Trivial pension rule with a company pension ?

glossopguy

My wife is just comming up to 60 and has both a company pension and a stakeholder pension.

The company pension will pay out £11,000pa

The stake holder pension has a value of £ 11,000

On retirement, in December, can the 'Trivial pension rule' apply to the full stake holder value - since it cant be 'transfered'

Andy_L

The combined value of ALL pensions has to be under the limit for trivial commutation. Final salary schemes are assumed to have a value of 20x the annual pension.

As this puts you wife over the limit (£16000 iirc) she can't use trivial commutation.

glossopguy

Thank you for such a definitive and rapid response.

Since it can not be transfered into the company pension - Can the wifes stakeholder balance (after taking the 25% tax free ) be transfered into the husbands collective private pensions?

jem16

glossopguy wrote: »

Since it can not be transfered into the company pension - Can the wifes stakeholder balance (after taking the 25% tax free ) be transfered into the husbands collective private pensions?

No it is your wife's pension and only she can access it.

glossopguy

Wow - Im well impressed - thank you ! ...

Lastly then....

Any recommendations on what to to do with am £11,000 stakeholder fund ?

jem16

glossopguy wrote: »

Any recommendations on what to to do with am £11,000 stakeholder fund ?

Does your wife need the income from it? If so you have two choices.
1. Buy an annuity
2. Use Income Drawdown - may need transferred to a pension that will allow it.

If no income needed at present leave it to grow.

dunstonh

Its more tax efficient to keep it in the wife's name anyway. Both individuals have personal allowances that allow nearly £10k a year tax free after 65. If you dont have the income in retirement to utilise the personal allowance then its basically money wasted if it was all lop sided in one name (bad planning by having it all in one name can create an extra £2k tax liability year just because the direct debit didnt split the pension between spouses)

dasherman

You are allowed to take 25% of all your pensions put together as a tax free lump sum,as long as the individual schemes allow it. As someone else said your wifes company pension is worth aprox £160k and the stakeholder is worth £11k,so in theory you could take about £42k as a lump sum.

Doing this would obviously reduce your income so you could just take the £11k as tax free cash.

EdInvestor

dasherman wrote: »

You are allowed to take 25% of all your pensions put together as a tax free lump sum,as long as the individual schemes allow it. As someone else said your wifes company pension is worth aprox £160k and the stakeholder is worth £11k,so in theory you could take about £42k as a lump sum.

Doing this would obviously reduce your income so you could just take the £11k as tax free cash.

Aggregating the two schemes together can only happen if the company scheme rules allow it, which is unlikely. The 25% tax free cash will thus probably come in two separate chunks.

Leaving the stakeholder invested so it can grow may result in a bigger chunk of cash later - or not depending on what the money is invested in and how markets behave.

Depending on the size of the wife's state pension, it may be wise to take as much tax free cash from the company pension as possible to cut tax liability.