Alabama Town’s Failed Pension Is a Warning

Alabama Town’s Failed pension Is a Warning

The New York Times, December 22nd, 2010

This struggling small city on the outskirts of Mobile was warned for years that if it did nothing, its pension fund would run out of money by 2009. Right on schedule, its fund ran dry.

Then Prichard did something that pension experts say they have never seen before: it stopped sending monthly pension checks to its 150 retired workers, breaking a state law requiring it to pay its promised retirement benefits in full.

Since then, Nettie Banks, 68, a retired Prichard police and fire dispatcher, has filed for bankruptcy. Alfred Arnold, a 66-year-old retired fire captain, has gone back to work as a shopping mall security guard to try to keep his house. Eddie Ragland, 59, a retired police captain, accepted help from colleagues, bake sales and collection jars after he was shot by a robber, leaving him badly wounded and unable to get to his new job as a police officer at the regional airport.

Far worse was the retired fire marshal who died in June. Like many of the others, he was too young to collect Social Security. “When they found him, he had no electricity and no running water in his house,” said David Anders, 58, a retired district fire chief. “He was a proud enough man that he wouldn’t accept help.”

The situation in Prichard is extremely unusual — the city has sought bankruptcy protection twice — but it proves that the unthinkable can, in fact, sometimes happen. And it stands as a warning to cities like Philadelphia and states like Illinois, whose pension funds are under great strain: if nothing changes, the money eventually does run out, and when that happens, misery and turmoil follow.

It is not just the pensioners who suffer when a pension fund runs dry. If a city tried to follow the law and pay its pensioners with money from its annual operating budget, it would probably have to adopt large tax increases, or make huge service cuts, to come up with the money.

Current city workers could find themselves paying into a pension plan that will not be there for their own retirements. In Prichard, some older workers have delayed retiring, since they cannot afford to give up their paychecks if no pension checks will follow.

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Who Thrives After Surgery?

Who Thrives After Surgery?

The New York Times, December 27th, 2010

Martin A. Makary, a surgeon and public health researcher at Johns Hopkins Hospital in Baltimore, had a long talk with a patient last week. The man had a tumor in his pancreas that was probably benign but might not be. Should Dr. Makary remove it? Or should the man have regular scans to see whether it grew?

“If you’re 25, the decision is easy — get rid of that risk,” Dr. Makary told me afterward. But this patient was 89.

Let’s pause for a moment to consider the changing surgical landscape. When Dr. Makary was in training, he recalled, surgeons were just starting to offer elective procedures to patients in their 70s. Now, with better techniques, safer anesthesia and, of course, more old people — half of all operations in the United States are performed on those over age 65.

“It’s become acceptable to do major procedures on very old patients,” he said. “We routinely do elective surgery on people in their 80s and 90s.”

That doesn’t mean it’s always a good idea, or that it’s easy to calculate the costs and benefits. How very old patients respond to surgery has proved unpredictable. “There are some people you worry won’t do well, and then they fly,” Dr. Makary said. “And some people you are confident will do well have a cascade of symptoms that lead to their demise or permanent disability — and everybody is shocked.”

Surgeons eyeball their patients all the time to try to evaluate whether they can recover well from the stress of an operation, but it’s an inexact science. “You can be thrown off by hair or teeth or wrinkles, things that don’t have much to do with physiologic reserve,” Dr. Makary said.

The usual tests surgeons use to try to predict how older patients will fare are crude, Dr. Makary added, mostly based on cardiovascular strength. And standard estimates of mortality and length of hospitalization for specific operations are all but useless for patients who might be 30 or 40 years older than the norm.

But thanks to a rather elegant piece of research by a Johns Hopkins team, recently published in The Journal of the American College of Surgeons, surgeons can give more informative answers when elderly patients in this situation, or their families, wonder what to do.

Read more of this article.

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How to plan for a richer retirement

Fancy surviving ice-cold winters without heating? Or rummaging through value ranges at the supermarket for cheap reconstituted meat every week? Didn't think so.

Unfortunately, that's the prospect for millions of Britons who reach retirement and have to make do on the measly £97.75 a week state Pension, having failed to plan effectively.

The stark reality is that putting something aside for old age has become an unavoidable necessity these days.

As life expectancy rises, many of us can expect 45 years in employment followed by 30 years of retirement, possibly living on until we're in our nineties.

So, how can you make sure you're not left out of pocket for three whole decades? Simple answer: plan effectively.

How, exactly, to do this is a tricky question. After all, it varies greatly depending on how far you've journeyed through life.

So to make things a little simpler, we've put together this easy-to-follow guide on making sure your golden years are rich and fulfilling.

We've recruited the help of two highly-regarded pensions experts, to keep you on track.

One is Mike Morrison, a man with a treasure trove of experience in the pensions industry and currently head of pensions development at Axa Wealth. The other is Martin Bamford, the managing director of award-winning IFA, Informed Choice.

Follow our decade-by-decade guide below...

›› IN YOUR 20s

Key points:

• Focus on clearing your debts
• But make sure you open an Isa.
• Then save what you afford.

In your twenties you probably have your first proper job with a proper salary. But retirement will seem a long way in the future. At this stage, it's reasonable to allow other financial objectives to take priority.

According to Mike Morrison, those in their 20s should first look into repaying any student debt, especially more expensive bank and credit card debt, cover all living costs, and then see if there's enough left to squirrel some away.

- How to pick the best Isa

Martin Bamford says that saving something, however small, is better than nothing: 'Starting a Pension this early is a great way to build up a bigger retirement fund for later in life, as you add more contributions over your lifetime and they have longer to grow. Even if you can only afford a small amount, this is about forming a healthy savings habit.'

One of the best places for younger adults to put savings is a tax-free Isa.

'It might be better practice to save using an Isa where you are still building financial resources for the future but have greater flexibility in terms of access to the money,' says Bamford.

At this stage, a Pension is by no means a necessity.

Pension TOOLS & HELP

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›› IN YOUR 30s

Key points:

• Reassess your debts and outgoings
• Join your company Pension scheme as soon as possible
• Think long-term with your investments.

So you're in your 30s. This can be a busy decade from a financial perspective. All of us face new challenges, with the costs to go with them. You may be getting married, starting a family or buying your first house. Or a combination of the three.

First things first, then: re-establish what debt you have and find ways to address it. Once you've done this, says Mike Morrison, you should ask yourself a set of questions: 1. Do you now have your own family to consider? 2. Do you have sufficient 'rainy day' savings? 3. Have you bought / are you looking into buying a house?

Marriage? Young couples in their 30s are faced with myriad financial concerns

This should help you establish a overview of your key financial outgoings. There is a fine balance to be struck between saving for the future and paying off debt, particularly expensive unsecured debt such as credit cards and personal loans.

Once this is done, there's no time to waste. Explore your retirement saving options as soon as you can. Your first point of call should be to find out if your company offers a Pension scheme. If so, they'll make contributions on your behalf. This is effectively a pay rise – if you don't take it, you're turning down free money.

Martin Bamford says: 'Make sure you are a member of your company Pension scheme if one is offered and take an interest in how this money is being invested. Too many Pension scheme members select the default investment option rather than something tailored to your own financial objectives'

Take a long term view on your Pension investments. You can afford to take on more risk – in the form of shares - as there is a high chance this will pay off in 30 years' time. The old adage, 'shares outperform savings accounts in the long run', still rings true.

But remember, adds Bamford, that retirement planning is about more than just building a big Pension fund - make sure your budget is under control and clear debts where possible.

›› IN YOUR 40s

Key points:

• If you haven't started saving, do something about it!
• Keep building your Isa
• Your earnings should be peaking - dedicate some to a Pension

Ideally, by the time you reach your 40s you'll already have built up some retirement savings, whether in the form of Isas or a company or personal scheme.

But if you haven't already started, it's not too late. It will just require more effort. This is a very crucial time for your retirement planning, and it's imperative that you act now. Your earnings are likely to be approaching their highest during this decade, and you should now be on top of your debts. All in all, you should be in a good position to start dedicating some real money towards planning for the future.

Try our Pension pot calculator to get a better picture

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'Make the most of pay rises and bonuses to boost your retirement savings, rather than simply increasing your expenditure each time,' says Martin Bamford. 'This is the time to take your retirement planning seriously, and that means having a target retirement age and understanding what your lifestyle will look like in retirement. You might not be able to paint an accurate picture of your retirement just yet, but you should be thinking about it in broad terms and making sure your financial plans are on track to deliver.'

The least you should have is an Isa, says Mike Morrison. Keep contributing to this over the years and try to build up your tax-free savings. Crucially you'll need to start planning the sort of income you expect to receive in retirement. If you plan to pack it all in early, then factor this into your thinking and make sure you increase your savings contributions.

›› IN YOUR 50s

Key points:

• Maximise your contributions
• Remove risk from your Pension investment plan
• Consider using a Sipp for greater control

Right, it's time to get serious. This decade is perhaps the most important of all when it comes to retirement planning.

Big 50: When you hit the half century, it's time to get serious about your Pension

Firstly, do you have a retirement date in mind? It might not be definitive, but it should serve as a guide. Then calculate the sort of income you want. 'Perhaps work out a minimum and a 'nice to have',' says Mike Morrison.

Next, take a detailed look at your Pension and where it's invested. You'll need to be positioning your Pension fund for your choice of retirement income option.

'If you are likely to purchase an annuity when you retire, you should be phasing out volatility from your Pension fund so there is less risk of a big dip in value a short time before you take benefits,' says Bamford. Take money out of risky equities and put it into safer cash investments. There could be nothing worse at this time than seeing a stock market lurch take a chunk out of your pot just as you're about to dig in.

Hopefully, you'll have accumulated a sizeable Pension fund by this age. If this is the case for you, consider using a Self Invested Personal Pension (Sipp) to exercise greater control over the way in which it is invested.

- How to find the cheapest Sipp

Consider maximising your contributions, too. Particularly if you are a higher rate taxpayer (remember that pensions can be tax-efficient). You may have grown up children you wish to support financially, but try to strike the balance. As much as you can should go towards your pot - you won't have many other chances to maximise the size. If, and when you purchase an annuity, this can make a serious difference to your annual income.

PENSIONS: COMPARE & APPLY

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Equity releaseCompare equity release schemes and get expert advice

Life insuranceCompare providers to get the best policy

›› IN YOUR 60s

Key points:

• Check that all your debts, including mortgage, are in order
• Decide on whether you'll buy an annuity immediately or take drawdown
• Talk to an IFA before you take any action.

You're almost there. During this decade you will be making important decisions about how your Pension fund produces cash and income in retirement.

'These are often lasting decisions that can have a major impact on your finances in later life, so it is the time to seek expert independent financial advice,' says Bamford.

This is particularly true in the case of annuities, where the options are varied. Essentially annuities are like insurance in reverse - you hand over a large lump sum (your Pension pot) to an annuity provider, and they give you regular monthly payments in return for the rest of your life.

You may qualify for a higher annuity rate if you are a smoker or have an illness. This is called an enhanced annuity.

- Deals: Find the best annuity rates

- Forecast: What next for annuity rates?

Relax: If you've planned carefully, your retirement truly can be your golden years

Martin Bamford says: 'Making choices at retirement is about so much more than simply choosing the most competitive annuity rate. It is becoming increasingly popular to use an Unsecured Pension to have greater control over income flexibility in retirement, often phasing the payment of tax-free cash over several years to reduce income tax bills. This is a more complicated strategy than buying an annuity but can really pay off over the longer term.'

Mike Morrison says that it's important to make sure all your debts are in order. Hopefully you will have been able, or are close, to paying off your mortgage, but what about children on your payroll? Are you still supporting them and their young families? These are important issues to discuss with an IFA before you sign up to an annuity.

Additionally, you may be fit and able and want to keep working. This is now possible because the government is set to prohibit employers from forcing their staff to retire at 65. It may be beneficial to keep working for a period and top up your pensions as much as you can.

'Don't forget,' says Morrison, 'pensions contributions get tax relief, so any immediate contribution gets an uplift from the taxman.'

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Last updated in October 2010 by Dan Hyde

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Boomers Recognize Need for Long-Term Care, But Fail to Obtain Coverage

Boomers Recognize Need for Long-Term Care, But Fail to Obtain Coverage

Reverse Vision, December 19th, 2010

A recent study of Baby Boomers finds that while the Boomers have experienced the struggle their parents are facing with long-term care, few are doing anything to acquire their own coverage. The results of the survey show that more needs to be done to educate and motive Baby Boomers to seek long-term care coverage sooner, rather than later.

The online survey, conducted by the research firm of Mathew Greenwald & Associates, was taken by 1,073 Americans between the ages of 46 to 64. The survey revealed that personal experiences, such as the current economic hardship or watching their parents age, have inspired many Boomers to take hold of their financial future, including seeking out long-term care coverage.

“This study explored the influence a parents’ long-term care experience can have on their Boomer children,” said Mathew Greenwald, of Greenwald & Associates. “Boomers overwhelmingly say they learned the consequences of being unprepared, however very few currently have long-term care Insurance. Even though Baby Boomers face a more than seven in ten chance that they will have some long-term care needs later in life, many haven’t connected the risk to their own personal situation.”

The survey’s findings exposed powerful recognition of the benefits of having long-term care Insurance among Baby Boomers – mainly for financial and emotional benefits such as protecting their families from paying, providing peace of mind, ensuring retirement savings remain, and helping with the ability to leave an inheritance.

Approximately 72 percent of Baby Boomers whose parents had used long-term care Insurance said it was a “good value” for reasons such as increasing quality of life, preserving the parents’ nest egg, and lessening the family’s financial contribution to care. Of those Boomers whose parents did not have long-term care coverage and needed it, 71 percent think that coverage would have benefited their families.

The study found that while more than half of the surveyed Boomers worry that they will need long-term care themselves, only 9 percent of these Boomers have actually purchased long-term care coverage. Many signs point to the fact that Boomers do not fully understand how long-term care financing works and do not grasp the concept of paying now and benefiting later on in life.

Read more of this article.

Long Term Care Insurance:  Long Term Care coverage is a more and more critical portion of any serious retirement plan, and the lack of it can absolutely destroy not only your retirement plan, but those of your relatives and loved ones.  While not everyone should purchase it, everyone should at least consider it.  Find out more at NewRetirement.com

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Interactions cause seniors to drop antidepressants

Interactions cause seniors to drop antidepressants

Yahoo News, December 17th, 2010

More than half of older Americans taking an antidepressant for the first time were already taking another drug that could interact with it and cause side effects, researchers reported on Friday.

And a quarter of patients who suffered side effects stopped taking antidepressants altogether, the study by a team at Thomson Reuters, the University of Southern California, Sanofi Aventis and elsewhere found.

"We found a concerning degree of potentially harmful drug combinations being prescribed to seniors," Dr. Tami Lee Mark of Thomson Reuters, parent company of Reuters, said in a statement.

Other studies have found that older adults are often taking dangerous combinations of prescription drugs, but doctors are not getting the message, the researchers report in the American Journal for Geriatric Psychiatry.

The research team used a Thomson Reuters database of claims for Medicare, the federal health insurance plan for people over 65.

They found more than 39,000 patients who started antidepressants between 2001 and 2006. "Twelve commonly reported antidepressant side effects were identified in the month after drug initiation," Mark's team writes.

More than 25 percent of the patients were prescribed antidepressants and another drug that could cause a major interaction. Another 36 percent had potential moderate interactions.

"The most common side effects were insomnia, somnolence and drowsiness, which occurred in 1,028 (2.6 percent) patients. The next most common side effect was dizziness, which was documented in 416 (1.1 percent) patients," the researchers report.

The side effects meant patients often dropped the drug they were taking. Only 45 percent of those with documented side effects refilled the prescription for the same antidepressant, and a quarter quit taking antidepressants altogether.

Many adults are at risk of this problem, the researchers point out -- other studies show that 25 percent of older adults with chronic illnesses such as arthritis or heart disease also have depression, and they have also been shown to be helped by antidepressants.

Read more of this article.

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Scottish Eq savers due Ј60m rebate

Scottish Equitable has been fined and ordered to make the repayments by the financial Services Authority (FSA) after it owned up to 300 separate errors, affecting over 200,000 people.

It says around 150 of these errors left customers short of a total £60m they should have received.

So far 181,500 pensioners and savers are known to have been overcharged, under-paid or are missing income altogether.

Around £30m – half the total amount – will have been handed back to them by end of this month.

Aegon, the parent company of Scottish Equitable, is on track to repay the rest of the lost MONEY by 'the end of 2011'.

However, both the number of affected customers and the £60m figure could rise as investigations continue, the company admitted.

A spokesperson for Aegon said it will endeavour to 'return affected customers, wherever possible, to the financial position they would have been in had the issue not occurred'.

If this cannot be done, it will 'pay them appropriate compensation', instead.

In all, Aegon has written to 280,000 people – around one in ten of its total customer base – to advise them of the errors.

'If customers don't hear from us, there is nothing to worry about,' Aegon told This is MONEY.

The FSA today fined the company £2.8m for the errors, in addition to the order to repay customers.

The problems were discovered in May 2009 when Scottish Equitable began a review of systems. It immediately began repaying the lost MONEY and then brought the issue to the attention of the FSA in December 2009. An investigation was launched and finally concluded today.

According to the FSA, around 238,000 people did not receive policyholder documents and a further 774 customers had their guaranteed minimum Pension payments and future benefits calculated incorrectly.

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BrokenBut how do we fix pensions?

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Good riddanceIt's time to scrap final salary pensions

Meanwhile, Aegon failed to rebate charges on 25,000 policies.

Aegon also failed to trace around 200,000 policyholders who had moved without informing the insurer of their new address.

Margaret Cole, FSA managing director of enforcement and financial crime, said: 'The redress package is significant news for the customers of Scottish Equitable and I am pleased that £30m will already have been paid back by the end of the month.

'This case shows the importance of getting customer administrative procedures right and fixing them quickly when they go wrong. This is a key part of treating customers fairly.

'By letting the issues build up over such a long period Scottish Equitable made it even more difficult to fix the problems and this led to delays in getting compensation to customers.'

A statement from Aegon said: 'Aegon brought the programme to the FSA's attention last year as part of its ongoing dialogue with the regulator.

'It fully accepts the FSA's findings and sincerely regrets that some customers have suffered financial loss or inconvenience as a result.

'The immediate priority of the programme has been to deal with issues that resulted in financial detriment and to return affected customers, wherever possible, to the financial position they would have been in had the issue not occurred and, if not, to pay them appropriate compensation.'

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Wealth Questions - How can 55% tax be attractive?

Are pensions really becoming more attractive for inheritance tax (IHT) planning? I have always thought that building up my pension fund was more attractive than wasting money on life insurance: if I die, my partner would receive a six-figure sum from the value of my retirement savings, free of all taxes including IHT. And, of course, if I don’t die, we get to enjoy the pension.

But following last week’s government announcement on retirement flexibility, FT money tells me that pensions will become the “estate planning vehicle of choice”. However, while there will be no IHT on pensions that remain invested in the stock market, there will be still be a hefty 55 per cent tax charge. This doesn’t sound particularly attractive – what am I missing?

Laith Khalaf, pensions analyst at Hargreaves Lansdown, the financial adviser, confirms that up until the point you draw any pension benefits – and so long as you are under 75 – your entire pension fund would be passed on free of all tax including inheritance tax (IHT). So, yes, a substantial pension fund could take the place of life insurance for someone yet to retire.

But bear in mind that with life insurance you get full cover from day one – rather than the value needing to be built up.

This tax-free status of pensions on early death does not change under the latest proposals.

Also, many retirement savings schemes provide a dependant’s pension, with the income taxed solely at the recipient’s marginal rate, or other death-in-service benefits – so reducing the need for separate life insurance.

However, where you have started drawing on your pension via an income drawdown plan – including taking the tax-free lump sum – or have reached 75, then the residual capital can be passed on but is subject to a tax charge.

Previously, this charge has been 35 per cent on death before age 75 and up to 82 per cent on death after age 75. Under the new proposals from April 2011 there will be just one charge of 55 per cent, irrespective of your age on death.

While this might still sound steep, it is a great improvement for the over-75s – hence the talk of estate planning benefits. Also bear in mind that all the government is trying to do here is recoup the tax relief it has paid on your pension fund, leaving the money you have saved yourself to be passed on to your heirs.

So the size of the tax charge simply reflects the generosity of the tax relief paid on your pension in the first place. The government has estimated that for a higher-rate taxpayer, 55 per cent of their pension fund at retirement is made up of tax relief, hence this level of tax should be charged on death to recoup these monies. The remaining fund can then be passed directly to the beneficiary, without IHT.

A slightly different treatment applies to “Protected Rights”, the money that has built up in your pension as a result of contracting out of the State Second pension (S2P). When you die, these funds must provide a pension income for a surviving spouse or dependant. If no spouse or dependant exists, they can then be paid out as a lump sum. However, these special rules are set to be abolished from April 2012.

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AXA Equitable Study Shows New Retirement Reality – People Will Work Longer

AXA Equitable Study Shows New Retirement Reality – People Will Work Longer

AXA Equitable, December 16th, 2010

AXA Equitable Life Insurance Company released today results from its Retirement Reality Study – one of the largest global surveys to poll workers and retirees on numerous Financial topics, including their views on and preparations for retirement.

Results from AXA’s latest survey show that today’s working world anticipates retiring much later than previous generations. The average age of retirees polled around the world is 57 years old. However, current workers anticipate retiring at 61 – a full 4 years later.

In addition to working longer, people in most countries are expecting a lower standard of living in retirement. Globally, 43 percent of workers and 30 percent of retirees believe their retirement income will be insufficient. Working people know they need to prepare for retirement, with 46 percent saying they have started to prepare and an additional 37 percent intending to start later. 

“Our survey shows people realize they will be increasingly dependent on personal savings in retirement but aren’t ready,” said Andrew McMahon, senior executive vice president of AXA Equitable and president of its Financial Protection & Wealth Management business. “Clearly individuals are coming to terms with the reality that they won’t be able to retire until many years after they hoped, unless they prepare successfully.”

Americans Are Getting It Right at a Younger Age

Americans are among the top nations surveyed to say that they have already started their retirement planning. Among U.S. Workers, 72 percent said they have started saving for retirement, compared with a global average of 46 percent. Not only has a large percentage of Americans started preparing for retirement, they are starting younger than people in other countries. U.S. workers are among the youngest to say that they have started to prepare for retirement; the average age in the U.S. is 31, compared with the worldwide age of 34.

Although Americans seem more prepared than their counterparts in other countries, the anticipated retirement age is still among the highest of any country. The average American anticipates retiring at 64, three years older than the survey average of 61, and six years older than their desired retirement age of 58.

This is the fifth global survey released by AXA Equitable and its parent, AXA Group, and is part of the company’s continued effort to enhance its understanding of the retirement issues.

Additional survey findings include:

The main triggers to start saving for retirement in the U.S. are:

Employer contributions to a defined contribution plan

Reaching a key age

Advice from family or friends

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Portfolio Names Best Places for Seniors to Retire to in 2011

Portfolio Names Best Places for Seniors to Retire to in 2011

Yahoo News, December 12th, 2010

As retirement communities and senior living facilities clamor for the hard-earned Social Security funds and personal savings of today's retirees, Portfolio names the best places to retire to. What's hot, what's not and why?

Who are today's Retirees?

Portfolio selected its list of best places to retire to by matching retirement communities and senior living options to the likely customers: baby boomers. Estimating that roughly 3 million Americans will reach age 65 and seek out the best places for seniors in 2011, this huge chunk of the population eligible for Social Security represents a surprisingly large demographic with equally sizable buying power.

What's Hot?

The undisputed hot spot is Bradenton-Sarasota, Florida. Second and third on the list are Prescott and Lake Havasu City, which give a nod to Arizona. The list of the best places to retire to continues on with only Florida locales: Cape Coral-Fort Myers, Naples, Palm Bay-Melbourne, Homosassa Springs, Ocala, Punta Gorda and Port St. Lucie round out the top 10.

What's Not?

The bottom five places on the 157-city list of the senior living hot spots are Harrisburg (Penn.), Jackson (MS), Columbia (SC), Baton Rouge (LA) and Ogden (UT).

What Differentiates Bradenton from Ogden?

According to the statistical data, the total 2009 population of Ogden was 542,642. Those aged 65 and above made up 48,798 of these residents, which translates to roughly 8.99 percent. The median age in Ogden is 30 years and the percent of seniors born out of state is above 45.

In contrast, Bradenton-Sarasota featured a 2009 population of 688,126, of whom 184,455 (or 26.81 percent) are senior citizens. The median age is slightly above 48 and the percentage of those moving into the retirement communities from out of state topped 95 percent.

The main draw, says Portfolio's editor to PR Newswire, is the presence of an already established senior living community. A warm climate is another big plus.

How Much Credibility Has the List of the Best Places to Retire to in 2011?

The entrepreneur ready to expand into the baby boomer market may wish to take a few pointers from Portfolio and set up shop in Bradenton-Sarasota and surrounding areas. That said, do not bet the farm on Bradenton becoming a lasting hot spot.

Read more of this article.

Relocation assistance:  Relocating, even to a good area for seniors, is not an easy process.  There are companies and organizations that can help with the physical, organizational, and logistical aspects of relocating or downsizing your home.  Find out more at NewRetirement.com

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Firms push staff to end final salary pensions

Workers are typically enticed with a cash lump sum in exchange for the final salary pension benefits they have built up over many years. This money must be transferred into a personal pension, but in most cases they will be worse off in retirement.

Final salary schemes pay a guaranteed pension, based on length of service and salary on retirement. Unlike other pensions, they provide protection against inflation, falling annuity rates and stock market movements.

They also offer good life insurance cover and benefits for widows and children. Crucially, they tend to pay far more than other types of pension for the same level of saving.

A typical final salary pension would pay an average earner £12,626 on retirement after 20 years, compared with just £5,099 in a typical defined contribution pension, according to financial adviser Hargreaves Lansdown.

The tactics, revealed by the watchdog the Pensions Regulator, have harrowing echos of the pensions mis-selling scandal that occurred 20 years ago.

On that occasion, insurers and financial salesmen were forced to pay more than £10bn in compensation after 1.6m people were misled into ditching final salary pensions between 1988 and 1994.

This time the Pensions Regulator has found shocking evidence of underhand tactics, including:

• Cash bribes being offered to workers to give up the benefits they have already earned;

• Firms offering to pay for financial advice for staff - but only if they take the advice given;

• Excessive pressure and ultimatums to make a decision;

• Inaccurate or incomplete information provided to members. This can include threats that the pension scheme is likely to close;

• Using sales tactics such as claiming they are making a special offer for a limited time;

• Badgering former staff with phone calls at home.

Employers are desperate to ditch final salary schemes because increased life expectancy means they have to pay out for longer. And poor investment performance is forcing them and employees to contribute more. As such, they are rapidly becoming extinct in the private sector.

But in the public sector, where taxpayers foot most of the bill, they are thriving.

Official figures from the Office for national Statistics show just 1.1m private sector workers are members of open final salary pensions - a massive drop from the 4.9m in 1995.

However, 5.2m people have final salary pensions from former employers.

pension expert Robert Reid, from financial adviser Syndaxi financial Adviser, says : 'Employers are doing this to save money and workers are being shafted. Appealing to people's need for immediate cash while damaging their long-term future is reprehensible.'

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Cash offers are usually made to 'deferred members' - former employees or staff who have built up pensions but have seen their final salary pension closed to future contributions.

But the Pensions Regulator says staff who are still paying into schemes are also being pressured to ditch these benefits.

However, if they swap to a defined contribution scheme, most would need to use the money to buy an annuity to pay their retirement income. Since June 2009, annuity rates have fallen by 8%, according to annuity firm MGM Advantage, and hit record lows earlier this year.

Now the Pensions Regulator has issued tougher guidelines for employers and trustees of pension schemes. It demands that employers and the financial advisers they use must start from the presumption it is not in workers' best interest to switch.

Offers must be made in a clear, fair and not misleading way. Employers must spell out the benefits they are giving up, and illustrate how much it would cost to match these in a new pension.

Firms must not pay financial advisers based on how many people they persuade to ditch their final salary pension.

Staff and former staff must be given access to independent financial advice, rather than just being offered advice from the firm's financial adviser.

David Norgrove, chairman of the Pensions Regulator, says: 'It can be extremely difficult for a member to weigh up whether giving up a defined benefit pension promise in exchange for a cash transfer into a defined contribution scheme will be in their interests in the long term.'

But the watchdog has stopped short of an outright ban on cash bribes. It has also failed to take any action against firms that have been pressurising people to give up their final salary pensions.

Experts say the few occasions when switching could be worthwhile are for those in ill-health, single workers with no dependents or those who urgently need cash to pay off personal debts.

I lost £440,000 if income

Peter Cuthbert, 67, is paying the price for ditching his final salary pension almost 20 years ago. he estimates the decision will cost him and his wife Elaine (both pictured) £440,000 in lost income by the time he turns 80.

He says: 'It's a bitter pill to swallow and it's so frustrating that this kind of thing is still going on. I would advise others not to make the mistake I did.'

Mr Cuthbert, from Notts, worked for Kodak for 22 years, paying into its final salary pension all that time. But, in 1991, he was made redundant and Kodak set up a meeting with a financial adviser, Sedgwick Noble Lowndes - now Mercer.

He was misled into switching his money into a with-profits personal pension. If he had stayed in the Kodak scheme, he would have enjoyed an income of £38,000 a year, payable from the age of 63 and then increasing in line with inflation.

Instead, he is receiving a fixed income of £16,000 - including the £47,812 compensation he got from Mercer for the mis-selling in 2000.

A Kodak spokesman says: 'There was no financial arrangement between Kodak and Sedgwick Noble Lowndes. Kodak encouraged employees leaving the company to remain in the final salary pension scheme, and an overwhelming majority decided to do so.'

• This is money has teamed up with our sister website MailOnline to build a calculator, powered by Pensiontracker, that will help you:
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Read more: Pension

Closing In on Alzheimer’s Disease

Closing In on Alzheimer’s Disease

The New York Times, December 14th, 2010

Alzheimer’s researchers are obsessed with a small, sticky protein fragment, beta amyloid, that clumps into barnaclelike balls in the brains of patients with this degenerative neurological disease.
It is a normal protein. Everyone’s brain makes it. But the problem in Alzheimer’s is that it starts to accumulate into balls — plaques. The first sign the disease is developing — before there are any symptoms — is a buildup of amyloid. And for years, it seemed, the problem in Alzheimer’s was that brain cells were making too much of it.

¶ But now, a surprising new study has found that that view appears to be wrong. It turns out that most people with Alzheimer’s seem to make perfectly normal amounts of amyloid. They just can’t get rid of it. It’s like an overflowing sink caused by a clogged drain instead of a faucet that does not turn off.

¶ That discovery is part of a wave of unexpected findings that are enriching scientists’ views of the genesis of Alzheimer’s disease. In some cases, like the story of amyloid disposal, the work points to new ways to understand and attack the disease. If researchers could find a way to speed up disposal, perhaps they could slow down or halt the disease. Researchers have also found that amyloid, in its normal small amounts, seems to have a purpose in the brain — it may be acting like a circuit breaker to prevent nerve firing from getting out of control. But too much amyloid can shut down nerves, eventually leading to cell death. That means that if amyloid levels were reduced early in the disease, when excess amyloid is stunning nerve cells but has not yet killed them, the damage might be reversed.

¶ Yet another line of research involves the brain’s default network: a system of cells that is always turned on at some level. It includes the hippocampus, the brain’s memory center, but also other areas, and is the brain’s mind-wandering mode — the part that is active when, for instance, you’re driving in your car and you start thinking about what you will make for dinner. That brain system, scientists find, is exactly the network that is attacked by Alzheimer’s, and protecting it in some way might help keep the brain healthier longer.

¶ For example, during nondreaming sleep, the default network is thought to be less active, like a light bulb that has been dimmed. The network also ramps down during intense and focused intellectual activity, which uses different areas of the brain. One emerging theory suggests that if the default network can be rested, amyloid production might be decreased, allowing even an amyloid disposal system that was partly hobbled by Alzheimer’s to do a better job.

¶ The result of all this work is a renewed vigor in the field. After years in which it was not clear how to attack this devastating disease, scientists have almost an embarrassment of riches. The research is in early stages, of course, and there are many questions about which discoveries and insights will lead to prevention or a treatment that works.

Read more of this article.

Read more: Pension

What if I die before I collect my pension?

Think again. For many of those in work, the pension accumulated in their name will be worth far more than they realise, running into tens or possibly hundreds of thousands of pounds.

So it is crucial to think about what might happen to this wealth if an accident or illness means you do not live to collect the pension.

Paul McGlone, a pensions actuary at consultant Aon Hewitt, says: 'If you are aged 25, there is a 95 per cent chance that you will reach 65 to claim your pension.'

Put another way, five out of every 100 workers are likely to die before normal retirement age. An early death can land families in a Financial nightmare.

And changes to relationships, such as divorce, can lead to conflict over what happens to a pension pot.

Helen Kanolik, who runs HelenK Financial Advice in Wimborne, Dorset, says: 'I've seen cases where someone has died and their pension has gone to people from whom they are now estranged.' So it is vital to sort out your pension legacy.

Company schemes

The golden rule on these is to tell your employer exactly who you want to benefit.

Staff can sign an 'expression of wish' form, detailing who they want any pension lump sums or income to be paid to. This gives clear direction to the trustees of your company pension, though it is not legally binding.

It is important to complete a wishes form, even if you have already written a will. Some pension entitlements never become part of your estate, so they are not covered by a will.

McGlone says: 'The most difficult conversations I see at pension trustee meetings are when someone has died and their wishes are not clear. The trustees are left scratching their heads over who to give the money to.' The sums concerned are significant.

In a final salary scheme, there is usually a lump sum deathin-service payment, typically three or four times salary. On top of this, a spouse or partner can receive an annual widow's pension and there may be separate dependants' pensions paid to each child up to the age of 18 or 21.

In money purchase pensions, also called defined contribution schemes, there is again usually an insured death-in-service payment linked to salary. Then your relatives will get a return of the value of the pension fund that has been accumulated, including contributions from the employer.

Kanolik says: 'You may not realise quite how valuable the whole death-in-service package is, so there is every incentive to keep your expression of wish form up to date.'

Don't forget about pensions with former employers. Tell them where you live and, if your plans change, you can complete a new expression of wish form.

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Evolving family circumstances can affect your decision about where the money should go.

Matt Hall, 42, and Emma Bishop, 37, are expecting their first child in January. And Matt wants to be sure Emma and their baby are provided for should he die.

They have both been married before and they live with Max, 7, Emma's son from her previous relationship. Matt says: 'It is second time round for us so there are lots of issues to consider.' The couple, who are renovating the old farmhouse where they live in Swindon, have drafted wills. Matt, a website controller for Nationwide Building Society, has also updated his expression of wishes form.

'More by luck than planning, I was able to transfer the pension from my previous job into the Nationwide scheme when I joined, so I've sorted out what will happen to the whole fund,' he says. 'It's reassuring to know I have reviewed the pension and everything is in order.'

Personal plans

In most circumstances, an early death will trigger a payment of whatever your personal pension fund is worth at the time you die.

For a few older schemes, usually those started before 1988, the contract offers only a return of the premiums you have paid, with or without interest. But most insurers voluntarily choose to be more generous and return the value of the fund. Again, you can use an expression of wish form to say who should get this money.

Most savers choose to pay money direct to their spouse, but in some cases, especially where there is a substantial pension, it can pay to make different arrangements and set up a pension by-pass trust. This means that if you die, the money goes straight into trust.

money can still be used to benefit a spouse, but it will not form part of their estate, reducing inheritance tax bills. A by-pass trust also lets savers ring-fence their money after they die, with only nominated beneficiaries able to take an income or use the capital.

Philippa Gee of Philippa Gee Wealth Management in Church Stretton, Shropshire, says: 'More people are concerned about the solidity of their child's marriage and they don't want to see half of any pension they leave siphoned off in a divorce, so they decide to skip a generation and use it to benefit their grandchildren.'

State pensions

If you die before pension age, there is no guaranteed pension money reserved for your dependants or any return of the National Insurance you have paid.

But your NI contributions record can still help those you leave behind. You need 30 years of qualifying NI contributions for a full State pension.

If you have a better contribution record than your spouse or civil partner, they may use your contributions to get a better State pension when they retire.

There are also State bereavement benefits available if someone dies before pension age. These are not means-tested but they do depend on the person having an up to date NI payments record.

The Bereavement Payment is a £2,000 tax-free lump sum. On top of this, widows or widowers aged 45 or over can claim Bereavement Allowance for up to a year after someone has died. This starts at £29.30 a week, rising with age to £97.65 a week. And those with children aged under 19 may be entitled to Widowed Parents Allowance, worth up to £97.65 a week. These benefits go to spouses and civil partners, but not to unmarried partners.

More details at direct.gov.uk

›› Check how your pension is performing - read our guide

Read more: Pension

Clampdown on offshore retirement schemes

Senior executives who have topped up their pensions to the maximum each year will no longer turn to expensive offshore schemes after the government announced a clampdown this week.

Employer financed retirement benefit schemes (EFRBS) will now suffer higher tax charges in an effort to close what the government saw as a loophole in retirement saving, it said this week.

Companies had been setting up the offshore retirement schemes for their highest earners in the past 18 months. The schemes became popular after the government originally restricted pension saving in the 2009 Budget and were widely tipped as the next big thing for employee remuneration.

EFRBS initially had attractive tax benefits. Payments into the schemes were free of income tax and national insurance for employees. They were also attractive to employers as they offered a deferred corporate tax deduction, which came into effect
when the employee withdrew their benefits.

But the schemes came under the spotlight of the Treasury as some were allowing employers to deduct corporation tax with immediate effect. From this week, any new payments into EFRBS will no longer be free of income tax or national insurance.

“This announcement marks the end of EFRBS,” said John Lawson, head of pensions policy at Standard Life.

Instead, senior executives are likely to rely on old-fashioned cash payments or bonuses to top up their retirement arrangements.

From next April, people will only be able to save 50,000 a year into their pension with tax relief. The move is expected to affect around 100,000 people. The lifetime allowance for pension savings will also be reduced from 1.8m to 1.5m.

Read more: Pension

Should I top up NHS pension with savings?

Mel Kenny, and independent Financial planner with Radcliffe & Newlands in the City of London replies: It is a good deal, but whether it is right for you depends on your need for a certain income versus your need for capital in future.

Payable for the rest of your life, this pension translates to an index-linked annuity rate of 7.1%. This is roughly double what you can currently get on the open market.

However, you will need to live for about 12 years to break even, so if you are in poor health it might not be right for you.

Also, if you want access to or want to bequeath the capital, you will need to consider other options.

This Ask an Expert question originally appeared in Financial Mail

Read more: Pension

'Your house is a home, not a pension'

Housing Minister Grant Shapps [official website] said the Government would try to ensure property prices rise more slowly than incomes to prevent a repeat of the boom that has made it impossible for a generation to get on the housing ladder.

Mr Shapps issued a stark warning to the better-off, saying they will no longer be able to use rising property prices as a retirement nest egg.

Calling for an end to the 'lottery' of the housing Market, he said: 'People should think of homes as a place to live rather than a pension.

'What is required now is a period of stability. House price booms keep people out of the Market. And house price busts mean people's homes are worth less than they paid for them.'

Mr Shapps's message is unlikely to appeal to many Tory voters who have relied on regularly rising house prices to help provide a comfortable retirement.

It also leaves him open to accusations of the 'I'm all right Jack' syndrome. He has already pocketed an estimated £250,000 from a previous house sale, and could make a similar amount if he sold his five-bedroom detached house in Hertfordshire, which is currently worth more than £1m.

But Mr Shapps is convinced there is widespread support for his policy. 'The exact same people in Middle England who want a retirement nest egg will say their child can't leave home because they can't afford it,' he said.

'Over time we want to move to a position where house prices continue to grow but people's ability and purchasing power increases quicker.' House prices fell 3.6% in September, the biggest monthly fall since records began in 1983, wiping £6,000 off the value of the average home in just one month.

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But average prices, just over £162,000, are nearly double the £85,000 figure of a decade ago. Mr Shapps stressed he did not want to see 'a dramatic fall in house prices'.

'I think we need a Market that's boring, where the pressure of making what could be the single biggest financial decision of your life, is based on your needs and desires, not on whether you feel lucky. Buying a home shouldn't be like playing the lottery.'

He said rising prices had created a 'Sorry' generation, a reference to the 1980s sitcom in which Ronnie Corbett played a middle-aged man living with his mother.

'With a house liable to cost perhaps seven times someone's earnings, it is no surprise the average unsupported firsttime buyer is now 37 years old. Sorry was once a joke, now it's real life. We'd like to make it a joke again.'

A recent National Housing Federation survey found that 30% of middle-class parents would actually like house prices to drop to help their children.

In August, just 18,300 loans were handed out to first-time buyers, compared to 19,300 in July, and up to 50,000 a month before the credit crunch.

Mr Shapps admitted the Government could not 'dictate' house prices, but said it would help stabilise the housing Market by using economic policy to 'keep interest rates low'.

In a speech to the Housing Market Intelligence conference in London, Mr Shapps also vowed to look at building regulations to make it easier to build new homes.

Last year, 142,000 homes were built in the UK, the smallest number during any peacetime period since 1923. In the 1960s, up to 385,000 were built every year.

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Read more: Pension

More women face retirement 'poverty'

More than half of women under the age of 50 admit that they are not saving enough for retirement, marking a rise of eight percentage points on last year, according to an annual report by Scottish Widows.

Currently, two-thirds of pensioners living in poverty are women – the report suggests this imbalance could now worsen.

'Women are still very much second-class citizens when it comes to pensions - and what is worse is that it's barely even acknowledged,' says Dr Ros Altmann, director-general of Saga Group and former adviser to No.10.

'Millions of people, but particularly women, are at risk of poverty. We have a real crisis in this country.'

Women are typically left at a disadvantage when it comes to saving for old age due to unequal pay, taking career breaks to care for children, bereavement and divorce.

And with university fees set to rise to around £6,000 a year, this could get worse thanks to increased personal debt.

Many young women are inheriting the mistakes made by their parents, says Ian Naismith, head of pensions at Scottish Widows.

'The findings paint a worrying picture,' he says. 'Attitudes need to change. The major disparity between male and female saving habits needs to be resolved, or even more women will face poverty in their old age.'

Scottish Widows found that women aged 18 to 29 have typically accumulated £4,800 on average - just over half of the £7,700 achieved by young men - and they are saving just £49 per month, compared to £111 per month for men.

Age of the 'pensionista': Women bury their heads in the sand, says Ruth Sunderland, Daily Mail associate City editor

Pensions Minister, Steve Webb, said that reforms that will auto-enrol all employees into a company pensions will make a significant difference.

He said: 'We know that women aren't saving enough for retirement and this is exactly why we are committed to bringing in reforms that will result in up to 3m more women saving for the first time or saving more in workplace pensions.

'Our actions will ensure that people have the opportunity to save for their retirement on top of a decent and fair state pension.'

Scottish Widows' major report also focused on women aged between 51 and 59, who are in the last chance saloon if they want to have any chance of retiring in their 60s.

On average, they have built up retirement savings - excluding a pension - which they plan to use to pay for their retirement of just £37,642.

If they cashed this pot of money with an insurance company to buy an annuity, which provides an income for life, they would receive just £40 a week.

With no pension and little other savings, millions of women have no option but to keep on working into their late 60s and 70s.

Read more: Pension

Pension vs Isa: The big debate

Everyone from granny to graduate has a view - but for most of us these days, Isas rule supreme.

And they dominant the savings world for very good reasons.

Ask yourself this: how many ways can you save money, get instant access to your cash, and enjoy protection from the Government's tax-grabbing mitts?

Answers on a postcard please (clue: pensions ain't one of them).

With the amount you can save each year raised to £10,200, a maximum of £5,100 in cash, savvy savers have quickly come to regard Isas as long-term homes for their nest eggs.

But what about pensions? Are they still worthwhile?

A few years ago, the final salary pension was a mainstay of the British workplace. And that certainly was worthwhile. Millions of workers knew they would retire in comfort, which often meant two-thirds of their final income.

But such bounteous company perks have died a ghastly and painful death in the 21st Century.

We're left with a barren landscape of 'defined contribution' schemes, where retirement income depends on how much you save and how fast this grows.

And yet around 14m people in Britain still have a pension. The industry is still firing on (most of its) cylinders, too. Surely there must be benefits?

Right. There are. One is a new ability to inherit your forefathers' savings or pass on yours. Soon you'll be able to convert up to 100% of pots into cash once you hit 55 and leave any unused money to your loved ones on death.

But you've been able to do that with Isas for ages. So back to the big debate - what's the verdict? Isa or pension? We asked five independent experts for the lowdown.

We want you to get involved in the Big pension vs Isa debate, too. What do you reckon? Leave your thoughts in the reader comments at the bottom of this page.

• PENSIONS

pension pros:

- Tax relief

When you pay money into a pension the Government refunds the income tax you paid on it. Effectively, basic rate taxpayers only need to put in £80 to see £100 go into their pot; 40% taxpayers only need to put in £60 to see £100 added. When you draw on your pension you are taxed at income levels again. But in all probability you are going to have a smaller income and usually this means basic rate tax. According to Lorreine Kennedy, an adviser at Care Matters, this could mean you're 33% better off than with an Isa.

- High contribution limits

Work bonus: Many employers contribute to their workers' pensions

Pensions have high annual contribution limits of 100% of earnings, subject to an overall cap of £255,000.

- Employee benefits

Many companies have a staff pension scheme. Lots of these used to be generous, 'gold-plated' final salary arrangements. But now most depend on you sacrificing chunks of your salary and watching a pot grow (slowly).

However, most employers will at least match your pension contributions - some even put in more. So if you contribute, say, 6% your employer might put in another 6% or even 8%. Look at this as a pay rise - it'd be madness to say no.

And as Peter McGahan, of Worldwide Financial Planning, points out, you can save on National insurance, too. 'With a pension you can elect for a salary sacrifice which will allow you to avoid National insurance of 11%,' he says. 'So a basic rate tax payer could have tax relief at 20% on the contribution plus 11% national insurance saving. An Isa doesn't have any of these tax luxuries.'

- Tax-free growth

Virtually tax free growth within the fund. That should mean your money's safely stored away from the Government's prying eyes. pension funds did used to get dividend tax credits. But Gordon Brown axed this bonus in 1997. The move is said to have cost pension funds around £5bn a year. So much for 'safely stored', then.

›› Video: Are pensions worth the effort?

pension cons

- Not accessible until 55

This is where a pension falls down; you do not have immediate access to your cash in a time of crisis. Any money in a pension cannot be accessed until you reach 55. And even then, you will need to purchase an annuity – an insurance product that pays a set income for the rest of your life - unless you have a pretty large pot (size to be decided by the Government). [Read more on this here]

- They're complicated

Pensions are difficult to understand and are run in complex ways. This can be very off-putting for ordinary savers who just want to know how much they need to put aside and what they'll get back in old age.

- Government meddling

Raid: Gordon Brown has been accused of damaging pension pots

Watch out, Brown/Cameron/Blair/Thatcher (insert your PM of choice here) is about! Past governments have tinkered and fudged the pensions system to no end. It's made it difficult for savers to feel that their nest eggs are secure.

- Why it's time to take politics out of pensions

And this could keep happening, says David Thurlow: 'You can't access your pension fund until the Government says you can – this used to be 50, has recently been increased to 55 but could rise again. At present, you are allowed to take 25% of the pension fund as a tax free lump sum, but again, it is possible that a future government could abolish or restrict availability of this.'

• ISAS

Isa pros

Flexible options

Isas come in two types: a cash Isas (basically a savings account) and stocks and shares Isas (a wrapper that you can either place individual shares in, or more often a fund that will pick shares and bonds on your behalf).

- Read more: How to pick the best Isa

- Instant access

This is what makes Isas such winners. With both cash and shares Isas, you can get at your money as and when you want. Even fixed-rate cash Isas only see your money tied up for a few years. For those keen to ensure they can access their savings in an emergency – here's your ready-made answer.

- Best Isa rates tables

- Simple tax rules

Once your money is in a cash Isa, you will not have to talk to the taxman again. It won't be taxed as it grows and the income you take is totally tax-free.

- The 'wrapper' effect

Easy access: Isas are the winners in a cash emergency

Stocks and shares Isas act as tax 'wrappers'. As well as tax-free growth, you do not have to pay Capital Gains Tax (CGT). The only tax payable is dividend tax at 10%, which applies for both basic and higher rate taxpayers. Outside Isas, higher rate taxpayers pay 32.5%. And if you use a fund supermarket as your Isa 'wrapper', costs are significantly cheaper than with a pension.

- Read more: How fund supermarkets cut costs

- Means-testing in retirement

Used as a source of income, Isas have certain benefits for retirees. 'The Isa really comes into it's own at the time the person decides to stop working and start drawing an income from the fund,' says Lorreine Kennedy.

Danny Cox explains: 'Tax free income from Isa has no impact on age related allowances for the over 65s, no impact on personal allowances for those with income over £100,000 and there is no requirement to record on a tax return.'

- Lasting simplicity

You put your money in, you take your money out - it's very, very simple.

Isa cons

- No tax relief on contributions

There's no tax-back incentive as described for pensions above. So any growth isn't as powerful. 'On paper a pension will always produce a bigger fund for the same contribution because of the tax relief,' explains Danny Cox.

- Saving limits

You can only pay a maximum of £10,200 into Isas each year. You can invest all of it into a stocks and shares Isa, or save up to £5,100 into a cash Isa. These limits might well be sufficient for most people. Think about it, over the course of a 40-year working career, you can put away £400,000. But what about those wanting to save more or who start late? Perhaps you can only afford to start saving for retirement when you reach your 40s - the limit here is serious restriction.

David Thurlow says: 'One of the biggest drawbacks with an Isa is the contribution levels. A maximum of £10,200 can be paid into an Isa each year, whereas for most people allowable contributions to pensions are much higher'.

- No employer contributions

David Thurlow of Atkinson Bolton says: 'Employers can't pay into ISAs but can pay into pensions. So if your employer will pay into your pension, it is nearly always best to receive this.'

- Means-testing while young

While you are still working, an Isa will affect most means tested benefits, such as income support, whereas a pension pot pre-retirement will not.

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• THE VERDICT

- Danny Cox (Hargreaves Lansdown)

'Isas provide an ideal way to grow tax-free cash savings as well as building capital by investing in the stock market. Isas are a better choice if access to savings is needed before age 55 or if 100% of the capital is required at once.

'In reality, most people should spread their savings between Isa and pension, so they have funds which they can access if they need to, whilst at the same time taking advantage of the tax benefits of pension for retirement savings.

- Find an independent adviser near you

- David Thurlow (Atkinson Bolton)

'In my view, many basic rate taxpayers should maximise their Isas before paying into pensions. The flexibility of the ISA gives it a clear edge, especially as with the pension they will get basic rate tax relief up font but end up paying basic rate tax on most of the income. For higher rate taxpayers, especially those that are likely to be basic rate taxpayers in retirement, the pension has the advantage, if you are comfortable with the inflexibility and the risk of government meddling with the rules. Where employers are paying into the pension scheme, this opportunity should be maximised.'

- Jason Witcombe (Evolve Financial Planning)

'For basic rate taxpayers my view is that Isas are generally better. With the exception of contributions made via an employer scheme, why would you tie money up in a pension for 20% tax relief when the odds are you will pay at least 20% tax in retirement?'

'However, higher rate taxpayers should focus more on pensions. Take an extreme example. Someone with an income of £110,000 is paying an effective rate of income tax of 60% on the top £10,000 of their income due to the loss of Personal Allowance. Paying money into a pension gets round this. Given the choice, most people would take £10,000 in their pension versus £4,000 of post tax income that they could put into an ISA.'

- Peter McGahan (Worldwide Financial Planning)

'It depends on the need for the investor. Personally, however, if I had an option for an immediate uplift of 66% with a pension [the effect for a higher rate taxpayer], I would value that higher than the accessibility of an Isa.

- Lorreine Kennedy (Care Matters)

'Anyone planning for their retirement should consider both pensions and Isas. It depends on how much you can afford to save. If you are considering contributing a modest sum of £20 per month, then perhaps a cash Isa on its own may be most appropriate route. Anyone able to save more than the annual Isa allowance should generally consider investing the excess into a pension.'

What do you think? Have the experts got it right or is there more to it? Share your views in the reader comments below...

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Millions to lose Ј41K in two-tier pensions

Some of these pensioners will have retired as little as a day before the planned introduction of a new flat-rate basic state pension, which promises to pay £140 to everyone.

Almost one million workers are due to retire in the two years before the proposed changes are introduced in 2015.

Knowing they will be £41,600 worse off over 20 years than those who retire later, many could be forced to rethink their plans and postpone their retirement.

'This would be a disaster,' says Neil Duncan Jordan, from the National Pensioners Convention charity.

'It would create a new form of pensions apartheid, whereby those reaching state pension age before the changes are introduced will receive a fraction of the pension enjoyed by those retiring after.'

Earlier this week, the Daily Mail revealed that pensions minister Steve Webb wants Britain to have a flat rate £140 basic state pension. This would replace the current payout of £97.65 for single people and the complex system of benefits and credits for poorer pensioners.

The British state pension is one of the lowest in Europe. An estimated five million women pensioners are not even able to claim the full amount.

Even if the state pension rises with inflation, the difference between the old and new pension will be £40 a week. That amounts to £2,080 a year more for those with the new state pension - a total of £41,600 over the 20 years most pensioners will live for after retiring.

For couples, the difference could be even worse. They get £156.15 under the current system: but under the new regime they would get £280 between them - £123.85 a week more. If they were to both live until they were 85, this would mean they were £128,804 better off than those stuck in the old system.

Existing single pensioners would need to have saved £54,000 into a private pension to get a weekly payout of £140, according to the insurer Standard Life. Experts suggest that many of the one million workers set to hit state pension age in the two years before 2015 may consider postponing retirement in order to claim the higher handout.

Sheila Grant, 65, is one of the millions of women forced to rely on her husband for pension income.

Mrs Grant (pictured with her husband, Graham, at their home in ascot, Berkshire) cared for their two daughters and paid the married women's stamp when she returned to work.

This means she now receives a state pension of just £60 per week instead of the full amount at £97.65.

She says: 'It is really unfair that women like me should have to rely on their husband's pension provision just because they took time off work to care for children. Hopefully, the new rules will give women a bit more independence and not penalise carers in the same way.'

Unfortunately, Graham also bought a single-life annuity, which means their income from his private pension will stop entirely when he dies.

'I only have a tiny private pension, so I know my income will be drastically reduced if Graham dies first and that is a big worry,' she says.

They also fear the Government could put in place draconian measures to ensure savers can't do this. More than 1.2 million people have put off drawing their state pension. In return, they will get a higher state pension when they retire.

'I'm sure the Government will clamp down on those who delay their retirement to avoid the new rules,' says John Lawson, head of pensions policy at Standard Life.

Experts also fear another raid on Middle England to pay for the changes, with generous earningsrelated state pension top-ups, which push certain people over the £140 threshold, clawed back.

'we could well see many savers losing some of their entitlement to state pension top-ups, which would, effectively, be a form of tax,' says John Ralfe, an independent pensions consultant.

Ministers claim savings made from cutting means testing and increasing the state pension age will pay for the pension increases. pension credit, for example, costs £54 per person per year to administer, compared with just £5.40 for the basic state pension.

The full details of the reforms have yet to be unveiled, but the Government will still require savers to build up the minimum number of NI contributions to qualify for the full £140 a week.

'This could mean large numbers of women with several part-time jobs who don't pay NI could miss out,' says Dr Ros Altmann, director general of Saga.

A Department for Work and Pensions spokesperson says: 'Our aim will be a simple, decent state pension for future pensioners which is easy to understand, efficient to deliver and affordable.'

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