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Q&A; Your money queries answered by TREVOR CLARK, Director of Rutherford Wilkinson Ltd, Chartered Financial Planners.


QI was an active member of my employer''s final salary pension scheme when the company went into liquidation in 2009. I am now retired and in receipt of benefits from the Pension Protection Fund (PPF). I have heard a rumour that the PPF is reviewing its compensation limits and I am concerned that my benefits may be reduced. Is this likely? A The pensions minister, Steve Webb, has announced that the Government is reviewing the structure of the PPF, the lifeboat fund for members of defined benefit pension schemes whose employer becomes insolvent.

Members of the PPF receive compensation equivalent to 90% of the value of their accrued pension at the date of their employer''s insolvency, capped at PS34,049.84.

Mr Webb has expressed concern that the cap on compensation, intended to restrict the level of compensation paid to fat cats who may share in the responsibility for the company''s demise, affects negatively those members who had long service with an employer before the company''s insolvency.

The Government is examining a number of options for reforming the PPF cap, with many commentators suggesting that this is likely to be amended so that the cap on compensation increases in accordance with a member''s length of service.

In that instance, there would be a minimum cap on compensation, which increases the longer a person has been a member of a particular scheme.

Therefore, while the Government is committed to reviewing the structure of the PPF, it is unlikely that your benefits would be reduced (particularly as they are already in payment).

If you have any concerns, further information and contact details can be found at QI am an elderly widower and I have two adult children. I do not want them to have to borrow money to pay for my funeral expenses and I was therefore thinking of opening a joint savings account. A friend told me that this will also help my children to avoid inheritance tax. Is this true, as, if so, I may transfer a greater sum into the account? A First, you ought to be able to open a savings account which your two children have access to. This will enable them to meet expenses upon your death, such as the costs of a funeral. However, this might not be the most appropriate means of providing for that eventuality. Secondly, if your intention is to minimise their liability to inheritance tax, transferring funds into a joint account may not achieve that objective. There have been a number of instances in recent years where people have sought to open bank accounts in joint names, for example for the benefit of children or siblings, which have been challenged successfully by HMRC on the basis that the deceased was beneficially entitled to the whole of the funds in the joint account at the date of their death.

I recommend therefore that you seek advice from a solicitor and, if appropriate, a chartered financial planner in order to assess your financial circumstances and to plan your affairs in a tax-efficient manner which achieves your objectives. To request a free consultation with one of our expert advisers or if you have any questions you would like answered, please contact me at Rutherford Wilkinson Ltd, Northumbria House, 21 23 Brenkley Way, Blezard Business Park, Newcastle upon Tyne, NE13 6DS. Telephone 0191 217 3340 Website Rutherford Wilkinson Ltd is authorised and regulated by the Financial Services Authority.
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Title Annotation:Business
Publication:The Journal (Newcastle, England)
Date:Dec 22, 2012
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