Services and Markets Act 2000
Receiving Royal Assent on 14 June 2000, the Financial Services
and Markets Act 2000 (FSMA) was brought into force from midnight
on the 30 November 2000. The effect of this Act has been to
constitute the Financial Services Authority (FSA)
as a super-regulator, with powers to regulate insurance, investment
business and banking.
It abolishes the Self-Regulating Organisations (SRO)
and replaces the existing two-tier regulatory regime for investment
business established under the Financial Services Act 1986,
with an integrated regime and a single regulator being the FSA.
The FSMA will at the first stage reproduce and update the existing
rule book but the second stage will introduce new features.
The FSMA will create the market abuse regime that will apply
to members of the public as well as regulated individuals:
||The FSMA will
establish the Financial Services and Markets Tribunal;
||The FSMA will
create a financial promotion regime prohibiting persons
or an exempt person from communicating financial activities;
||The FSMA will
create a single compensation and ombudsman scheme called
the Financial Ombudsman Service (FOS);
||The FSMA will
appoint individuals within regulated firms to be registered
with the FSA as approved persons.
For a couple on divorce, judicial
separation or nullity of marriage the court may be required
to settle any disputes of the matrimonial assets and this
is known as ancillary relief. Either of the parties can apply
for a financial order although they may need to take professional
advice from a solicitor before doing so.
Firstly the applicant must complete Form A this being the
notice of application to the court where the divorce,
judicial separation or nullity of marriage took place together with Form H estimating the
applicants costs as this will help the judge in making any
cost orders. The court will then notify the parties of the
first appointment that must be between 12 and 16 weeks after
the submission date of Form A, allowing time to serve and
receive copies from the other party as shown in the step-by-step
guide. A financial statement on Form E must
be served on the other party and to the court no later than
35 days before the first appointment.
At the first appointment the judge will review the case and
require further information such as expert
evidence for a valuation of complex pension arrangements
such as an employers final salary pension or public service
scheme or if the parties agree, to make a final order for ancillary relief.
If there is no agreement the case will progress to a financial
dispute resolution (FDR)
At retirement an individual with a pension fund or a lump
sum can buy either a pension
annuity or purchase
life annuity. They can select the income to be paid with
a fixed rate of escalation over the life of the annuitant.
Although any percentage can be selected, the usual rates are
3% or 5% per year.
In order for the insurance company to be in a position to
pay the the annuitant, it must purchase Sterling fixed interest
securities such as UK Government securities or gilts. The
amount of income that can be paid by an annuity with a pension fund
depends on the yields for long-term gilts and in particular
gilts with a redemption periods of 15 years or more.
Alternatively, the individual may opt for RPI
escalation so the income will be inflation proofed. The effect of inflation over time can be significant
reducing the value of the income from annuities in real terms,
thereby reducing the annuitants standard of living if they
only have a level
annuity. At retirement the individual using the fund to buy pension annuities has the option to consider an open market option to search for the highest annuity rates. Once you have purchased an annuity it cannot be changed, so learn more about annuities, compare annuity rates and before making a decision at retirement, secure a personalised annuity quote offering guaranteed rates.
The annuitant could select a With
Profits annuity if they are prepared to accept some risk,
rather than a conventional pension annuity with a fixed rate
of escalation. By selecting an Anticipated
Bonus Rate (ABR) of only 1.0%, the initial income would
be higher and there would be potential for future growth if
actual bonus rates declared were higher.
For a family with an elderly relative that now requires 24
hour care after suffering an illness, the escalating long
term care costs for a residential or nursing home can
be funded with an immediate
needs annuity that includes a fixed rate of escalation.
In addition to an employees basic salary, fluctuating emoluments
could represent other taxable pay such as bonuses, profit
related pay and benefits in kind. Most employers
pension schemes such as a final
salary pension will base a members pension rights at retirement
age only on the basic salary.
However, pensionable earnings will include fluctuating emoluments
and the scheme member can absorb any shortfall by contributing
to an additional
voluntary contribution (AVC) scheme offered by the employer
or a free standing additional contribution (FSAVC) scheme
through a life assurance company. These payments will be used
to create a pension fund value and at retirement
age a pension income would be payable based on investment
returns, contributions made and annuity rates at the time. Once you have purchased an annuity it cannot be changed, so learn more about annuities, compare annuity rates and before making a decision at retirement, secure a personalised pension annuities quote offering guaranteed rates.
standing additional voluntary contribution
A pension plan where the scheme member can make extra contributions
that are separate from the occupational pension scheme is
called a free standing additional voluntary contribution (FSAVC).
The FSAVC contributions are free standing in that they will
be made to a life assurance company through a defined contribution
plan. The maximum Annual Allowance will increase in each subsequent
year from the 2009/10 tax year of £245,000. The annual allowance ceiling represents
the combined amount that an employee and their employer can
contribute to pensions during the year without a tax penalty.
Previous to A-Day the members total contributions to all schemes,
including an FSAVC, was limited to 15.0%
of taxable earning and a scheme member of a free standing additional
contribution scheme with contributions of more than £2,400
gross per annum would have required a headroom
check. At this time there was no opportunity
for the scheme member to commute part of the fund value to
a tax free lump sum.
The retirement income from an FSAVC is based on the contributions made by the member, investment return, annuity rates at that
time and the pension fund value can be used to buy an annuity. The individual has the option to use an open market option to search for the highest pension annuity. Once you have purchased an annuity it cannot be changed, so learn more about annuities, compare annuity rates and before making a decision at retirement, secure a personalised annuity quote offering guaranteed rates.
This is a method of calculating the value of the member's
share of a final salary pension scheme. On winding up the
scheme, its value can be determined by an actuary applying an actuarial calculation from which an individual
member's entitlement can be ascertained. The scheme may be
in surplus or deficit and this will impact the value of the member's
benefits and hence spouses entitlement.
unapproved retirement benefits scheme
For directors and senior employees with earnings in excess
of the earnings
cap, a funded unapproved retirement benefit scheme (FURBs)
will allow members to top-up their existing arrangements.
However, FURBs have very different taxation implications than exempt approved
Although the employer contributions are allowable as a business
expense, they are fully taxable to the member as a benefit
in kind. National Insurance (NI)
contributions are payable and no tax relief is available on
any member contributions. There is no ceiling to the level
of funding and at retirement, commutation is available for the whole pension fund as a tax free lump