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

barbara22

Annisele wrote: »

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.

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.

Big big SORRY to all!!!!! Total fund value is £24085 and they are offering £10632 as tax free lump sum - obviously way more than 25%.

Except that, and I quote, the terms state "You have protected cash. This means that you are entitled to a tax-free cash sum greater than 25% of your pension fund. If you transfer your benefits to another provider you may lose this protection."

Does this clear up the apparent incorrect figure for 25% lump sum? I hope so because I'm getting more confused by the minute, and my sums are usually ok.

I just rang the pension company to ask about the disparity between tax free sum with 5 yrs guaranteed annuity total (£14416) and original fund value (£24085), as there is £9669 unaccounted for.

Lady I spoke to was as helpful as she could manage, said she would have to get one of the advisers there to call me back, although I'm not holding my breath - they have a 'backlog'....

OK, so what does happen at the end of the 5 years guaranteed payment period - is this where the £9669 comes into play? Apologies for ignorance - this is lack of knowledge, not stupidity.

BILBO - can you just go through it one more time for me? As simply as possible please, will be very much appreciated.

maggieann155

hi barbara

As i understand it, the £700+ annual payment is for your lifetime.
but if you should die before 5 years of payments, the remaining payments go to your estate.

eg if you die 2 yrs in, 3 yrs of payments go to your estate.
if you die after 6 yrs payments, thats it. it dies with you.

i think !!

WillowCat

barbara22 wrote: »

Big big SORRY to all!!!!! Total fund value is £24085 and they are offering £10632 as tax free lump sum - obviously way more than 25%.

Except that, and I quote, the terms state "You have protected cash. This means that you are entitled to a tax-free cash sum greater than 25% of your pension fund. If you transfer your benefits to another provider you may lose this protection."

Does this clear up the apparent incorrect figure for 25% lump sum? I hope so because I'm getting more confused by the minute, and my sums are usually ok.

I just rang the pension company to ask about the disparity between tax free sum with 5 yrs guaranteed annuity total (£14416) and original fund value (£24085), as there is £9669 unaccounted for.

Lady I spoke to was as helpful as she could manage, said she would have to get one of the advisers there to call me back, although I'm not holding my breath - they have a 'backlog'....

OK, so what does happen at the end of the 5 years guaranteed payment period - is this where the £9669 comes into play? Apologies for ignorance - this is lack of knowledge, not stupidity.

BILBO - can you just go through it one more time for me? As simply as possible please, will be very much appreciated.

The pension company could never guarantee that you'd get all of your money back, as with an annuity there have to be both winners and losers.

The minimum money your estate will get if you die the day after it's all set up is your five years payments, and the pension company 'wins' the difference between the amount you paid for your annuity and the amount your estate will receive.

If however you live for say another 40 years you'll carry on getting £756 per year for that 40 years. Then the pension company is very much a loser!

To put it bluntly, if you 'lose' at the annuity game you're already deceased so it doesn't matter. If you win you are alive to enjoy the fact.

bilbo51

barbara22 wrote: »

Big big SORRY to all!!!!! Total fund value is £24085 and they are offering £10632 as tax free lump sum - obviously way more than 25%.

Except that, and I quote, the terms state "You have protected cash. This means that you are entitled to a tax-free cash sum greater than 25% of your pension fund. If you transfer your benefits to another provider you may lose this protection."

Does this clear up the apparent incorrect figure for 25% lump sum? I hope so because I'm getting more confused by the minute, and my sums are usually ok.

I just rang the pension company to ask about the disparity between tax free sum with 5 yrs guaranteed annuity total (£14416) and original fund value (£24085), as there is £9669 unaccounted for.

Lady I spoke to was as helpful as she could manage, said she would have to get one of the advisers there to call me back, although I'm not holding my breath - they have a 'backlog'....

OK, so what does happen at the end of the 5 years guaranteed payment period - is this where the £9669 comes into play? Apologies for ignorance - this is lack of knowledge, not stupidity.

BILBO - can you just go through it one more time for me? As simply as possible please, will be very much appreciated.

They're offering to give you £10362 as a tax free lump sum.

With all the rest of your pension fund (£24,085 - £10,362 = £13,723) they will take this off you and they promise to pay you an annuity (annual payment for as long as you live) of £756 per annum. And even if you die before the end of 5 years, they will honour this promise for 5 years so if you only live long enough to get 3 years payments, they will still pay the other two payments to your estate. It's like a bet - if you live longer than 13723/756 = about 18 years, you win - roughly speaking!

And, no - you can't take it all as cash.

barbara22

bilbo51 wrote: »

They're offering to give you £10362 as a tax free lump sum.

With all the rest of your pension fund (£24,085 - £10,362 = £13,723) they will take this off you and they promise to pay you an annuity (annual payment for as long as you live) of £756 per annum. And even if you die before the end of 5 years, they will honour this promise for 5 years so if you only live long enough to get 3 years payments, they will still pay the other two payments to your estate. It's like a bet - if you live longer than 13723/756 = about 18 years, you win - roughly speaking!

And, no - you can't take it all as cash.

:rotfl: Nuff said. :T

Hope medical advances gallop forward enough to keep me going for another 50 years, unlikely but if so I'd still manage a grin for sure!

Don't think there are any more issues here.....

Thanks to all for so much help, really really appreciated.