News

The latest edition of Pensions News is being issued to all our members and should be delivered in early December.

Please note that the newsletter, and other documents containing member-related information, can now be found in a secure, members only area of the website. To access the information in the members only area, you will need a password. Members can access this document by entering their password at our members’ page – please click here. If you are a Plan member and you do not have a password, you can call 0141 207 6800, or email pensions.services@coats.com. You will need to give your Plan member number (or NI number) and date of birth.

This edition of Pensions News refers to the pension increase – if you’d like to know more about the increase, please click here. As above, you will need the password to access this page.

If you are still receiving your copy of Pensions News by post, please remember that you can save the Plan money – and access Pensions News earlier – by choosing to receive future editions of Pensions News and other general correspondence electronically. Simply click here to subscribe to electronic communications. If you have already subscribed, thank you.

The summer Budget contained a few measures that our members might like to know about.

Annual Allowance (AA)
From April 2016, the AA – the limit on defined contributions (DC) contributions you can pay in a year, or your defined benefit (DB) pension can grow in a year, before being subject to tax – will be reducing for those with incomes over £150,000 a year. As ever, the rules surrounding this are complex and you can find out more about this from the BBC news website by clicking here.

Lifetime Allowance (LTA)
Although already signposted in the March 2015 Budget, it was confirmed that the LTA will be reduced to £1m from April 2016. It will increase each year in line with the Consumer Prices Index (CPI) from 2018.

Tax relief on pensions
The Government are launching a consultation to review whether the current taxation treatment of pension saving is both understood and suitable. We will update you on this when more information is available. This is expected to be early next year.

Personal Taxation Allowance
This is increasing to £11K from April 2016 for everyone, which means that older pensioners will see an increase to their frozen personal allowance for the first time in years.

We will keep you informed of any further changes.

The latest edition of Pensions News is being issued to all our members and should be delivered in early June.

Please note that the newsletter, and other documents containing member-related information, can now be found in a secure, members only area of the website. To access the information in the members only area, you will need a password. Members can access this document by entering their password at our members’ page – please click here. If you are a Plan member and you do not have a password, you can call 0141 207 6800, or email pensions.services@coats.com. You will need to give your Plan member number (or NI number) and date of birth.

If you are still receiving your copy of Pensions News by post, please remember that you can save the Plan money by choosing to receive future editions of Pensions News and other general correspondence electronically. If you have already given us your email address, thank you.

With effect from April 2015, major changes apply to individuals with defined contribution (DC) pension pots.

As the Coats Pension Plan is a defined benefit (DB) scheme, our members do not have a pension pot and instead, accrue benefits based on service and salary. The changes have less impact on schemes like the Plan.

However, many unscrupulous companies see these changes as an opportunity to con people out of their pensions, regardless of whether they have a pension pot.

So-called “Pension Liberation” companies are contacting individuals – by phone, email and even in person – under the guise of these changes, saying, ‘the Government is encouraging you to review your pension – we can do that for you’, offering a ‘pension loan’ or immediate access to cash. They entice pension savers by claiming to help them access their pension before age 55, suggesting that more than 25% can be paid free of tax, or offering “unique investment opportunities” which are often overseas. What they’re actually doing is encouraging people to transfer into another – usually bogus – pension scheme, causing victims to lose most, if not all, of their pension.

Also known as “Pension Scams” and “Pension Fraud”, you can probably tell that these schemes are dishonest. So why would anyone get involved?

Well, firstly, those businesses who offer to “unlock your pension” can be very convincing. They will insist that they are legitimate, professional, qualified pension advisers. It’s all lies.

Secondly, for people with financial worries, accessing the cash locked up in their pension to pay off debts, etc, seems like a solution to their money problems. It’s not. Pension scheme members who agree to transfer may lose all their savings and may still be subject to tax charges of over half their transfer value for taking an ‘unauthorised payment’.

This means that instead of clearing off their debts, they end up even further in the red.

Finally, the lack of clear information about the changes has been used by these crooked companies as a smokescreen. It’s understandable that people outside of the pensions industry (and even some of those in it!) are confused about the changes, and vulnerable to scammers.

The cost of these scams isn’t fully known – many people are too embarrassed to admit that they have been conned in this way. So far, the official estimate is that victims have lost as much as £500m, however some experts believe that the true cost is closer to £1bn.

Unless there are exceptional circumstances, anyone under 55 attempting to access their pension early will face a tax charge of at least 55%, with additional fines if they fail to report it to HMRC. Only in rare cases – like terminal illness – can pension scheme members take their pension before age 55.

We will continue to do our utmost to safeguard our members’ interests. We scrutinise all transfer requests in a bid to spot these scam pension schemes, but you should also be wary of these scammers and protect your hard-earned pension savings. The Financial Conduct Authority have produced a guide to spotting and avoiding scams – for more information, please go to: www.fca.org.uk/consumers/scams/how-to-avoid-scams

The 2015 Budget has been announced and while it contained fewer surprises for the pensions industry than last year’s, there are still a few changes that could affect some of our members.

From 6 April 2016, the lifetime allowance (LTA) will reduce to £1m. It is proposed that it will increase annually in line with the Consumer Prices Index (CPI) from April 2018, though it is not yet clear what happens if CPI is negative. Depending on your circumstances, this may have an impact on any pension benefits due to you which are not already in payment. To help those who have already made pension saving decisions based on the previous LTA limit, transitional protection will be introduced for those with pension benefits in excess of the reduced LTA. We will update you when we have more details.

Personal tax allowance is increasing to £10,600 from 6 April 2015. It is expected to further increase to £10,800 from 6 April 2016 and £11,000 from 6 April 2017.

One point to note is that although the current Government has announced these changes, they will be subject to review in the event of a new Government forming after the May election.

There will be more information about the 2015 Budget when the detail becomes clearer, and Pensions News 34 – due to be issued by late Spring/early Summer – will update you further.