Is my dad's pension policy illegal?

7104adam

My dad's been paying into his policy for about 25 years.

The current value of the policy is about £20k

Now, when he hits retirement age in a few years, he'll get a lump sum and a weekly payout for life.

The weekly payout is so low that he'd have live to the age of 150 to get back the full value of the policy.

Since it is massively unlikely that he'll live that long, I'm wondering if this policy is sort of illegal or if they're breaking some kind of rule.

Your thoughts, ideas and advice please...

dunstonh

First of all, it wont be illegal. However, 20k is never going to pay much. Its a tiny value and indeed not far off what is known as a trivial amount. You tend to look to get your pension pot into the hundreds of thousands of pounds mark. 20k is what someone aged 30 would be wanting to have in their pot to put it in context.

What terms is he taking the income on?
How old is he?
What is the income?

EdInvestor

Try inputting the information in the "pension annuities" section to give a rough idea of how much income may be available.

https://www.fsa.gov.uk/tables.

Often the pension provider will pay less than other companies, so it is better to move the money.

Paul_Herring

Now, when he hits retirement age in a few years, he'll get a lump sum and a weekly payout for life.

The weekly payout is so low that he'd have live to the age of 150 to get back the full value of the policy.

Assuming retirement at 68, that's 82 years, and a fag packet calculation shows that you're looking at a 1.22% annuity rate. This random page from Google indicates that you should be looking at a 4.7%/5.6%.

Where did you get your figures from?