Money News February 2013

GAD ABOUT TURN
The Government is going to reverse one of the restrictions it imposed last April on how much we can take out of our pension pots. After the age of 55 you can put your pension fund into what is called a ‘drawdown’ plan. That lets you take money from your pension pot and spend it without using the whole pot to buy an income for life – an annuity. Normally there are restrictions on how much you can take out. Step one is to work out roughly what a fit person of your age could get from a flat guaranteed annuity. That is done using a set of tables drawn up month by the Government Actuary’s Department – hence their name ‘GAD rates’. As the value of annuities has fallen, those rates have fallen too. Step two is to multiply that amount by a percentage. Until April 2011 that was set at 120%. In other words you could take out about 20% more than you might get from an annuity. But last April the Government cut the percentage to 100%. With falling annuity rates and the cut to 100% many people found the amount they could drawdown cut in half. Now the Government has decided to move the percentage back to 120% which will go some way to relieve the problem. Advisers are hoping for a start date of April 2013 for the new rate.

Some people are not bound by these rules. If you have guaranteed pensions already which total £20,000 or more you can take whatever you like from your pension fund – though what you take out will of course be taxed as income. The state pension, any pension from a former employer, and any guaranteed annuity can all count towards achieving the £20,000. It is called ‘flexible drawdown’ and you will need to set up a plan to take advantage of it. Find a good independent financial adviser and ask their advice. You can find a local specialist through www.unbiased.co.uk  

PASSPORT TO LOSS
Derek wrote to me with what he thought was a ‘government scam’. He and his wife both renewed their passport. He went online to what seemed like a Government website and paid £24. He entered his details online and a week later he was sent a printed application form with his details filled in which he then had to sign and send to the Passport office together with the standard fee of £72.50 so his total cost was £96.50. His wife, meanwhile, went to the Post Office and collected the free forms, filled them in with a black biro and sent them off with the standard passport fee. Total cost £72.50. “Please warn others” Derek wrote “what a waste of money this is.”

In fact the website Derek found was not a Government website at all. It is just one of many that try to get money from us for things that are free – making a driving test appointment, renewing our European health card EHIC, getting a passport, or applying for a visa. Searching online for any of these things will pull up a lot of fake sites that have official sounding names but in fact simply to charge you a fee for something you could do yourself free. When challenged they usually say they ‘check’ the form to see if it is filled in correctly and tell you exactly where to send it. But it is not worth the money. When you search online make sure you get the genuine legitimate site not one masquerading as it.

More information: For all UK government services start at www.gov.uk and search for what you want.

GATHERING WINTER FUEL PAYMENT
If you were born on 5 July 1951 or earlier you are entitled to a tax-free winter fuel payment for this winter of between £100 and £300. But if you are still working and do not claim any benefits or pension the Department for Work and Pensions may not have a record of you or your current address. In that case you will have to claim your money. If you have not received it by now you should claim at once – and don’t delay because you must do it before 31 March. Next winter’s qualifying birthdate is 5 January 1952 or earlier.

More information: 08459 15 15 15 or www.gov.uk/winter-fuel-payment

LAND FRAUDSTERS JAILED
Two men have been jailed for six and seven years for defrauding more than 300 people out of a total of £3 million in a land scam. They sold people house-sized plots in rural fields on the promise they were in prime locations for development and that the plots could be sold for a big profit later. It was a lie. Some of the £10,000 plots were on a steep hill, others in a designated Area of Outstanding Natural Beauty. Two elderly people were conned out of more than £300,000 each. Omar Eshpari aged 33 was jailed for seven years and 42 year old Stefan Mitchell for six. Their convictions are the first for these so-called ‘landbanking’ frauds. But thousands of other people have been conned out of tens of millions of pounds in similar schemes with no-one else punished. The judge who sentenced Mitchell and Esphari expressed his frustration with the Government and called on it “to look with some urgency at regulating these sorts of businesses.”

A few days later the Financial Services Authority expressed its concerns about another ‘investment’ which could lose you a lot of money – carbon credits. It says “an increasing number of firms are using dubious, high-pressure sales tactics and targeting vulnerable consumers.” Carbon credits do exist and are traded. But they are not for amateurs who know nothing about the business.

Fraud is a huge and growing business and older people who may have a large lump sum for the first time through redundancy or an inheritance are especially vulnerable to these crooks. Even if they are caught and jailed there is often little left to return to their victims.

More information: www.fsa.gov.uk/consumerinformation/scamsandswindles www.cityoflondon.police.uk

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