Personal Finance: A pension time bomb

DURING the past few months, the financial pages have been full of tales of hapless people who may have been erroneously transferred out of their occupational pensions into personal pensions. Hundreds, or perhaps thousands, of people may have to be compensated for benefits lost by transferring.

However, a potentially far bigger time bomb is ticking away for millions of people who opted to take out a personal pension based only on the State Earnings Related Pensions rebate supplied by the Government from the National Insurance fund.

Some 2.4 million people in this situation were lured into accepting what was, in effect, a government bribe. They need to be made aware that it is unlikely a rebate- only pension is going to provide them with an adequate income when they retire. In fact, according to a survey in September's Money Management magazine, the charges on rebate-only personal pensions that are held for just a few years may be so high they wipe out nearly all of their potential savings.

One of the major problems faced by rebate-only personal pension policyholders is that many of them will have been sold their pensions by independent financial advisers who may have gone out of business because of the recession.

These people are rather emotively termed 'orphan clients' by life insurance companies and personal pension providers. If you are an 'orphan' and have a rebate- only personal pension, it may be worth contacting the company you have your pension with to see whether it can give you advice or put you in contact with a new independent financial adviser.

THERE IS one action that everybody with a bank or building society account takes from time to time, no matter how impecunious they are. They will indulge in the simple act of paying a cheque into their account. Paying the cheque in seems simple enough, but the time taken before they can draw on those funds seems to be a source of confusion. Cheque clearance times among banks and building societies are vastly different - building societies tend to take much longer. Leeds Building Society last week announced it was cutting its cheque clearance time from a whopping nine working days to seven - a time-span that to many people would still seem to be unacceptable.

Consumers are understandably confused. Often the exact time of day you pay your cheque into your bank or building society account will make a difference to whether that day is counted as the first day of cheque clearance. Perhaps it is time for the industry to standardise this most commonplace of actions.

HOW GREEN is green? Is it the deep verdant green of the canopy of the Amazonian rain forest, is it the rather more insipid green of the Irish footballing strip, or is it the transparent green of a glass of creme de menthe?

This is the question facing the ethical fund managers pressing for clarification from Body Shop about allegations of breaches in the green ethical code. The fund managers, who control pounds 800m on behalf of thousands of investors, are reconsidering Body Shop's membership of the ethical investment club. Surely there can be no question of the colour of the company's credentials - only the exact shade is now in doubt.

Vivien Goldsmith is on holiday