Money News

BOOST YOUR PENSION
More people are boosting their pension when they retire by telling the pension provider about ill-health or negative lifestyle factors such as smoking. If you declare those things before you buy your pension then it should be higher. In the last year a record amount of pension money went into these enhanced annuities. About a third of all those who used their penson pot to buy an annuity from a different provider – the so-called ‘open-market option’ – bought one which was boosted by health or lifestyle circumstances. However a majority of people still fail to use the open market and will normally not get these enhancements.

The difference can be significant. People who smoke get about 7% a year more. High blood pressure, obesity, and diabetes can add double that to a pensoin. And anyone with heart disease or cancer will get an even bigger enhancement. Once the higher rate is paid it lasts for life. So those who beat the odds and live to an old age will do very well.

The downside to this trend is that the more people who claim higher annuities the lower the pensions paid to the healthy remainder. In the past risk was ‘pooled’. In other words we all got a pension based on the average life expectancy. Those who lived a short time paid for those who lived a long time to get more money. But once the high risk people are taken out of the pool – and given enhanced rates – there is inevitably less left for the rest.

DIGITAL INHERITANCE
You may have decided who will get your house, your money, your pension, or your collection of jelly moulds. But who gets the right to your Facebook page, your twitter address, or your website? Lawyers are beginning to grapple with these new problems. And one firm Thomas Eggar has produced standard clauses to put in wills to ensure that individuals can transfer authority over these items to their heirs. Otherwise they may simply disappear forever after a period of inactivity. Remember copyright in your photographs, writing, and emails lasts for 70 years after you die. So when you come to write your will make sure your solicitor puts clauses in to preserve and protect them.

Passwords may also cause problems. There is no need to worry about your bank and credit card accounts – once you have gone your executors will get access to those in the normal way. But how will anyone access your computer files or your online accounts if they are locked securely behind a password that only you know? Some computers cannot even be started up without a password. On the other hand if you write your password down there is always the chance it will be stolen while you are alive. So you should put all your passwords into a letter and keep it with your will lodged in a sealed envelope labelled simply ‘to be opened on my death’ with a solicitor. But do not forget to keep it up to date. And tell your heirs where this information is! 

STATE PENSION AGE TABLES
The pension age for women is rising so here is a cut out and keep table to show when you will reach the age you can claim your state pension.

Men still reach state pension age on their 65^th birthday. But the age they become entitled to pension credit, higher council tax benefit, and free bus travel – all of which used to be – is now the same as their pension age would be if they were a woman. So their entitlement begins on the dates shown. The Government is planning to raise pension age still further and we wil keep you up to date in Saga.

NINO ninnies
Although the Government has scrapped ID cards, our National Insurance number is becoming ever more important as our own personal and unique identifier. When you reach pension age the Department for Work and Pensions uses it to identify the payments it makes into your bank account. Saga reader Tom from Wales complained that his bank prints his NI number – and that of his wife Val – by their state pension payment every week. So anyone who gets their hands on the bank statement would know their full names, their address, their bank account details and their NI numbers. He thinks that is a security risk.

I tend to agree. The DWP says that the NI number is never used as proof of someone’s identity and so the risk is small. In fact it uses a much longer identifier for pension payments half of which is the full NI ‘number’ of nine letters and digits. A spokeswoman added “how much of it appears on the customer’s statement is the responsibility of the bank.” So I asked the British Banker’s Association why banks are so careful about only using the last four digits of a credit or debit card number but all of them put the NI number on the statement in full.

Meanwhile it is as well to shred all bank statements before putting them in the recycling.

MORE INFORMATION

State pension age: direct.gov.uk and put ‘state pension age’ in the search box.
Digital Legacy: www.thomaseggar.com and search for ‘digital legacy’.

e-mail Paul Lewis on paul@paullewis.co.uk