personal financial planning
Personal Financial Planning Re-sit assignment – Semester 5 2008/09 Name: XUEBIN LU ID: C06351245 Question 1 Discuss to what extent the Pension Simplification remedies the shortcomings identified with pension provision in the UK. There is no doubt that for individuals commencing pension provision for the first time after 6 April 2006 the rules will be far simpler and far more transparent. However, for those individuals with existing provision as at 6 April 2006,, the desire of the pensions industry to ensure that individuals are not disadvantaged has made things far from simple for many. The need for analysis of these individuals’ current arrangements and subsequent advice has been, and continues to be paramount. Secured Income Scheme pensions Such pensions can be paid either out of the scheme’s own resources or be secured with insurance companies: they cannot however decrease in payment to the member, except in very limited circumstances. A guaranteed period of up to ten years ‘value protection’ may be applied to the scheme pension. Alternatively secured pension (from age 75 only) – ASP This option provides an alternative to individuals who have reached the age of 75 and do not wish to purchase an annuity. In practice it is similar to income drawdown but the income limits that apply are different: Minimum – 55% of the amount established from tables published by the Government Actuary’s Department. Maximum – 90% of the amount established from tables published by the government Actuary’s Department. On death, the value of the plan must be used to provide income for the individual’s spouse or dependants.