Adrian puts questions to Malcolm

"I contacted the Department in Newcastle and was told they were busy. How much longer do I have to wait?"

Hopefully, not much longer.

Mr and Mrs Richmond have done all that could be asked of them and made their pension claims in good time.

Mr Richmond submitted his claim for his state retirement pension in March and received his pension shortly after his 65th birthday in June.

Mrs Richmond, who had been receiving a small pension in her own right based on her (incomplete) contribution record, similarly submitted a claim for the bigger pension she was entitled to (60% of her husband's pension) once he had reached his pension age and had begun to draw his pension.

For some reason this has not been forthcoming and Mrs Richmond has still not received the higher pension.

On the Richmonds' behalf, I am taking this up with the Pensions Service of the Department for Work and Pensions.

I would expect them to pay Mrs Richmond's pension with arrears back to the beginning of June with a full apology for the trouble and inconvenience caused.

Richard Clark, who is a teacher from Cheshire, says his French wife, who has worked in the UK for more than three years, has no pension and would like to start one.

She works for a small manufacturing company which does not have a scheme.

"What do you suggest?" he asks. "Is a stakeholder pension the best way forward?"

A stakeholder pension is a "cheap and cheerful" type of personal pension, which would normally be a good option to consider.

If Richard's wife's employer has five or more employees, the company is now required by law, in the absence of any other acceptable approved arrangement, to provide its employees with access to a nominated stakeholder pension scheme.

There is no requirement that the employer should contribute to the scheme or that any employee should be compelled to join it.

They can make their own arrangements with a provider of their own choice should they wish to do so.

Further information about stakeholder pensions can be obtained in a leaflet produced by the Department for Work and Pensions entitled Stakeholder Pensions - Your Guide (PM8).

Other options for saving for retirement, including Isas or paying additional funds to reduce a mortgage, might also be considered.

The Financial Services Authority produces a helpful booklet, called The FSA Guide to Saving for Retirement - Starting to Save. This is specifically intended for people with little or no retirement provision.

The dedicated Opas website on stakeholders is also a useful guide at www.stakeholderhelpline.org.uk.

If Richard or his wife needs more definitive financial advice, they should consider visiting an independent financial adviser.

Geraint Hughes-Jones from Caernarfon asks: "I have a private pension with Scottish Widows, which was to mature on 19 May 2003.

"On 22 January I received a quotation. On 28 January I spoke with Scottish Widows who said that the quote was guaranteed providing acceptance was within 14 days.

"I therefore signed the necessary paperwork and sent it back to them. On 22 May I received a letter saying that they had made a mistake in the quote.

"After much consultation they still refuse to honour their quote and now tell me that if I do not accept the new quote by 5 September, I will lose my Guaranteed Annuity Rate and that the policy will automatically be deferred to age 75.

"I find it very difficult to get any sense out of them, different people tell me different things. Can you help?"

I really sympathise with Geraint's problem. We are getting more and more complaints and enquiries where pension administrators have misquoted people their benefits.

The level of administration generally seems to be deteriorating.

Most people, like Geraint, very understandably take the view that the company quoted figures and that they should stand by them.

Unfortunately the law doesn't share that view. It says that compensation is only required where the individual has, as a direct consequence of the misquote, taken an action they would not otherwise have done and suffered financial loss as a result.

An example could be someone entering into an expenditure, such as having an expensive holiday, that they would not have entered into had they known the true figures.

This can be a very complicated area and most people will need help. The best thing for people in this situation is to write to Opas with copies of all the correspondence involved and we will advise them on the specifics of their case.

Our contact details are: Opas, 11, Belgrave Road, London SW1V 1RB.

Unfortunately we can't do anything within the deadline set. He can accept what is on offer now and continue the fight afterwards if he thinks, in light of what I have said earlier, he still has a basis for doing so.

I would just add that we are seeing a growing number of complaints from people who have reached the specified retirement age under their policy but, for one reason or another, decided to defer taking the policy proceeds, often for a relatively short period.

When they then take their benefits, maybe only months later, they find the new retirement date has been set as 75 and they are now deemed to be retiring early and subject to a penalty on a policy, which earlier had been penalty-free.

We think that this is a pernicious practice, which should not be allowed to continue.

Paul Jefferson from Durham says: "I am 59 and have a pension pot with Equitable Life of around �33,000. I stopped paying into this fund and took out a stakeholder pension with Scottish Widows as a place to put my monthly pension savings.

"I, like many other thousands of Equitable Life pension holders, am in a quandary as to what to do. Would you advise transferring my Equitable pension pot to my stakeholder and accepting the further drawdown on capital or leave it where it is and pray that it might produce an annuity?"

I can certainly understand why Paul feels this way. If he were to transfer before his selected retirement age, almost certainly Equitable would apply an exit penalty to his fund.

Given Paul's age, he needs to bear in mind the short investment period he has left in which any future investment would need to overcome this penalty before he would be back to where he started.

In those circumstances, Paul might be better not to transfer.

He may be worried about Equitable's solvency position, given the amount of press speculation. Equitable has, however, continued to reassure policyholders on its solvency position and ability to meet its legal commitments.

In the event that Equitable (or indeed any other insurance company) were to become insolvent, there is also the government-backed Financial Services Compensation Scheme, which aims to cover 90% of existing guaranteed benefits.

For more information about the compensation scheme, visit their website, www.fscs.org.uk or phone 020 7892 7300.

In terms of Paul's options, the Financial Services Authority have produced a very useful booklet, outlining the considerations that people should take into account when making plans.

It is called The FSA Guide to Saving for Retirement - Reviewing Your Plans and is available from the Opas Helpline - 0845 601 2923.

If Paul remains unsure what to do, he could consider seeking written financial advice - preferably from an independent financial adviser.

IFA Promotions, on 0800 085 3250, will be able to provide names and addresses of some financial advisers in the Durham area.

Tony Ainsworth from Hitchin advises that he will be retiring in December.

He says that he is considering commuting part of his pension for a cash sum. The argument being put forward is that the tax-free cash released will provide more income when reinvested than the small amount of taxed pension which would be lost by doing so.

Is this a good rule of thumb? He will be 56 in December and has no pressing need for a cash sum.

Any benefit that is free of tax is generally accepted as being a valuable option.

If the money was reinvested, there is the possibility that the income secured could generate a higher income to that given up.

However, the factors that pension schemes use to commute pension for cash were often set a number of years ago and possibly have not been revised to take into account the low interest environment that currently prevails.

Tony should therefore investigate how much income he could secure with his lump sum before committing himself, particularly ensuring that he is comparing like for like - for example the level of pension increases and any attaching spouse's pension on death.

Anne Halliday from Lincolnshire writes: "I seem to recall an item on the show which suggested that the government may be changing pension rules.

"Specifically, I have had a quote from my employer about taking early retirement at 50. Are rules to be changed to prevent this and if so, when?"

The government has said that it plans by 2010 to change from 50 years to 55 years the minimum age from which you can draw pension benefits.

It is not yet known whether this will be phased in gradually or will apply from a fixed date, e.g. April 2010. The legislation introducing this is unlikely to be laid until April 2005. Therefore it is most unlikely that the proposed age change will affect Anne's plans in any way.

Yvonne Lloyd says: "I will be 60 next month and have been informed that I will get a pension of 28p a week. It will cost me one week's pension to claim (1st class stamp).

"If I do not claim will I lose out on other benefits? I thought they had put the decimal point in the wrong place."

The full state retirement pension is �77.45 a week. To qualify for this at normal pension age (currently 60 for a woman) you have to have made or have been credited with the appropriate National Insurance contributions throughout most of your working life.

For whatever reason, it appears that Yvonne's record of contributions is deficient and her only entitlement is to the totally trivial sum she has been offered.

This is probably connected to the old and now defunct graduated pension scheme (the forerunner to Serps) which ran from 1961 to 1975.

While I can understand her frustration at being offered such a paltry amount it might not be in her best interests to reject it. The money can be paid direct into the bank at intervals and apart from the initial cost of a stamp there will be nothing further for her to do.

The fact that she is then drawing a pension could be useful later on in connection with claims for other things (e.g local authority aids) and/or in support of claims for other benefits such as the Pension Credit.

If Yvonne is married she should be able to claim a pension based on her husband's record of National Insurance contributions when he reaches age 65 and starts to draw his own pension.

This would be 60% of his basic pension entitlement up to a current maximum of �46.35 per week.

A Working Lunch viewer says that he has been told that it is not possible to alter an annuity once it has been set up.

His father finished work and had bought an annuity because of his ill health. The adviser from the Co-operative Insurance Society who arranged the annuity was party to that information. However, no mention was made of the possibility of getting an enhanced annuity, due to ill health, which he now understands was a possibility.

He wants to know how his father can seek redress and compensation for the loss he believes he has suffered due to bad advice.

Some annuity providers do provide better terms for customers who are in ill health. However, it will depend upon the nature and extent of the illness, as to whether better terms would be offered.

As a starting point, a letter should be written to the Compliance Officer of CIS asking that they review the advice that was given.

If a satisfactory response is not received, it is possible to complain to the Financial Ombudsman Service. A copy of an explanatory booklet and complaint form can be obtained by phoning the Opas Helpline on 0845 601 2923.

Richard Stroud has been offered an alternative to taking a conventional annuity, which is being called drawdown.

He has not heard this type of arrangement being discussed on Working Lunch before. Richard wants to know what are the advantages, pitfalls or limitations of such a deal.

Although legislation requires a pension plan holder to buy an annuity with their pension fund before their 75th birthday, in the meantime it is possible to take income direct from your pension fund instead of buying an annuity.

The Inland Revenue set minimum and maximum limits and within this range it is possible to withdraw income from your pension fund which will, of course, be subject to tax.

Richard will need to bear in mind that the value of his pension fund can go down as well as up, but provided he is happy with the risks, there may be advantages in terms of flexibility as he will be able to vary the amount of income that he takes.

He would also avoid being locked into current annuity rates but should take into account that there is no certainty that future annuity rates will improve.

There is also an advantage if he were to die before an annuity was bought as the bulk of his pension fund could then be left to his heirs, although there would be a tax charge on the fund.

There is however an extra investment risk in electing drawdown when compared against buying an annuity. Consequently, most advisers usually only recommend such arrangements as suitable where the fund value is over �100,000 after taking any lump sum.

The Financial Services Authority has produced a guide on the subject called the FSA Guide to Annuities and Income Withdrawal, which Richard may find useful.

Pam from Worcester asks: "In taking a final salary early retirement pension, can a company waive the early retirement factor which desperately reduces my pension? How does the 'rule of 85' work?"

When a member of a final salary pension scheme takes their retirement before the scheme's normal retirement age, a percentage reduction is often applied to the rate of benefit payable to take into account and that it will be potentially paid for a longer period.

This is known as an early retirement factor, and is commonly between 4% and 6% for each year that the pension is taken early.

Whether a company can waive the early retirement factor depends primarily upon the scheme rules. Indeed, the rules will dictate in what circumstances early retirement is possible and who needs to give their consent for this to happen.

Even if the company does have the power to waive the early retirement factor, it would have to consider very carefully before doing so. It would be difficult for the company to authorise this without putting in the extra costs involved.

I believe the "rule of 85" relates to some public sector schemes, in which you are able to take an early retirement pension without reduction if the total of adding together your age and the number of years of your pensionable service exceeds 85.

The "rule of 85" situation is different from the company waiving the early retirement factor at this is normally planned for under the scheme rules.

If she would like to check whether the "rule of 85" assists in her case, Pam should write to the scheme managers.

Joe asks: "Could you please tell me what effect savings, Isas, Peps, shares etc have on the state pension (i.e. is the pension reduced in any way)? I am not receiving the pension yet."

The simple answer is that there is no effect. Your entitlement to your basic state pension is dependent upon your National Insurance contribution history and that you have reached state pension age, currently 60 years for women and 65 for men. The pension is not means tested or dependent even from having retired from work.

However from 6 October 2003 the government is introducing a state benefit called the Pension Credit. This replaces and extends the present Minimum Income Guarantee (MIG), which is a means tested state benefit.

The new Pension Credit, although more generous than MIG, will also be means tested and will be affected by private savings (over �6,000) and the other types of investment Joe has referred to.

The Pension Credit is available from age 60. It is designed to top up incomes where the money you have coming in is less than �102.10 per week for a single person or �155.80 if you have a partner.

If you are aged 65 or over you may be eligibly to receive more Pension Credit if the money you have coming in is less than �139.10 per week if you are single, or �203.80 a week if you have a partner.

To enquire further about Pension Credit and/or to make an application, ring the Pension Credit Helpline on 0800 99 1234.

Brian Tipper says: "I have been receiving a company pension since 1986. I have now been informed by Pitmans Trustees of Reading that the company has gone into liquidation and the scheme is to be wound up.

"An annuity will be purchased for me to secure the current amount of my pension but Pitmans advise that my pension will be frozen at its current level and will not be subject to future increases.

"However, I have received conflicting information that says that inflation proofing should be included. Which view is correct?"

Pitmans Trustees may well be correct as the ability to secure increases will depend upon the scheme's actual funding position.

If the investments of the scheme are not sufficient to meet all its liabilities, then benefits are secured according to an order of priority laid down under legislation.

Essentially, increases on pensions in payment can only be secured if sufficient funds remain after other benefits further up the priority order have been dealt with. Pensions in payment will be secured first.

Too often in company insolvency cases we have found that there is not enough money to pay the pensions of people who have not yet retired, yet alone the increases due on pensions in payment.

However, from Brian's comments it would appear that his basic pension is being secured.

The government intends to bring in legislation to set up a protection fund to guarantee members a specified minimum level of pension where the sponsoring employer becomes insolvent.

Unfortunately this will not help Brian or other people in this category as the new rules will not be retrospective.

Mr McElherron from County Down wants to know why tax is charged on his state pension.

"Surely", he says, "if the state wants us to have a worry free retirement we should get our state pensions tax-free!"

The state retirement pension together with any Serps/S2P, which is paid with it, is treated as taxable income for the purposes of your tax return.

This does not mean, of course, that you necessarily pay income tax in consequence of it. It depends on the level of your pension and whether you have other taxable income to be aggregated with it.

People aged 65 and above also have a higher annual personal tax allowance than those under 65. For those in the age bracket 65-74 it is �6,610: for those aged 75 and over it is �6,670. Both figures relate to the tax year 2003/2004.

Mr McElherron has a valid point, however, in drawing attention to the fact that National Insurance contributions do not attract any tax reliefs, unlike contributions into a company or other type of private pension plan where relief is given at an individual's highest personal rate.

This is quite clearly designed to provide a financial incentive to those willing to make their own private pension arrangements to supplement that provided by the state.

Mark Segal from London is 49. Several years ago he chose to opt out of Serps and transferred to a personal pension with NPI.

In March 2002, he was made redundant and since then nothing has been added to his pension. Should he opt back into Serps now or should he leave it until a later date? Mark has heard that after a certain age people should transfer back into Serps.

The state pension comes in two parts, a basic state pension and an earnings related element previously called Serps, but now known as the State Second Pension (S2P).

Serps was introduced in 1978 and since April 1988 it has been possible to opt out (known as contracting out) of Serps via a personal pension plan.

If someone elects to do so, rather than building up an entitlement in Serps instead the government as an incentive will pay a rebate to your pension provider, which they will invest on your behalf.

Recently, concern has been raised by a number of pension providers that the incentive is not now sufficiently generous for them to confidently recommend to their customers that it will ultimately produce a better pension compared to that which they would have received had they not contracted out.

The decision depends upon a number of factors - your age, your attitude to risk and the amount you earn, particularly if you earn less than �11,200 (for tax year 2003/04). The relevance of �11,200 is that the government will treat someone as earning between �4,004 and �11,200 as earning �11,200 for the purposes of calculating their entitlement to S2P.

A financial adviser or the company running your scheme should be able to look at your situation and advise you whether or not you should contract out.

You should ensure that you obtain written advice. There is also a very useful factsheet produced by the Financial Services Authority entitled Contracting out of Serps.

With regards to Mark's particular circumstances, he is presently unemployed. To qualify for the state second pension, an individual needs to earn more than the Lower Earnings Level, presently �4,004, in the tax year.

Although Mark will be entitled to a credit towards the basic state pension, that credit does not count towards the S2P. Credits may, however, be available for individuals unable to work because they are looking after a child under the age of six or a person with long-term illness or disability.