Claiming pension with terminal illness.

emaNresU_2

Hello to All,

I have been paying into a private pension with Phoenix for a few years.
The total value to date is £62,000, 26thou being protected rights
and 36thou being non-protected.

I am 55 yrs old and have been diagnosed with a terminal illness with a
prognosis of 1 to 3 years life expectancy.

I have contacted Phoenix regarding this but they are being extremely slow in responding
and very tight-lipped about what pension benefits I might expect from them.

Do any members of the forum have any similiar experiences
that they might care to share with me ?

For example, what proportion of the total value can i realistically expect as a lump sum.
Might it be beneficial to take a reduced lump sum and receive some pension payments.

I thank you for any light you can shed on this matter,
regards,
Paul.

EdInvestor

IIRC you can only get the total fund back if you have 6 months or less to live.

You could take the pension now, with 25% in cash and the rest with a guaranteed annuity which would pay out after your death.Or you could put it into income drawdown which would also enable your spouse to take the fund in cash minus 35% tax but without IHT on your death.

You would likely need to move the pension to another provider for drawdown, typically via a SIPP.

MiloH

I'm sorry to read about your illness.

In general terms, I think it depends on your priorities. If you have financial dependants you may be concerned about what you leave behind. In this case, if you take no retirement benefits, 100% of the fund you built up with your own savings will be paid out to them on your death, while if the financial dependant is your spouse or civil partner the protected rights fund (from contracting-out) would need to buy a pension income.

If your priority is more about spending the fund now then there is an option to take the whole fund created from your own savings as a lump sum if your life expectancy is less than 12 months. Again, if you are married, half of the fund has to be used for a pension income for your spouse on your death but the other half can be paid as a lump sum to you.

You need to apply for this via your plan provider. I've had first hand experience of Phoenix's claims team and found them extremely poor. Making a complaint usually helps get your case through to someone who will sort it out.

There's some information about serious ill health and personal pensions here: http://www.pensionsadvisoryservice.org.uk/personal_and_stakeholder_pensions/ill_health

If you can't satisfy the 12 months rule then taking the lump sum and seeking an annuity provider that will pay an income that factors in your health would be worth considering.

Finally on the off-chance that your policy retirement dates are after 1/1/2020 and your Phoenix pension plan was sold originally by Sun Alliance, you may have received details last week about a proposed Scheme of Arrangement. If so, you should strongly consider voting yes for the uplift in current fund value and consider waiting until 1st January before finalising any claim.

Best of luck,
Milo

emaNresU_2

thanks for the info. so far regarding my situation

I am no longer married and have 2 sons in their 30's.
I feel that taking the whole fund as a lump sum would be to my benefit.

With this lump sum I could pay off the mortgage on my property.
The property will be left to my sons on my death, providing either a
long-term accommodation option or a profitable sale with 50% payable to each son.

I feel that I will satisfy the 12 month rule as my GP has issued a DS1500
certificate to the DWP to enable me to claim a maximum payment of DLA.

I intend to contact Phoenix and, if needed, complain regarding the delay.

If anyone can think of any alternatives that I could pursue, or of any
pitfalls that I might encounter with my intended course of action, please
post and let me know.

many thanks,
Paul.

EdInvestor

Will your estate be subject to inheritance tax?

If so, be aware pension death benefits are outside the tax net.If you left the pension as it is, nominating your sons as beneficiaries, the trustees would be able to pay out the fund in cash to your sons directly on your death without needing to wait for probate.They could then proceed as you suggest regarding the house.

This might be a more efficient way of achieving your aim.

emaNresU_2

After numerous phone calls, Phoenix have finally got round to mailing me an offer for payment of my fund value of my pension.

They will pay me a lump sum using the protected rights fund value of my pension (26 thou)

As i understand the terms, protected rights are the value of the benefits from my S2P, and the non protected rights are the value of the benefits that I contributed to my private pension scheme.

My question is - What happens to the non-protected rights portion ? (36 thou)