7. As of April 2010, the maximum combined pension fund of any one person must not exceed £1.8 million
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9. Present rules allow a Pensioner to draw down on their pension at 120% of GAD up to age 75.
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12. For a UK Income tax payer, 20% will be automatically added to any contribution and a further 20% can be reclaimed by higher rate tax payers on their annual tax return.
13. Income drawn from a pension either through an annuity or from a draw down will attract an income tax charge.
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18. Since the year 2000, pension fund managers have been required to hold a minimum of 40% of their assets in UK Government Bonds.
19. While this has been a massive boost for the Treasury giving the government a large captive market to borrow from, it has reduced returns in pensions funds dramatically.
28. The pension funds paid by both the employee and employer belong to the employer and the employer is entitled to use any surplus in the fund for its own use.
29. The employer is also responsible for making up any shortfall in the fund. However with a rapidly ageing population and relatively poor investment performance over the past decade, most final salary schemes have unsustainable shortfalls.
30. For example, British Airways pension shortfall is larger than the entire stock market value of the company.
31. In the event that the employer becomes bankrupt the pension fund may collapse. In this event the Pension Protection Fund will step in. The maximum compensation for pensioners is 90% and up to a maximum cap of £30,856.
32. The Pension Protection fund is not government funded and relies on other final salary pension schemes paying a levy to bail out the insolvent scheme.
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34. For anyone retiring outside the UK then a QROPS should be considered. The funds can be paid gross and are free of UK income tax anywhere in the world. Once you are outside the UK for 5 years the funds are removed from Inheritance Tax.
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36. Many of these schemes offer to give you access to 100% of your money instantly.
37. This is a violation of the pension transfer conditions laid out by HMRC. If the UK revenue discover this they will take the funds back and deduct a 55% tax from the fund.
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