Translating pension docs

SallyG

I'm reading this for information on income withdrawal:
http://www.scottishwidows.co.uk/Extranet/Literature/Doc/49559
"Limits on income withdrawals
• No minimum limit – tax-free cash can be taken and a zero income selected.
• Maximum yearly income limit of 120% of the basis amount determined by reference to Government Actuary’s
Department (GAD) tables.
• Income limits for protected rights must be calculated independently of those for non-protected rights.
• Income limits applicable for five years, or until a review is triggered if earlier. Certain events, such as an additional designation or an annuity purchase, will trigger a recalculation of the basis amount."
Can anyone help with points 3 and 4 ?
"Income limits for protected rights must be calculated independently of those for non-protected rights."
Are they treated differently for drawdown in a way that will affect me?

"Certain events, such as an additional
designation or an annuity purchase, will trigger a recalculation of the basis amount."
What is a designation / "additional designation"?

Grateful for any assistance.

JOHNGT

Protected rights must be kept seperate from non-protected rights until 5th April 2012 when the distinction disappears. The main reason is that different death benefit rules apply until then.

However, for the purpose of calculating income limits for unsecured pensions (income drawdown) there is no difference between PR and non-PR.

So, unless you die before 6/4/2012, there is no practical difference between PR funds and non-PR funds in drawdown.

Designation means putting more of your fund into drawdown e.g. say you had £200K in your pension, took £30K tax free cash and put £90K into drawdown (£120K of your fund used). That would leave £80K of your fund untouched. Say you then took that as £20K tax free cash and the other £60K into drawdown, the addition of that extra £60K to your drawdown fund would be a 'designation'.

SW site is written for IFAs, hence why you don't understand the terminology

SallyG

This SW website is interesting and helpful even for the people who are not IFAs but ultimately have to make the decision?
e.g.
http://www.scottishwidows.co.uk/extranet/tools/designation-calculator
I try to educate myself as much as I can so as to avoid the worst advice.
I've previously had conflicting information from professionals - particularly about safeguarded rights and tax free cash and then about how I could use the protected rights they morphed into.
The online calculator asks whether protected rights are included/designated for drawdown I guess because until next year they have to be accounted for separately but I have no idea why.
So that points up my need to ask for reassurance on that .....and so on.
I have to say this stuff is clearly written and not beyond ordinary comprehension.
The information targeted at pension punters is often much more obscure.

JOHNGT

Good for you Sally! Most people are not interested in the detail so the information aimed at customers is simplified. SW site is quite good. Other large financial firms have similar adviser websites but most require a password to access which is only given out to advisers.

If you want to get into some detailed pension rules, the government also have a lot of good stuff. Here is one from HMRC:

http://www.hmrc.gov.uk/manuals/rpsmmanual/index.htm