DEAR TRICIA
Need some practical financial advice? YOUR MONEY Editor Tricia Phillips and her team can help
QI have recently retired and, with my state and private pensions, I believe I will be eligible to pay income tax. My wife works part time and is a non-taxpayer. Are we able to transfer part of her allowance to me so that I can reduce my tax?
AIf you are a basic rate taxpayer then, yes, you can. Via the Marriage Allowance your wife can transfer up to £1,150 of her allowance saving you a potential £230 in tax. You can also claim for last year if you both qualify. Visit gov.uk/marriageallowance or call 0300 200 3300.
QFor a few years, I contributed to an Additional Voluntary Contribution scheme that ran alongside my company pension. When I access my pension fund will these AVCs be judged separate from my company pension or will they be deemed to be part of it?
AThat all depends on the type of pension scheme you have. If you have a Defined Contribution AVC money purchase scheme, your pot at retirement will be determined by how well your funds were invested. If your investments perform well, you could buy more retirement income.
However, if you have a Defined Benefit scheme, final salary, this is a little different as your AVCs go to purchasing extra pensionable time, and income is final-salary based.
QI would like to set up a trust fund for when I’m older. I am 70, a widow and I have two sons. I’ve been told that if I need to go in a nursing home the money in a trust fund can’t be touched. How can I set one up?
AIf the money to be placed into trust is simply to avoid potentially paying care costs, please be careful as it may be deemed as “intentional
deprivation of assets” and be brought back into your estate to pay any fees. Speak to a financial specialist to ensure you set up the appropriate trust and do it correctly.
QDo the new pension freedoms mean that if I buy an annuity from my savings I’m not stuck with it for the rest of my life – like people were before the changes came in? It’s all a bit confusing.
ANo, that rule remains the same. If you choose a guaranteed annuity you cannot reverse that decision. The pension freedoms mean you have full access and flexible control over your pension fund and how it is taken, but be cautious and ensure you access cash wisely as you could run out if your savings are not managed properly.
QIf the Bank of England interest rate goes up, does that mean the interest on my credit card and loan will rise? I’m worried as I’m already struggling to keep on top of all my bills.
AIt is likely the interest rate on your credit card (after any initial 0% or introductory rate) will rise. But bank loans are usually at an agreed rate over a specified time. They are repaid at the end of the loan term, as long as the agreed monthly payments are met.