British Gas Board Pension

nxdmsandkaskdjaqd

On behalf of my sister.

Her husband has a British Gas Board pension and is approaching retirement.

Yesterday she was told that he has to take an annuity at 60! Is that right? I was under the impression that one had until 75 to convert your pension pot.

Or is there may be a condition in the pension plan that says you have to take it at 60?

Sorry, but I dont know the type of pension plan, all I can say is that he left BG about 15 years ago and was an active member of the scheme for about 15 years.

C_Mababejive

If he left BG 15 years back and had worked for them previously for many years then surely he would be a member of the defined benefit/ Final salary scheme?

Cautious_Investor_3

Hi

I don't know for sure, but I would assume it was a final salary pension scheme. In which case the income / tax free lump sum will be payable from the scheme retirement age.

Also, it would not involve the purchase of an Annuity, the pension would be paid directly from the scheme.

Question for the OP, is there any reason why he wouldn't want to take the pension at the scheme retirement age?

The Cautious Investor

nxdmsandkaskdjaqd

Cautious_Investor wrote: »

Hi

Also, it would not involve the purchase of an Annuity, the pension would be paid directly from the scheme.

Question for the OP, is there any reason why he wouldn't want to take the pension at the scheme retirement age?

The Cautious Investor

I didn't realise that on a Final Salary Scheme that you do not purchase an annuity and it actualy gets paid from teh scheme. Have I understood your comment correctly?

He plans to continue to work until 65, and based on previous comments on here, it has been stated that you should not take you pension till you need to. Is that not the case with a Final Salary Scheme?

Cautious_Investor_3

nxdmsandkaskdjaqd wrote: »

I didn't realise that on a Final Salary Scheme that you do not purchase an annuity and it actualy gets paid from teh scheme. Have I understood your comment correctly?

He plans to continue to work until 65, and based on previous comments on here, it has been stated that you should not take you pension till you need to. Is that not the case with a Final Salary Scheme?

Yes you have understood correctly, if he is a member of a final salary scheme the pension will come directly from the scheme.

You should check however that it is indeed final salary and not money purchase, if it is the later then an Annuity may be needed.

Re when he should take it, he could ask the scheme trustees if there is any provision for delaying taking it and if this increases the pension when he does ultimately take it. In my experience though this is generally not possible.

If he takes the income he has a couple of choices I guess:

1. Spend it!
2. Save it

The problem with these two things is that he has paid tax on the income from the pension. One option could be to take the income and then pay it directly into another pension e.g. a new personal pension plan or Stakeholder, he could do this for the period of time between 60 and when he finally retires. The main benefit of doing this is that when he pays the money into the new plan he gets tax relief which will make up for the tax he has paid on the income from the British Gas scheme. When he comes to finally retire, he can stop payments into the new pension and buy an Annuity with the fund. can be a bit complicated but I have seen people do it and make it work really well.

The Cautious Investor