This is the pension gained as a result of salaried employment
and generally referred to as an occupational pension scheme.
Occupational pensions are governed by the Occupational Pensions
Regulatory Authority (OPRA) and must comply with certain regulations
to benefit from the tax incentives.
The scheme contributions are calculated as a percentage of a
member's basic salary with the maximum contribution being 15.0%.
An occupational pension scheme can be operated as a final
salary pension with a pension related to the schemes accrual
rate and member's earnings at retirement
age or operated as a money purchase scheme with the pension
income linked to the fund value, this being dependent upon the contributions made and investment return.
At retirement the individual can use a money purchase fund to buy an annuity and has the option to use an open market option to search for the highest pension annuity. Once you have purchased an annuity it cannot be changed, so learn more about annuities, compare annuity rates and before making a decision at retirement, secure a personalised pension annuities quote offering guaranteed rates.
Pensions Advisory Services
In the event of an internal dispute between the former scheme
member and the scheme trustees involving the payment or calculation
of a transfer
value (which should have been resolved satisfactorily at
the time of transfer) the transferred out scheme member can
have recourse to the services of the Occupational Pensions Advisory
Service (OPAS). The former scheme member could also approach
Ombudsman that performs a similar role.
Pensions Regulatory Authority
When the Occupational Pensions Board was disbanded on 6 April
1997, the Occupational Pensions Regulatory Authority (OPRA)
took on some of its functions. OPRA are funded by a levy on
pension schemes generally. Their role is to enforce the law
applicable to occupational pension schemes and have wide powers
for this purpose. This includes the power to wind up pension
schemes and suspend, disqualify or remove scheme
OPRA will also ensure schemes adhere to the minimum funding
the introduction of member nominated Trustees, contribution
schedules, the audit of scheme accounts and presentation requirements.
All occupational schemes are regulated by OPRA but schemes with
only one member are exempt from paying the general levy, such
as Executive Pension Plans.
of Fair Trading
The director general of the Office of Fair Trading (OFT) has
extensive responsibilities covering consumer protection and
The OFT aims to maximise consumer welfare by; protecting consumers
by preventing abuse; empowering consumers by giving them access
to information and redress; and promoting competitive and responsible
supply. The OFT aims to promote competition and create efficient
working of markets for goods and services by; removing or limiting
restrictions on the competitive process; and improving the effectiveness
of competition law. This will enable consumers to buy goods
and services they want at the best possible price.
The director general of the office of Fair Trading is responsible
under section 122 of the Financial Services Act 1986 to review
the rules and practices of the financial services industry.
As a result of the director generals report to the treasury,
Services Authority (FSA) has liberalised polarisation and
the government has introduced the Financial Services and Markets
Act 2000 (FSMA) to
replace and update the Financial Services Act 1986.
for National Statistics
Produced from the Office for National Statistics (ONS) are national
statistics outputs which ministers have decided should come
within the scope of the new arrangements, and which have been
produced to high professional standards set out in a code of
practice, and have been put together free from political interference.
The ONS are responsible for a vast amount of UK statistics and
information on statistics as well as publications covering thirteen
themes such as commerce, economy, social and welfare, population,
transport, education and many more. For example, the economy
theme contains articles on economic trends for national accounts
like the retail
price index (RPI) or gross domestic product (GDP).
The ONS uses geography as one of the key variables in the collecting,
processing, storing and aggregating of almost all the surveys
completed. To produce the various articles and publications
the ONS will work with other organizations such as the Government
Actuary's Department (GAD), Department of Works and Pensions
(DWP) or the Lord Chancellor's department and may others.
For matrimonial lawyers in England and Wales the most appropriate
solution for the division of the matrimonial
assets and financial matters such as the members pension
rights of any retirement benefits has been offsetting. The couples
on divorce that can come to an out-of-court settlement will usually use
offsetting of the pension fund value against other matrimonial
assets such as the family home.
Despite introducing earmarking of pension arrangements in the Pensions Act 1995 with insertions
of sections 25B to 25D of the Matrimonial Causes Act 1973 (MCA
73) offsetting has still been the preferred method of resolution
as it achieves a clean
break between the parties. However, for wealthier and older
couples the retirement benefits could be more substantial than
other matrimonial assets making offsetting impossible where
the objective is an equal split of the assets as is stated should
be the starting point in the case White v White (2000).
Introduced from 1 December 2000 by the Welfare Reform and Pensions
Act 1999 (WRPA) pension
sharing also achieves a clean break for the couple on divorce
but will give the former spouse the opportunity to secure a
percentage against the members
pension rights. This would be charged as a pension debit
against the member and paid as a pension
credit to the former spouse that will have the choice of
an internal transfer if permitted by the scheme trustees or
as an external
transfer to a provider of choice.
The attraction of an open annuity is that for those with larger
pension funds of £250,000 or more, that are not wholly
dependent on this money for their income at retirement, can
establish an open annuity where part of the residual pension
fund can be passed to the beneficiaries, even if the annuitant
is 75 years or older.
Unlike a conventional annuity such as a pension
annuity or purchased
life annuity where the funds are pooled and the underlying
assets are invested in gilt-edged securities, an open annuity
is operated within protected cells creating a non-pooling annuity.
This means that if any deficits occur these are limited to the
funds in each protected cell and any surplus will increase the
value of the cell.
The open annuity can be invested in equities or fixed interest
securities to reflect the risk the annuitant is willing to take
although the options are more restricted than those under pension
drawdown. The amount of income payable is not fixed and
will vary relative to the value of the fund and this income
will be subject to PAYE taxation. It is also possible to have
pension to provide for a spouse and on the death of the
annuitant the beneficiary will receive the residual fund within
the protected cell.
Introduced in the Finance Act 1978, the open market option allows
the member to transfer their pension
fund from one life assurance company to another to achieve
a higher annuity rate. The member must exercise an open market
option before any benefits are drawn from the existing Life
Assurance company in the form of an income or lump sum.
Subsequent to exercising an open market option the member must
apply the funds to a pension
annuity (or compulsory purchase annuity). This does not
have to be a conventional (standard) annuity where the income
and escalation is fixed as it is also possible where the annuitant
is prepared to take some risk to purchase a with
profits annuity. Here the annuitant could benefit from increasing
bonuses declared in the future by the life company.
Although every person retiring with a private
pension scheme has the right to source pension annuities other than from their existing provider , over 2/3rds still do not
shop around to find the best annuity, yet many could receive
extra income by up to 30%, worth thousands of pounds every year
for the rest of their lives, simply by asking.
The individual that needs the maximum income should take their tax free lump
sum and buy a purchase
life annuity. The open market option can also apply to this
lump sum at securing the best annuity income and the purchase
life annuity also offers advantageous annuity
It is important that if an individual is in any doubt when taking
the open market option route, they must seek an annuity and
pension company offering specialist
advice from an independent financial adviser (IFA). Once you have purchased an annuity it cannot be changed, so learn more about annuities, compare annuity rates and before making a decision at retirement, secure a personalised annuity quote offering guaranteed rates.