Pension Scheme - When do I have to take

nxdmsandkaskdjaqd

Based on what I have read hear, I was under the impression that a pension pot, money purchase scheme, could be taken anytime up until 75.

In my circumstances I will have to retire at 60, but may not wish to take my pension, if take it at all, (medical reasons and life span reasons).

The question is: Do I have to take my pension pot at 60, or is there a rule/law that says I have until 75 to take this?

As additional information, I have taken a look at the members handbook and it states:

(i) that normal retirement is at 60,
(ii) with the Company’s consent, you remain in service after your Normal Retirement Date, payment of your pension can be postponed until you actually retire.
(iii) when you retire – whether at, before, or after your Normal Retirement Date – the amount of your pension will be that secured by the value of your retirement account at that time.

dunstonh

Based on what I have read hear, I was under the impression that a pension pot, money purchase scheme, could be taken anytime up until 75.

Age 77 now (changed in emergency budget) and expected to be extended after the current consultation period ends. Although there will be some caveats and conditions.

Do I have to take my pension pot at 60, or is there a rule/law that says I have until 75 to take this?

Any age between 55 and 77 currently. However, schemes can set their own rules which can restrict or offer less than the generic maximum.

If the company do insist upon you commencing a money purchase scheme at a given age and you dont want it then you can transfer it to another money purchase scheme (like a personal pension) which wont have that restriction.

nxdmsandkaskdjaqd

dunstonh wrote: »

If the company do insist upon you commencing a money purchase scheme at a given age and you dont want it then you can transfer it to another money purchase scheme (like a personal pension) which wont have that restriction.

My reason for not wanting to take the pension pot, is that upon my death 100% of the pension (cash sum) could be paid to my spouse. Would that still be an option?

dunstonh

Yes. Thats a common reason for not taking a pension if its not needed. You get more out of it if you die before commencing the pension than after.

nxdmsandkaskdjaqd

Where should I start looking to transfer it to another money purchase scheme (like a personal pension)? What am I specifically looking for?

nxdmsandkaskdjaqd

Anyone. Are we talking a HL SIPP or something else. Just need a starter.

Thanks

dunstonh

Do you want the features of a SIPP? Or would a personal pension or stakeholder be better? Generically, all three are the same. Its the investment choices and features offered that will vary between those three.

nxdmsandkaskdjaqd

dunstonh wrote: »

Do you want the features of a SIPP? Or would a personal pension or stakeholder be better? Generically, all three are the same. Its mean the investment choices and features offered that will vary between those three.

I am at the present following your thoughts and need to find the product that it is right. I think that having a product where I can select the funds would be a good idea.

As to the pro's and con's of the 3 different types, I have no idea. So will start to Google these.

Just needs to some pointers to find teh best approach.

Thanks

dunstonh

Simple guide
stakeholder - simple investment options. usually limited to 1-40 funds. Defined charging process but not necessarily the cheapest
personal pension - the middle option. usually offers all the stakeholder funds as well as a selection of external funds. range tends to be around 50-1500 funds.
SIPP - typically the most expensive option for funds as its designed for people who want direct investing rather than funds. i.e. shares, ETFs etc. Only pension rules limit what investments you can hold within a SIPP. Admin likely to be greater and you need to be aware of fee structures as often there are dealing fees or transaction fees or option fees (for excercising features on tha plan). Only really suitable for those that are going to utilise those options and have an understanding of what they are doing. Very easy for an inexperienced investor to make a right pigs ear of it and end up paying more than the other two options.


Note that pension funds quote the TER as the AMC. Unit trust versions (which you see most often in SIPPs and some personal pensions) have an AMC and a TER quoted. Make sure you look at the TER if you intend to compare against a personal pension or stakeholder using pension funds. It is a common error for people to think that pension funds cost more than unit trusts as they dont compare like for like. (some pension funds actually do cost more but some cost less. there is no hard and fast rule here).

nxdmsandkaskdjaqd

Thanks

And all 3 of these will allow me to transfer my existing Money Purchase fund in to their scheme at 60? Does it make any difference that I will not be making any additional contributions to the new scheme? Does it matter that the fund value will be in the order of £300K?

Annual charges are going to be an high on this sum!

dunstonh

And all 3 of these will allow me to transfer my existing Money Purchase fund in to their scheme at 60? Does it make any difference that I will not be making any additional contributions to the new scheme? Does it matter that the fund value will be in the order of £300K?

Yes all three accept transfers. It makes no difference that there are no regulars. Fund value can matter on what is best but all three will take your amount.

Note higher fund values are usually better in personal pensions than stakeholder as PPs get better fund based discounts if you use a traditional style pension. Some platform based pensions may also provide better terms with that amount if you want a greater investment choice (but dont want SIPP suitable investments).

Annual charges are going to be an high on this sum!

percentage based charges can appear like that but there is no reason for them to be too high. Indeed, they can be lower than you have on a savings account (which are implictly charged - i.e. behind the scenes). The system needs higher value clients as it needs to partly cross subsidise the lower value ones. However, nowadays higher value clients can get better terms than lower value ones as the cross subsidy is gradually reduced or even removed.