The Guardian - 31.08.2019

Sat urday 31 Aug ust 2019 The Guardian •

Money^51

 Continued from page 49

Pensions

Think twice before

it all goes in one pot

Combining several pensions

seems like a good idea

in theory , but there are

fi ve reasons to be cautious.

Rupert Jones reports

E

xperts often say it

makes sense for savers

to combine all their

pensions in one place,

so they have a single pot

that is easier to manage.

But former pensions minister Steve

Webb this week issued a warning

for consumers to think carefully.

He says there were fi ve good

reasons to think twice before

consolidating small pension pots,

and that for some people there is

a risk they could end up worse off.

On the face of it, it seems obvious

that you should combine your

various arrangements in one place:

it is tidier, there’s only one company

or provider to deal with, and so on.

Many of us will accumulate a

lot of pots over a long working life:

it is said the average person will

have about 11 jobs. Throw in the fact

that some of those providers will

probably change their name , move

to a new address or be taken over ,

and it is easy to see why keeping

track of all those diff erent schemes

and plans might be a challenge if

you keep them separate.

Webb, who is now director of

policy at life and pensions company

Royal London, says: “One of the

questions I am asked more often

than any other is whether people

should combine all of their pensions

in one place.”

While that has some advantages,

there are also unexpected

disadvantages, he says. “Older

pension policies may have attractive

features which would be lost if

transferred, while small pots

benefi t from certain tax privileges

which do not apply to larger ones.

As ever, the best approach is to seek

impartial advice or guidance.”

These are his fi ve reasons to think

twice before consolidating small pots:

1 Throwing away enhanced tax-free

cash or early retirement options

attached to some older pensions

Some , especially those taken out

before April 2006 – when a great

deal of pension tax simplifi cation

took eff ect – allowed members to

draw more than 25% of the pot tax

free, or to access the pension before

age 55. If these are transferred out

individually, privileges can be lost.

2 Throwing away valuable

guaranteed annuity rates attached

to some older pensions

When some pensions were sold,

they carried a promise that the pot

could be turned into a guaranteed

▼ Retirement planning? Beware the

pitfalls of combining all your pensions

PHOTOGRAPH: BLOOMBERG /GETTY IMAGES

Yo u ’r e t h e ex p e r t

The iPhone 6s that

I bought for £300

three years ago

won’t get any iOS

software updates

after September.

Should I worry ,

or will it carry on

working fi ne? Why

can’t Apple keep its

phones working?

OK, let’s be realistic. New phones
usually introduce new processors,
new hardware and bigger memory.
It becomes increasingly diffi cult
to make new operating systems
(and apps) support older hardware
as well as new, so Apple has an
obsolescence policy.
Of course this also encourages
customers to buy newer devices! It’s
not just Apple – almost all companies
stop supporting older hardware
eventually. Apple’s support beats
many – it’s better than Android.
In fact, Apple has now confi rmed
that your iPhone 6S will be able to
upgrade to iOS 13 to be released
next month, and so the good news
is you’ll get updates and fi xes for
the following year. So assuming
you keep it until then you’ll have
had over four years’ use with full
support, which works out at less
than £1.50 a week. Not a bad deal.
After this period, not getting
operating system security fi xes

may render your phone vulnerable

to newly discovered exploits, so

I’d be reluctant to use it for online

banking. But it will continue to work

perfectly for calls, messaging and

for most other apps for several years.

meadowend

The 6s is probably one of Apple’s

best iPhones ever. It still has a

headphone jack, plenty of memory

and storage space. It was released

in September 2015 so it’s now four

years old and Apple has said it will

be receiving iOS 13 this autumn.

I’m running the beta test software

of iOS 13 on my current 6s and

6s Plus and they’re as fast as the

day I got them. But you have to

realise that nothing lasts for ever

and Apple’s support, for four to fi ve

years on average, is unprecedented

in the smartphone market.

Android support usually lasts two

to three years and that depends on

the large number of manufacturers

making the phones it runs on and

the carriers. TheKingFish

Even if you didn’t get the update,

the phone wouldn’t just stop

working (nor would it be obsolete).

If you don’t care about any of the

new software features carry on using

it happily for as long as you want.

MikeTheGoat

Chances are the update will cause

a real drain on your battery in order

to encourage you to buy a new

iPhone. You can replace the battery,

which I have done twice in the last

15 months, but chances are it won’t

be great after a couple of months.

Smithathon

I was appalled that my Samsung

suddenly became “obsolete”

overnight without warning after just

three years! I’ve stuff in my freezer

more than three years old. IvanTiger

Four or fi ve years is about par for

the course, and I suspect it’s a longer

life than the average iPhone buyer

expects. Your choice is to change

now while it’s worth something

secondhand or eke it out another

year or two. LeadBalloon

Please email your sugg estions to

[email protected] or write

to us at Money, The Guardian,

Kings Place, 90 York Way, London

N1 9GU. And do you have a problem

readers could solve? Let us know.

OK, let’s berealisti

Next week

My parents, in their late 80s, are struggling with life on their own. We help , but
can only call by two or three times a week. They ’re moderately well off and we’re
researching a homecare package for them. We could go with one of the care
companies, but people say they send diff erent people each day. How do we fi nd
independent carers? How much should we pay? How often should they come?

End of the

line? The

iPhone 6S

income in retirement. Remember

Equitable Life? It was the guaranteed

annuity rates that were at the heart

of its problems. Webb says that,

given the collapse in annuity rates

in recent years, these guarantees are

extremely valuable, but can be lost

if transferred into another pension.

3 Paying steep exit penalties

While modern pension policies

can generally be merged without

penalty, savers can sometimes

be hit with hefty exit charges if

they want to take money out of

older policies. Previous reports

and surveys have indicated some

schemes have charges of 10% or

more. So tread carefully.

4 Missing out on “small pot”

privileges for those potentially

aff ected by the lifetime allowance

for pension savings

The lifetime allowance is a limit

on the value of payouts from your

pension schemes that can be made

without triggering an extra tax

charge. It’s currently £1,055,000

– so most people aren’t aff ected.

But if you are, Webb says that

“savers are allowed to take up to

three pots of under £10,000 without

counting against the allowance”.

5 Missing out on “ small pot”

privileges for those still putting

money in

If you start taking money from a

defi ned contribution scheme, the

amount you can pay in and still get

tax relief on, typically plummets

from up to £40,000 a year to a

fraction of that : £4,000 for the

2019-20 tax year. That is known

as the money purchase annual

allowance , or MPAA. This won’t

normally be triggered if you cash in

small pots less than £10,000. “Those

who consolidate all their small pots

miss out on this ,” says Webb.

website before his trip – which said
his car was not liable for the charge.
“We had heard of the LEZ and
had checked with the relevant TfL
website before travelling to London.
We did not want to be caught out
by any congestion charge -type
scenarios. Ironically, this is exactly
what ended up happening.”
He showed Money screengrabs of
the TfL site, which showed he could

check by either registration plate , or

vehicle type. As the car was foreign-

registered, Bonati thought it more

sensible to check by type. “We input

our vehicle details. It stated: ‘You

are not aff ected by the Low Emission

Zone .’ Great! Or so we thought.”

If Bonati had clicked the “check

by registration plate” button it

would have warned him of a £200

daily charge. Intriguingly, the “check

by vehicle type” button has been

removed from TfL’s site since Bonati

fi rst logged on. Also, when Money

entered his details early this week,

it said he was liable for a charge, but

later in the week it said he was not.

Helen Chapman, director of

licensing, regulation and charging

at TfL, said: “We’re sorry to hear of

Mr and Ms Bonati’s experiences.

Having reviewed the information

from the relevant country’s licensing

equivalent, we are now satisfi ed

the vehicle is not subject to the

LEZ, and we have now cancelled

the LEZ charge. We urge people

with vehicles registered outside

the UK to register their vehicle with

us before they travel so its status,

including emissions, is confi rmed

before they travel. This is necessary

as we cannot access information

from foreign vehicle licensing

authorities in the same way we can

with UK vehicles registered with

the DVLA. And, as in this case, there

are occasions when it isn’t clear if a

vehicle is aff ected by the LEZ.”

Bonati is still angry he was put

through such an emotionally

exhausting saga by TfL. “They

now appear to have changed the

rules and, most importantly, their

website, which in future will

stop other people falling in to this

particular trap ,” he said. “But why

were these fi nes not internally

reviewed, particularly when huge

fi nes were given, particularly when

they were imposed around this

admittedly grey area of the LEZ?”

RELEASED BY "What's News" vk.com/wsnws TELEGRAM: t.me/whatsnws