Company pension ,skint and need moneynow

dunstonh

Hi Pal - Do you think there will be nothing in place of the MIG.

MIG was replaced with pension credit (i think it was april last year but havent got a reference to hand). It's the same principle but doesn't hit those that save a little as much.

Long term, who knows what will happen but it is clear that the country cannot maintain the state pension, S2P or Pension credit in it's current form. I was at a pensions seminar last year and the comments coming from that were that the two extremes are get rid of the pension credit and state pension (at one extreme) or double the current tax levels to keep funding the state pension/pension credit (at the other extreme).

In reality, it is likely to be something in between.

Tel_4

Do these funds relate to an occupational money purchase scheme or a group Personal Pension Plan? I presume the 8K x 2 is not the cash equivalent transfer value from a final salary scheme?

If we assume that your wife is in good health,

1)If a money purchase OCC scheme, as previously mentioned, early retirement from age 50 would be at the discretion of the scheme trustees. If this is not allowed, a transfer into a Personal pension Plan could be considered to access the benefits from age 50.

2) If a GPP, the fund can be accessed, currently from age 50.

Note that this age will change to 55 from 2010.

New legislation regarding "triviality" (The Finance & pensions Acts 2004) permit full commutation of benefits, provided that the TOTAL fund value does not exceed 1% of the Statutory lifetime allowance in force at the time benefits are taken

The lifetime allowance will be set at 1.5 million in 2006 when the legislation becomes effective from, and increase to 1.8 million over 5 years.

So,a fund of 15k in 2006 could in theory be commuted in full for a lump sum with no need to buy an annuity. Normally, only 25% of the fund can be taken as a lump sum.

Notes: only 25% of the fund would be "tax-free" the balance would be taxable.

The excercise can only be done from age 60-75.

The excercise must be completed within 12 months and is a "one off" excercise.

The 15k figure from 2006 must represent all of the pension provision. You cant just commute the "first" 15k of your total pension fund.

There must be no annuity in payment at the of the excercise.

T.