The state second pension

Changes to the state second pension, or S2P, the government’s earnings-linked top-up pension, were announced in May. Under the proposals, the S2P will evolve into a flat-rate benefit.

The Pension Protection Fund

The Pension Protection Fund (PPF), which provides a cushion for members of final salary pensions when their employer goes under, recently published its first annual report detailing how many pension scheme members it had provided protection for in its first full year of operations and how the organisation has managed its funding.

Unsecured pensions

Income drawdown plans, or unsecured pensions as they are now known, have been popular in recent years as rates on annuities have fallen, hitting retirement incomes.

Alternatively Secured Pensions

In April this year, when the new A-day pensions regime came into force, one of the most anticipated changes by many investors was the introduction of the Alternatively Secured Pension. With one fell swoop, one of the most disliked elements of the old pensions regime – the requirement to purchase an annuity with your pension fund – was removed.

Defined contribution pensions

A defined contribution, or DC, scheme takes contributions from the employer and employee and invests them over the long term to build up a pot of money to fund the employee’s retirement.

Pension funding statements

Members of occupational pension schemes are being sent statements that explain the funding position of their schemes. Many will be shocked to see that the funding looks very low.

Self-invested personal pensions

Self-invested personal pensions, or Sipps, were expected to become very popular when the new A-Day pensions regime goes live in April next year. This was to have given investors the opportunity to invest in a wide range of alternative assets from residential property and expensive wine to vintage cars.

Pension rights

Millions of workers have been affected by changes to their pension schemes which have largely resulted in less generous terms for most. Until recently, scheme members had no say in these decisions. However a recent, but little publicised, change in the law means private sector workers can now have a say over significant changes to their schemes.

Annuities

An annuity is purchased with a lump sum and pays a regular income for the rest of your life, although shorter “term” annuities are also available. Normally annuities are purchased by pension pots. Annuities can be traced back to the Roman era when “annua” promised a stream of payments for a fixed period of time, or for life, in return for a single premium payment. Modern annuities offer investors a choice of income levels, benefits and how much risk they want to take with their savings.

Final salary schemes