53 + ill health+ 3 small pensions

col553

I am 53 with long term ill health and have not worked since Jan 2001 and i am not likely to return to work. i have 3 small pensions with pearl dating back to 1985- 1987- and 1989. Am i right in thinking there is a way to cash in these pensions, if so i would appreciate any advice on doing this.

dunstonh

If all your pension funds are worth less than £15,000 (thats real value, not surrender value) and you are aged 60 or over you can take benefits under trivial commutation. This means you can take most of the value as a lump sum (all but some of it taxable).

Pearl plans up until 1988 mostly had guaranteed annuity rates and the terms and rates were quite high. The rate kicks in at its earliest at age 60. These are basically the only Pearl plans worth keeping nowadays.

Your ill health could allow you access to the pensions early but must be used to provide a pension and not a lump sum (apart from the usual 25%). You will not get the guaranteed rates.

col553

Thanks, trouble is i am only 53. How do i know if they are worth keeping.

EdInvestor

Step one is to ask Pearl if your policies have guaranteed annuity rates and if so at what rate (eg 9%,10%) and what other condiditions apply ( eg age you can take them etc).

If there are no GARs or the rate is low or conditions onerous then you would probably be best to transfer the pensions to a company where they can perform better.

Also ask for "transfer values" for them and let us know how much they are worth.

It might be worth transferring them to a low cost Sipp and putting them into income drawdown.That way you could get 25% of the money out.This applies to anyone over 50 ( 55 from 2010).