dear Prudence

An expert answers your queries on money matters

I see the price of gold has reached its best level since 1988, and I would like to buy some gold coins. Is this wise, and if so which are the cheapest and where can I buy them?

Mr P W, Surrey

The price of gold goes up when inflation rates are rising and gold is seen as a way of storing value, and when interest rates are low and the cost of holding gold which earns no interest is therefore painlessly low.

There is a wide choice of gold bullion coins, including sovereigns, Britannias, krugerrands, which contain an ounce of pure gold, Canadian Maple Leaves, Australian nuggets, Austrian ducats, Russian chervontsi and Chinese pandas. They all sell for perhaps 1 per cent to 3 per cent above their gold content.

Unfortunately the trade in gold coins in the UK has been virtually dead since the Seventies when the Chancellor imposed VAT on the price of bullion coins traded essentially for their gold content. He did so because unscrupulous dealers bought coins free of VAT, melted them down and sold them for scrap, reclaimed VAT which did apply to scrap, and then disappeared.

The scam won't work now because Customs & Excise requires the VAT on scrap gold to be paid direct to them, and bullion dealers would love the VAT to be repealed. But meanwhile retail trade in gold coins remains hamstrung by VAT, which individuals cannot reclaim. Some coin dealers and jewellers do sell coins individually but expect to pay 20 per cent above the gold content.

You could now go to countries like Luxembourg where there is no VAT on gold coins and import them legally. The trouble comes if you want to resell them.

I have worked for a number of employers over the years and earned pensions with several of them, although they are frozen until I am 65. I also started a number of personal pension plans in the late Eighties when the whole country was being pressurised into getting a portable pension. I cannot blame an adviser for selling me a plan because I went along with the crowd quite freely, although clearly I should have joined my then employer's company scheme and got a contribution from him.

I am now employed on a series of short-term contracts which might end abruptly or could lead to a staff job. I have three questions. Could I, and should I, try to consolidate my earlier pension plans into a single plan; what should I do about pension contributions in my present employment; and can I reopen my existing personal pension plans?

Mr G H, Manchester

I suspect your problem is quite common and very complex. You can seek to transfer your old company plans into a single scheme. If you get a new staff job and expect to keep it for some years that might be a suitable home, if you don't get a staff job you could transfer into a personal pension scheme, but you have no control over the transfer values on the way out or the way back in, and there is no way you can buy longer service in a company scheme. My instinct is to sit tight and wait until the pensions become payable.

You were certainly a victim of government hype for personal pensions in the Eighties. My understanding is that most providers will let you back into schemes which have become dormant, but some will ask you to pay all the back contributions, plus a fee.

For the future you will not be able to join a company scheme and get tax relief on contributions to a personal pension scheme in the same tax year. You do not say how old you are but contributions to a pensions scheme are tax efficient and as you get older you can put an increasing proportion of your earnings, up to 40 per cent if you are 61 or over, into a scheme. I think however you do need one-to-one advice from a specialist adviser.

I have a savings account in the Woolwich which I have held for many years and am entitled to a vote on the conversion to banking status. I am happy at the prospect of getting a pay-off, but will conversion make the society a better business?

Mrs P W, London

That is the $64,000 question. Societies want to convert because they will be able to raise more money from the London money markets and lend for a full range of purposes. They will also have shares they can use to mount takeover bids to expand their business faster.

But they will have to generate extra profits in future to pay dividends to shareholders, and they will have to come from somewhere, through increased volume or increased efficiency, or at the expense of borrowers or savers. That is why the Bradford & Bingley has deliberately set out to pay more to savers and charge less to borrowers, at the expense of its own profits, in order to embarrass the banks and building societies which are converting to banking status.

Questions from readers are welcome. Write to Prudence, c/o the Features Department, 'The Independent', One Canada Square, Canary Wharf, London E14 5DL. Fax: 0171-293 2182. Personal correspondence cannot be entered into.

Suggested Topics
PROMOTED VIDEO
Arts and Entertainment
On set of the Secret Cinema's Back to the Future event
filmBut why were Back to the Future screenings cancelled?
News
Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Sport
Lewis Hamilton walks back to the pit lane with his Mercedes burning in the background
Formula 1
Arts and Entertainment
The new characters were announced yesterday at San Diego Comic Con
comic-con 2014
Sport
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
football
Arts and Entertainment
No Devotion's Geoff Rickly and Stuart Richardson
musicReview: No Devotion, O2 Academy Islington, London
News
i100
News
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
News
i100
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior Risk Manager - Banking - London - £650

    £600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

    The benefits of being in Recruitment at SThree...

    £18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

    Test Analyst - UAT - Credit Risk

    £280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

    Trainee Recruitment Consultants - Banking & Finance

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Day In a Page

    Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

    Best comedians: How the professionals go about their funny business

    For all those wanting to know how stand-ups keep standing, here are some of the best moments
    Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

    Jokes on Hollywood

    With comedy film audiences shrinking, it’s time to move on
    Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

    Edinburgh Fringe 2014

    The comedy highlights, from Bridget Christie to Jack Dee
    Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

    The BBC’s wolf in sheep’s clothing

    What will Evan Davis be like on Newsnight?
    Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

    Finding the names for America’s shame

    The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
    Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

    Inside a church for Born Again Christians

    As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
    Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

    Olivier Rousteing is revitalising the house of Balmain

    Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
    Cancer, cardiac arrest, HIV and homelessness - and he's only 39

    Incredible survival story of David Tovey

    Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
    Backhanders, bribery and abuses of power have soared in China as economy surges

    Bribery and abuses of power soar in China

    The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
    Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

    Highland terriers steal the show at opening ceremony

    Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
    German art world rocked as artists use renowned fat sculpture to distil schnapps

    Brewing the fat from artwork angers widow of sculptor

    Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
    BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

    BBC takes viewers back down memory lane

    The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
    Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

    Nicolas Cage shines in low-budget drama Joe

    Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
    How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

    Make your own ice lollies and frozen yoghurt

    Think outside the cool box for this summer's tempting frozen treats
    Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

    Fiesta is UK's most popular car of all-time

    Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride