Pension Release

sudi

My husband is self-employed and he is 51 years old. He has had a private pension with Standard Life for a good few years but for the last 10 years or so he stopped putting money in it.

Is is possible to release this pension now?

EdInvestor

As he is over 50 he could take benefits from the pension.A tax free lump sum of 25% would be available and you can either buy an annuity income with the remainder or leave it invested in an income drawdown plan, while taking anything from zero to 120% of the annuity rate out.

If it's an old pension you should check if it has any "guaranteed annuity rate" attached, which could be quite valuable - although would probably mean you had to wait until the retirement date on the policy to collect.

dunstonh

As your husband is self employed, is he aware that he doesnt qualify for the full state pensions? He is just looking at the basic which is £4700 a year.

Commencing pension benefits early will not only reduce his retirement income potential but if he isnt paying into a pension either, then you are potentially looking at a very poor retirement.

sunnygal

HI,
Is this thread right that although I am self emplyed and pay my national insurance by direct debit, I am not entitled to the full state pension?

Ian_W

sunnygal wrote: »

HI,
Is this thread right that although I am self emplyed and pay my national insurance by direct debit, I am not entitled to the full state pension?

You're entitled to the full basic state pension [£90odd per week] if you have the required number of years contributions.
You don't get the state second earnings related pension [SERPS as was, before that I think Graduated springs to mind] whilst you're self-employed though you may have some from time in employment if you weren't in an opted out pension scheme.
Don't know all the details but don't believe the SE pay NI contributions for that part of the pension whereas employees do.

dunstonh

The basic state pension is £4716 a year. The second state pension/SERPS can be worth double that (although younger people can only get around £3900 if they fully qualify for the second state pension).

As self employed pay less NI, they get less state benefits and the loss of SERPS/S2P is one of them.

The Govt feels that self employed people prefer to make their own provision. Problem is that many self employed dont realise this and fail to save the extra £100k that would match the second state pension.