The VA pays a pension to disabled veterans who are over the age of 65 or are no longer able to work. The disability pension benefit is also available for surviving spouses and children but is called the improved death pension.

These pensions are available whether or not the war-time veteran’s disability is service-connected, but to be eligible the following requirements must be met:
The veteran must not have been discharged under dishonorable conditions. The veteran must have served ninety (90) days or more of active duty with at least one day during a period of war. NOTE: Anyone who enlisted after September 7, 1980, however, must serve at least 24 months or the full period for which that person was called to serve. The claimant (You) must be permanently and totally disabled, or age 65 or older. You will need your doctor to provide an evaluation statement to prove that you are disabled and housebound.

In addition, your income must be below the yearly limit set by law; called the Maximum Annual Pension Rate (MAPR). The MAPR for individuals who 2009 are below:

Veteran with no dependents $14,457
Veterans with a spouse or a child $18,120
Un-remarried widowed surviving spouse $12,681

Your pension depends on your income. The VA pays the difference between your income and the MAPR. The pension is usually paid in 12 equal payments.

Example: John is a single veteran and has a yearly income of $12,500. His pension benefit would be $1,957 ($14,457 – $12,500). Therefore, he would get $163 a month.

Allowed Adjustments to Your Income – Adjusted Countable Income

Your income does not include welfare benefits or Supplemental Security Income. It also does not include un-reimbursed medical expenses actually paid by the veteran or a member of his or her family.

This can include Medicare, Medigap, and long-term care insurance premiums; over-the-counter medications taken at a doctors recommendation; long-term care costs, such as nursing home fees; the cost of an in-home attendant that provides some medical or nursing services; and the cost of an assisted living facility.

These expenses must be un-reimbursed. This means that insurance must not pay the expenses.

The expenses should also be recurring – this means they should recur every month.

Aid and attendance – The VA’s Best Kept Secret

A claimant (veteran or the un-remarried widowed spouse of a war-time veteran) who needs the help of another individual for their primary activities of daily living may qualify for additional money on top of the disability pension benefit.

The claimant needs to show that he or she needs the help of another individual on a regular basis. Note: A claimant who lives in an assisted living facility is presumed to need aid and attendance (Most people call it assistance – attendance is the VA official lingo).

WHAT in the heck are Activities of Daily Living?

They are activities such as bathing, grooming, dressing, eating, toileting, transfer to and from chairs and bed, etc.
A Claimant who meets these requirements will get the difference between his or her income and the MAPR below (2009 figures):

Veteran with no dependents $19,736 (who needs aid and attendance)
Veterans with a spouse or a child $ 23,396 (where the veteran must need aid & attendance)
Un-remarried widowed surviving spouse $15,128 (who needs aid and attendance)

Example: John is a married veteran and has a combined household yearly income of $29,500.
John has a medical evaluation to support his aid and attendance claim.
John and his wife pay insurance premiums, medical co-payments and care costs totally $23,200 yearly.

His pension benefit would be $17,096. Therefore, he would get $1,424 a month.

How did we get that benefit amount?

1. Calculate the Adjusted Countable Income: $29,500 – $23,200 = $6,300
2. Calculate the Remaining Countable Income: $23,396 – $6,300 = $17,096

How To Apply

Before you apply for either disability pension benefit it is helpful to get helpful tips and examples of what exactly you need to do. Filling out the VA Form 21-526, Veteran’s Application for Compensation Or Pension and/or the VA Form 21-534, Application and Indemnity Compensation, Death Pension and Accrued Benefits by a Surviving Spouse is a daunting and overwhelming task for most individuals.

We recommend you seek experienced sources to help you fully understand what you need to do, not do and most importantly when and where.

Company pensions are an invaluable part of employees’ remuneration packages. They are a central incentive and motivation to staff and an important part, therefore, for successful retention and recruitment. This importance is recognised by the Independent Financial Advisers who help and advise employees and companies alike on the benefits of a company or occupational pension scheme.

Types of occupational pension

If the company offers an occupational pension scheme, this generally means that it also makes contributions to its employees’ pensions and may also include benefits to the spouse, partner or dependents of the employee in the event of their death.

Although the particular scheme in place in any one company will vary from workplace to workplace, it will fall into one of two broad categories:

- Final salary schemes – as the name suggests, this type of scheme bases the pension on the salary the employee is earning in the final years of his employment and the number of years he or she has worked for that employer;

- Money purchase schemes – individual employees receive pension benefits based on the amount of money that has been paid into a pension fund and the performance of the investments in that fund.

Who pays?

Company pensions generally rely on regular monthly contributions being made by both employee and employer, based on a percentage of the employee’s salary. For both employee and employer, those contributions are made free of any tax deductions.

Pension payment

The employee’s retirement age – the age at which he or she can start to draw the pension – will be set out in the rules of the particular pension scheme. Details about qualification, together with estimates of the pension benefits likely to be paid on retirement, will be made available by the administrator of the pension scheme.

Changing jobs

If the employee leaves the company’s employment, it is generally not possible for him or her to continue contributions to the same occupational pension scheme, although the benefits are preserved and the former employee becomes what is known as a “deferred member” – the benefits are deferred until the employee’s qualifying retirement age under the rules of the scheme.

In the case of a final salary scheme, the deferred pension benefits are re-valued on a regular (generally annual) basis, with the intention of their being kept broadly in line with inflation. Some of the benefits of such schemes – “death in service”, for example – are unlikely to continue to be available, however, if the employee has left the company’s employment and is a deferred member.

In the case of a money purchase pension scheme, the combined employee and employer contributions remain invested in the pension fund. Annual statements on the current performance of the fund and forecasts of its future performance will continue to be sent to the former employee and deferred member.

Pension transfers

Employees have the option of transferring their accumulated pension from the occupational scheme into a personal pension plan or, if they have changed jobs, into another company scheme.

The implications and costs of doing this, however, are by no means straight forward and anyone thinking of transferring from an occupational pension scheme, or anyone with any questions about company pensions in general, would best seek independent financial advice.

This is a big challenge for those who are retiring after 2010 that whether they are adding any value to their pension by topping it up by £392 in class 3 of National Insurance plan. Until a couple of years ago this was a non issue for all those who were on the threshold of retirement and used to get deficiency letters from the National Insurance urging them to top up in order for them to be eligible to receive a full state pension at the time of retirement.

Now what is that which has caused the situation change all of a sudden? To understand this, let us begin by looking into what Class 3 contributions mean and how they work to your benefit. The Revenue & Customs Department writes to all those men and women who have made contributions deficient of threshold limit to their NI pension funds to fill gaps through a voluntary contribution provision called as Class 3. Class 3 contributions are in fact good value for money assuming you retire at 60 and live for another 20 years, your voluntary contribution of £392 made for one year of deficiency will return £3,012 in pension.

Topping up to fill gaps in your pension contributions is a very good value for money but it could soon be a worthless investment if the proposed amendments to the pension laws are made effective. The proposed changes are expected to be effective from 2010 and once they are in place, anyone who has made contributions to his or her NI funds for over 30 years will stand to loose the additional contributions and neither are they entitled to get any extra pension whatsoever to reflect your additional contributions.

Typically you have two points to consider if you are in a predicament over topping up pension funds particularly if you are retiring after 2010. The present stipulation requires men to contribute through Class 3 for 44 years and women for 39 years which turns out to be significantly higher than the present minimum of 30 years. That is a big loss by any means to anyone.

The proposed changes will not affect if you are retiring before 2010 when the law is scheduled to be brought to force and Class 3 contributions will likely benefit you. Those retiring after 2010 must think before contributing further beyond 30-years of service. It is worth investing elsewhere than in a scheme which does no good despite additional investment.

For those who are looking to retire sooner rather than later, it is advisable to read up on the Utility Warehouse business opportunity.

Pension is the amount one receives during retirement as a replacement of the income that was received during one’s working life. Pension funds have been in existence for a long time, as institutional investors that help the private investor to amass pension for retirement. A knowledge of the sources of the funds is hereby discussed to help the investor to assess whether enough provision has been made before retirement.

There are broadly speaking two lots of pension schemes: personal and occupational. A personal pension scheme is an individual saving effort made to put aside money towards one’s pension during retirement. Occupational pension scheme is associated with the workplace and takes two forms: non-contributory, and contributory. A non-contributory pension scheme involves the employer alone paying money into a pension fund towards the retirement of the employee, whereas the contributory kind has to do with the employee also contributing part of his income into the fund.

There are two types of occupational pension schemes: ‘defined benefit’, also known as ‘final salary’ and ‘defined contribution’, also called ‘money purchase’ scheme. A defined benefit scheme specifies the level of income the employee is entitle to during retirement. The level of income is based on what the final salary of the employee is at the time of retirement, as well as on the length of service in the firm. The money purchase kind does not specify the level of income, but depends on the contribution made by the employee towards the fund, as well as on how well the fund has fared and the annuity rate at the time of retirement.

State pension is always there to provide basic pension, and these other pensions, are to act as supplements. At the time of retirement, the lump sum accumulated in the pension fund for the employee is used to take out an annuity policy in an insurance company, which then ensures that a specified annual amount is paid regularly to the retiree during the entire retirement period.

With the state pension system in a mess it looks like ‘define pension’ scheme is what is needed by the employee. The irony is that this type of occupational pension scheme is gradually being wipe out of the system by employers because it is considered very expensive as well as time-consuming. If at the retirement time, the pension funds do not perform well enough or the annuity rates are not high enough to provide the level of income guaranteed by the employer in a ‘defined benefit’ scheme, the employer is supposed to top it up. This is very different from the ‘money purchase’ kind, in which the employer does not have to bother himself with the performance of the pension fund or level of annuities. It is not surprising that many employers are replacing ‘defined benefit’ pension schemes with the ‘defined contribution’ kind, to the detriment of the employee.

It is thus necessary for every employee to find out how much roughly his/her income will be during retirement, relate the figure to the sort of lifestyle anticipated, and if at all the pension will not be sufficient, start stashing some extra money away in a personal pension fund.

Every worker should endeavour to face realities, and not to lose himself/herself in abstraction, when considering pension for retirement. State pension has never been enough and they will never be. It is wise to know how much pension there will be and what is needed as top-up, to ensure an easy and comfortable retirement.

Retirement Blues: Current Financial Crisis Forces Billions to be Pulled From Pension Plans

For everyone who has a pension plan, last year was one of the worst financial years. The crisis sucked more that $5 trillion from retirement plans that are company-oriented. This affected markets in the United States, as well as in Japan, the UK and The Netherlands. Due to the plunging stock market, there was a decline of 19% among worldwide assets. The only country that saw an increase in value was Germany.

United States pension plans were hit hard. These plans account for more than 60% of all global pension assets. The crisis resulted in company pension funds being under-funded by over $400 billion at the end of the year in 2008. Retirement accounts in the U.S. were declined by $2 trillion.

These massive losses have forced individuals planning to retire to adjust their retirement savings plans as well as their IRA & retirement plan investing. In many cases, people have completely stopped all traditional IRA and 401(k) plan contributions – some have completely went overboard by terminating their 401k plan all together. This will result in people having to work longer than they expected and may even force many to adjust their current lifestyles. These losses have severely affected the lives of people who had been relying on their retirement plan as a source of income. For example, the largest pension fund on Colorado lost $11 billion, more than 25% of its assets. The state pension fund in North Carolina lost 17% in value. Despite these huge losses, there are some companies who have found a way to increase the salary of CEO’s, even though those same companies have slashed their pensions to other employees.

Losses of Pensions Will Have Enormous Effects

For anyone who has a retirement plan, these losses will be very painful. It will have an effect on almost every household in the U.S., especially for those who have also watched the value of their home depreciate or who have lost their jobs. The crisis does not only affect individuals, it will also play a part in corporate earnings.

Company-sponsored pension plans are becoming rare. More and more companies would rather place the liability and cost of retirement savings onto the employees. At one point, pension plans were a key part of the benefit package offered by a company. Now, they are becoming scarce. Instead, companies are offering 401k retirement plans. These plans still allow the employee to save for retirement, but the employee has to make contributions out of their pay check. For some, 401k plans were not the right choice. Many employees turned to a traditional IRA or a Roth IRA to help with retirement savings.

At the end of 2007, company pension plans were over-funded. By the end of 2008, after the financial crisis, these same plans were severely under-funded. This swing of over $400 billion resulted in only 75% of U.S. pension plans being funded.

When the stock market crashed, companies were faced with choices. They had to decide how to cut costs by taking the cash out of the business itself, or by decreasing the amount being placed into pension plans. The results of these decisions are having a huge impact on employees around the country who were trying to save for their retirement.

It’s obvious that the pension system is in dire straits and within the talks and discussion of concerns; many people are sharing ideas that could revamp & re-ignite the pension system.

Recent research found that only half the working population belong to an occupational pension scheme and that over 50% of employers offering a defined contribution plan found that the majority of their staff failed to even sign up for it, even when the employer is making a contribution. What is the turn off from pensions and what (if any) is the turn on?

Could the following idea be the ON switch?

There have been a number of blogs and reports talking about changing the pension rules to make pensions more useful to people throughout their working lives and not just in retirement. The idea is simple and has got a lot of people talking.

The basic idea is that, at any age, individuals who have reached a certain level of pension fund should be allowed to draw down some of the tax free cash of their pension pot. Sounds great! But will the government go for it?

The Savings Gateway (created by the government) is an initiative to help individuals save up a lump sum of money. The aim is to help people to cope with the difficulties in life with having an accessible sum of cash. A change in the pension rules that allow for early access to the fund, as tax free cash, would also achieve the same result the government is looking for with the Savings Gateway.

The new rules would also work well with the new pension initiative in 2012. The so called government ‘Personal Accounts’. In 2012 all employers in the UK will be forced to be actively involved in the process of getting their employees auto-enrolled in a pension scheme. If they don’t have one, the government will create a ‘Personal Account’ scheme as a default pension.

Employees just don’t appear to want the hassle of saving into a pension for one reason or the other. Maybe the new rule changes (if implemented), would encourage a much higher percentage of employees to sign up for a pension, increase their pension savings or act and take matters into their own hands.

There’s more chance that more people will sign up for a pension in the first place if it also acts as a safety net of cash should you need it throughout your life.

This new rule idea has popular in the recent downturn of the economy and the feedback has been overwhelming. It appears that the majority of people would see the value of such a relaxation in the rules and welcome it. It’s understandable that there will be deeper complications that these initial reports are not highlighting. However it is still easy to imagine that many people will be encouraged to save more in pensions if such a benefit of tax free cash came as standard.

Maybe it’s not such a wild idea that a change in pension rules may aid in the recovery of the economy in some small way.

Retiring is supposed to be the time when you can sit back and relax after years of hard work, but for some people retiring is not plain sailing. As it has been reported in the news recently, there are a growing number of people struggling to survive on their pensions.

Although many people will have paid in to a company or private pension plan over the years, some pensioners are finding it increasingly difficult to survive financially on their current income.

There has been talk of increasing the retirement age of 65 up to 70 as life expectancy increases and people need their pensions for longer than ever before.

So what can you do if you are worried about retiring? Well there are ways to guarantee you will have a sufficient income for retirement. For instance, if you have a large amount of capital gaining very little interest sitting in a current account, consider investing it to get a monthly or annual income.

You could put your money in to an ISA which allows you to invest up to £7,200, providing tax free returns on your capital. And if you are over 50, from October you can invest up to £10,200 from participating financial providers.

If you need easy access to your savings, then a savings account could suit your needs. You can get competitive rates of interest on many accounts from various providers and if you need your savings unexpectedly, you are not tied down to a long-term agreement.

An alternative way to provide an additional income could come through property investments. Although house prices have fallen in the last year, there is still money to be made in renting, if you have the hard cash available to buy a property this could be a profitable investment.

For those who have recently entered the world of work in the last few years, it is imperative you start thinking about your retirement now because the earlier you save, the easier your retirement will be.

It is likely your state pension income will not be sufficient enough to maintain the lifestyle you have been accustom to when you have been earning money, so consider an additional private pension plan.

Many companies offer employees the opportunity to pay in to a company pension plan, but there are also many other pension plans on offer from financial providers, so do your research before making a decision.

It is vital you do extensive research before deciding what financial route you are going to take.

As you are probably aware, the New NHS Pension Scheme goes live April 1st 2008.

This scheme is automatic for new members from that date, and a major change here is that the normal retirement age is 65, not 60.

However, the existing scheme also changes in some key areas for those of you who opt to stay as you are.

We concentrate here on these changes as most of our clients are in their 40’s and 50’s and are almost certain to remain in the current scheme. You will automatically become members of the updated existing scheme from April 1st next year.

So how are you going to be affected?

Well, there are quite a few changes, so lets start with the bad news! The flat 6% cost will now be tiered, depending on your earnings:

Up to £19,165 6%

Up to £63,416 6.5%

Up to £99,999 7.5%

£100,000 plus 8.5%

As you can see, if you earn more you pay more. If your NHS income is, say, £90,000, you are currently paying £5,400. From April it will be £6,020, although this is gross and you get tax relief on these figures (meaning as a higher rate taxpayer you would pay £3,612 on the latter figure).

The good news is that you will retain the normal retirement age of 60, or age 55 in certain special cases such as Mental Health Officers.

Other key changes are:

The earnings cap for hospital based individuals is being abolished. So, although higher earners will be paying more as above, you will benefit from a real pension increase if your NHS earnings are above £112,800 pa. (e.g. if you have a merit award).

The General Dental Practitioner earnings cap is also being removed – circa £110,000. So for those of you earning more than this figure, from 2008 you will benefit from increases to your pension.

Also for this group, and also for General Medical Practitioners, your pensionable earnings revaluation on dynamisation will now be determined by the retail price index plus 1.5%, rather than the increases in each practitioner profession.

A key change for benefits to partners on death have also been announced. Qualifying partners now include someone you have nominated who you have an exclusive and long-term committed relationship with for at least two years and who is financially dependent or inter-dependent. In addition, if such a partner were to remarry or cohabit, they keep their survivor pension (a huge benefit).

It should be mentioned here that the ill health retirement rules are being reviewed separately, and this review is due to report early next year. As these are very important benefits, we will update you when there is more news.

Buying extra pension benefits has also got new rules, one of them bringing the NHS scheme in line with the overall ‘A DAY’ pension changes that were introduced in April 2006. This means you can contribute as much as you earn. Secondly, the option of Added Years is being removed entirely – existing contacts will be honoured – (you need to have your application in by the end of March 2008 if you wish to use this route). The replacement is called ‘buying additional pension, with a maximum of £5,000 per annum.

At retirement, you can take your pension and lump sum as usual, but there is an option to commute some of the pension to give more lump sum. As this lump sum is tax free, it may well prove popular. For example, for someone with around 36 years service and an NHS income of £100,000 pa:

Typical pension/lump sum – £45,500/£136,500

Option pension/lump sum – £36,500/£244,000

Finally, you can now work on to age 75. Please apply early to avoid the rush

We have not covered all the various changes here. Make sure you are aware of how these changes affect your benefits.

The Financial Tips Bottom Line:

As the NHS Pension Scheme is the foundation for many dentists and doctors, ensure you are up to date with these changes, and understand what they mean to you.

You will receive information packs from the NHS Pension Agency with your pay advice in due course.

Many people wrongly think all forms of pension are set in stone and can’t be altered – but there are some helpful mechanisms in place which prove this isn’t always true. Pension transfers are when you switch or change your pension provider and transfer all money from your existing plan to a new one, thereby ending the original plan.

Typically, this can happen naturally if you change jobs and your new job has a different pension scheme, but you can also choose to do it voluntarily. Some of the reasons for doing it yourself might be if your own pension plan charges large administrative costs that you want to avoid by transferring to a pension plan with lower fees or if you want to add a personal pension plan to a work-based pension plan to take advantage of any employer contributions. Or it could simply be because your current pension provider are no longer offering the service.

Whatever the reason, pension transfers can be advantageous, but you should always make sure that you are doing it for the right reasons, and that you will be better off with your new scheme. This is a big decision, and it is always worth seeking financial advice before you make your choice.

A financial advisor will be able to tell you the benefits, and drawbacks, of transferring your pension plan, how it works, and point you in the right direction.

They will also be able to talk you through your current pension plan, pointing out anything you don’t understand, before suggesting alternatives which may benefit you more in the long run. You may also decide that you want to start paying more, or less, into your pension plan in terms of your monthly contribution, depending on any changes in circumstances you may have had since you first starting paying into your scheme.

Once you make your pension transfer, your monthly payments will stop going into your old plan, and start going into your new pension provider. One common reason for transferring your pension is if you want to transfer from your employers’ final salary pension scheme to a personal plan.

Many employers are now offering cash incentives to their employees to persuade them to do just that, as a final salary pension can prove to be expensive for them. If you want to transfer from your employers’ final salary pension scheme to a personal plan, you will need to get a ‘Statement of Entitlement’ from the administrators of your pension to find out the value of your plan.

You can do this by making a written request to the administrators and within three months, they should then send you a transfer value, which will typically be valid for another three months. This figure is not the total amount which you have paid into the pension scheme during the time in which you have had it, but rather the amount of money which would need to be paid in for the company to provide your pension entitlement under the final salary scheme.

Once you have this transfer value, you can decide whether or not to go ahead with the pension transfer – and if you do, make sure it is before the guarantee date on your Statement of Entitlement – and your pension scheme administrator will then be required to make the transfer complete inside of six months from when you lodged your request.

Pension transfers can therefore often be a way of saving money and getting a deal which in the long run can be far more suitable when it comes to planning for your future.

Choosing a particular pension scheme may be down to individual choice, but saving for such should be embraced by anyone who would like to have the possibility of financial assurance when they reach their retirement.

A pension is a tax-efficient way of saving for the future, and it doesn’t matter whether you are young or old, there is never a wrong time to start saving for one. However, because there are so many different options it can be confusing trying to pinpoint the right pension for you and your particular circumstances. Of course, taking independent financial advice is one route to securing the best pension for you, but if you want to make your own decisions, what is out there?

In their very basic forms there are two types of pension; state and private. Currently, a state pension is paid to qualifying UK residents who reach retirement age and the amount received is based on the amount of NI (National Insurance) contributions made throughout that individual’s working life. Although, in 2009 men receive state pension at 65 and women at 60 years of age, by 2020 the age will be 65 for both, with a gradual phasing in starting from 2010.

However, the levels of payout under the UK state pension are inadequate for the majority of people to live in comfort throughout their latter years, and therefore contributions into private pensions – either personal or corporate – are recommended by the government and pensions specialists alike, in order to supplement the state pension income.

Corporate pensions are provided by employers who act as the middle man between the employee and the pension scheme provider; however the employee has a direct contract with the pension provider. In most of such schemes, both employee and employer will make contributions to the pension fund which is invested – normally in stocks and shares – and the fund should grow. Bear in mind, however, that investments can go down as well as up before the employee’s retirement. This is known as a money purchase pension and under such a scheme, at the point of retirement there is the option to take a tax-free lump sum and the rest of the fund is used to secure an income, normally as a lifetime annuity. There is also the option to make additional contributions to a group pension scheme, up to a maximum limit, known as Additional Voluntary Contributions, which will boost the value of an individual employee’s fund.

If not a member of a group pension, then a personal pension is an individual’s private fund that will continue regardless of your employer and is especially relevant for self-employed workers. However, the above is a very brief explanation of the main types of pension available and if you are thinking of starting a pension fund then it is recommended you seek more information or the help of a specialist.

Warnings
The above is based on our understanding, as at June 2009, of current taxation, legislation and HM Revenue & Customs practice, all of which are liable to change without notice. The impact of taxation (and any tax reliefs) depends on individual circumstances. The rate of growth of funds cannot be guaranteed. Past Performance is not a reliable indicator of future performance.