My dad's private pensions

migwella76

Hi all,

My Dad has 3 Private Pension pots.

He is 73 years old and has yet to take an annuity as he manages on his state pension. He has a rusty old car, no holiday, doesn't drink, doesn't smoke ... just how he lives his life.

The pots would go to my Mum on his death.

Have we got the following correct ...

The current rule that he has to cash them in before the age of 75 has been scrapped?

Come April 2011 there will be no age restriction (but there is a current 'temporary' age of 77 as a maximum)?.

On his death my Mum will be hit with a tax bill of 55% of the value of the combined pots?

Thanks in advance for your replies.

Mig

Bigsmak

migwella76 wrote: »

Hi all,

My Dad has 3 Private Pension pots.

He is 73 years old and has yet to take an annuity as he manages on his state pension. He has a rusty old car, no holiday, doesn't drink, doesn't smoke ... just how he lives his life.

The pots would go to my Mum on his death.

Have we got the following correct ...

The current rule that he has to cash them in before the age of 75 has been scrapped?

Come April 2011 there will be no age restriction (but there is a current 'temporary' age of 77 as a maximum)?.

On his death my Mum will be hit with a tax bill of 55% of the value of the combined pots?

Thanks in advance for your replies.

Mig

From the tone of your post, are you expecting him to die soon?

migwella76

Bigsmak wrote: »

From the tone of your post, are you expecting him to die soon?

Given that he is 73 and I am asking about what happens once he hits 75 (or 77) ... so ... it appears not.

All of that info was in the OP.

I see you are an Independent Financial Advisor ... I just hope you pay more attention to your clients needs than what you did to the contents of my post.

bilbo51

migwella76 wrote: »

I see you are an Independent Financial Advisor ... I just hope you pay more attention to your clients needs than what you did to the contents of my post.

I can't help you Mig, but the same thought crossed my mind..

kidmugsy

"On his death my Mum will be hit with a tax bill of 55% of the value of the combined pots?"

Not if all she wants to do is draw a pension from them. She'd get the usual 25% tax free lump sum plus a pension exposed to income tax.

ffacoffipawb

kidmugsy wrote: »

"On his death my Mum will be hit with a tax bill of 55% of the value of the combined pots?"

Not if all she wants to do is draw a pension from them. She'd get the usual 25% tax free lump sum plus a pension exposed to income tax.

On death, I believe the whole fund is payable tax free (though any part that is protected rights will have to be used to buy a widow's pension).

Francesanne

Can't offer any advice but honestly think pensions are to be enjoyed before it's too late. Can understand your Dad wanting to leave your Mum well provided but who know's what's around the corner. They should both be getting some pleasure from it.

kidmugsy

"On death, I believe the whole fund is payable tax free"
But you'd just said that you thought it would be taxed at 55%. Which?

ffacoffipawb

kidmugsy wrote: »

"On death, I believe the whole fund is payable tax free"
But you'd just said that you thought it would be taxed at 55%. Which?

NO I DIDN'T, I have only made one post on this thread, apart from this one, and it states ...

On death, I believe the whole fund is payable tax free (though any part that is protected rights will have to be used to buy a widow's pension).

I made no mention of a 55% tax.

Bigsmak

migwella76 wrote: »

Given that he is 73 and I am asking about what happens once he hits 75 (or 77) ... so ... it appears not.

All of that info was in the OP.

I see you are an Independent Financial Advisor ... I just hope you pay more attention to your clients needs than what you did to the contents of my post.

Hey... I was just wanting to clarify this (which you did - thanks), that's why I asked a question rather than offered any thoughts.

It was because you made reference to your mum getting the pots should he die.

migwella76

Francesanne wrote: »

Can't offer any advice but honestly think pensions are to be enjoyed before it's too late. Can understand your Dad wanting to leave your Mum well provided but who know's what's around the corner. They should both be getting some pleasure from it.

I totally agree. I said they should get a new car on a lease but my Dad gets all 'grrr it would just be throwing money away, it would get scratched and they would charge you more for it'.

They could afford it as is without cashing the pensions but the principle remains the same to him.

To be fair to him though if we all lived a bit more like him then the term 'Credit Crunch' wouldn't exist.

Thank you all for your replies.

So the 55% tax only applies if the pot is cashed in total rather than draw a pension?

Could he cash the pots in total now so as to only be taxed at 35% or even at 55% after April 6th?