UK pensioners miss out on over 2 Billion of cash
15 July 2008
UK PENSIONERS MISS OUT ON OVER 2 BILLION OF CASH
- A quarter of pensioners (or over 3.16million)* are not claiming their pension credits
- Over 2 billion** worth of pension credits will go unclaimed this year
Whilst the UK’s retirement savers squander 726 million* in unnecessary tax payments
Research from Unbiased.co.uk, has revealed that as much as 2 billion of pension credits will remain unclaimed this year. Even though pensioners are feeling the sharp rise of inflation and the impact of the credit crunch, approximately one in four of them are failing to claim their full pension credits.
Pension credits are a government entitlement for people aged 60 or over, guaranteeing them an income of at least 109.45 a week. But with between 22% and 28%* of pensioners failing to realise their entitlements, this valuable source of income is being wasted by many retirees.
And what is more, working people in company pension schemes are also missing out on huge sums by neglecting to save in tax-efficient ways. In fact, high-rate taxpayers that are that are members of their employers’ occupational pension scheme will give an unnecessary extra 726 million to the tax man this year by failing to make Additional Voluntary Contributions (AVCs).
AVCs run alongside employers’ pension schemes and allow employees to pay extra into their pension which should result in a larger pension pot at retirement. AVCs benefit from the same tax relief as contributions paid into the main pension scheme, so it makes sense to benefit from this tax-efficient way of saving for retirement.
David Elms, Chief Executive of Unbiased.co.uk comments: “Failing to save for retirement has become an increasing problem for the UK population. The onset of the credit crunch has further compounded this problem, with people finding their money doesn’t go as far as it used to and so tightening their purse strings. However, this means it is now more important than ever for people to claim vital sources of retirement income in the form of tax credits.”
“Either through confusion or apathy millions are missing out on what is rightfully theirs, and are paying more tax than they should be. We are urging people to kick-start their pension and tax planning and to review their current situation today. A discussion with a local IFA is a great way to start this process.”
As a first step to stamping out this waste, visit Unbiased.co.uk’s dedicated website at www.unbiased.co.uk/taketaxaction. The site contains tips on how to save tax, an online tax wastage calculator, and a guide to saving tax. You can also find details of local IFAs on the site.
-ends-
* ONS figures show there to be 11,344,000 million pensioners in the UK (August 2007). Up to 28% are not claiming pension credits – or 3.16 million.
** TaxAction 2008 report produced for IFA Promotion by RAKM, based on a specially commissioned analysis of Inland Revenue and a range of other official data sources.
Tax doesn’t have to be taxing – Here are 10 basic ways to claw back some of the waste:
- IF YOU HAVE ASSETS OVER 312,000: Plan your inheritance - an extra 1.9 billion could go to chosen heirs by planning properly to avoid IHT liabilities. IHT is often lost through not writing life assurance policies in trust, not thinking about inheritance tax allowances and, worst of all, by not making a will at all.
- IF YOU SAVE: Use up your annual ISA allowance - 263 million in tax could be avoided by sheltering investments in ISAs, or moving savings from an ordinary deposit or savings account to an ISA. Also consider a Friendly Society savings account or products from National Savings & Investments as tax-efficient savings options.
- IF YOU ARE ELIGIBLE: Claim your tax credits - 3.7 billion of ‘free money’ is up for grabs from HMRC and the DWP, in the form of Pension Credits, Child Tax Credits and Working Family Tax credits.
- IF YOU FILL IN A TAX RETURN: Sort out your self-assessment - 479 million waste could be wiped out by all forms arriving present and correct by the 31st January deadline. Self-assessment forms received after the deadline incur penalties of 100; further penalties and errors make up the balance of tax wasted in this way.
- ALL TAXPAYERS: Maximise your personal tax allowances - 474 million goes begging each year, 330 million through non-taxpayers failing to claim tax back on banks and building society savings accounts, and a further 144 million by taxpayers not transferring savings accounts to non-taxpaying spouses, if appropriate, so that the tax liability on the savings is lower, or none.
- IF YOU SAVE: Top up your pension pot - 726 million could be spared by optimising contributions to personal or company pension schemes, or making Additional Voluntary Contributions.
- IF YOUR EMPLOYER OFFERS AN EMPLOYEE SHARE PLAN: Take advantage of it - 184 million is up for grabs for the estimated 600,000 staff currently in Profit Related Pay schemes.
- IF YOU HAVE CAPITAL GAINS: Use your allowance efficiently, perhaps by transferring assets between spouses to make the most of both of your CGT allowances - 264 million could be saved in this way.
- IF YOU GIVE TO CHARITY: 936 million more could go to good causes by using tax-efficient means of charitable giving, i.e. using a deed of covenant, Gift Aid or payroll giving.
- IF YOUR CHILD OR GRANDCHILD IS ELIGIBLE FOR A CHILD TRUST FUND: Avoid waste by using up the tax free saving potential - 242 million in tax could be saved in their first yearof existence.
For further information please contact:
David Elms | Anna Schirmer/Jennifer Comerford |
Chief Executive | Lansons Communications |
Unbiased.co.uk | 020 7294 3682 |
020 7833 3131 |
For expert comment or case studies from over 200 media-friendly IFAs, journalists should call Unbiased.co.uk’s Media Services hotline on
020 7294 3682 or search online at www.unbiased.co.uk/bluebook
1. Unbiased.co.uk
Unbiased.co.uk (IFA Promotion) is a not for profit organisation which promotes the benefits of Independent Financial Advice to UK consumers. Over the past 12 months, over 575,000 consumers have used Unbiased.co.uk’s confidential ‘Find an IFA search’ to find local member IFAs - 94% of these enquiries are now dealt with online.
Unbiased.co.uk, which is in its 19th year, creates over 6,000 pieces of positive coverage in the consumer media each year, highlighting the importance of seeking independent financial advice across online, broadcast and print media. This positive media generation influences consumers’ behaviour and increases their awareness of the benefits of seeing an IFA.
Unbiased.co.uk is now positioned as the online gateway between consumers researching their financial advice options and member IFAs. Over 60 white label versions of Unbiased.co.uk’s ‘Find an IFA’ service are now running on partner websites including those of media and portal money channels, product provider sponsors and other industry bodies.
When searching for a ‘Find an IFA’ on UK Google, around 80% of the returned links over the first five pages of search results now display either Unbiased.co.uk directly or a white label version of Unbiased.co.uk’s ‘Find an IFA’ service running on a partner website. To support this activity Unbiased.co.uk now regularly provides white label versions of its consumer guides, tools, microsites and podcasts to partner personal finance websites.
2. Unbiased.co.uk’s product provider sponsors
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AEGON Scottish Equitable Plc | MetLife |
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Bright Grey | Norwich Union Life |
BPP | Prudential |
Canada Life Ltd | Scottish Life |
Cardif Pinnacle | Scottish Life International |
The Children’s Mutual | Scottish Widows Plc |
Clerical Medical Investment | Skandia UK Group |
Defaqto | Standard Life Assurance Company |
Friends Provident | Tomorrow |
The Hartford | Unum |
Invesco Perpetual | Zurich Intermediary Group |
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