pensions/life insurance

welshkatt

i want to cancel my pension/life insurance but if i do they will give me a lump sum and a annual pension...question.....can i at 50 just surrender it or can i sell it on and make money rather than lose it..

dunstonh

Can you clarify.

Do you have pension term assurance or a pension?

pension term assurance has no value at any time. It is just life cover (like level term assurance) but with tax relief.

a pension can be commenced at age 50 through 65 with 25% tax free lump sum payable and the remainder purchasing an annuity. Some contracts will have restrictions on them to age 60. Other pensions will have benefits which are worth keeping until age 60.

Pensions do not lose money. They are the same as any other investment wrapper. Performance is identical to the same funds within an ISA.

welshkatt

sorry, its a pension...... i want to surrender it but the company said i have to take a lump sum and have the rest as a yearly anunuity...which i dont want....

dunstonh

welshkatt wrote:

sorry, its a pension...... i want to surrender it but the company said i have to take a lump sum and have the rest as a yearly anunuity...which i dont want....

It's the way pensions work. You get tax relief on contributions because you are forced to take an income on the bulk of the money. If you could take the whole lot out and spend it, the Govt wouldnt add tax relief to it. Thats what ISAs are for.

There are other options on larger funds which could be considered instead of the annuity but nothing will increase that pension lump sum (unless the total value of your pensions are under £15,000 and you are aged at least 60).

EdInvestor

welshkatt wrote:

sorry, its a pension...... i want to surrender it but the company said i have to take a lump sum and have the rest as a yearly anunuity...which i dont want....

How big is the fund?

Instead of an annuity you can take income drawdown, which means the money stays invested and you take an income ( which is probably what you would do with it if you coukd take it anyway.)

This gives the opportunity of the fund increasing in size as you get older and paying an increasing income - but of course there's a risk the reverse could happen as well , so it's not normally recommended for small funds or people who don't have much retirement income as a whole.