Withdrawing a lump sum help please

jzr172

Hi, quick question my dad turns 65 in July, he wants to withdraw sum his pension he has one valued at 7k an the other at 23k, he has been told that he can only take 25% of them, but he's sure that when he signed up for them he could take more out if he wanted to. It's with zurich.

Any he would be great, he said what a waste of money they are if he leaves them, the 7k one only gives him 268 a year what's the point of that

Cheers

Joe

tanith

AFAIK he can only take 25% as a lump sum the rest will be paid out as a pension payment which is what it is meant for. How is it a waste of money as he will be getting what he paid in for? I'm sure someone more knowledgable will be along to explain in more detail

JOHNGT

What sort of pensions are they? Personal/stakeholder pensions or occupational pensions (may be called Section 32, executive pension, contracted in money purchase)?

Loughton_Monkey

jzr172 wrote: »

Hi, quick question my dad turns 65 in July, he wants to withdraw sum his pension he has one valued at 7k an the other at 23k, he has been told that he can only take 25% of them..

Perfectly true, and has been for ages.

jzr172 wrote: »

but he's sure that when he signed up for them he could take more out if he wanted to. It's with zurich.

Most unlikely. The word 'pension' has meant the same throughout my living memory (almost as old as your father). Is he maybe thinking of things like 'Endowment Assurance' or 'Savings' - since these have always been used by people if they want their contributions to be paid in a cash lump sum instead of a pension. But they don't come with the same generous tax relief as pensions.

jzr172 wrote: »

Any he would be great, he said what a waste of money they are if he leaves them, the 7k one only gives him 268 a year what's the point of that

Well firstly, at age 65 he should be getting an annuity rate in the region of 6.5% - which I calculate as about £455 a year on £7K. [Or tax free lump sum of £1,750 and a pension of £341 a year]

Secondly, it was surely a deliberate act to pay such a small (unknown) contribution into this pension? For all we know it could have turned out to be an excellent investment return on the tiny amounts he paid in?

[Don't wish to be blunt, but it's a bit like saying 'I opened a Sainsbury's Christmas Club Saver. Only managed to contribute £2.89 over the whole year, and all I got was a packet of biscuits and a tin of spam. What's the point of that?']

And lastly, one has to ask what he would do with the money if it were taken entirely in cash? If he would spend it, then you have to ask if he has sufficient other income to survive happily? If he would use it to supplement his income throughout retirement, then an annuity is an ideal product to achieve that.

jzr172

Thanks I still don't see the point of of 200 an odd pound a year thats not enough to buy to pints of beer a week,

I am 28 never had pension an never every will I pay into one

Velcro_Hotdog

jzr172 wrote: »

Thanks I still don't see the point of of 200 an odd pound a year thats not enough to buy to pints of beer a week,

I am 28 never had pension an never every will I pay into one

You will be chucking away free money when NEST kicks in (assuming your employed). And I suppose you could say tax relief was also free money. Pension as part of a bigger picture can provide excellent benefits.

tanith

jzr172 wrote: »

Thanks I still don't see the point of of 200 an odd pound a year thats not enough to buy to pints of beer a week,

I am 28 never had pension an never every will I pay into one

But the point is your Dad didn't pay in enough to get anymore where does he think any more is going to come from?

Lokolo

jzr172 wrote: »

Thanks I still don't see the point of of 200 an odd pound a year thats not enough to buy to pints of beer a week,

I am 28 never had pension an never every will I pay into one

So you're never going to retire eh? Work til the death bed?

dunstonh

Any he would be great, he said what a waste of money they are if he leaves them, the 7k one only gives him 268 a year what's the point of that

He should transfer them into one pot and buy a single income. That is unless the income offered on the existing pensions is too high to be beaten.

he has been told that he can only take 25% of them, but he's sure that when he signed up for them he could take more out if he wanted to

Its been 25% since 1988. Pre 1988 retirement annuity contracts got 3 times the annual income as the tax free cash which could be lower or higher depending on the annuity rate. In April 2006, these were changed to pay 25% fixed unless he obtained transitional relief to protect the lump sums. Section 32 buy out bonds automatically got transitional relief.

I am 28 never had pension an never every will I pay into one

And you can look forward to £5000 basic state pension in retirement then.

Thanks I still don't see the point of of 200 an odd pound a year thats not enough to buy to pints of beer a week,

They are only as good as what you pay in. If you dad had paid in more than £200 a year then he would get back more than £200 year.

jzr172

What's the point in pay thousands into sum pension it's point less, my dad paid into it for years and years an look what he's getting back.

I say sod pensions an sod the stupid idiots in charge of them an the !!!'s running are banks and country, u lot are pay thousands into them an the big fat cats sitting at the top are raping the companies dry,

ffacoffipawb

jzr172 wrote: »

What's the point in pay thousands into sum pension it's point less, my dad paid into it for years and years an look what he's getting back.

I say sod pensions an sod the stupid idiots in charge of them an the !!!'s running are banks and country, u lot are pay thousands into them an the big fat cats sitting at the top are raping the companies dry,

Nonsense. :rotfl: