Friday, 27 March 2015

Pension reforms: liberation or freedom to lose your pension pot?!

From April 6th anyone aged 55 or over will be able to access all of their pension savings as a cash lump sum if it is in a 'Defined Contribution' scheme (as opposed to 'Defined Benefit' scheme which promises a specific income/salary). 

This lump sum is money you've been saving in your pension pot over many years, if not decades, and it has generally been paid in 'tax free'. In other words, the income tax normally deducted from your salary and employers contributions has been paid into the pot too.

This is because it has been a long standing policy of all UK Governments to encourage and help people make provision for their retirement and later life.

The UK Government has been promoting next month's changes to UK pension law as 'the pensions freedom revolution'.  Yet, empowerment to access all of your pension pot from 6 April 2015 might also be seen as freedom to lose your money or get ripped off.

What has not been publicised with equal vigour and prominence is that if you 'cash-in' your pension fund next month you can only take 25% of it tax free.  The other 75% is taxed at your marginal rate. Let's look at an illustration.

Example at 6 April 2015
So you currently pay 20% tax - and let say you earn £24,000 per annum - and you cash-in a pension pot worth £50,000. You can obtain £12,500 tax free.

The balance of £37,500 is treated as your income during the 2015/16 tax year. So your earnings are now £61,500. In relation to the balance of your pension pot you are liable to pay 20% rate tax on the first £7,785, and 40% tax on £29,715 of that balance. Your extra tax bill is £13,443.

To think of it another way - you had a pension pot worth £50,000, but cashing in all of it at once next month (instead of taking a quarter of it tax free) means you lose almost £15,000 in tax!

So you need to think very cautiously and extremely carefully whether you should 'liberate' all of your life savings. 

People often underestimate how long they live for, and making the wrong decision now could not only be expensive, but could prove detrimental in later life.  You can obtain free online guidance from the UK Government's Pension Wise online service and the Money Advice Service.

Two further issues are worth mentioning. First, whatever you do don't get scammed. If something sounds to good to be true, it usually isn't true. So don't get ripped off. The Financial Conduct Authority (FCA) also has good information on pension scams.  If in doubt take independent financial advice from an advisor regulated by the Financial Conduct Authority.

We also post below a helpful '60 seconds' tips on pension law changes from personal finance broadcaster and writer Fergus Muirhead.

Second, the law remains unsatisfactory and unclear as regards the ability of a trustee in bankruptcy to access a Defined Contributions pension fund. There are conflicting English High Court decisions, for example the cases of Raithatha v Williamson [2012] EWHC 909 (Ch), and Horton v Henry [2014] EWHC 4209 (Ch).

Govan Law Centre believes the position should be place beyond doubt: trustees in bankruptcy should not be able to access an uncrystallised pension fund (in other words a pension which is still locked and not accessed by the debtor).  The law should be clarified by the UK Government and Scottish Government (where bankruptcy is devolved).

Disclaimer: this blog provides information only and does not represent legal or financial advice. You should always obtain your own independent and regulated legal or financial advice from a solicitor or qualified independent financial advisor.

Thursday, 5 March 2015

Recruitment: GLC Education Law Unit - vacancies for parent sub-committee members

  • Job type: Project Delivery Sub-Committee Members
  • Status: Management Board
  • Closing date: 31/03/2015
  • Location: Glasgow


Govan Law Centre’s Education Law Unit aims to uphold, protect and enforce the rights of pupils and parents across Scotland by providing expert legal, and non-legal representation at tribunals and courts; provide advice and information about education law; and work with stakeholders to influence legislation and policy with regard to education and the law.
We seek two parents to be part of our Project Delivery Sub-Committee to provide strategic guidance and manage the performance at the Education Law Unit alongside our current Committee members. The Committee’s functions are as follows:
  • Provide guidance and direction, make decisions to steer the progress and delivery of the project;
  • Monitor and approve the progress of the project against the aims of the project;
  • Approve project documentation provided by the project manager;
  • Provides timely and appropriate visibility of project progress and key risks and issues to the Board of Trustees as required; and
  • Proactively managed project risks.
The meetings take place on a quarterly basis and there is no payment to attend such meetings, although reasonable travel expenses can be met.

Organisation profile:

Govan law centre (GLC) is an independent, charitable community controlled law centre operating in Scotland.


Govan Law Centre (GLC) is a registered Scottish charity: SCO30193. All GLC legal services are provided by the independent legal practice of Dailly & Co., Solicitors. The Education Law Unit is partly funded by the Third Sector Early Intervention Fund, a joint initiative of the Scottish Government and the Big Fund in Scotland. Let’s Talk ASN is a joint initiative of Govan Law Centre and Kindred Advocacy (Charity No. SC000264). It is funded by the Scottish Government.

Application notes:

If you are interested, please contact Anne Taylor by email on or by letter to Govan Law Centre, Orkney Street Enterprise Centre, 18-20 Orkney Street, Unit 4, Glasgow, G51 2BZ. Expressions of interest should be returned no later than 31 March 2015.


Tuesday, 3 February 2015

Tenant's survey 'offensive to landlords' say Morrisons

We have to say Govan Law Centre are a bit disappointed with Morrisons. We sent the supermarket a letter to ask if we could carry out some important research. We just want to know how many people in our catchment area live in private rented accommodation, why they are living there, do they enjoy it, and what’s their general experience.

We are seeing many more families in housing need or even homeless who are living in private rented accommodation. We need to understand why?  We approached Morrisons Cardonald  ‘Community Champion’ asking if we could carry out the research within the entrance atrium in their Cardonald store. We intended to ask a few survey questions of shoppers. Just to seek the views of local people. This work will help Govan Law Centre meet the needs of vulnerable people.
Morrison’s in Cardonald is a perfect place to carry out this work. Its a popular shop and the surrounding area has a high level of private rented sector tenants. We were delighted that Shawlands Arcade, Govan Shopping Centre, Glasgow City Council, the Pearce Institute and others have all welcomed us.
But Morrison’s Cardonald Store spokeswoman said that although she ‘welcomed the idea of a tenants survey’ she ‘would not allow Govan Law Centre research to be carried out on Morrison’s premises because ‘the survey would be offensive to private landlords, and as a business Morrisons would not want to offend customers who were also private landlords’.
The questionnaire forms part of a more in depth piece of research which will help us improve our prevention of homelessness services. We would be delighted to hear the views of private landlords as well.
It’s vital that organisations like Govan Law Centre can carry out this type of work so that the voice of tenants is heard. Private landlords are already represented by the powerful lobby group the Scottish Association of Landlords. This organisation has the ear of the Scottish Government. Scotland has 330,000 private sector tenants who do not have any such lobby. We need to talk to them so we can better meet their needs.

Morrisons pride themselves in providing a 'fantastic service'.  On this occasion we don't believe this has happened.


Monday, 26 January 2015

Govan Law Centre and Children 1st launch new family support project in Glasgow

Govan Law Centre (GLC) has launched a joint project with Children 1st to improve the lives of over 60 ‘just coping’ families each year. We will provide legal services and money advice to families with young children who are already working with Children 1st in the Glasgow South.  The project is funded by the Scottish Legal Aid Board and will be led by Lorna Walker, senior solicitor at GLC, and Alison McLaughlin, money advisor with Children 1st (based at GLC).

GLC will work along side the many family and early years services run by Children 1st in Glasgow. Our  legal services will be aimed at families who are coping but whose debt and legal problems are in danger of becoming too much for them.  We will ensure these families can access appropriate  legal advice and representation alongside the intensive family support that the existing Children 1st services provide.

The project will also provide training to Children 1st staff so they can give basic advice and information, and ensure they have a basic understanding of the law as it relates to debt and benefits and that they are up to date with any changes.

GLC will run an advice service for family support workers and their clients; support family support workers who have complex cases; and take on legal case work referrals including defending evictions, appealing to social security tribunal and taking on judicial reviews and appeals to the Supreme Courts.

This is an exciting  innovative project and fits with GLC's aim to intervene early as we can before problems become even more stressful, complicated and expensive for our clients.  We will embed legal and advice services in existing models of family support, meaning we can intervene as early as we can to resolve immediate or escalating debt crises alongside other ongoing family issues, so that families can achieve the long term goals they are working towards with Children 1st.


Saturday, 24 January 2015

Iain Nisbet appointed Convener to School Closure Review Panel in Scotland

The appointment of Govan Law Centre's Iain Nisbet as the first Convener of the School Closure Review Panel in Scotland has been confirmed.  Until now, school closure proposals that have been called in under the Schools (Consultation) (Scotland) Act 2010 have been determined by the Scottish Ministers.  

Amendments made by the Children and Young People (Scotland) Act 2014 will change that process so that  school closure proposals that are called in by Scottish Ministers will be referred to the Convener of the School Closure Review Panels.  The Convener will be required to constitute a School Closure Review Panel to determine each individual case.

Mr Nisbet - is the Head of Education Law at Govan Law Centre, where he advises and provides training for parents, schools and education authorities on all aspects of education law.  He is the Chair of the advisory group on Additional Support for Learning, and a former Non-Executive Director with Education Scotland.  He was until recently, a member of the Parent Council of his local school.

This appointment will be for five years and will run from January 12, 2015 to January 11, 2020. This appointment is regulated by the Commissioner for Ethical Standards in Public Life in Scotland.