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  • FIRST POST
    • cogito
    • By cogito 9th Feb 18, 1:19 PM
    • 3,207Posts
    • 7,874Thanks
    cogito
    Winding up lump sum
    • #1
    • 9th Feb 18, 1:19 PM
    Winding up lump sum 9th Feb 18 at 1:19 PM
    An elderly friend has been offered a WULS of £11000 less tax and has asked me what she should do with it. She's 77 and until now has been receiving £68 a month from the scheme.

    Her kids are a bunch of money grabbers and would have it off her in a blink if they found out about it.

    I told her that my instinct would be to buy an annuity with it but that I'm not a financial advisor. Thoughts?
Page 1
    • molerat
    • By molerat 9th Feb 18, 1:23 PM
    • 17,952 Posts
    • 12,219 Thanks
    molerat
    • #2
    • 9th Feb 18, 1:23 PM
    • #2
    • 9th Feb 18, 1:23 PM
    Are you sure this is a winding up lump sum and not just a trivial commutation lump sum ?

    I would tell the pension to make a better offer or they will stick with the £68 per month.
    www.helpforheroes.org.uk/donations.html
    • cogito
    • By cogito 9th Feb 18, 1:30 PM
    • 3,207 Posts
    • 7,874 Thanks
    cogito
    • #3
    • 9th Feb 18, 1:30 PM
    • #3
    • 9th Feb 18, 1:30 PM
    Definitely a WULS. The correspondence she has received indicates that she must take the lump sum.
    • xylophone
    • By xylophone 9th Feb 18, 2:32 PM
    • 24,548 Posts
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    xylophone
    • #4
    • 9th Feb 18, 2:32 PM
    • #4
    • 9th Feb 18, 2:32 PM
    Like this?

    https://adviser.royallondon.com/technical-central/pensions/benefit-options/winding-up-lump-sums/

    Her kids are a bunch of money grabbers and would have it off her in a blink if they found out about it.
    In which case she doesn't tell them about it.


    How much difference will this make to her overall financial/tax situation?

    For example, would she become eligible for pension credit?

    https://www.ageuk.org.uk/documents/EN-GB/Factsheets/FS48_Pension_Credit_fcs.pdf?dtrk=true

    Or will she need to reclaim tax?
    • Linton
    • By Linton 9th Feb 18, 3:57 PM
    • 9,043 Posts
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    Linton
    • #5
    • 9th Feb 18, 3:57 PM
    • #5
    • 9th Feb 18, 3:57 PM
    An elderly friend has been offered a WULS of £11000 less tax and has asked me what she should do with it. She's 77 and until now has been receiving £68 a month from the scheme.

    Her kids are a bunch of money grabbers and would have it off her in a blink if they found out about it.

    I told her that my instinct would be to buy an annuity with it but that I'm not a financial advisor. Thoughts?
    Originally posted by cogito
    At 77 assuming she is of average health she can expect to live another 11-12 years. If it was tax free she would be better off taking the lump sum. However if it is all taxed at 20% it is marginal. She could of course live longer signficantly longer than 11-12 years.

    I dont think buying an annuity with the £11000 would give her much if anything more than the £68/month she is already getting.

    Therefore it would seem that if she has something useful she can do with £11000 take the lump sum otherwise stick with the pension.
    • xylophone
    • By xylophone 9th Feb 18, 4:00 PM
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    xylophone
    • #6
    • 9th Feb 18, 4:00 PM
    • #6
    • 9th Feb 18, 4:00 PM
    otherwise stick with the pension
    It appears that the scheme is being wound up?
    • badmemory
    • By badmemory 9th Feb 18, 4:06 PM
    • 1,352 Posts
    • 1,603 Thanks
    badmemory
    • #7
    • 9th Feb 18, 4:06 PM
    • #7
    • 9th Feb 18, 4:06 PM
    Pathetic offer especially if she isn't currently paying tax (as this will be taxable & COULD result in cancellation of any pension credit). Barely pays for the 11.5yrs life expectancy & is no incentive to accept.

    If it is inevitable then why is it an offer?
    Last edited by badmemory; 09-02-2018 at 4:10 PM.
    • cogito
    • By cogito 9th Feb 18, 4:23 PM
    • 3,207 Posts
    • 7,874 Thanks
    cogito
    • #8
    • 9th Feb 18, 4:23 PM
    • #8
    • 9th Feb 18, 4:23 PM
    Pathetic offer especially if she isn't currently paying tax (as this will be taxable & COULD result in cancellation of any pension credit). Barely pays for the 11.5yrs life expectancy & is no incentive to accept.

    If it is inevitable then why is it an offer?
    Originally posted by badmemory
    Offer is probably the wrong word. The letter sets out what is going to happen.

    She is paying tax at the moment.
    • xylophone
    • By xylophone 9th Feb 18, 4:57 PM
    • 24,548 Posts
    • 14,397 Thanks
    xylophone
    • #9
    • 9th Feb 18, 4:57 PM
    • #9
    • 9th Feb 18, 4:57 PM
    Is the 20% tax that will be deducted by the administrator correct in her case?

    She'll end up with a modest £8,800?

    I assume that she is in receipt of a state pension.

    Would it be worth considering "de retiring" (deferring it) for a year or so and using up the £8800 in its place?

    http://www.rights4seniors.net/content/deferring-state-pension
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