Open the door to an old-age income

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My 81 year-old widowed mother lives in a house worth pounds 70,000. She owns it outright, having paid off the mortgage some years ago. But she has very little by way of savings, and struggles to live on a small pension. I believe she should increase her income by releasing some of the value of the house. She is reluctant - partly because she has read of elderly home owners getting their fingers burned with such home income plans, and partly because she wants to leave as much money to her grandchildren as possible. Can you advise?

MP, Leeds

On the inheritance point, you'll just have to persuade your mother that there is no point in struggling along to give her heirs a bit more money. And should she need to end her days in a nursing home, the value tied up in her home may be compulsorily used to finance nursing home fees. This could reduce or eliminate the money she would like to leave her grandchildren.

It's true that some elderly home owners lost out in the 1980s through home income schemes where the extra income was based on volatile stock market returns. But there have always been "safe" schemes, whereby you remortgage and use the released equity to buy an annuity, then use the annuity to pay the mortgage interest and keep any excess to boost your income. These are safe in that the mortgage interest rate and annuity income are fixed from the outset. For details, write to Safe Home Income Plans, 374-378 Ewell Road, Surbiton, Surrey, KT6 7BB (0181 390 8166).

I have always dutifully belonged to company pension schemes where I have worked and now, in my late thirties, I have four pensions left with previous employers' schemes. Is there any advantage in bringing all these deferred pensions into one scheme?

TR, Cardiff

There is no general principle that consolidating pensions is advantageous. But you should enlist the help of a competent independent financial specialist to determine the best course of action for your circumstances.

The Society of Pensions Consultants (0171 353 1688) will be able to point you in the direction of suitable advisers. Although this sort of advice is not cheap, bear in mind the potential value of your pensions and the cost if you make the wrong decision.

Whether you decide to transfer depends on comparing the sort of pension you are likely to get by leaving your money where it is with the sort of pension you are likely to get by transferring it to a personal plan or to your current employer's scheme.

Your former employers' schemes are obliged to give you a transfer value, but your existing employer is not obliged to accept a transfer. You can always transfer to a personal plan. Here are some points to consider along with your adviser's recommendations:

Transfer values in pay-related pension schemes are based on actuarial assumptions about investment returns, inflation and so on. These may turn out to be invalid. A transfer value should be enough to give you the same pension benefits you are giving up if you invest the money in another scheme. So, in theory, there is no gain in transferring. Say you have five years' membership in one scheme but your new employer will allow you to buy the equivalent of only two years' membership of the new scheme. Assume both schemes give a pension related to your pay at or just before retirement. The discrepancy in values may arise because, for example, the formula for working out a pay-related pension is more generous in your current employer's scheme. And if you have a higher salary now than you had with the previous employer, each year's membership bought in the new scheme will be based on a higher salary. If you reckon you are going to end up as chief executive with your new employer, the two years' membership in the new scheme bought by your transfer value could turn out to be worth a lot more than the five years' membership of the old scheme.

Pensions with former employers are no longer "frozen" (depending on when you left). Their value will be protected by inflation of up to 5 per cent.

If you have a "money purchase" pension with a former employer, where the pension is determined by the investment value of your pension pot rather than your pay, the transfer value is simply the current value of your fund. But you could lose money through transfer charges.

There is no reason in principle why you should not have pensions from several sources when you retire. Having them all in one place may be administratively easier, but there's something to be said for not putting all your eggs in one basket.

Complications sometimes arise where you want to transfer an employer's pension which has been contracted out of Serps - the state earnings-related pension scheme.

Is it possible to give shares to my daughter without going through a stockbroker?

LD, London

You don't need to use a stockbroker unless you are buying or selling shares. If you want to give shares to someone else you will need to fill out a stock transfer form. To get a form and advice on what to do, contact the registrars for the company whose shares you want to transfer. This information should be on the share certificate or available from the company. The transfer may involve a small charge.

Write to Steve Lodge, Personal Finance Editor, Independent on Sunday, 1 Canada Square, Canary Wharf, London E14 5DL, and include a telephone number.

Do not enclose SAEs or any documents that you wish to be returned. We cannot give personal replies or guarantee to answer every letter we receive. We accept no legal responsibility for advice.

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