Your questions answered by an expert panel from Coopers and Lybrand

QUESTION TIME
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I recently retired and received a lump sum from my pension fund. I would like to use some of this lump sum to help pay for my grandson's school fees. The school has a composition payment scheme. Can you tell me what the scheme is and whether it would make sense for us to pass the money over to the school?

A number of schools operate these schemes. You hand over a lump sum which is used to pay for fees as they arise in the future.

Often the schools are responsible for investing the money themselves but some use external advisers.

One of the most popular ways is for the school to purchase an annuity (a contract which pays certain periodical amounts starting in the first term and ceasing with the last.)

But the return on the annuity depends on the length of time before the first fees are due and is influenced heavily by annuity rates at the time when it is taken out. When interest rates are low, generally annuity rates will be low as well.

In other circumstances, the school simply invests the money in a variety of investments and treats the income as part of the funds available to pay fees.

In many instances, composition payment schemes will guarantee a certain number of terms' fees.

The scheme will produce a capital sum which will be used until it is exhausted.

It is therefore extremely important to find out the exact details of the scheme operated by the particular school.

The advantages of composition payment schemes are that they can be tax- efficient because of the school's charitable status and, where the school is making investments, they will be low risk.

However, there can be tax complications if an annuity is surrendered and they can also be inflexible as not all schools will allow you to transfer money to another school.

If you are certain about the choice of school for your grandson, you should check on the exact arrangements offered by the school.

If they do not look attractive think about alternative investments

We paid a deposit on some double-glazing, but before the windows were supplied the company went into receivership. The receiver says he cannot now supply the windows or refund the deposit. What remedies do we have?

The receiver is within his rights: he cannot honour pre-existing contracts if to do so would be to increase the losses to all creditors (including you.) Check however whether the company was a member of the Glass and Glazing Federation, and had been trading for at least two years. If so, you maybe eligible for compensation under a scheme operated by the Federation. If your deposit was paid by credit card, you may also have rights against the card-issuer under the Consumer Credit Act 1974.

I am changing jobs and was thinking of investing my pension transfer value in a personal pension. With all the bad publicity I am not sure whether this is a good idea.

What you need to remember is that the transfer value is an actuarial calculation of the amount required by your old employer's pension scheme to provide the pension when it becomes due.

Because actuaries generally calculate transfer values assuming investment in bonds, the argument has been that someone transferring could improve their pension if they invest in (hopefully) higher performing equities. However, the golden rule remains that it is better to stay in an old employer's scheme unless there are tangible reasons for transferring. And, when there are tangible reasons, it is often the case that a new employer's scheme can give as good if not better value than a personal pension.

I have been lucky enough to repay most of my mortgage but I still have two endowment policies which were taken out to back my original borrowings. The smaller one more than covers the amount of my outstanding mortgage. Should I should cancel the other endowment which is a low cost endowment for pounds 30,000 which as been running for about 7 years?

You should think very carefully before cancelling your endowment. Generally, endowments cancelled within the first ten years, tend to provide only a very small amount of terms of investment return and often individuals are surprised to find out that they do not even receive a return of their premiums in that early period.

There are other options including selling the endowment on the secondhand market, having it treated as paid up (the investment continues with the life policy but you do not pay any further premiums into it) or, having paid so much money into it already, if it is easy for you to afford, you carry on paying the premiums on the endowment and run the policy to its normal maturity date.

You may find there is another event in the future which you could earmark the proceeds. It could, for example, provide you with an additional lump sum on retirement. We suggest you find out what you would receive if you cash in the policy and compare this with what you have already paid in before taking any further action.

Readers should send their questions regarding financial and investment matters to our panel of experts at Question Time, Personal Finance Department, The Independent, 1 Canada Square, Canary Wharf, London E14 5DL. We cannot guarantee to answer all readers' questions but they will be sent to Coopers and Lybrand and a representative selection will appear in Money each week

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