Questions & answers
1. I am not sure what my pension number is. Where can I find it?This eight-digit number can be found on your annual benefit statement. Don’t worry if you can’t lay your hands on it we should still be able to trace your records by a combination of your name, national insurance number and date of birth.
2. I have a couple of pensions from previous jobs; one is a company pension and the other is a personal pension with an insurance company. Can I transfer pensions from other providers to the company pension scheme?
No. The trustees are not accepting transfers into the scheme. You are therefore unable to transfer to
the scheme any benefit you have with another pension scheme
3. Can I invest in more than one pension arrangement at the same time? Yes, you can invest in any number of pension arrangements you wish, subject to the annual allowance.
4. I want to make sure that I have enough money to live on when I retire. Can I pay extra to the scheme? Yes. You can pay additional voluntary contributions, known as AVCs, of up to 15% of your total earnings in any one-tax year (less your contribution to the main scheme). Check out the AVC area for details on how to pay.
Alternatively, you may contribute more to a pension arrangement outside of DMGT if you wish. It is always best to speak to an Independent Financial Adviser www.unbiased.co.uk if you are considering this option.
5. I am close to retirement age, is it worth starting/increasing AVCs to give me a bigger pension when I retire? The sooner you start saving, the bigger the pension you will get from your AVCs. So, if you haven’t already started paying AVCs there won’t be sufficient time for you to build up a significant amount of pension. Similarly, if you are already paying AVCs but wish to increase them prior to retirement, the resulting pension will seem disproportionately small in comparison to the contribution paid.
However, if you are currently a higher rate taxpayer and predict you will not have any income in the higher tax bracket following retirement, it may be worth your while starting/increasing your AVCs to benefit from the higher rate of tax relief granted on your contributions.
Alternatively, it may be possible for you to use your AVC fund to take tax-free cash. If you are looking to take cash, this can be a cost effective way of increasing this benefit.
If in doubt it is always best to speak to an Independent Financial Adviser.
6. Am I allowed to stop paying contributions for a while with a view to recommencing them in a couple of months? No. You can’t stop paying contributions even if you know that you will at some point start paying them again.
You can however opt out of the pension scheme at any time by writing to the Company (with a copy to DMGT Pensions) at least six weeks before the effective date. Once opted out you can re-join at a later date but you will need to get the trustees’ agreement. You will also have to complete a medical questionnaire to show the trustees that you are in good health.
7. I really need some extra cash and have been offered the chance of cashing in my pension today. Should I take advantage of this opportunity?
No. Companies offering this service to pension scheme members often give misleading information about the true costs involved. Anyone tempted to cash in their pension could end up with a cash sum that is as little as 30% of the value of their pension fund. In addition your cash will be taxable.
8. I know that it is important to get financial advice in certain situations can I get this from DMGT Pensions or the trustees? No, we are unable to give you financial advice as we are not regulated to do so by the Financial Services Authority. We can however, provide you with information in other words we can tell what your options are but we can’t tell you what to do.
In some circumstances we may strongly recommend that you seek independent financial advice. You can find a local Independent Financial Adviser (IFA) through the website www.unbiased.co.uk
All IFAs will charge you either directly by fees or indirectly by taking commission. Before appointing an IFA it may be worth searching for websites offering ‘independent financial advice’ as a first step. You may well find a site that gives you some useful information.
9. I’m single and have a couple of close friends. Can I nominate them to receive my death benefits? Yes. You can nominate as many people as you want by completing an expression of wish form.
You don’t have to be related to your nominees and you can nominate a charity if you want. The main thing is to make sure that you have made a nomination or have kept your previous nomination up to date otherwise the taxman may end up benefiting!
10. I am thinking of retiring. Can I take my cash now and leave my pension in the scheme so that I can take it at a later date?
No. You can only take your cash and your pension at the same time.
11. Can I retire under the pension scheme and continue working for the company? Yes. If you choose this option, your employment will become non-pensionable, and you will be unable to continue to participate in the pension scheme. You will earn no more pension and will no longer be covered for death in service benefits.
You must take your pension and tax-free cash from the pension scheme at the same time.
12. My personal circumstances have recently changed. Can I opt out of the scheme at any time? Yes. You can opt out of the scheme at any time. You must give written notice to your payroll office (with a copy to DMGT Pensions at least six weeks before the effective date).
Because you will be giving up valuable benefits you will be asked to sign a form to say that you understand this. Your spouse/civil partner/adult dependant will be asked to sign the form too. You should be aware that contributions to the scheme will only stop once the form has been completed and returned by the stated deadline. If you opt out of the scheme you can rejoin at a later date, but only if the Trustees agree.
13. Can you explain how S2P works? On 6 April 2002, the State Earnings Related Pension (SERPS) was replaced by the State Second Pension (or S2P as it is known).
SERPS was reformed to provide a more generous additional State Pension for low and moderate earners, and certain carers and people with a long-term illness or disability. S2P gives those earning up to £30,000* a better pension than SERPS, with most help going to those on the lowest earnings (up to £13,000*).
If you are a member of a DMGT pension scheme you are contracted-out of S2P and pay a reduced rate of National Insurance contributions. If you are earning £30,000* or less you will get an S2P top-up which will be paid by the State at the same time as your basic State Pension.
*In 2007/2008 tax year terms.
14. Stock markets around the world always seem to move up and down very sharply. What happens if the stock markets in which our pension fund is invested all fall sharply, and how does this affect the benefit I am currently receiving?Stock markets around the world generally influence each other these days. For example if the US S&P Index falls sharply this will usually mean that other markets around the world will move in the same direction. However, this is not always the case and it makes sense therefore for the trustees to spread the assets across different stock markets around the world and within those markets to insure that investments are held in a wide variety of sectors. This process, known as diversifying the investments, is the first stage in protecting the assets.
Another important measure is to invest a proportion of the assets in sectors which are not affected by stock markets to the same extent, such as bonds and property; a proportion of the fund is always held in cash, a greater proportion in times of stock market uncertainty.
The final level of protection for your pension is achieved by the actuary whose calculations take account of the possibility that markets will fall sharply; this is allowed for in the costings. All these measures working together ensure that the pension fund is able to withstand sharp falls without impacting on the level of your pension.
15. I am thinking of investing in property - should I do this instead of making contributions to the pension scheme? You should think very carefully before using property investment as a substitute for pension scheme investment.
· The DMGT pension schemes are a sound investment choice because they are final salary in nature. This means that the company bears the investment risk and you are not directly exposed to stock market volatility.
· Pension schemes are a very tax efficient way of saving as you get the benefit of full tax relief on your contributions - the Treasury chips in £22 for every £78 paid into a pension by a lower-rate taxpayer.
· A direct investment in property, whether commercial or residential, will attract income tax on the rent and a capital gains charge of up to 40% on profits made from selling the property.
· Members of a DMGT pension scheme are contracted-out of the State scheme and pay a lower rate of National Insurance contributions. If you stopped making contributions your take home pay would reduce, although you would automatically be participating in the earnings related part of the State Pension.
· You would no longer be earning pension benefits and you would be giving up valuable protection for your family as you would no longer be covered for any death in service benefits (a cash sum, a dependant’s pension and children’s pensions).
· The Company pays the balance of the cost of providing your pension benefits, including administration - a valuable cost saving that is not available by investing in alternatives, like property.
In the view of many financial advisers, a conventional pension should remain the bedrock of most people’s retirement fund. However, if you have the capital and feel that it is a risk worth taking, you could consider investing in property as well as paying into a pension scheme.
16. I am a member of the Territorial Army. If I get called up will I still be covered for death in service and pension benefits? If you get called up you will receive a form about pensions when you receive your call up papers. You can either elect to remain a member of the DMGT pension scheme or join the Armed Forces’ Pension Scheme.
If you wish to continue membership of the DMGT pension scheme you must continue to pay your normal member contributions. You can either choose to pay these by direct debit/standing order or you can choose to have them deducted from your military salary.
You will continue to accrue pension benefits as if you were still at work and you will be covered for full death in service benefits.