cis option 32 lump sum

davegoorn

im hoping one of you clever money people can help me
I have just received an illustration from CIS about me taking a lump sum from my section 32 pension pot at the age of 50 (which i wil be in September)
my first question is how reliable is the illustration.......seeing as it is only 4 months till im 50 and eligable for the lump sum.
here are the figures ive been sent:
if i retire at 50 there are 2 options
option 1 total pension per year £1500
option 2 total pension per year £1070 plus a lump sum of £11,900
my GMP AT STATE RETIREMENT AGE IS £249.60 PER ANNUM
second question do i have to retire to get the lump sum? or can i continue to work..if i continue to work what are the tax implications?
hopefully thats enough information
Many thx in advance
Dave

dunstonh

my first question is how reliable is the illustration.......seeing as it is only 4 months till im 50 and eligable for the lump sum.

Assuming with profits and that the scheme retirement age is 50, then its likely to be somewhere between current value and illustrated value at lowest rate.

do i have to retire to get the lump sum? or can i continue to work..if i continue to work what are the tax implications?

You dont have to retire. However, the pension income is taxable.


Is the section32 set for a retirement age of 50 or is it set later? Are there guaranteed annuity rates (and if so, when do they apply and how much)?

Have CIS confirmed that you will be able to commence the pension at 50? (an illustration of benefits to that age doesnt mean you will be able to take benefits. e.g. fund isnt high enough to cover GMP and the scheme age is higher).

davegoorn

Thanks very much for your answers dunstonh
the scheme is a single premium retirement annuity contract purchased with the value of deferred benifits held in a previous occupational pension scheme
the scheme retirement age is set later at 65
as for guaranteed annuity rates i think this is what you mean
revisionary bonuses are declared each year as a permanent addition to the policy benifits and terminal bonuses may be added to policies becoming claims

CIS have not confirmed that i will be able to commence the pension at 50

Ultimately Im looking for a way to get the/a cash lump sum
am i allowed to tranfer the pension to a different provider to get the lump sum

EdInvestor

You can transfer the pension from a S32 buyout to a personal pension in income drawdown , which will enable you to get the 25% tax free cash.But you will lose the guaranteed minimum pension at 65.You can choose wehether or not to take an income at this stage.

What is the value of the fund?

ffacoffipawb

EdInvestor wrote: »

What is the value of the fund?

At a guess 4 x £11,900 = £47,600 ??

davegoorn

thanks for the very helpful answers i will look into transfering my pension to a personal one
In answer to the question how much the fund is worth ........im not really sure but the Current surrender value is £30,792.02 (not guaranteed)
Many thx again
Dave

dunstonh

CIS have not confirmed that i will be able to commence the pension at 50

That will be important with GMP being a part of the plan.

am i allowed to tranfer the pension to a different provider to get the lump sum

Most compliance departments at firms treat section 32 buy out bonds as occupational pensions. So, you may find a reluctance to allow transfer into a personal pension/stakeholder/SIPP without advice being sought advice. The FSA stated last year that they would consider a transfer from occupational schemes a mis-sale as default (even on direct sales) unles proven otherwise. This is mainly due to the statistically high odds of transfer being a bad choice.

So, whilst the transaction is possible and can be justified, you may find you are told by certain companies that they wont do it.

The GMP and GARs are quite possibly going be too valuable to justify giving up for just £7000 of tax free cash.