Illustration of Early Retirement Benefits

loopylil

My husband was in a company pension scheme from 1986 to 1990. The provider was Noble Lowndes (no longer exists as far as I can work out). We enquired with his previous employer about any benefits he may be entitled to as he turned 50 earlier this year. We had a reply from a company called Mercer but do not really understand what it means and what we should do now. Any advice would be appreciated. The reply is as follows:

I must advise that early retirement as at this date would not be possible. As you may be aware, under the rules of the plan, early retirement requires the consent of the Trustees. The rules also provide that the Trustees are not permitted to give their consent to early retirement if the early retirement pension would not cover the Guaranteed Minimum Pension. I have to advise you that in your case your early retirement as at your 50th birthday would not cover your GMP and so it is not possible for you to retire with effect from that date.

By way of further explanation, your GMP is the minimum pension benefit that the Trustees of the **** Group Pension Scheme are required to provide you with under Inland Revenue Rules. At the date quoted above (03/02/2009), your entitlement from the plan, when reduced to take account of early payment, would not be sufficient to cover your GMP.

Do we have any other options? Is there any likelihood of getting any money from them now or could we transfer it to his current provider.

Thanks in advance for your replies.

dunstonh

Bascially it means you cant get any money out of the pension in its current form. You could if you transferred it to a personal pension but that would almost certainly involve significant penalties and reduce the retirement benefits.

The only way to tell is to do an analysis between taking it now vs leaving it where it is and costing the difference. You would need an IFA to do this for you and it wont be cheap. I can imagine a minimum of £1000 to around £2000.

jamesd

You could ask them to tell you what age he would need to be today in order for the pension to provide the GMP. That would give some scope for planning when he might be able to take it, though it's possible that the date could change in the future. It's conceivable that a single month would make the difference, though that's unlikely.

He could also ask for a transfer value to see what they say it is and that may be useful for planning.