News & Events

At Ease - pensioners' newsletter
Spring 2002

I am pleased to introduce the fourth issue of Avon Pension Fund’s newsletter produced especially for pensioners.

There are lots of interesting and informative articles in this issue, including:-

Other important items included are pension pay dates and the pension increase for the forthcoming financial year, some frequently asked questions and answers and a few interesting facts about Avon Pension Fund you might not be aware of.

As always, your feedback and views on ‘at ease’ are welcomed. Contact Melanie Clark using the freephone number, email her at Melanie_Clark@bathnes.gov.uk or write to her.

I hope you enjoy this issue.

Jean Hinks
Resources Director
Bath & North East Somerset Council

PENSIONS INCREASE

This year the annual increase to Public Service Pensions is effective from 8th April 2002 and is 1.7%. This amount is reduced proportionately for pensions commencing in the last 12 months. Pensions beginning on or after 24th March 2002 will not be increased until April 2003. Similarly, if you are aged under 55 and your pension was awarded on redundancy, you will not receive this increase; instead this and any earlier stored increases will be paid from your 55th birthday.

The increase is applied to the full pension in payment less any Guaranteed Minimum Pension (GMP) entitlement under the State Earnings Related Pension Scheme. Increases relating to the GMP will be paid by the DSS with your state pension.

How will I be taxed on my state retirement pension?

Tax will not be deducted from your state retirement pension before you receive it. If you have other income on which PAYE in operated, such as an occupational pension, your PAYE code will be adjusted to take account of your state retirement pension. This means that when you start to receive your state retirement pension, more tax will normally be deducted from your earnings or occupational pension.

The amount of state retirement pension on which you are taxed in any tax year is the amount you would have been paid had you chosen to receive your pension weekly. Although you may receive your pension monthly or quarterly, this does not affect the way the tax due on your pension is calculated.

There are two other points worth remembering about state retirement pensions:-

• For tax purposes, we treat a married woman’s state retirement pension as her income even if it is paid as a result of her husband’s contributions.

• A state retirement pension may include an extra amount, known as the ‘adult dependency addition’. For example, this could be paid where the pensioner’s husband has not reached the state pension age. We treat the adult dependency addition as part of the taxable income of the person to whom it is paid.

Do I have to pay income tax on interest from my savings?

It depends on the amount of your taxable income and the allowances you can claim.

Generally, banks, building societies and local authorities have to take tax at the rate of 20% off your interest before they pay it. If your total taxable income is covered by your tax allowances, you should not be paying any income tax. You can arrange for your bank, building society or local authority to pay your interest without tax taken off by completing a simple form – R85. This is called ‘registering’.

If you could have registered your bank, building society or local authority accounts, but have not done so, you can claim back the tax that has been overpaid.

If you are not eligible to register, because your taxable income is more than your tax allowances, but the tax taken off your interest is more than the tax you are due to pay, you can claim back the tax that has been overpaid.

The Inland Revenue website was the source used for this information. The website address is www.inlandrevenue.gov.uk or you can ring them on 01271 312600 for more information.

Back to top of page

Pension pay dates 2002 – 2003

MY HOW WE'VE CHANGED

The past is a foreign country... never has this been more true than in the last half century. When the radiantly beautiful 25-year old Elizabeth took up her queenly duties in 1952, Britain was the world’s second biggest economy, a manufacturing giant. Favourite baby names were Susan and David, the steam train reigned supreme and olive oil was something you purchased in a chemist’s shop rather than drizzled on a rocket salad.

In material terms, life is much easier now than it was fifty years ago. Today we can afford to spend more on luxuries than ever before. The spending power of the average household has, in real terms, doubled from the equivalent of £190 per week in the 1950s to £409 per week in 2000-01. The items chosen for the Retail Price Index’s ‘shopping basket’ in the 1950s and in 2000 make for an interesting comparison.

In 1950, a third of our spending went on food and non-alcoholic drink, compared with only one sixth in 2000-01. Today, the largest slice of our spending (about one fifth) goes on non-essential leisure goods and services such as holidays and DVDs.

In 1952, only 15 per cent of households had access to a car, compared with 73 per cent today. There were no motorways in Britain, we lived in the golden age of steam. Air travel was a luxury enjoyed by the privileged few.

The British seaside holiday

Most households could afford at most a single holiday a year and this would be taken in the UK, at holiday camps, hotels or guest houses at UK seaside resorts. Today, more holidays are taken abroad than within the UK. The growth in air travel reflects this. Outward and inbound trips made by air have risen nearly 100-fold from 1.5 million in 1952 to over 140 million in 2000.

The way we live now

Many more people are choosing to live alone. While in 1952 there were around 1.5 million single-person households, there are now seven million people living alone.

Marriage à la mode

Our population has risen by 20 per cent, but the number of marriages has dropped by a quarter in the last half century. And the annual number of divorces has risen about five-fold. In more than seven in ten first marriages, the partners have lived together before marrying – compared with an estimated one in 20 in the 1950s. And four in ten babies are now born outside marriage, compared with about one in 20 half a century ago.

No more smog

In case we’re tempted into nostalgia for the passing of an age, let’s not forget that 1952 was also the year of the great ‘pea souper’ smog, which caused over four thousand deaths in London. Clean air legislation and the reduction in coal burning means that urban air quality is much better today.

Did you know?

Elizabeth II will be Britain’s fourth longest serving monarch on 21 June this year, a few weeks after she celebrates her Golden Jubilee on 3 June. She has presided over ten prime ministers. In an age that has encompassed Winston Churchill and Tony Blair, Queen Elizabeth has provided a rare note of constancy.

Back to top of page

WHY DO WE SAY THAT?

Gordon Bennet

James Gordon Bennet II (1841-1918) was a colourful character whose exploits included flying a plane through an open barn. Onlookers would shout "That was Gordon Bennet!"

No room to swing a cat

The ‘cat’ refers to the flail-like whip or cat o’ nine tails once used to punish sailors in the British Navy.

Bog standard

First recorded in the early 1980s, this expression is thought to come from a mispronunciation of ‘box standard’ meaning the basic article coming straight from the box.

Bob’s your uncle

Thought to refer to when Arthur James Balfour was unexpectedly promoted to Chief Secretary for Ireland by his uncle Robert, Lord Salisbury in 1887.

White elephant

A holy animal that, if given as a gift, was likely to ruin the recipient because it required such high maintenance.

Flash in the pan 

Muskets used to have a small pan holding a gunpowder fuse – which sometimes flared up without firing.

WHAT YOU MUST NOW ABOUT LONG-TERM HEALTH CARE

Who said growing older would be easy? While none of us likes to think that we may have to spend our last years in a nursing home, the statistics show that one in three of us will. And it’s not cheap. What’s more, the rules and regulations surrounding the financing of long-term care are a minefield that requires careful navigation.

The good news that emerged from the recent Royal Commission is that government now will be making a contribution towards the cost of nursing care for everyone by April 2003. The less good news is that anyone with assets of £19,000 or more will still have to foot most of the care bills themselves. And with nursing home costs currently between £400 and £500 a week, these are no small sums of money.

If your assets are worth between £11,500 and £19,000 you will receive some local authority help with costs. If you have assets of £11,500 or below the local authority will usually pay most of the costs. You will not be asked to make any contribution from your capital but your income (including pension and social security benefits) will be taken into account. You can retain a ‘personal expenses allowance’ of £16.05 a week – the rest of your income goes towards the care bills.

Means test

Assets taken into account by the local authority include property, cash, bank and building society accounts and all other investments. Personal possessions are not included, unless there is suspicion that they have been bought recently as a way of reducing assets for the means test.

Would I need to sell my home?

Your home is not included in the means test if your spouse, or a dependant relative continues to live there. If the home is not occupied by another dependant relative then it is considered to be an asset – in this case it is still disregarded for the first 12 weeks of care.

Reducing your care bills

Some people are tempted to give away their home and other assets in order to reduce the bills for long term care. But this is usually inadvisable. There are things you can do, such as arranging ownership of the house as tenants in common rather than joint tenants, but it is vital to take independent professional advice from an adviser specialising in the financing of long term care before you make any such moves.

Other ways to pay for care

If your assets are well over the £19,000 mark and you don’t want care costs to deplete your wealth, you may wish to find other ways of paying for long-term care, in the event that you require it. You can take out an insurance plan, with a monthly premium, for an agreed level of cover. If you end up needing care, the plan pays out – if you don’t, it doesn’t. Or there are investment-linked care plans, which pay out both ways. If you don’t make a claim then a cash sum can be passed on to your heirs.

If you need the money for care now, then an option is equity release (from the value of your home). Some of the cash released from a property can be used to buy a care annuity designed to pay residential fees for the rest of your life.

There are many possible approaches to dealing with the possibility of providing for long term care – the solution will depend on your own particular attitudes towards your health and your wealth. But before you make any decisions about this important area it is highly recommended that you take independent, specialised financial advice.

Useful Contacts

Help the Aged – call free for advice on 0808 800 6565 or visit their website at www.helptheaged.org.uk

Age Concern – Call free on 0800 009966 to request their free factsheets on long term care or visit their website at www.ace.org.uk

The Care Funding Bureau provides a free guide to funding long-term care, just call 0845 603 1177 for a copy.

Back to top of page

IMPORTANT INFORMATION FOR PENSIONERS

If you are a pensioner, or will be one by next year, take note. After April 2003 all pensioners will need to have a bank account. After this date it will no longer be possible to draw pensions at the Post Office. In future, money will be paid by direct credit into a building society or bank account.

CAN YOU TAKE A RISK?

Much as we try to avoid it, risk is an inherent part of everything we do in life. Whether it’s eating a cream cake or getting behind the wheel of car – there’s a risk attached to most worthwhile activities. But our assessment of risk is not always logical. Risk theorists aim to strip away the emotion and understand the role risk plays in our everyday lives – with sometimes surprising results.

The word ‘risk’ comes from the Greek concept of ‘rhiza’, or sailing round a cliff or rocks. If you chose the shorter route and sailed close to the cliffs you were in danger of hitting submerged rocks. If you sailed a little further out to sea your danger was reduced, but the journey longer.

Sport, eating, transport, recreation, romance - our everyday activities all involve risk at some level, and we all have our own built-in risk strategy. If you’re a risk-seeker you opt for a higher level of risk to get the buzz you want from life. Risk-averse types prefer to limit their risk and accept fewer rewards. You only have to watch ‘Who Wants To Be a Millionaire’ on television to spot the risk seekers (who gamble most of their winnings on the high numbers to win a million) and the more risk averse (who prefer to pocket what they’ve got).

Not always logical

You’d be forgiven for thinking that travelling in a plane is the riskiest form of transport. But in fact you’re four times more likely to meet your death in a bus and over 30 times more likely to come a cropper in a car. So why do we feel more edgy about plane travel? First, plane crashes get far more media coverage than individual car accidents. Second – when you’re in a plane, you’re not in control, your life depends on someone else’s prowess in the pilot’s seat.

We tolerate high levels of risk when we’re playing sport. But then it’s worth it. According to a study published by the journal Sports Exercise Injury in 1999, Cricket is the third riskiest sport (130 players get injured out of every 100,000) after football and rugby respectively (200 and 440 out of every 100,000). Interestingly, motorsport, climbing and sailing all come further down the list.

The Munich taxicab experiment

Our understanding of the more remote kinds of risk can be fuzzy, but it can be surprisingly accurate when it comes to more direct risks such as the danger posed by driving a car. An experiment was carried out with a Munich taxicab company along these lines. Some of the cabs were fitted with ABS braking systems, others weren’t. Drivers weren’t told about this, and any driver might drive any vehicle on any particular day. Contrary to expectations, accident levels weren’t reduced. In fact, it was observed that those drivers with ABS brakes responded to the enhanced braking capability by driving more recklessly than they would normally.

Results like this lead many risk analysts to believe that we tend to stick with a level of risk that we feel happy with – known as the individual’s ‘target risk’. They argue that even when people are given the chance to reduce the risk in their life, if they are intrinsically risk-seekers, they will still choose to take risks. This tends to explain why international mortality statistics show that, despite all the improvements in safety engineering over recent years, the number of fatal accidents of all sorts remains roughly constant.

And, finally, if watching Crimewatch UK leaves you feeling vulnerable, it’s worth bearing in mind the following statistic: Of every 1,000 men who smoke cigarettes, one will be murdered, six will be killed on the road and 250 will be killed by tobacco related diseases.

THE CHANCE TO DO YOUR BIT

Great jobs! Salary £00K, no company car… lots of fun. The Experience Corps is looking for people aged between 50 and 65 to fill 30,000 positions throughout the UK.

The Experience Corps is a new organisation which recognises that 50 to 65s are a uniquely experienced group of people with a great deal to offer to charities, community groups and other local organisations. Whatever your skills and experience, be they in the office, the classroom, the gym, the nursery or the garden, there’s a niche for you. It could be helping to coach a swimming team, co-ordinating a high profile event or promoting your local area. Interested? Call their information line on 0800 10 60 80 to find out how you can be matched directly with ‘vacancies’ in your local area. The Experience Corps is an independent, non-profit making company, funded by a grant from the Home Office.

RETIREMENT PENSION

Angela Maxwell, State Benefits and Retirement Consultant, gives us an update on the new legislation and this year’s budget.

• The basic state pension has risen by £3 to £75.50 a week from 8th April 2002 for single pensioners and by £4.80 a week to £120.70 for couples.
• The winter fuel payment will be £200 in each year before the next election.
• Stamp duty was abolished from 30th November 2001 on all property sales up to £150,000 in the "poorest" areas. Estate agents will be able to tell you if you qualify.

Working after state pension age?

If you continue working after state pension age, there will be no deduction of national insurance contributions if your normal payday falls on or after your state pension birthday, even if the payment includes earnings for work done before.

Tax Matters

As we enter the new tax year, it would be a good idea to ensure that you are not due a tax refund on the interest earned by your savings for the last tax year. If, in the 2001-2002 tax year, you had taxable income, (i.e. income over and above the level of your tax-free allowances), of less than £1,880 which includes bank or building society interest, then you might be eligible. Interest on bank or building society accounts will normally have had 20% tax deducted at source before receipt. For the 2001/2002 tax year, tax payable on the first £1,880 of taxable income was only due at 10%. Ring the Inland Revenue for more help and information. To register to receive interest without tax being deducted, you must complete a form R85 which you get from your building society, bank or other savings institution.

When assessing whether you have reached the pensioners’ upper earnings limit above which the extra tax-free age allowance starts to reduce, it is only taxable income that will count. Income which is normally excluded from the calculation includes: premium bond and lottery winnings, income and/or interest from national savings certificates, investments held within individual savings accounts (ISAs), PEPs and TESSAs. These are all free of tax.

Department for Work and Pensions

All change from April 2002! The Department of Social Security has merged with the employment side of the Department for Education and Employment to form the new Department for Work and Pensions, (DWP). The Benefits Agency has ceased to exist and all work relating to pensions has become the responsibility of the new Pensions Service. A new service called Jobcentre Plus brings together the Employment Service which runs Jobcentres, and it will also combine those parts of the former Benefits Agency providing help to people of working age. Access to the new Pensions Service will be more straightforward as, instead of about 400 or so individual telephone lines to local offices, there will be far fewer, clearly signposted, national numbers. There will be an improved local service located in places where pensioners are likely to congregate, such as community centres. In addition, home visits in certain circumstances will be available. This new Pensions Service will be "phased in" between April 2002 and April 2003. Telephone directories will catch up with these changes of name in due course.

Nursing Homes

The Department of Health has issued a free booklet explaining how people in nursing homes will be affected since the NHS took over the responsibility for nursing care in October 2001. The leaflet, "NHS Funded Care in Nursing Homes, What it means for You", is available from the NHS Response Line.

Stroke Association

The Stroke Association has produced some very useful information leaflets on therapies for people who have suffered a stroke. The leaflets cover: physiotherapy, occupational therapy, and speech and language therapy. You can send for these 3 free leaflets from The Stroke Association, Stroke House, Whitecross Street, London EC1Y 8JJ or request them by telephone.

Back to top of page

MAKING CONTACT

If you have any queries, need advice on your pension, or wish to contact us for any other reason please write to:

Avon Pension Fund
Floor 3 South
Riverside, Temple Street
Keynsham
BS31 1LA

or call freephone 0800 0644155

Inland Revenue
0845 980 0645
0845 077 6543

NHS Response Line
08701 555 455

The Stroke Association
0845 303 3100

QUESTIONS, QUESTIONS.......

Q: If I don't get my cheque or lose it, how do I get a replacement?

A: Tell us and we will place a stop on the cheque. A replacement cheque will be sent at no cost to you, however, this will take about five days. Most pensions are paid straight into your bank or building society accounts, so this rarely happens.

Q: Why have I paid so much tax?

A: This could be due to a change in your tax code, please contact the Inland Revenue on 01271 312600.

Q: What are my spouse's benefits should I die?

A: Normally 3 full months pension and half pension thereafter. However, each case does need to be considered individually, so please contact us for confirmation.

DID YOU KNOW?

• Avon Pension Fund has 15,500 pensioners – there are a lot of you out there!
• Almost 61 million pounds was paid out in pensions over the last financial year

DON'T FORGET TO TELL US...

It is important you tell us about any changes that might affect your pension. This includes change of address, bank account details, change in your marital status or if you have taken up employment.

You will have noticed the new style pay advice slip, which was recently introduced. A detachable slip is included, so you can use this easy and convenient method to inform us of any changes. If you have no changes to tell us about, simply store your payslip as normal – you need take no further action.

Remember – it is important you keep your P60 safe as the Tax Office will not issue duplicates.

WHAT IS THE PENSION SERVICE?

The Department for Work and Pensions was created last June with the objectives of promoting opportunity and independence for all, tackling poverty and delivering more modern services, tailored to the needs of different customers. As part of this programme of reform, The Pension Service and Jobcentre Plus will replace the Benefits Agency and Employment Service from 1 April 2002.

The Pension Service will provide a dedicated service for today’s pensioners, whether you deal with the Service by telephone, through the Internet, by post, or face-to-face. It will also improve services to future pensioners, by providing accurate information to help them make decisions about saving for their retirement.

The service brings together the Benefits Agency’s pension-related services and will operate through a network of twenty-six Pension Centres to deliver services to pensioners. These centres will deal primarily with customers over the telephone – already the primary means of contact for many services.

The pension centres will be supported by improved local services, delivered in partnership with local authorities and voluntary organisations. These will provide face to face contact with pensioners who need it. The Department for Work and Pensions will write to you when these new arrangements start and give you the contact details. The new service is being introduced gradually over the next two years, so it might be a little while before you hear more. For the time being, continue to use your local social security office.

This information was supplied by the Department for Work & Pensions. For more details, ask any member of staff at your local social security office or have a look at the pension service website www.thepensionservice.gov.uk

NOTHING TO FEAR STOCK MARKET CRISIS

Following the recent downturn in global stock market conditions and fears that we are heading towards a recession there has been articles in the press that pensions will suffer because of this. So, should you be worried?

As a pensioner member of the Local Government Pension Scheme you'll be pleased to hear that the answer is No. As this is a Government scheme, your pension is guaranteed and not specifically linked in any way to the Pension Fund’s investment performance or to the amount of money in the Fund.

So whatever happens to the stock market and share prices you can rest assured that your pension will be safe.