25% lump sum question

pro_bono

Is this figure that I have read about available to those of us that are over fifty??. I have at present three pensions, all frozen (because of employment circumstances) and was wondering if I can divert some cash assets from one or two, in directions other than annuities.
The three are spread out and include Allied Dunbar(Zurich), Standard Life and Scottish Widows. Each has no more than 60k invested to date.
Questions and comments appriciated

Regards

whiteflag_3

You are currently able to take the tax free (25% of the fund value) and not purchase an annuity now.

Post 6th April 2006 you will be able to do the above and not take an income either :j

Having 3 pots you are ideally placed to take advantage of both the existing and new pension rules.

pro_bono

White Flag,
Thanks for the rapid reply, but I just want it spelt out. What yuou are saying is that I can take 25% of any or all of the above now, but have to take an income, OR after 6/4/06 do the above but not take an income ( not needed if I am employed). Sorry if my statement is stating the obvious but none of the above pension companies have notified me of this when I reached 50.

Regards

bernice_2

Hi i have a small pot in nhs pension, a private pension and a private hospital pension scheme and a stake holder pension.They all have a small pot in each except the private hospital one which has 10 yrs. There is new regulations with agenda for change in the nhs that we dont get a final salary pension when we retire. I dont know whether to transfer it all into one pot. advice needed.
regards bernice

EdInvestor

Hello probono

From tha ge of 50 onwards,anyone who has personal pensions like you can "take benefits" from them. This used to mean you could take 25% of the fund as tax free cash and the rest had to be converted into either a (taxable) annuity - a guaranteed income for life - Or a (taxable) income drawdown fund, where the money could be left invested , but a minimum (taxable) income had to be taken.

From next April , this minimum taxable income from the drawdown has been abolished.

So you can move all your pensions to a SIPP, convert it to drawdown taking the 25% tax free cash, and then leave the other 75% invested in the SIPP drawdown fund to grow.You don't need to take any income now.

Be sure to choose a cheap drawdown SIPP with no annual fee such as those run by

www.sippdeal.co.uk
www.hargreaveslansdown.co.uk

whiteflag_3

pro_bono wrote:

White Flag,
Thanks for the rapid reply, but I just want it spelt out. What yuou are saying is that I can take 25% of any or all of the above now, but have to take an income, OR after 6/4/06 do the above but not take an income ( not needed if I am employed). Sorry if my statement is stating the obvious but none of the above pension companies have notified me of this when I reached 50.

Regards

I think the previous poster has answered your query, but would add the following-

You dont need to add all you pensions together before you take the tax free cash ie. at this stage you may only need £15k so therefore you could just take the benefits form one of your pots.

You dont need to use a Sipp to do drawdown

If you opt for drawdown you may not find the cheapest is best, you might want/ prefer to pay slighty more for investment advice and good quality service.

You might have health issues which may mean an alternative to drawdown may be more suitable.

There are also Inheritance tax issues that need to be considered

and its a big and - your attitude to investment risk

see threads above drawdown vs annuity & and warning about Sipps

As you can see good financial advice from an expert is essential although I hope these posts will give you a bit of background info before you start.

pro_bono

Whiteflag - Edinvestor
Thankyou, I will seek help with the direction I should take.
Does anybody know why none of the aforementioned companies were not pro-active and inform me that I could do this??

Regards

dunstonh

Does anybody know why none of the aforementioned companies were not pro-active and inform me that I could do this??

They are not allowed to provide advice. It is your responsibility to seek advice on these issues. They are just providers of the products.

They are not being difficult. If they were caught, it could lead to big fines and potential suspension of licence.

bbruce

Useful info, thanks.
Are the 226 pensions with 33% lumpsum treated similarly?

dunstonh

A S226 with 33% goes to 25% after April. Also many 226s have guaranteed annuity rates which are very high and make more sense taking as annuity. These can kick in or increase at certain ages so a little research would be required.

pro_bono

dunstonh,
I understand your point, but I still am not sure of why they just didn't inform me of the possible avenues I could follow, when I reached 50 years old.

Regards