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   Occupational pension scheme    Open market option    Offsetting
   Office of Fair Trading    Office for National Statistics    OPRA
   Open annuity    OPAS    

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Occupational pension scheme
This is the pension gained as a result of salaried employment and generally referred to as an occupational pension scheme. Occupational pensions are governed by the Occupational Pensions Regulatory Authority (OPRA) and must comply with certain regulations to benefit from the tax incentives.

The scheme contributions are calculated as a percentage of a member's basic salary with the maximum contribution being 15.0%. An occupational pension scheme can be operated as a final salary pension with a pension related to the schemes accrual rate and member's earnings at retirement age or operated as a money purchase scheme with the pension income linked to the fund value, this being dependent upon the contributions made and investment return.

At retirement the individual can use a money purchase fund to buy an annuity and 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 pension annuities quote offering guaranteed rates.

Occupational Pensions Advisory Services
In the event of an internal dispute between the former scheme member and the scheme trustees involving the payment or calculation of a transfer value (which should have been resolved satisfactorily at the time of transfer) the transferred out scheme member can have recourse to the services of the Occupational Pensions Advisory Service (OPAS). The former scheme member could also approach the Pensions Ombudsman that performs a similar role.

Occupational Pensions Regulatory Authority
When the Occupational Pensions Board was disbanded on 6 April 1997, the Occupational Pensions Regulatory Authority (OPRA) took on some of its functions. OPRA are funded by a levy on pension schemes generally. Their role is to enforce the law applicable to occupational pension schemes and have wide powers for this purpose. This includes the power to wind up pension schemes and suspend, disqualify or remove scheme trustees.

OPRA will also ensure schemes adhere to the minimum funding requirements (MFR), the introduction of member nominated Trustees, contribution schedules, the audit of scheme accounts and presentation requirements. All occupational schemes are regulated by OPRA but schemes with only one member are exempt from paying the general levy, such as Executive Pension Plans.

Office of Fair Trading
The director general of the Office of Fair Trading (OFT) has extensive responsibilities covering consumer protection and encouraging competition.

The OFT aims to maximise consumer welfare by; protecting consumers by preventing abuse; empowering consumers by giving them access to information and redress; and promoting competitive and responsible supply. The OFT aims to promote competition and create efficient working of markets for goods and services by; removing or limiting restrictions on the competitive process; and improving the effectiveness of competition law. This will enable consumers to buy goods and services they want at the best possible price.

The director general of the office of Fair Trading is responsible under section 122 of the Financial Services Act 1986 to review the rules and practices of the financial services industry. As a result of the director generals report to the treasury, the
Financial Services Authority (FSA) has liberalised polarisation and the government has introduced the Financial Services and Markets Act 2000 (FSMA) to replace and update the Financial Services Act 1986.

Office for National Statistics
Produced from the Office for National Statistics (ONS) are national statistics outputs which ministers have decided should come within the scope of the new arrangements, and which have been produced to high professional standards set out in a code of practice, and have been put together free from political interference.

The ONS are responsible for a vast amount of UK statistics and information on statistics as well as publications covering thirteen themes such as commerce, economy, social and welfare, population, transport, education and many more. For example, the economy theme contains articles on economic trends for national accounts like the
retail price index (RPI) or gross domestic product (GDP).

The ONS uses geography as one of the key variables in the collecting, processing, storing and aggregating of almost all the surveys completed. To produce the various articles and publications the ONS will work with other organizations such as the
Government Actuary's Department (GAD), Department of Works and Pensions (DWP) or the Lord Chancellor's department and may others.

For matrimonial lawyers in England and Wales the most appropriate solution for the division of the matrimonial assets and financial matters such as the members pension rights of any retirement benefits has been offsetting. The couples on divorce that can come to an out-of-court settlement will usually use offsetting of the pension fund value against other matrimonial assets such as the family home.

Despite introducing
earmarking of pension arrangements in the Pensions Act 1995 with insertions of sections 25B to 25D of the Matrimonial Causes Act 1973 (MCA 73) offsetting has still been the preferred method of resolution as it achieves a clean break between the parties. However, for wealthier and older couples the retirement benefits could be more substantial than other matrimonial assets making offsetting impossible where the objective is an equal split of the assets as is stated should be the starting point in the case White v White (2000).

Introduced from 1 December 2000 by the Welfare Reform and Pensions Act 1999 (WRPA)
pension sharing also achieves a clean break for the couple on divorce but will give the former spouse the opportunity to secure a percentage against the members pension rights. This would be charged as a pension debit against the member and paid as a pension credit to the former spouse that will have the choice of an internal transfer if permitted by the scheme trustees or as an external transfer to a provider of choice.

Open annuity
The attraction of an open annuity is that for those with larger pension funds of £250,000 or more, that are not wholly dependent on this money for their income at retirement, can establish an open annuity where part of the residual pension fund can be passed to the beneficiaries, even if the annuitant is 75 years or older.

Unlike a conventional annuity such as a pension annuity or purchased life annuity where the funds are pooled and the underlying assets are invested in gilt-edged securities, an open annuity is operated within protected cells creating a non-pooling annuity. This means that if any deficits occur these are limited to the funds in each protected cell and any surplus will increase the value of the cell.

The open annuity can be invested in equities or fixed interest securities to reflect the risk the annuitant is willing to take although the options are more restricted than those under pension drawdown. The amount of income payable is not fixed and will vary relative to the value of the fund and this income will be subject to PAYE taxation. It is also possible to have a survivors pension to provide for a spouse and on the death of the annuitant the beneficiary will receive the residual fund within the protected cell.

Open market option
Introduced in the Finance Act 1978, the open market option allows the member to transfer their pension fund from one life assurance company to another to achieve a higher annuity rate. The member must exercise an open market option before any benefits are drawn from the existing Life Assurance company in the form of an income or lump sum.

Subsequent to exercising an open market option the member must apply the funds to a pension annuity (or compulsory purchase annuity). This does not have to be a conventional (standard) annuity where the income and escalation is fixed as it is also possible where the annuitant is prepared to take some risk to purchase a with profits annuity. Here the annuitant could benefit from increasing bonuses declared in the future by the life company.

Although every person retiring with a private pension scheme has the right to source pension annuities other than from their existing provider , over 2/3rds still do not shop around to find the best annuity, yet many could receive extra income by up to 30%, worth thousands of pounds every year for the rest of their lives, simply by asking.

The individual that needs the maximum income should take their tax free lump sum and buy a purchase life annuity. The open market option can also apply to this lump sum at securing the best annuity income and the purchase life annuity also offers advantageous annuity taxation.

It is important that if an individual is in any doubt when taking the open market option route, they must seek an annuity and pension company offering specialist advice from an independent financial adviser (IFA). 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.

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