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early pension withdrawal advice needed
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# 1
alkalo
Old 17-06-2007, 2:42 PM
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Default early pension withdrawal advice needed

just received at long last my pension transfer value from an ex employer and need help on the best way to realise the cash .
its worth 72000 , im 52 and intend to leave the EU area at 55
i have an option to join a company scheme now but i would prefer to realise as much cash as possible as soon as possible .
can anyone advise please
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# 2
dunstonh
Old 17-06-2007, 2:55 PM
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Whilst the pension is under UK law, you only have access to 25% of the lump sum. That is a once in a lifetime dip. You don't get a second go even if the amount you leave invested doubled.

There are arrangements with a number of other countries which allow UK pensions to be transferred to their equivalent. The options available in that country may be better or worse.
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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# 3
alkalo
Old 17-06-2007, 4:03 PM
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my ex employers say there is not enough in company fund for me to take early retirement
my intention is to take 25% and reduced pension as soon as possible but they say i cannot have it so i need to know what options are available to me
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# 4
EdInvestor
Old 17-06-2007, 5:45 PM
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Quote:
Originally Posted by alkalo View Post
just received at long last my pension transfer value from an ex employer and need help on the best way to realise the cash .
its worth £72000 , im 52 and intend to leave the EU area at 55
i have an option to join a company scheme now but i would prefer to realise as much cash as possible as soon as possible .
can anyone advise please

If you transferred it to a SIPP (self invested personal pension),you can take 25% in cash and put the rest into "income drawdown" where you can take an annual income at 120% of the annuity rate.Choice of a SIPP depends largely on what you want to invest the money in, shares, investment tusts, unit trusts?

Does the fund have contracted out "protected rights" money in it?If so, the PR money can't yet go into a SIPP. It's worth asking whether an insurance company would offer you a drawdown to include the PR money, though they usually want a 100k fund value (and their charges are higher than a low cost online SIPP.)

If nothing's on offer you can separate out the two pensions, put the non PR one into drawdown as above, and either open a new pension for the PR money and leave it invested until the rules are changed, then move to the SIPP or take the 25% cash and buy an annuity with the remainder.

You may have a problem moving this final salary pension.Insurance companies are almost certainly going to require an advised sale and IFAs may not be happy to approve it.

See this case reported today in the Sunday times

Quote:
This warning follows a ruling by the City regulator, the Financial Services Authority, that banned Alexanders, a Swindon independent financial adviser, from certain activities for incorrectly advising 650 staff at a local manufacturing firm to transfer their pensions from deferred membership of a final-salary scheme to a GPP plan.

This raises the spectre of the pensions mis-selling scandal of the 1990s, when salesmen were encouraged by commissions to shift their clients out of valuable final-salary schemes into personal pensions.
Have you looked at the figures closely, comparing what the transfer value is likely to give you when you retire, compared with what you would get if the pension was left undisturbed?

Last edited by EdInvestor; 17-06-2007 at 6:24 PM.
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# 5
dunstonh
Old 17-06-2007, 8:18 PM
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Quote:
Does the fund have contracted out "protected rights" money in it?If so, the PR money can't yet go into a SIPP. It's worth asking whether an insurance company would offer you a drawdown to include the PR money, though they usually want a 100k fund value (and their charges are higher than a low cost online SIPP.)

Or cheaper than an online SIPP and will accept amounts less than 100k....

Quote:
You may have a problem moving this final salary pension.Insurance companies are almost certainly going to require an advised sale and IFAs may not be happy to approve it.
That could be the problem. Transferring the occ scheme into a personal arrangement just to get access to a lump sum early whilst in the process probably losing tens of thousands of pounds is going to put a lot of advisers off.
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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# 6
alkalo
Old 24-06-2007, 10:21 PM
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thanks for the contributions
im still confused though
pension company trustees say i cannot have early retirement
it does have protected rights in the fund
the company say the amounts involved in the fund would not allow early retirement benefit
i intend to live in west africa at age 55 and was hoping for 25% lump sum and reduced pension
i already have similar from another company pension which is why i thought it would be simple to do the same with this fund
i can live a very nice life thank you in africa and want the cash while i can enjoy it
i intend to live off the interest from my other savings
the company say the fund is in serious deficit so i think it may disappear before age 65
im a bit simple when it comes to pensions so i need simply explained advice on the best way to realise the cash
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# 7
dunstonh
Old 24-06-2007, 10:56 PM
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Quote:
pension company trustees say i cannot have early retirement
it does have protected rights in the fund

Many occupational pension schemes have a selected retirement age and allow early retirement at the discretion of the trustees. This is mostly commonly the case with final salary schemes. Money purchase schemes are usually a little more flexible and allow earlier retirement as your withdrawal has less impact on the scheme than a final salary scheme.

Quote:
the company say the fund is in serious deficit so i think it may disappear before age 65
That makes it sound like a final salary scheme. However, your conclusion is not sound. Many schemes are in deficit but that doesnt mean it is going to fail. There is probably a plan in place to increase the assets of the fund over the coming years. Either by a reduction in liabilities or increased funding. Or more commonly both.

Quote:
i intend to live off the interest from my other savings
Not a good idea. Your money will be going down in real terms and at age 55, you need to be actively looking for growth and income and not just income.
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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# 8
Cook_County
Old 24-06-2007, 10:57 PM
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I hate to ask more questions - but these are the kind of things I'd want to know:

1. Will the West African country tax the 25% lump sum?
2. Will the West African country tax the regular pension payments?
3. Does the West African country have a tax treaty with the UK & if so what does that treaty say about pensions?
4. Can you transfer the entire funds from both pension schemes to a pension scheme in that country & obtain a higher annuity rate because mortality there is not the same as the UK?
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# 9
alkalo
Old 25-06-2007, 1:37 PM
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1 no tax payable on lump sum
2 no tax on regular payments
3 double taxation agreement in place with uk
4 dont want any funds in another country bulk to stay in uk
if i can acheive an income of 10,000 pa split between my wife and i dont think there is any tax liability
i can have a comfortable life on that income
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# 10
bigbloke45
Old 25-06-2007, 8:02 PM
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From what I recall, it seems like you are thinking about exporting your Pension Sheme Trust abroad. From my dealings with the Revenue, they are always paranoid about someone being able to access more tax free cash from their fund than available in the UK.

I think you will have to research this VERY carefully. You say about higher annuity rates in West Africa. From whom? and what about guaranteed payments for the rest of your life?

Don't confuse good financial planning with wishful thinking, there is no such thing as a free lunch!
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# 11
EdInvestor
Old 25-06-2007, 10:51 PM
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it appears that you can't take early retirement from the firm with TFC and reduced pension.But they will offer you a transfer value.

So what you need to do is find a scheme which will accept the transfer value and then enable you to take benefits from the pension. For this you almost certainly will need the help of an IFA, albeit possibly one who is acting on an "execution only" basis.

You could try talking to the advice section of Hargreaves Lansdown, or one of the specialist retirement IFAs to get a view:

www.h-l.co.uk
www.justretirement.co.uk
www.annuitybureau.co.uk
www.williamburrows.co.uk
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# 12
dunstonh
Old 25-06-2007, 11:35 PM
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Early retirement would be classed as an occupational pension transfer. Not an open market option. As its a final salary scheme, you will find most providers will want an IFA to sign off on it. You are not going to get that on execution only basis.
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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# 13
EdInvestor
Old 26-06-2007, 11:28 AM
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Yes but he's over 52 and entitled to take benefits, so IMHO he should at least ask around.

Quote:
the company say the fund is in serious deficit so i think it may disappear before age 65.
Although the fund won't disappear now, as a protection fund has been set up,this may well provide justification for an IFA to advise a transfer out to take benefits.
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# 14
dunstonh
Old 26-06-2007, 1:25 PM
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Quote:
Yes but he's over 52 and entitled to take benefits, so IMHO he should at least ask around.
Its before scheme retirement age though and the trustees will not allow early retirement. So it would require a pension transfer and not open market option. That is G60 pension specialist territory.
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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# 15
alkalo
Old 01-07-2007, 6:54 PM
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thank you for your replies
i shall now seek out an ifa
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