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must take annuity?
waltzer
Posts: 56 Forumite
BiL is going to take benefit from a small pension he has. He principally wants the 25% lump sum but does not need any income from it at present. What are his options for the 75%? Is he forced to take an annuity or can he divert the remainder into some other pension vehicle?
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Comments
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Is he forced to take an annuity or can he divert the remainder into some other pension vehicle?
If he is under 75 he can take the 25% but leave the 75% invested. Most pensions dont allow you to do it in the pension plan held (e.g. stakeholders or pre-2006 personal pensions). However, most providers (that are still open for business) will allow an internal transfer to their drawdown plan or he can transfer it to a personal pension or SIPP that does allow drawdown. If there are guarantees on the plan (such as guaranteed annuity rates GAR) or GMP) then these will be lost. In those cases, crystallising the benefits early (taking the pension benefits is called crystallisation) can actually be a very bad move (GARs can often be 50-100% higher than current market rates).I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Thank you Dunstonh. This gives us some ideas to consider. I thought I'd ask specifically because he is due to meet a rep from a company that have told him they can release his pensions. However, on researching we see that said company has been censured and fined by FSA so I'm naturally wary. Initial suggestions have been that he should crystallise this small pension as well as his railway pension but my gut feeling is that he should get some independent advice.0
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I thought I'd ask specifically because he is due to meet a rep from a company that have told him they can release his pensions.
Be on guard, these reps that trade in this area have a very very very very very poor reputation (get the drift
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I would suggest a local IFA reviews what is discussed. There is no going back if he gets this wrong.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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