Pension Mortgage

ekkygirl

We started a pension mortgage around 20 years ago. The deal was that we would pay interest only payments and at the maturity have enough to pay off the mortgage with the guaranteed sum and have a pension with the remainder (yeah right). When things started to look bad for this sort of mortgage we took a repayment mortgage out and still continued with the pension mortgage payments. The house is nearly paid and the pension fund will be due at the same time.
Will we still have access to the guaranteed sum seeing as though we won't need it to pay off the house? are we likely to have to invest the sum for an annuity?
Does anyone know?

Burridge60

You have a Pension Plan with a fund value and some of this will be available to you as a tax free cash sum but the pension you buy will be smaller.

dunstonh

Will we still have access to the guaranteed sum seeing as though we won't need it to pay off the house?

Is your pension a pre 1988 "Section 226 retirement annuity contract " or post 1988 personal pension? (rules changed over the years regarding the two. What guarantees do you have?

are we likely to have to invest the sum for an annuity?

Annuity is no longer the only option available. There is the unsecured pension income option (also known as drawdown)

ekkygirl

dunstonh wrote: »

Is your pension a pre 1988 "Section 226 retirement annuity contract " or post 1988 personal pension? (rules changed over the years regarding the two. What guarantees do you have?



Annuity is no longer the only option available. There is the unsecured pension income option (also known as drawdown)

It says it's a personal pension with a guaranteed sum which was to pay off the balance of the mortgage

Thrugelmir

ekkygirl wrote: »

It says it's a personal pension with a guaranteed sum which was to pay off the balance of the mortgage

Personal pension plans don't normally come with a guaranteed sum.

The plan may have been originally forecast to achieve a sum .

dunstonh

Personal pension plans don't normally come with a guaranteed sum.

Typically no. However, there are some rare pre 1988 contracts that did have guaranteed minimum maturity values. As long as premiums are kept up they still retain the benefits. However, I have never come across one issued by a bank before. They are rare beasts. Damned valuable and the unfortunate thing is that those that have them don't usually realise it and tend to stop payments and/or transfer them away. However, the mention personal pension would suggest post 1988. These typically came with no guarantees apart from some early ones and even then it was just guaranteed annuity rates.

I wonder if the guaranteed sum refers to either a conventional with profits plan where bonuses are added to that figure or the life assurance amount on death (as typically a pension term assurance plan was bundled with the pension).

Burridge60

ekkygirl wrote: »

It says it's a personal pension with a guaranteed sum which was to pay off the balance of the mortgage

dunstonh is right you must have the original Pension DODO but they don't normally come with the written guarantee you state above. This tends to suggest it is a mortgage payment plan and is not a bona fides retirement savings arrangement.

Is this the wording you have from a document or something that you recall hearing?

ekkygirl

Have not located the policy will post what it states on it when I do. Thanks to all so far!

ekkygirl

Have located the policy and it says on it Personal Pension for the self employed. It is with Sun Alliance and states in the policy Guaranteed basic sum payable £XX XXX XX It then mentions a pension amount.
Does the guaranteed sum mean this is what the will pay us in addition to the pension amount mentioned?

Thanks

dunstonh

ekkygirl wrote: »

Have located the policy and it says on it Personal Pension for the self employed. It is with Sun Alliance and states in the policy Guaranteed basic sum payable £XX XXX XX It then mentions a pension amount.
Does the guaranteed sum mean this is what the will pay us in addition to the pension amount mentioned?

Thanks

The basic sum assured is an amount that is typically around 1/3rd to 1/2 of target. You are guaranteed to get that if you keep up premiums. Annual bonuses are then added to that. A potential final bonus on top of that may be paid as well.

Burridge60

You might even have a guaranteed annuity rate which converts the lump sum to income? Worth investigating.