some places this can mean the pension is totally free of tax at source. The funds are invested in a plan that is carefully constructed to reflect the balance you wish to strike between risk and growth, so professional advice is crucial to ensure you get the best possible return.

Pension flexibility

One of the main advantages of Qrops for UK residents who retire abroad is the flexibility it provides. Because you choose the jurisdiction in which it will based, you can ensure you are getting the most advantageous tax benefits available. And, if there is a shift in the economic climate or a change in your circumstances, you can move your investment to a fund that is more likely to deliver the results you expect.

These are just some of the benefits. Depending on the jurisdiction and the fund you choose you could also take advantage of higher fixed deposit rates, the increased confidentiality that comes with offshore accounts and a facility to take a tax free lump sum from your pension fund.

There is no stipulated minimum amount for setting up a scheme, but the start-up costs involved mean it only really comes into its own with funds of £25,000 or more. The biggest benefits, however, are realised with funds of £100,000 or more which allow for greater flexibility in your investment portfolio choice.

Company’s Profile:

Whichoffshore provides professional expatriate information on offshore estate planning, QROPS pensions and more, in order to help British expatriate make the most of their money. For more information, please visit – http://www.whichoffshore.com/

Income from UK private pensions and index-linked government bonds could be reduced under new proposals put forward yesterday to narrow the gap between the CPI and RPI measures of inflation.

The Office for National Statistics said on Tuesday that it would launch a consultation next month on various options for improving the Retail Prices Index (RPI), in an effort to address the gap between the two measures of inflation caused by statistical effects and align the RPI more closely to the Consumer Prices Index (CPI).

At present the RPI tends to be around 0.5% to 1.0% higher than CPI, which the Bank of England uses for its inflation target, partly due to different methods of calculation rather than a difference in the goods and services included.

The Consumer Price Advisory Committee, which includes members from the ONS, the Bank of England, the Treasury, academia, the media and consumer organisations, has announced four possible options regarding the way the RPI is calculated. Three of these options would lead to a rate of RPI that is closer to the CPI, while the other alternative is to make no change.

If changes are made, analysts believe that pensioners, whose payments are often linked to RPI, could find themselves worse off. Holders of index-linked gilts could also face lower income, although the Bank of England will be consulted on whether any proposed change would be “materially detrimental” to bondholders. The final decision would then be down to Chancellor George Osborne.

Benefits from a change to the RPI measure would include a reduction in government borrowing costs of around GBP3bn next year and up to GBP6bn in 2016, helping to lower the budget deficit.

The change could also reduce pension scheme deficits and prices linked to RPI, such as wage settlements, train fares, water bills and taxes on beer and cigarettes, the Telegraph reported.

Following the consultation period the ONS plans to publish its recommendations in January, and any change would be introduced with the annual update of the RPI when it is published in March.

It is an unfortunate fact that many pension schemes are forced to wind up as a result of underfunding, company mergers, or other factors.  Understandably, a failed or winding up pension scheme can generate huge amounts of uncertainty and resentment on the part of contributing members.

Trustees should be aware of the strategies available for taking a pension through the wind up process. There are ways to shield a fund from a worst case scenario via application to dedicated government compensations funds. These funds include the Pension Protection Fund (PPF) and the Financial Assistance Scheme (FAS – managed by the board of the PPF) – both aim to protect some or even all of members’ payments to a wound up pension plan.

Applying for compensation

Both the PPF and the FAS involve detailed application processes. A consequence of a fragile economy and an uncertain financial climate, is an increasing frequency of failed pension schemes – which, in turn, adds pressure to those funds put in place to compensate affected members. Given the demands on the PPF and the FAS, entry into the schemes is strictly controlled. Successful entry into the PPF and the FAS requires a period of assessment, during which time a candidate pension scheme will be examined closely.

The PPF and FAS assessment periods can be expedited by appointing the right kind of trustee to  oversee the wind up process. While it is possible to appoint lay-persons to the role of trustee, such as family members or close friends, to ensure that the assessment process has the best chance of success, appointing a professional trustee, with years of financial experience and expertise, is often the best choice – especially in the case of large trusts, such as pension schemes. Financial organisations who offer the services of professional trustees represent the chance to deal with the specific needs of individual cases. Their rosters of PPF and FAS specialists include lawyers, actuaries and accountants, who will be able to conduct valuations, recognize problems and otherwise guide a pension scheme safely and efficiently through the application process.

Finding the right trustee helps everyone…

A well-handled pension wind up is in everyone’s interests – so it is beneficial to put the personnel in place to do that. Navigating those potential pitfalls means inspiring confidence not only in a scheme’s beneficiaries but in a wider sense – encouraging others to make contributions to pension plans and promoting good financial practice.

House prices in the UK have continued to stretch further away from the reach of millions of workers, a new study confirmed today.

Research from the National Housing Federation shows that house prices have risen three times as much as average incomes over the last ten years.

In 2001 the average price of a home stood at GBP121,769 and the average salary was GBP16,557. A decade later the price of a home had shot up 94% to GBP236,518, while wages rose just 29% to GBP21,330. The result is that buying a home has become increasingly unaffordable for many people.

To make matters worse, saving for a mortgage has become harder as the amount of deposit needed to get a mortgage has risen by 386%. In 2001 the deposit for a typical 90% mortgage was GBP12,177, corresponding to about nine months’ salary. By 2011, after the financial crisis, banks were generally less willing to lend 90% of the price and the the deposit needed for a typical 75% mortgage had ballooned to GBP59,129, almost three years’ salary.

At the same time the cost of renting has increased, a letting group said today. LSL Property Services plc, which owns a letting agent network that includes national chains Your Move and Reeds Rains, reported that the average rent paid by private tenants in England and Wales had reached a new record high of GBP725 a month in July.

Average rents rose by 1% compared to June and were 2.9% higher than a year ago, fuelled by strong demand for rented accommodation due to the growing number of people unable to get a mortgage.

Housing charity Shelter has called for government action to increase house building in order to address the housing crisis, after official figures released yesterday revealed a 24% decrease in the number of new homes started. Only 21,540 new homes were started by builders in the three months to June 2012, down 24% from the same period a year ago and a 10% decrease from the first three months of the year.

Shelter’s chief executive Campbell Robb said: “With a flatlining construction sector, building significant numbers of new, genuinely affordable homes would create jobs and stimulate the economy. More importantly, it would send a clear message to the millions of people priced out of homeownership or struggling with high housing costs that the government is on their side.”

Two out of three UK employers intend seeking specialist outside auto-enrolment advice, says The Pensions Regulator – a figure which represent nothing less than a golden opportunity for the professional pension trustee and other pension industry experts.

By now, more than 100,000 independent financial advisers, accountants and HR professionals should have been contacted by the regulator advising them of their role in workplace pensions reform.

The mass communications strategy was launched in March of this year in a bid to raise awareness among advisers who, according to the regulator, are crucial to the success of workplace pensions reform.

The hope is advisers will help raise awareness of changes in the law and of the need of every employer to act.

A survey by the regulator found two-thirds of employers intended to take specialist external auto-enrolment advice, with the majority opting to approach accountants or IFAs. Nearly 70% of HR professionals surveyed plan to give advice to employers or had already done so.

Charles Counsell, executive director for employer compliance, said at the launch of the strategy the regulator expected to send around 100,000 letters and over 30,000 targeted emails to IFAs, accountants and HR professionals.

These would act as a reminder of the new employer duties and the crucial role that these advisers would play as employer clients approached their staging dates.

Mr Counsell said, “So far, we’ve issued over 200,000 letters and emails to advisers, industry bodies and individual employers, and we’ll keep utilising direct communications where we feel the need is greatest. This is about making compliance as easy as possible for employers, and the first part of that is making sure that they understand their duties and are able to get help from those around them.”

The regulator intends writing to every employer at least twice as their staging date approaches, and has educational materials available on its website for anyone interested in auto-enrolment – from pension consultants and large employers, to small businesses and their advisers.

Between October 2012 and April 2017, employers will be required under the reforms to automatically enrol all of their ‘eligible jobholders’ into a qualifying pension scheme. They’ll also have to make contributions towards the scheme.

An eligible jobholder is a worker who is aged between 22 and state retirement age, ordinarily works in the UK, and earns more than the minimum earnings threshold.

According to government figures, an estimated 9-10 million people will be eligible for automatic enrolment into a qualifying workplace pension scheme. Estimates also suggested that 2-4 million individuals would opt out of automatic enrolment.

Levels of participation and opt-out are difficult to predict, says the government.

Survey results published by the National Association of Pension Funds (NAPF) in October 2011 indicated that 27% of people thought it unlikely they would remain in auto-enrolment schemes, while 57% said it was likely and 16% were unsure.

The NAPF suggested that a proportion of the “unsure” respondents might also opt out, and they concluded that overall one in three workers – around three million people – might opt out.

Of those who told the NAPF survey they would opt out, nearly 48% said they could not afford the contributions, 29% said they did not trust the government and 26% said they did not trust the pensions industry.

Photo courtesy of 401k via Flickr.