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PBR: Women could get a pension worth £30,656 for only £421

Standard Life says that women with an incomplete national insurance record could get a return on investment of up to 7,200 per cent if they buy back extra years.

But the life office says that consumers should move fast to take advantage of the deal before the buy-back price rises in April 2009, as announced yesterday in the pre-budget report.

Women with less than 10 qualifying years of national insurance are entitled to no basic state pension, but as soon as they reach 10 years they are entitled to 26 per cent of the full basic state pension.

If a woman only has 9 qualifying years, the cost of buying Class 3 NI contributions to get an extra year and qualify for 26 per cent of the full pension is only £421.20.

But if they were to buy an index-linked pension on the open market to draw the same amount per week, it would cost £30,656.

Standard Life says even if a woman already has 10 qualifying years, it could still be worthwhile to buy extra years.

Head of pensions policy John Lawson says: “Women looking to take advantage of this deal should act fast. The Government has cottoned on to the fact that Class 3 contributions are a give away and plan to raise prices.

“It was announced in the pre-Budget Report that the weekly price for Class 3 contributions will rise to £12.05 per week from April 2009. This represents a rise of nearly 50 per cent. Women seeking to buy extra years should do so now.”


Lottery of timing to buy annuities

If markets get back to the 5,000 level, then a large number of people should get buying an annuity “over and done with” William Burrows Annuities director Billy Burrows has urged.
Speaking at Money Marketing’s annuity round table, Burrows said that his company is investigating a number of exit strategies for people who may have seen investments suffer by as much as 15 to 20 per cent.

ABI’s 30-day transfer target misses the point

The Association of British Insurers’ 30-day target for transferring pension fund has been criticised by advisers.
The Retirement Adviser director of retirement planning Nick Flynn said it was ridiculous that while some firms would guarantee a quote for an annuity for two or three weeks, the failure of other firms to transfer funds on time left those quotes redundant. “On one hand, you are offering 30 days to move the money and on the other, most insurers are promising people two or three week guarantees. You are promising the client something they cannot have because the rates are going to move,” he said.

Client pays the price

Annuities are widely acknowledged as potential nightmares to arrange.


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