Pension payouts

Trotboy

I have a very quick question, I have a personal pension with Royal Scottish which I started a long time ago, and I have just realised from my annual statement it is supposed to pay out at 55. I suspended it a while ago, because I have a far better one through my work, but there will be a lump sum. Does this pay out at that age even if I don't retire? Is there any way of deferring the payout date, or is it set in stone?

dunstonh

Does this pay out at that age even if I don't retire?

Up to you.

Is there any way of deferring the payout date, or is it set in stone?

The age nomination is just that. It is not cast in stone. You can take benefits at any age between 50 and 75. They just have to put something down on paper and in your case that it currently 55. Easily adjusted by letting them know when the time comes that you wish to defer it until a later age (the forms often give this as an option).

Trotboy

Thanks for that, but presumable potentially I could take the 'lump sum' at 55 if I wanted to even if I haven't retired?

dunstonh

Trotboy wrote: »

Thanks for that, but presumable potentially I could take the 'lump sum' at 55 if I wanted to even if I haven't retired?

You would probably have to transfer the pension to a more modern contract that allows it. Most legacy contracts do not. You should check if there are any guarantees lost in doing this and if its really viable. For example, taking the 25% is a once only transaction against that fund and it reduces your death benefits on the pension. You are also removing funds from a tax free investment so if you plan to reinvest, you may find the alternatives are not as tax efficient. Pros and cons to it basically.

Trotboy

dunstonh wrote: »

You would probably have to transfer the pension to a more modern contract that allows it. Most legacy contracts do not. You should check if there are any guarantees lost in doing this and if its really viable. For example, taking the 25% is a once only transaction against that fund and it reduces your death benefits on the pension. You are also removing funds from a tax free investment so if you plan to reinvest, you may find the alternatives are not as tax efficient. Pros and cons to it basically.

Sorry, I may be being a bit thick here, it's a private pension which is supposed to pay out at 55 in a single lump sum. I don't know anything about death benefits - I can't see many benefits to dying anyway! I certainly don't want my Pension after I'm dead - would be nice to get the money beforehand!

dunstonh

Sorry, I may be being a bit thick here, it's a private pension which is supposed to pay out at 55 in a single lump sum.

That does not make it a conventional scheme. If 100% is available at 55 then it is worth investigating to see if you can have it (although also worth looking to see if there are enhancements at 60 or 65 (sometimes these plans do have guarantees in them which can be worth holding on for).

I don't know anything about death benefits - I can't see many benefits to dying anyway!

Remember that we dont know anything about you. You could have a spouse/partner or other dependents. In those cases death benefits are important.