Help section 32 buyout - wont let me take cash

emmylu

Hi, turned 50 last month, lost job, have 3 children, am utterley (butterly!) skint. Have three pensions from companies I worked for years ago and want to taketax free cash lump sums. These are as follows:-

1. MMC pension. FUnd value approx £10,000. have offered me £2,700 cash with pension of approx £30 a month.

2. HSBC pension. am awaiting details but only paid into for about 2 years plus 1 year of avcs

3. Eagle star section 32 buyout contract taken out about 18 years ago when transferred pension from AON.

Zurich/eagle star have advised the 'the gmp is £1,001.72 per annum therefore the current fund is insufficient to provide these benefits".
They have given illustrations as follows:- to retire at age 59 the guaranteed with profit cash fund is £4,577. The estimated retirement cash fund is £7,920 which produces a pension of £864. to retire at age 60 the guaranteed with profit cash fund is £4,838. The estimated retirement cash fund is £8,370 which produces a pension of £1,000.

My questions are a) Can I transfer this contract to a pension where I can access the tax free lump sum and b) what is the easiest way of doing this!

I would really appreciate an urgent reply as I have borrowed a friends laptop today (yep, no computer either as mine blew up) and have it until 6pm. Tell you, when things go bad, they go really bad. Also, I have read all the pitfalls to taking out the cash but my pensions are all quite small anyway and my only chance of survival at the moment is this cash to get a car, to get a job etc etc. The way things are going my ulcer will kill me long before I reach 65 so I need to 'take the money and run - so to speak'!!!!

Thanks - wonderfull site, amazing info available.

dunstonh

a) Can I transfer this contract to a pension where I can access the tax free lump sum

Yes.

) what is the easiest way of doing this!

Transferring all three plans into one pension which you crystallise to get the 25%. Whether you take the income or not will be something you need to decide.

emmylu

Thanks for your reply. Will I have charges by transferring pensions into one fund. Also, MMC said I must take the lump sum and the pension or nothing. I cannot take the lump sum and not take the pension? Also, is it ok to transfer the section 32 buyout into the hsbc fund and then take the lump sum and if so how long is this likely to take. Can I do this myself by sending a copy of the buyout info I have and requesting hsbc incoporate this into my fund prior to realising the lump sum?

Sorry but just trying to clarify this.

thanks

dunstonh

Will I have charges by transferring pensions into one fund.

Possibly. However, the charges would apply whether you buy the annuity on the open market or with them with most providers. The Section 32 is going to be the major area where you suffer a loss as you lose the GMP.

Also, MMC said I must take the lump sum and the pension or nothing. I cannot take the lump sum and not take the pension?

That maybe what they offer but its not the only option available. You can do just the 25% lump sum but not with them.

Also, is it ok to transfer the section 32 buyout into the hsbc fund and then take the lump sum and if so how long is this likely to take.

HSBC wont allow you to do that. Its a high risk transaction for them and it would need an IFA to do it. Or you do it yourself, but not using HSBC. Also, IIRC HSBC dont allow income drawdown on their pensions either.

emmylu

thank you so much for your speedy reply it is really appreciated. Think I will take lump sum and pension from MMC as really do need this as quickly as it takes but will see a local IFA and look to put section 32 and hsbc pension into presumably a personal pension that will unlock further lump sum but that will let me so this without drawing any pension as yet.

Once again many thanks

chris

EdInvestor

emmylu wrote: »

will see a local IFA and look to put section 32 and hsbc pension into presumably a personal pension that will unlock further lump sum but that will let me so this without drawing any pension as yet.

To do this you need to put the funds into "income drawdown". The easiest way to do this is to transfer all the pensions into a SIPP (self invested personal pension).

Low cost, efficient providers are

https://www.h-l.co.uk and
https://www.sippdeal.co.uk

These are both execution only providers and no IFA is required, so no fees.

They will help you get the transfers sorted. Then when the money arrives they will pay out the 25% tax free cash. The rest of your money will sit in the SIPP's cash fund initially and you can then invest it in funds, shares, bonds, whatever you like.

You can take an income of up to 120% of the annuity rate from your drawdown fund, so if you are desperate for money it is a better bet right now. Alternatively you can take no income at all, or anything in between.Hopefully over the years the markets will recover and your fund will be able to grow and provide a higher income later.

dunstonh

These are both execution only providers and no IFA is required, so no fees.

Since when do these have no fees? For the use of funds, HL offer little or no discounts over a conventional pension in drawdown. Indeed, they cost more.

EdInvestor

I'm talking about the transfers/drawdown setup, not the ongoing runnning costs, which depend on what you invest in with Sipps. .It should be cheaper to DIY on the former with the low cost providers and it's not that hard to get it sorted.