Lost my job at almost 60, what can I do with old company pension to help with debts

barbara22

jamesd wrote: »

The second bank account advice is good.

Will ring CCCS this week, want to get the info/quote pack from the pension admin company first.

Just a quick query about opening unlinked bank account, don't banks ask about your employment status when you open an account - obviously I'm unemployed and with no visible income?

jamesd

You're unemployed or early retired, depending on how you view your situation. Your anticipated income is your pension then state pension, possibly plus non-pension state benefits until then, depending on the circumstances. There's no bar on either unemployed or retired people getting bank accounts, though you shouldn't expect a large overdraft facility to be offered.

barbara22

dunstonh wrote: »

Its a pension, not a savings account. So, you cant get any more than 25% out. To do what you want (take the 25% and not the income) would require you to transfer it to a SIPP, personal pension or drawdown plan.

Pension company have now given me a quote for an annuity which seems to be quite good considering the minimal funds held. Turns out I have 2 pensions, so they can offer 25% of each as tax free lump sum of £10632, with an annuity at £756 pa on the remainder.

This on basis of 5 yrs guaranteed but no growth - have asked for a quote to include 3% pa growth, on such a small amount pa it won't make a lot of difference.

As a complete innocent in these matters, this leaves approx £9669 (from the original fund value of £24000) - how does that work, is is this 'money' theirs?

bilbo51

Your sums are all over the place (I tried to think of a more polite way of putting that but failed.)

If £10,632 is 25%, then the remaining 75% is £31,896 not "approx £9669" and the original fund value is £42,528 not £24,000. Moreover, £10,632 plus £9,669 is 20,301...

barbara22

bilbo51 wrote: »

Your sums are all over the place (I tried to think of a more polite way of putting that but failed.)

If £10,632 is 25%, then the remaining 75% is £31,896 not "approx £9669" and the original fund value is £42,528 not £24,000. Moreover, £10,632 plus £9,669 is 20,301...

I did say that I have two separate pensions with the company administering them (maybe because the company employing me changed ownership more than once), the combined 25% tax free lump sum being £10632. The figures I gave didn't include odd pence.

£10632 + £3783 (annuity over 5 yrs @ £756 pa approx). Original fund value of £24085 (actual, rounded down) less above = £9670, near enough to what I said originally?

Maybe it's me, tell me if I'm wrong please - probably being dim, but still want to know who's is the £9669/£9670 remainder?

Annisele

OK, I'm properly confused now.

I think the OP is saying that the total value of her two pensions is about £42,500. She can take 25% of that as a lump sum - so she gets £10,625ish in her hands now as tax free cash. She can use the remaining £31,875 to purchase an annuity, which gives her £756 per year for the rest of her life. (That looks a little on the low side, but I don't know enough about the OP to judge - the tables at http://www.moneymadeclear.org.uk/tables/ might be helpful - choose pension annuities).

But - I'm not at all sure why the OP has calculated (£10,632 + £756 x5). I think that's total amount she'd get over the next five years. If she survives for more than five years, she'd get more than that.

sleepless_saver

Annisele wrote: »

OK, I'm properly confused now.

Me too.

OP, as bilbo51 said, if 25% of your 2 funds is £10632, then your total fund value must be £42528, not £24085. You would therefore have 42528-10632= £31896 available to buy an annuity.

You may be able to get a better deal elsewhere rather than sticking with your current pension company - annuity rates can vary quite a bit.

jamesd

Never automatically go with buying an annuity from the company where you have your pension pot. They are required by law to tell you about something called the open market option - to buy elsewhere - because it is so often wrong not to do that.

If you do nothing else and just want helpful people to talk to with a good chance of a better deal, phone Hargreaves Lansdown.

bilbo51

OK - one more go.

Ignoring the £ figures above. When you 'take' your pension, you can take up to 25% as a lump sum. tax free. This you already know.

Whatever is left (the 75%) you give to the pension company and in return for this, they promise to pay you the annuity for the rest of your life. The 5 year guarantee you mention in post #14 means that they guarantee to pay 5 years pension at least - even if you die before the 5 years are up. Any payments after your death would go to your estate.

So there is no "£9669/9670 remainder."

Loughton_Monkey

The OP did say these were 'buyouts'. Many buyouts do not get the full 25%. The fund is used primarily to provide the GMP and the lump sum is what is 'left over'. To preserve the 'value', it is imperative to take the annuity from the same provider.