Can I cash in my pension?

dunstonh

1,i wont live to see it.

So the same would apply to an alternative.

2,the last statement said £230 a year.

These things are only as good as what you contribute into them. However, the assumptions used in your case are not realistic. That said, at 60 you can exercise triviality and then get the lump sum.

3, its frozen,so wont increase.

That is incorrect. it is not frozen and it will increase.

4,i would rather i have the money than lose the lot when i die.

Do you have a spouse/partner?

gadgetmind

dunstonh wrote: »

However, the assumptions used in your case are not realistic.

Are they realistic for anyone?

The OP said "under 12,000". If we take that as "just under" then £230 is under 2% pa, which seems exceedingly low. Maybe if it's escalating, full spouse, and was quoted when 15 yr gilts were around 2%, then maybe, but that would seem seem to be a very low figure.

jamesd

chrisgreen wrote: »

i have a major health issues that will probably kill me before i reach 66,and will probably force me to give up work before i am 60. (degenaritive lung disorder)

You can't take it all as a lump sum but you can get a substantially higher income than is normally possible. There are two main ways to go about that:

1. An enhanced annuity. These pay more based on the life expectancy of the individual. An IFA is the way to buy these, it takes fairly detailed investigation and maybe haggling. Do not under any circumstances accept any standard annuity quotes! They will massively underpay someone in your situation. It is vital that you tell anyone you talk to about an annuity about your medical situation and greatly reduced life expectancy and say clearly that any annuity must be an enhanced annuity not a standard one. £230 is probably a standard annuity quote.
2. A "scheme pension" instead of capped income drawdown. These use an actuary to work out an appropriate income level based on your personal health. The costs of this are prohibitive for smaller pots, likely at least £1,000 just for the actuarial work.

For both of these the investments within the pension are likely to continue to grow.

Normal life expectancy is half of males in normal good health at age 55 living for another 30.7 years (ONS cohort-based UK principal projection on 2010 data). You're giving a personal life expectancy of 11 years. So even a basic calculation suggests that you should be able to get between two and three times the income that a normal annuity or standard capped drawdown.

If you don't have any other pension pots then it's likely that your best route once you need the income is to ask an IFA to help you get an enhanced annuity.

It's probably best not to do this until you are forced to give up work. The worse your health is at the time you are buying, the greater the amount the annuity will pay. So give it time to get worse, then buy. One thing to watch out for, though, is investment risk, so it might be worth buying a couple of years earlier or switching to lower volatility investments gradually starting now.

But in your specific case the pot value is under the triviality limit so at 60 you can use triviality and get it all, then decide for yourself how fast to spend it. So you can forget about drawdown or annuity buying if you're content to wait until 60. But it's still worth considering an annuity because its income won't stop if you live longer than expected and that protection can be useful. You also get to look at the interaction with means tested benefits since if you have no other savings and investments or property you'll be relying on those to live once this is gone. Means tested benefits probably will allow you to keep much of the income that this would provide, depends on the specific rules at the time.

atush

The income rate you were given isn't correct at least for you.

If you are very ill, and no spouse, you'd get a much better ate than this with enhanced annuity.

But when you are 60 you could get the whole thing as a lump sum if you haven't taken it before then.

If you have to retire due to illness, what will your employer do for you? Did you get sick there?

Sarah715

I stumbled across this subject when I was looking into my pension and I can see why it is a popular subject for debate!

To me it looks like it is something that some people could really benefit from, especially reading about how much debt some people are in when they are reaching retirement age, even more so when ill health comes into play.

This infographic has some interesting points and stats:
http://www.portalfinancial.co.uk/tax-free-cash.php

gadgetmind

Sarah715 wrote: »

To me it looks like it is something that some people could really benefit from, especially reading about how much debt some people are in when they are reaching retirement age

Um, a pension is intended to provide you with a comfortable income from retirement to death and not to clear off debts. If someone has built up debts while working, then what's going to happen when they only have state pension coming in?

dunstonh

To me it looks like it is something that some people could really benefit from, especially reading about how much debt some people are in when they are reaching retirement age, even more so when ill health comes into play.

Robbing your retirement and leaving you short there does not solve anything. It just puts off the pain until tomorrow

Sarah715

I totally agree, sorry my point wasn't that clear.
If you are in ill health and you don't want to leave your family with your debt, it might be best to pay it off if you have the opportunity. Obviously this isn't the best idea for everyone, it is always down to personal circumstance.

DC1980_2

I am hoping someone can give me some information/advice in relation to my options regarding my police pension.

I have 13 years of contributions and am in the process of leaving the police for an new career. Prior to the government reforms I had been due to retire at 50. The information I have been told is that when I leave I won't be able to get hold of any of my contributions until I'm 69.

This is clearly not a very good set of circumstances so I am trying to find out if I can get hold of my last 13 years contributions or transfer the pension into another scheme.

I understand that IFAs would not advise a serving officer to come out of the scheme given it is still a decent scheme financially if you continue with your police career however my situation is different given I am leaving.

mark55man

Still a bad idea to get a transfer now - then all the risk (of matching the benefits you would be saying no to) will be with you. Once you leave you should (I am not familiar with police scheme but most are the same in this respect) retain all the options open that you had originally. Equally the changes from brilliant to merely exceptional are unlikely to apply to contribution/service already earned.


I would start a thread on your own (you will probably get more responses), but I doubt they will say much different