Since you ask

Mar 7 2006

By The Journal

Your money queries answered by Peter Rutherford, chief executive of Rutherford Wilkinson plc, independent financial advisors. Mr NT from Wallsend asks: I was talking to my wife's brother last week who is going to retire in just over a year. He has a very well paid job, but I was surprised when he told me he has been advised to stop paying into his company's pension scheme. This seems strange as I thought everyone should be paying as much as they can afford towards their retirement? Answer: I cannot comment on your brother-in-law's situation. However, I can confirm that some people may be affected by the Lifetime Allowance Limit (LTA) that comes in from April 6 this year under the pension simplification rules. The rules are anything but simple! The LTA is a maximum monetary amount that individuals can build up for their pension. For the 2006/2007 tax year this is set at £1.5m. For those in a final salary pension scheme you need to multiply your pension entitlement by 20. Therefore anyone with a pension of £75,000 per annum or over will be affected and could suffer a tax recovery charge. Specialist independent advice should be obtained. Mr & Mrs AB from Lemington asks: We are moving house and increasing our mortgage, but we have an existing life policy covering our present mortgage. It seems we can increase the cover enough without having to go through medicals. Is this the most sensible option? Answer: Many life company policies will allow the cover to be increased at certain times such as moving house or the birth of a child without further medical evidence (up to certain limits). I have to say though that if you are both in good health, competition in the life assurance market has driven premiums down, so you may find cheaper cover elsewhere. An independent financial adviser will be able to check this. Story continues ADVERTISEMENT Mrs SD from Alnwick asks: I had an equity based Tessa Only Isa (TOISA) that has matured recently after five years. It guaranteed the £9,000 that I put in was safe, but all I have got back is £9,000. I am disappointed to have made no interest at all. What do I do now? Answer: Your equity Isa will probably have been linked to the FTSE 100 Index or similar. Whilst the last three years have been very good overall for stock market returns, 2001 and 2002 were not so good. While the initial capital value you invested was guaranteed, the underlying value will have fallen substantially in the first couple of years. You could reinvest in a similar scheme and hope stockmarket returns are better in the next five years, or consider a deposit based TOISA. *********** Investors Guide is a booklet with information on all aspects of investment. For your free copy, freephone (0800) 074-5489 or write to me at Rutherford Wilkinson Plc, 21-23 Bridge Street, Morpeth, Northumberland, NE61 1NT. Please also write with any queries you would like answered. Rutherford Wilkinson Plc is authorised and regulated by the Financial Services Authority.

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