Everyone is talking about Lottery winnings. Great fun last week to be on the Big George Show on BBC Radio London 94.9 FM talking about a lucky couple who have won £4 million and want to keep their council flat. Research shows that the happiest Lottery winners tend to be those do not cut themselves off from their roots. Nice thing about this story is that the winners are doing exactly this and are basically making the money work for them rather than the other way round. Depressing number of Lottery winners have little or nothing left after a year or two. Winning a huge amount (or maybe inheriting it) doesn’t sound much to do with pensions but unless you do win a decent amount, chances are that your pension funds are the largest pool of money you will ever have.

Before knowing if you have enough pension or how far ahead or behind you are, do an audit and here is a layman’s guide so you can do the exercise yourself.

a) make a list of all the places you have worked and find any correspondence from this. If you have worked somewhere for 2 years, you may have earned a small pension.

b) if the employer is still in existence, write to them asking what pension benefits you may have. Try and make it easy for them with dates, job title, department, location etc. Pensions may be administered by another firm so you may have to write more than once

c) if the employer doesn’t exist anymore, there would have been a receiver if they went bust, or if they were taken over, try Companies House http://www.companieshouse.gov.uk/

d) if the insurance or pension company doesn’t exist anymore, try the Association of British Insurers http://www.abi.org.uk/CompanyList/or contact Unclaimed Assets Register http://www.uar.co.uk/ where there are £15 billion of unclaimed assets or the Goverment’s Pension Tracing  Service  http://www.direct.gov.uk/en/Pensionsandretirementplanning/PlanningForRetirement/AboutToRetire/DG_10027189e

e) once you have located the benefits, make sure you receive a benefits statement annually and chase them if you don’t receive one. Chances are that your Nominated Beneficiaries - the people who would inherit your pension fund if you die before taking them, will need changing. Usual reasons are: marriage, divorce or children.

f) when you have the values which will be: a current transfer value or fund value, make a note of all them along with your current pension arrangements. Add them up. Leave out any non-pension money.

g) NOW you can go to a pensions calculator and see how much pension you will get for a given level of contribution. Google will show up many of them, but here is an FSA one http://www.moneymadeclear.fsa.gov.uk/tools/pension_calculator.html

Have some fun here:

i) firstly, do the exercise just with your pensions adding in the total from f) above and see what pension a particular contribution will give you.

ii) then do it adding in your other savings and investments, as if they were in your pension fund too. This should reduce the contribution required

iii) then do the exercise pretending that the value of your home is in the pension fund

iv) see how changing the retirement age affects the figures

Be prepared for some surprises. If you want a “ball park” figure for how much to put away each month – 15 per cent will do. Save less and you are probably going to be working beyond 65. And in 2024, the State Pension Age will go up to 67 anyway. As a friend put it recently, “Soon ‘retirement’ will be something our grandparents did!”

Second media appearance this week is on www.jnetradio.com talking about long-term care in a programme fortuitously sponsored by http://www.freemanssolicitors.net/ as long-term care and inheritance tax planning are areas where the skills of IFAs and solicitors overlap. Common question here is “Surely my private medical insurance covers this?” but the answer is No! Private medical insurance (BUPA et al) only covers acute or curable conditions e.g. hip replacements – something that can be fixed or cured.

Chronic or incurable illnesses are covered by long-term care insurance. With only two providers in the market, it can be expensive, but perhaps not as expensive as waiting to see what runs out first – the person in care or their money. It can be used to cover the cost of care in a nursing/residential home or at home. For info on the latter see http://www.caringandsharing.info

If you have private medical insurance, you might wish to get the handbook out and check this point. Can’t find it? call the provider and get them to send you a new one. If you have none and are employed, see if you can get it through your Employee Benefits package, as it will be probably be cheaper than buying directly. If you haven’t got it and want some, do it via a broker rather than just buying some off the net – there is a difference between price and value.

To conclude, let me step out of my comfort zone of pensions &c. and put myself on the side of our dear Prime Minister who seems caught like the proverbial seagull in an oil slick over his handwritten condolence letter to the mother of a dead soldier. Goodness knows there are plenty of things to sink the good ship Gordon with e.g. Northern Rock and other examples of sparkling financial management of the economy, but not this matter. No Prime Minister is going to want to upset a mother of one of our dead soldiers and while the letter does not look the tastiest or tidiest missive ever sent (he is blind in one eye apparently?) it is crass to feel that there were anything other than good intentions behind it.

Perhaps I am feeling a bit embarrassed here. My History master at school, former Spitfire pilot and Headmaster too, gave fascinating accounts of the Regency period and Industrial Revolution. Subjects included Beau Brummell, Robert Owen, and Crop rotation – with plenty of homework. One of my history essays was handed back with a respectable mark, but illegible comment on the footer. After literally 10 minutes of deep thought, the message is clear………….

Would have been more acceptable ………….if neatly written.

Sometimes you can’t win.