The full BSP of £84

The full BSP of £84.25 a week is worth as much as £125,000 as an annuity purchase for a woman retiring at 60.If this woman were to receive this pension on the open market, she would have to contribute more than double the existing level of £7.55 a week.”Right now, we don’t know what will happen, so it may be worth erring on the side of caution,” says Stewart Ritchie, director of pensions at Aegon. All we can do is keep them as best informed as we can.”People missing contributions can make voluntary top-ups to plug gaps in their NI payments stretching back to 1996, but from 2009 they will only be able to backdate six years. Recipients are encouraged to contact the Department for Work and Pensions for a pensions forecast to help them decide whether or not to pay any extra.More than 3.5 million letters are sent out every year, but only about 260,000 people respond, and less than half of these try to plug the gap.Although the rules on how much people need to contribute to be entitled to the full BSP may soon be changed, the existing benefits of topping up are huge. “Our job is to inform, not advise, and all we work on is facts. People will have to make their own decisions on what is best for their particular circumstances. If successful, as expected, it will mean that anyone reaching state-pension age after April 6, 2010, will have had to pay NI contributions for 30 years.”It may be construed as a warning, but that is not our aim,” says an Inland Revenue spokesman.

Currently, only 49 per cent of women qualify for the full BSP compared to about 91 per cent of men. Lawson is particularly concerned that hard- up mums may be salting away vital money to boost their retirement.He criticises the Inland Revenue for not making the position clearer in the letters (the impending change is only pointed out at the end).The confusion has arisen from new pension proposals in a Government White Paper, which is to be voted on by Parliament later this year. “It seems totally ludicrous: there should be recompense or a bigger state pension if it turns out that many people are putting in more than they should.”Any shortfall is paid as voluntary Class 3 contributions, which typically works out at £7.55 a week for missed NI payments when people are not in work. But proposed new rules would mean that after 2010, both sexes will have had to make NI contributions for only 30 years.”People being encouraged to top up their pension may simply be throwing their money away,” says John Lawson, head of pensions at Standard Life. Full-time carers, women who have taken career breaks to look after children, and people who have worked abroad are among those who could be most affected.
Men currently need to have made NI contributions for 44 years and women for 39 years to qualify for the full BSP.

It has certainly made more than its fair contribution towards giving the financial-services industry a bad name.Rumour has it that the company is up for sale. Let’s hope it’s sold, and someone finally has the courage to bring the business into the 21st century.j.daley independent.co.ukDavid Prosser is away. Warnings are being sent out in tax letters to 3.5 million savers telling them that voluntary top-ups towards their basic state pensions (BSP) may be a waste of money. These so-called “deficiency” letters are sent out every year to people who have not made sufficient National Insurance (NI) contributions to receive the full BSP The letters explain how much extra money people need to pay. In the intervening time, my strongest memory of the company is still the launch of a dodgy precipice bond that it missold to thousands of investors, before being fined millions of pounds by the regulator. wait for it: a Scottish widow.I’ve lost count of how many years it’s been using this same tired image.

OK, so the widows have got a bit sexier over the years, but what sort of message do they think they are sending out to would-be customers, especially younger ones, who are turned off by saving? Good-looking women might sell cars, but they don’t sell savings products. Scottish Widows is a powerful and long-standing brand that has been withering ever since Lloyds TSB bought it six years ago. And good-looking women who were recently bereaved? It’s all wrong.For me, Widows’ campaigns do nothing but reinforce the out-of-touch stereotype of the insurance industry. You’ve been warned.n n n What century is Scottish Widows living in? This week, it launched yet another advertising campaign starring… I’d rather it had left its charges at £20 for a late payment and kept this consumer-friendly policy.Who knows where banks will claw back profits from the OFT’s crackdown on overdraft fees? I never open my bank letters – I do all my banking online But I’m about to start The changes will all be there, hidden in the small print. So if you spend £100 on your card one day and £200 a month later, you won’t stop paying interest on that first £100 until you’ve cleared the whole balance.

This is the case with credit-card companies, who have been pressurised into reducing their late payment fees to £12.Providers have been clawing back the lost revenue where they can. HSBC scrapped its policy of allowing customers to pay off the highest-interest-bearing debt on their cards first. Banks will still make money, they’ll just take it in a more underhand fashion. Current accounts, debit cards, cheque books, direct debits and standing orders all cost us nothing, but are surely not without cost for banks.