Multiple Small Pension - Cash In Rules?

cloud_dog · 26 May 2006 at 11:35AM

My wife has pensions split across a number of providers (Equitable, GE, NU, and Scot Eq.) with the total, current, value being just over £20k. Some of this is Section 32 (whatever that means / implies) and some is in leui of the Second State Pension.

For a while now we have been thinking of re-organising / consolidating her pensions and considering other options, i.e. cashing in (if the rules permitted it). She does not work (as she is looking after our daughter) and we do not (or are not looking) to make any contributions to these existing pots.

I thought the limit to cash in pensions (in total, since April 06) was approx £20k - anyone confirm?? Additionally are Section 32 and SSP funds included or excluded from the total?

EDIT: Have discouvered the total limit is £15k, so I suppose the Section 32 / SSP question has even more relevance (wishful thinking, I think)

I think ideally we (certainly I would) like to encash the value(s) re-invest (probably within an ISA - yes I appreciate the tax advantages / diadvantages of ISA vs Pensions) and manage the investments ourselves.

Thoughts / info would be most welcome.

cloud_dog

dunstonh · 26 May 2006 at 11:38AM

The trivial pensions value is 1% of the lifetime allowance of ALL pensions held. This is currenty £15,000 so she is over the limit.

I think ideally we (certainly I would) like to encash the value(s) re-invest (probably within an ISA - yes I appreciate the tax advantages / diadvantages of ISA vs Pensions) and manage the investments ourselves.

With the same funds available in a pension that are available on ISAs, there is no need, even if you could.

EdInvestor · 26 May 2006 at 12:36PM

Hi cloud dog

cloud_dog wrote:

My wife has pensions split across a number of providers (Equitable, GE, NU, and Scot Eq.) with the total, current, value being just over £20k. Some of this is Section 32 (whatever that means / implies) and some is in leui of the Second State Pension.

Section 32 pensions are those where the money was originally in an occupational defined benefit company pension. The most important feature is the Guaranteed Minimum pension (GMP) payable at maturity.Because annuity rates have fallen such a lot, along with the value of pension funds because of the market crash, your wife's GMP could be "in the money". That is, it will cost the lifeco more to supply an annuity paying out the GMP income than is in the actual fund.If this is so, then it's sensible to leave that pension strictly alone.If it's not, an S32 can be easily converted to a PP if desired.

S2P contracted out ("protected rights") pensions are no longer subject to different rules from other PPs, with the exception that they are not yet allowed in Sipps.This should be sorted next year.

For a while now we have been thinking of re-organising / consolidating her pensions and considering other options, i.e. cashing in (if the rules permitted it). She does not work (as she is looking after our daughter) and we do not (or are not looking) to make any contributions to these existing pots.

How old is your wife?if she is over 50 she can take benefits from the pensions (not the S32) and extract 25% in tax free cash, which could then be reinvested elsewhere.This age goes up to 55 in 2010. You no longer have to take an income from the rest of the fund but can leave it invested till you actually need it.

It might well be a good idea to reorganise these pensions, especially if they are in old fashioned high charging poorly performing plans. However if they are invested in With profits funds, you need to check if there are any other valuable guarantees attached.

If not then a move to a low cost Sipp or stakeholder/PP might be sensible.

Suggest you write to all the companies and ask

a) about the guarantees and
b) about the level of charges
c)also requesting a transfer value
d)and some maturity projections
e)plus a list of your investment options (alternative funds you could move the money to within the pension, in search of better performance if appropriate.)

Then come back here with the info and we can take a look.

cloud_dog · 26 May 2006 at 1:01PM

ed

I gave you a 'thanks' but with all the useful info in there felt a 'thanks' click just wasn't enough so.....................thanks. :beer:

cloud_dog

EdInvestor · 26 May 2006 at 1:19PM

You're welcome, cloud_dog. Getting past the "baffle factor" is half the battle with pensions

cloud_dog · 21 September 2006 at 1:08PM

Am waiting on onfo from the existing providers (have to admit I got sidetracked for a few months).

In addition to gaining the above info IO've also looked for an IFA who would carryout our intentions based on a fee. Below is the info I provided:

"I am looking to consolidate a number of pension plans with four different
providers, containing a mixture of old group pension, personal pension, some
including GMP elements.

My total pension 'pot' is not particularly big (approx £20k) and I am
looking to acheive the following:

* Retain any valuable GMP rights
* Consolidation into as few different providers / plans as possible
* End up with a flexible solution which the investments can be managed by
myself/husband
* Consideration of a SIPP (if suitable considering charges etc)

I am looking to pay a flat fee for the advice rather than commission based
advice."

She has come back and indicated that the fee is likely to be in the region of £1250 and the process is likely to take approx 3 months. No due dilligence / fact finding carried out yet.

Am ok with the timeperiod but was wondering if the fee seemed reasonable to you IFA people? To be honest I was expecting a fifure around £600 (not sure why not having done this before but....).

cloud_dog

EdInvestor · 21 September 2006 at 7:08PM

This is often a problem - the pension system is very complex and it doesn't really matter if a pension is worth 5k or 500k, it takes the same amount of time to do the analysis.You wouldn't be the first person to find that it's not cost effective to get professional advoice on pensions.:(

If you don't want to pay all I can suggest if you post the info from the providers on here in due course and we will try to give some pointers about what you could handle yourself and what still should have a professional opinion.

dunstonh · 21 September 2006 at 7:56PM

Fee basis then £1250 isnt bad. You could get £600 with a bit more shopping round or a compromise. i.e. let the adviser keep the fund based commission on the SIPP (just as HL do on theirs) to bring the initial cost down?

cloud_dog · 21 September 2006 at 9:57PM

ok, thanks guys.

If you wouldn't mind I'd like to post the info to see if what you feel, i.e. how complex, etc, and what, if any, elements should be left alone.

cloud_dog

cloud_dog · 22 September 2006 at 6:59PM

Pension details below.......... (I'm sure there are lots of critical things I've missed out).........

[Edit: would you adam 'n' eve it, I spent ages lining up the columns and goes and ignores it]

Equitable Life
Type Group Money Purchase
Protected Rights 50% Approx
Non-Protected Rights 50% Approx

Investments: Type Holding
Managed Fund Unit Linked 468

GE Life (Prev. Nat Mutual)
Type Personal
Protected Rights 100% (in lieu of SSP)
Non-Protected Rights 0%

Investments: Type Holding
Global Equity Tracker Unit 368
Managed Unit 415
With Profits Endowment 771

Norwich Union
Type Variable Group AVC Money Purchase Plan
Protected Rights ?
Non-Protected Rights ? (Probable)

Investments: Type Holding
NU Balanced Managed S2 Unit 366
NU Global Bond S2 Unit 547

Scottish Equitable
Type Unsure
Protected Rights 33% Approx - GMP *
Non-Protected Rights 67% Approx

Investments: Type Holding
Mixed Unit 260
With Profits * Endowment 7780
With Profits Endowment 6173

Notes GMP:

The Reserved Contributions are reserved for a GMP of £151.31 re-valued to State Pension Age of £1232.43, plus a spouse’s GMP of £75.65 re-valued to State Pension Age of £616.17.

• Rate of Re-valuation on GMP is 7%
• Maximum Lump Sum Benefit is £2992
• Maximum Pension is £1330

(Above info dated 30/06/95)

Not sure if the above notes have any relevance or whether they were projection information.

Many thanks cloud_dog
p.s. I also accept that any views posted on this information are only views and opinions and do not constitute advice, professional or otherwise.

EdInvestor · 23 September 2006 at 8:26AM

Hi CD

I'd have thought her Scot Equit Section 32 is almost certainly "in the money", that is, in order to meet the guarantee, the insurance company will have to pay you extra, more than the fund is currently worth.

So leave that one strictly alone.[There are occasionally some winners in this game

]

The ELAS and GE LIfe can be consolidated and IMHO the best place to do that is in a low cost online SIPP these days. However, protected rights money can't go into a SIPP until next April.So I would leave it until then and use the intervening time to study which funds ( or shares) you might invest the money in.

Good information on that is available here:

https://www.citywire.co.uk/Home/Funds.aspx

If you don't expect to make any further contributions, this gives you a wider choice of online Sipp providers to check out.

Have a look at

https://www.sippdeal.co.uk
https://www.hargreaveslansdown.co.uk
https://www.alliancetrust.co.uk

and if you are really keen to get going now, you could check out https://www.epml.co.uk
which has a parallel cash "holding fund" in which you can put the PR money right now, while waiting for full investment availability next April.

I am not sure about the AVCs. You should ask NU if they can go into a SIPP, they should be able to tell you that - or one of the SIPP providers will be able to .It may depend on the rules of the original pension scheme they are attached to ( was that by any chance the S32?)

The complexity is really startling isn't it, you'd think we were talking about hundreds of thousands of pounds.

Multiple Small Pension - Cash In Rules?

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