THIS TRANSCRIPT IS ISSUED ON THE UNDERSTANDING THAT IT IS TAKEN FROM A LIVE PROGRAMME AS IT WAS BROADCAST. THE NATURE OF LIVE BROADCASTING MEANS THAT NEITHER THE BBC NOR THE PARTICIPANTS IN THE PROGRAMME CAN GUARANTEE THE ACCURACY OF THE INFORMATION PRINTED HERE.

MONEY BOX LIVE

Presenter: Vincent Duggleby

Guests: Raj Mody, Michelle Cracknell, Tom McPhail

TRANSMISSION 24th SEPT 2001 1500 - 1530 RADIO 4

ANNOUNCER : And now it's two minutes past three - time for MONEY BOX LIVE with Vincent Duggleby:

DUGGLEBY: Good afternoon. We're talking about pensions on this Money Box Live, focusing on two main issues: first the impact of falling share prices on pension funds, especially the so called money purchase schemes where the amount of your retirement income depends on how much is in the pot, and also on the level of interest rates.

Secondly, there's the Equitable Life crisis where those with guaranteed annuity rates are being asked to give them up in return for a boost to their already much reduced pension savings, while those without guarantees are being offered a token payment to stop them suing right left and centre for mis-selling. Equitable is a dramatic example of what happens when assets are insufficient to meet liabilities. It claims to be solvent, but measures of solvency are based on assumptions and Equitable are making no promises about the future value of the underlying investments - they can't, and nor can any other insurance company running a with profits fund.

If on the other hand your employer runs a final salary or defined benefit scheme you're protected to the extent that the employer has to make good any shortfall assuming they can afford to. However, many such funds are being closed off to new employees and they're being offered the more risky money purchase schemes. Against this background the government sponsored stakeholder pension has been launched and employers are obliged to offer access to such a scheme with the October deadline for compliance fast approaching. But you don't have to join it. These are just some of the many pension issues you may wish to ask about.

The Money Box Live number is 08700 100 444 and with me in the studio Tom MCPHAIL from independent advisors Torquil Clarke - Michelle Cracknell from Advisory and Brokerage Services - specialist in company pensions, and Raj Mody from the actuaries Bacon & Woodrow and before we take our first call I'd like to ask you Raj a little bit more about this vexed question of solvency which has been much in the news in the last couple of days:

MODY Well solvency really means having enough money to pay your pension liabilities, so if you look at a company sponsoring a final salary pension scheme for example, you can only take a guess at what the cost of future pensions will be. It depends on things like future interest rates and how long people will live. You make that guess and the company then invests its money in things like stocks and shares. What's happened recently is that the stocks and shares have fallen quite considerably in value - the liability value hasn't changed so

DUGGLEBY: So you have to guess whether the liability can be met 5/10 years down the line?

MODY: Even longer sometimes - you've got a 20 or 30 year time frame that you're looking ahead to. Now, if current investment conditions persist that means that you're not getting the money you expected from investment returns and the company will have to pump in extra cash.

DUGGLEBY: And Tom if you're talking about a personal pension fund that's gone down because the assets have gone down - what can you do?

MCPHAIL Bad new for investors - the simple answer is that we're all going to have to accept that we need to put more money into our pensions over the longer term

DUGGLEBY: If your pension fund's gone up you just have to put money in? - no other solution?

MCPHAIL: I think it's possible we could also in a lot of cases manage our pensions more actively, but essentially yes -more money's going to be needed and that's the message that's been coming out of the industry for some time now, but even before everything that's happened in the last few weeks the pensions are being under funded generally.

DUGGLEBY: And perhaps not take any risks in the few years coming up to retirement?

MCPHAIL: Absolutely - the - the time to take risks is when you're young and you should be investing heavily in equities then and riding the markets - in the run up to retirement you should be minimising risk and we've seen - seen the reason for that in the last couple of weeks.

DUGGLEBY: Right, first question now from Doctor Ian McIntyre in Leicester:

IAN: Oh hello Vincent. Well my question is a very straightforward one - why should we take any notice at all of these numbers that Dow Jones and the British stock exchange are producing in determining the level of pensions that should be paid in Britain or indeed the level of consumer spending and the level of investment spending? I mean I would have thought that not - I'm not really referring to this crisis because the dot com boom which goes up, goes down -

DUGGLEBY: I get the drift of your question. I think what you're saying is - it's very difficult to touch this money. Now who can - Raj perhaps you could pick up this concept of money appears to have kind of disappeared but has it really gone? - it's almost an illusion - I mean what is a share price? - what is a market price? - who's - who's got this money?

MODY: Well in a sense the money has gone. A share price is what someone would pay you for it if you decided to sell that share and eventually if you've got your own defined contribution pension scheme for example which is invested in stocks and shares, one day the time will come when you do have to sell those shares to make money to buy your pension. So the value very much has gone and gone quite significantly. The markets recently have fallen by over 30% so you do have to have regard to what's happening out there because otherwise you'll find you're retiring on a pension that might be 30% lower than you expected.

IAN: Can I come back in there? - yes but you see over the weekend Vincent in a trail you were saying that you thought that the appropriate level of the FTSE after adjustments was somewhere between four one, four seven

DUGGLEBY: Correct

IAN: Yeah. And yet two years ago it was up around six seven. So why are we relying on these market judgements which are inherently unstable to determine the proper level of investment - proper level of the value of shares when in fact all that's really happening is that the system of professional actuaries, adjusters, valuers and accountants are being subjected to emotional waves - ups and downs?

DUGGLEBY: Yeah I get the drift of it - the question is here it's a matter of forecasting Michelle - I mean you have to come up with forecasts otherwise it doesn't make any sense. You've got to have growth forecasts?

CRACKNELL: That's right

IAN: Yes but

DUGGLEBY: Hang on a minute - hang on - let's answer the question:

CRACKNELL: The stock market is a market and at the end of the day there are buyers and sellers and people have to set the price and that's all the stock market does and that's - that's the point of the call - it is a market and we rely on those prices being set.

DUGGLEBY: And the point is Tom, you as an independent advisor are required as an advisor to set growth rates which are reasonable and what are they at the moment?

MCPHAIL: Absolutely and for pensions business you're talking about between 5 and 9% investment growth, but crucially if you look back to the late 80s we were told to assume up to 13% investment growth on investments. Now you go into equities because historically they've proven to deliver the best returns over the long term - now the PIA, our regulator, soon to be replaced by the FSA - financial services authority, tells us we should assume much more conservative growth rates. That means we need to put more money in, but we should still be investing in equities for the long term.

DUGGLEBY: But when I - when I was forecasting the market would fall that is sure what I felt was going to happen in the short term - it doesn't say what my adjusted forecast might be for 5 years down the line, and I clearly wouldn't say it's going to fall 10% every year for the next 5 years, now would you?

MCPHAIL: No I think the message is if you're investing for the long term, pensions should be invested in equities or predominantly in equities as producing the best returns.

DUGGLEBY: Right, sorry you can't come back on that one Dr. McIntyre because we've got to move on, but it's William in Hampshire who's next?

WILLIAM: Yeah hi Vincent - my question is basically how can a personal pension fund holder avoid having to take an annuity when they get to the age of 75? - sort of especially in light of the fact that all these funds have slumped in value and that the annuity rates are so poor compared to sort of 10 or 12 years ago and I ask this because my father's 72 and in good health and doesn't actually need the money at the moment?

DUGGLEBY: Well first of all Michelle Cracknell - the rule is still in place but it's being challenged in the courts?

CRACKNELL: Age 75 is still in place and the government haven't altered that although some innovative annuity products now push the age further and by the special design of some of these flexible annuities.

DUGGLEBY: Tom some accounts that do this?

MCPHAIL: Well - ..we've also got Cherry Booth challenging

DUGGLEBY: Yeah that's the legal case I mentioned earlier

MCPHAIL: There's companies like Foreign & Colonial who've come out with invested annuities and Prudential - they're trying to find ways round this. I think it's interesting that Ian McCartney, the pensions minister went on record very recently as saying that in spite of all these innovations and proposals been put to the government, he hasn't seen anything that persuades him that we should move away from this age 75. He's throwing it back at the mark in saying you come up with solutions, but in the meantime the age 75 limit stays.

DUGGLEBY: So William, the thing is there are solutions and you can go to an advisor who will tell you what they are. We can't say whether they're suitable - they may or may not be. But as to the likelihood of the government giving way on this 75 - Raj - Tom said he doesn't think they'll move - what do you think? - is there an actuarial case for saying no it is actually nonsense?

MODY: There is a lot of pressure from the - really everyone in the pensions industry to abolish the rule to have to buy an annuity at 75, but we are stuck with it in the meantime. One other thing I would say is that if you're uncomfortable with the ups and downs in the stock market as you get closer to that age, you don't have to invest in stocks and shares - you can invest in assets such as gilts and bonds which move up and down in line with the cost of a pension...

DUGGLEBY: The point is the be all and end all of 75 - it's the fact that you know you part with all this money and who gets it? - the insurance company if you die. I mean I know we're all supposed to be living longer, but people are upper most in their minds going to say - gosh I've spent �100,000 on this and I'm - only going to get �50,000 back - that's what they're saying?

MODY: That's the bottom line although the other side of the coin though is that if you live to 100 you will have done quite well.

DUGGLEBY: Yeah it's cross subsidy isn't it? There you are William

WILLIAM: One question - I mean the real crux of it is for a businessman or other people there are better returns than annuities and it's just rather galling if you have �100,000 in a pension fund and you're offered �6,000 a year - I understand of course you can get 25% of the fund cash tax free to start with but it's still a very poor return?

DUGGLEBY: Yes and I think there's a lot of misinformation from the government saying that they're going to lose

WILLIAM: living longer

DUGGLEBY: Yeah but the government also maintains it's going to lose tax revenue which I've never really been able to understand at all - it's the insurance

WILLIAM: Well you pay tax on the pension when you take it don't you?

DUGGLEBY: Exactly, but anyway I don't think the government are going to give in easily on this one - you can argue all you like but in the end the rules stays and as we've already said discuss the possibility of products - they're being introduced maybe we will manage to get an innovative product which sorts it out.

WILLIAM: Right, thank you very much

DUGGLEBY: But watch that space. Okay, Hilda in Cambridge?

HILDA: Hello. My husband who is now 52 was self employed for a number of years and built up a personal pension in Scottish Amicable which was valued at just over �72,000 at the end of 2000. For the last 3 years he's been working in local government and is part of the local government scheme and basically we were wondering whether it would be better given the volatile state of the market to actually use that sum - that was the transfer value �72,000 - to purchase extra years within his local government scheme?

DUGGLEBY: First of all I think I hate to say the valuation was at the end of last year?

HILDA: Yes I know I appreciate it's probably gone down quite considerably

DUGGLEBY: I don't think it's going to be anything like that. However, this is an interesting point and this is the transfer either into or out of a final salary scheme - can you start us off Michelle with the basis - basic rules for this arrangement?

CRACKNELL: Yes you can transfer and if your employer and the local government usually do offer the ability to accept the transfer value into the pension scheme. What you now - what you then have to think about is whether it's the right thing for your personal circumstances - the sorts of things you need to think about is how long is your husband going to work for the local government? - you've got to think about what the prospects of his salary increasing are and whether the design of the pension with the government suits your individual requirements.

HILDA: Right, I mean I think we've look at all of those. I mean the one thing that decided us not to transfer it when we were looking at this last year was that the Scottish Amicable - he can draw when he's 60 whereas obviously if we transfer the money to the local government he would have to wait till 65 or take reduced benefits.

DUGGLEBY: Let me put this across to Tom because he's dealing with these sorts of questions from the point of view of the personal pension side.?

MCPHAIL: You've got to look at what suits you best personally and it maybe that you'll find the appeal of being back into a final salary scheme and getting the county benefits is something that you regard as valuable. What you need to be able to do is compare the sort of benefits you're going to get from the money purchase scheme with the sort of benefits that the local government is offering you in terms of added years. You're probably going to need to talk to a financial advisor about that because the calculations involved can get quite messy, but I think also you should take account of your own personal feelings on this - if you're in money purchase you're in risk - if you're in final salary you have some degree of security, but potentially at a lower level. After that you need - you need to get the sums done for you I think.

HILDA: I have to say that we have approached a couple of financial advisors but it doesn't seem to be that there's very much in it for them, and I think we both felt unhappy about the advice we were given

DUGGLEBY: You may have to accept that you'll have to pay a fee for that�I was going to say I would have thought you could easily expect to pay �500 for that sort of advice - it's a very complicated calculation isn't it Raj?

HILDA: Is there anywhere specifically where we can find somebody who has particular expertise in this area?

DUGGLEBY: well you need to get the names of an IFA Michelle?

CRACKNELL: If you contact the Association of IFAs - AIFA - and we do have a website, they will be able to put you in contact with advisors who can help you

DUGGLEBY: In your area - and ask for one - make sure they've got a specialist pension expert in and also as I say you'll almost certainly have to expect to pay a fee because there isn't anything in it for them, probably unless you're going to buy some sort of other product.

HILDA Okay

DUGGLEBY: But it is complicated these sums and there is no definite answer, but it's - what about the other way round going from a - would anybody ever go from a final salary scheme to a non - a personal pension? - I mean bearing in mind all the mis-selling that went on ? - anybody would advise on that - Raj?

MODY: I think it's very rare nowadays for that to happen because you are giving up the security of a final salary pension - some individuals do decide to do it because it gives them greater flexibility but it's taking a risk, it's the issue that Tom and Michelle were talking about but just in reverse.

DUGGLEBY: Okay - now aha - here we go with Equitable Life I can see on my screen - Roy in Stoke-on-Trent?

ROY: Hello - hello yes. I have an Equitable Life pension policy with a guaranteed annuity rate. I'm 61 years old and am therefore able to take the guarantee. Now my question is if I take the annuity and things get worse at Equitable - heaven forbid, can I rely on the policy holders' protection to underwrite 90% of the pension?

DUGGLEBY: Well before you actually ask that question at all there's a vote coming up and it's by no means certain of course which way the vote will go - are you inclined at the moment as a guaranteed policy holder to vote in favour or against the scheme cos if you vote in favour you won't have the GAR?

ROY: Well I'm inclined to take the pension before the vote takes effect

DUGGLEBY: Use your current pot to take the pension - okay. There's a nodding going on here - let's get into the GARs now - who's going to start Tom?

MCPHAIL: I think - I think in your case my instinct would be to say you probably should exercise your right and take the GAR. The alternative is - is the compensation package that you've been offered which - it's generally recognised it does not fully compensate you for the GAR that you're giving up. You're in a position where you can take it without penalty so that represents the best value to you. You are then faced with the risk that if Equitable gets itself into a further pickle then perhaps going into the policy holder protection act and - and yes the policy holder protection act would apply to you in that situation, but you'd probably be looking at a reduced income. The only alternative is to move your money now in which case you lose both the GAR and any possible compensation. But

DUGGLEBY The answer to your - your basic question is the GAR is not guaranteed anymore than anything is guaranteed with the Equitable because the policy holders protection act hasn't been - I don't think it's ever been tested on a - a pension payment has it - hardly ever?

MCPHAIL: Not as far as I'm aware

DUGGLEBY: So it would open up an absolute can of worms?

MODY: Yes I think the swap you're making here Roy is really one of trying to get some sort of certainty and security now by exercising your GAR versus what's a very uncertain position going forward with Equitable if the compromise scheme doesn't go through no-one really knows what happens next and even if it does to some extent - there's still quite a few months until the details will be finalised and the payment's actually made.

DUGGLEBY: Now I have to declare an interest in this because my wife has a very substantial policy with Equitable Life - so I have read all the papers and I do understand I think the issues at stake and the thing that worries me - on behalf of Roy and others - it's not so much the amount of money that you're going to get in compensation as a GAR, but it's the risk to the terminal bonuses because the whole thing - it's the non guaranteed bit that bothers me - that none of this could perhaps - all this - whatever terminal bonus you've got left could be taken away tomorrow and so are you going to get - is the compensation going to be worth anything - Michelle?

CRACKNELL: That is the nature of the with profits fund and the policy holders protection act which we've just talked about - I know there has been confusion - is to how would that fit in with a with profit policy - pre retirement and it's uncertain as to what value would be attached to the with profit policy which is very much your point - that will any terminal bonuses be paid?

DUGGLEBY: Yes cos I mean essentially it's not much comfort if you suddenly find you've got 15% on the one hand and had 10% taken away on the other, but that's perfectly possible - I'm not saying it's going to happen but it's perfectly possible isn't it?

MCPHAIL: We've already seen this happen once before back on the 16th July with the reductions in policy values then. We've also seen substantial falls in the market since the 16th July both the FTSE all share - the 100 index and the all share index are both down around 20%, so I think it's entirely possible that Equitable may- may have to take further action in the future and I wish I could offer you guarantees but

DUGGLEBY: Another Equitable Life question from Stuart now in Hereford?

STUART: Hello.

DUGGLEBY: Yes your question?

STUART: Yes certainly. Directly related to what you've just been talking about - I've got several retirement annuities with the Equitable which mature in one and a half years time and many of them carry guaranteed annuities. Since my guaranteed annuity rate is roughly double the prevailing rate why on earth should I consider relinquishing that for a mere 17.5% uplift? I'd still be better off with the guarantee even if they cut my bonus to zero?

DUGGLEBY: Yeah absolutely - sorry - yeah I've done that calculation as well. You've got non GARs as well I see?

STUART: Yes roughly 50/50

DUGGLEBY: Right, so what's your inclination with the non GARs?

STUART: Well they're going to mature in a year and half's time and I will just look to see what the transfer - I mean it's worth - I'm not paying anymore in at the moment because - well for various reasons

DUGGLEBY: But you can draw a pension at aged 58?

STUART: Yes but if I drew my pension at 58 - because they're retirement annuities, and I'd be drawing it out prior to the originally age

DUGGLEBY: The originally agreed age of 60 yeah

STUART: I would be penalised. 60 I don't get penalised - I think is that correct?

DUGGLEBY: Yes nodding - everybody's nodding, but it's the non GARs you can draw now - the question is

STUART: Ah yeah they're in equities

DUGGLEBY: Alright yeah but the point about the non GARs is that they're only getting 2.5% Raj - is that a good deal?

MODY: It's so difficult to say - I think it depends on the individual. Equitable are just trying to get some sort of certainty out of what's a very difficult position for them and Stuart you're almost in the same difficult position because you've got a GAR policy and a non GAR policy, so you're faced with some of the dilemmas that Equitable themselves are faced with but across their whole policy holder group.

DUGGLEBY: Tom, some advice from you on a non GAR?

MCPHAIL: If on the non GAR policy - I think it's 50/50 as to what you do with it and whether you vote for or against - if you want certainty then leave now and take the transfer value and get out because you'll take a 10% hit but given the way the markets have behaved you can go back in - whether you'll see it grow again in the next 18 months remains to be seen. If - if you want to hang on and see what happens next then stay in there but I'm sorry I can't give you clearer guidance than that - it's a tough call

DUGGLEBY: What is regrettable in a sense is that it's never been wrong to leave the Equitable - this is I think what is it - it's version 4 or 5 that we've got - I mean it's - the crisis goes back over step and every step you take it's ah well now then hang on in there and every time it gets worse. So, the non GARs - if they're pensionable - if they can draw a pension what - I mean there again they can take what's there without a penalty - they don't suffer a penalty so are you saying that you know don't even vote, just - just move or what?

MCPHAIL: I think for non GAR policy holders there's an argument if you can retire now then it may be worth hanging on and hoping the vote goes through because you'll then go to 2.5% uplift and you can then immediately retire and take a benefit with a little bit more money in the pot. If you're worried that the deal might not go through of if there might be further complications ahead then again there maybe an argument for taking your benefits now, lose the 2.5% - but what you also avoid is any possible uncertainties, possible policy value reductions that might happen in the next few months.

DUGGLEBY: Michelle?

CRACKNELL: If you've got more than one policy the answer is to do different things with each of the policies

DUGGLEBY: Ah yes - yes well there we are -yes but which? - I mean do you jump

CRACKNELL: I think he's got more than one non GAR so

DUGGLEBY: Leave with the GAR - leave the GAR in and take the non GAR out?

CRACKNELL: No - I think he's got more than one non GAR so perhaps doing one thing with one and one with the other

DUGGLEBY: Oh yes okay - well there you are Stuart

STUART: Yes my question really wasn't what I should do with it because I certainly sent a vote against and I was advised that - because these are retirement annuities and my initially declared retirement age was 60 - in order to take the benefits prior to that I would need to transfer then I would suffer a penalty for doing that

DUGGLEBY: That's correct

STUART: I wouldn't suffer the penalty if I kept them in till I was 60 - the original age when I was planning to retire

DUGGLEBY: Yeah - you're going to vote against I know that, but you also have to -you can't just sit there saying I'm voting against so therefore the vote will definitely go no - you first of all have to say yourself if it goes no what are the consequences, and the consequences might well be that your entire terminal bonus will be wiped out, and the second thing is of course is that you might think you can retire in 2 years time with your GAR, well what if Equitable's insolvent? I mean it's not just as simple as saying I'm going to vote against you know

STUART: Well I assumed �as you were saying earlier on there is a statutory protection one hopes for GARs once they're in payment. But my real question is I'm baffled as to why anybody who has a GAR should contemplating, should contemplate accepting a mere 17.5% uplift. I'm baffled as to why the Equitable think anybody's going to accept that.

DUGGLEBY: Alright, thank you very much. You've made the point, and we must move on to Elizabeth in Wormbridge - hello Elizabeth:

ELIZABETH: Hello. It's not Wormbridge actually - it's Madley, but as I say - what I'm phoning about is to ask you whether this would be a good time for me to buy a stakeholder pension given that the price of shares is presumably low so that I could presumably get more. I'm 64. We've got sufficient income and pension at the moment, but we thought that in another 5 years it might be useful to have a bit more.

DUGGLEBY: Well there's a nice thought. Buy when the markets low Tom?

MCPHAIL: Well one option of course is - everybody's got an entitlement to put �3,600 in, more if your earnings justify it. There's nothing to stop you putting the money in and recycling it and pulling it straight back out as an income next week. Now, with the tax advantages you get on that forget the fact that it's a pension, just look at it as - look on it as an investment for income, and you can get yields of 10 or 12% on that. You lose the capital, but what you get in return is a guaranteed income for the rest of your life.

DUGGLEBY: But this question of again of a - of starting a stakeholder with the markets low Michelle I mean actually isn't a bad thing if you've got - if you've got a �3,000 investment in - you know could do very well over 2 or 3 years?

CRACKNELL: It's a very good thing. The majority of people buy when the supplements in the newspapers are big and there's lots of adverts and the stock market's doing well. Actually the reverse is true. You should be buying when - when it's Armageddon scenarios on the stock market.

DUGGLEBY: The irony about this Raj isn't it that you - you don't actually have to be - you can buy a stakeholder pension for someone else can't you - you can buy it for your children or grandchildren?

MODY: You can and it doesn't - doesn't have to be for yourself either and you still get the tax relief so that's a good thing. But you are giving up what is money now in your hands for an annuity and that maybe a good or bad thing depending on your point of view. The other thing I would just say and sorry to be a spoil sport but we think the market's low and we don't know that for sure while historically markets have rebounded over longer term time periods, if you're looking over a shorter term horizon - 2/3 years you don't know for sure which way it will go.

DUGGLEBY: Sure and also of course you've got the set up costs and charges and one thing and another so there are other considerations. Norman in Chichester your question?

NORMAN: Hello. Hello Vincent. I have - I'm paying into 2 pensions at the moment - one is a with profits and the other one is geared to a stock market. Stock market one over the last year has -has - has performed dis

DUGGLEBY: Bombed is the word

NORMAN: Absolutely. And I'm wondering whether I should now put the money from that one into the with profits?

DUGGLEBY: Yeah okay well - what's - can you give us the companies that you're with?

NORMAN: Standard Life and Nationwide

DUGGLEBY: Okay Tom?

MCPHAIL: Can I ask Norman how far off retirement are you?

NORMAN: 9 years

MCPHAIL: Okay Norman. The sort of advice we give at Torquil Clarke is that from - from here on in you should be starting to move away, gently moving away from equities and towards more secure investments. Now to an extent you're there with the with profits fund already. Now is a better time to be pulling all of your money out of the unit linked investment, out of the stock market investment. Over the next few years I would suggest you should be gently trying to switch the emphasis away from the risk based investments towards more secure investments and also as Raj said earlier on towards bonds and gilts.

DUGGLEBY: Michelle?

CRACKNELL: I agree with that advice. I think the with profits fund, you do have to realise the value you're getting on the policy is smoothed out. If he actually cashed the policy in today you would apply a market value adjuster to take into account the stock market is low.

DUGGLEBY: So there might be some penalties for moving it?

CRACKNELL: Yeah

DUGGLEBY: But in the last few years of any pension plan Raj presumably just stick it virtually all into bonds or cash for safety?

MODY: Well it depends what sorts of risk you can take with your pension money, but it's bonds and gilts that will move in line with pension prices.

DUGGLEBY: Right couple more questions I hope - Bernard in Devon first, your question fairly briefly if you may?

BERNARD: Hello, very briefly - I begun to be a little worried about my annuities which are in existence at the moment and I'm wondering with all the scare mongering going on about pension funds etc - whether my annuity is likely to be affected?

DUGGLEBY: Right are pensions annuities and payments safe - Raj?

MODY: Generally yes has got to be the answer

DUGGLEBY: Okay fine thank you and one final question now - Phil in London?

PHIL: Hello

DUGGLEBY: Hello

PHIL: Yes my son will be 65 in 2019 but he says that when he reaches that age the old age pension will have been done away with and he won't get anything.

DUGGLEBY: Right okay - do you believe that Tom?

MCPHAIL: Financial pressures on the government - they're trying to make us all pay for our pensions instead of them having to fund them for us - I hope the old age pension will still be there in 20 years time - I'm not guaranteeing it.

DUGGLEBY: Michelle in a word?

CRACKNELL: 50/50 chance

DUGGLEBY: And Raj?

MODY: Well it's politics more than pensions but I'm safer making my own provision not relying on the government.

DUGGLEBY: Okay there you have it - so many thanks to Raj Mody from Bacon and Woodrow, Tom McPhail from Torquil Clarke, and Michelle Cracknell from Advisory and Brokerage Services. I hope you're a little bit wiser about the mysteries of pensions and if you'd like anymore details about what we've raised on the programme then you can ring the information line on 08700 100 400, or log into our website: bbc.co.uk/moneybox. Paul Lewis will be here on Saturday to present MONEY BOX at noon on Radio 4 and incidentally there are transcripts on the website of all previous programmes, and for the next few Mondays Paul will also be taking your calls on MONEY BOX LIVE so from me good-bye for now.

BACK ANNO: That was Vincent Duggleby. The producer was Jessica Dunbar.