Help please re Dad's Pension

tracyk

My Dad is still working & has no intention of stopping just yet but is coming up to his 65th birthday shortly.
He has a number of pensions & the various companies have started to write & ask him what he wants to do with the money.
One of them is less than £15,000 - can he draw the whole fund from this even tho' he has a total of more than £15K (invested in different companies)?

I know that no-one can give specific advice but I just need a few pointers please - what's the best thing for him to do?
Also - will he have to stop paying into them once he reaches 65? I know that he doesn't have to draw them yet but he'll have to before he's 75.

TIA.

Mortgage_&_debt_free

I'm fairly sure that you can only cash a "trivial" pension if your total pension holdings are less than £15k, otherwise we could all invest £14999 in loads of pensions, get tax relief and get the cash.

Paul_Herring

One of them is less than £15,000 - can he draw the whole fund from this even tho' he has a total of more than £15K (invested in different companies)?

No he can't - the £15K limit applies to the sum of all funds held, it's not an individual limit on each fund.

EdInvestor

tracyk wrote:

My Dad is still working & has no intention of stopping just yet but is coming up to his 65th birthday shortly.
He has a number of pensions & the various companies have started to write & ask him what he wants to do with the money.

One thing he should do if any of them are invested in With profits funds or are retirement annuity contracts (RACs) is to check whether they have any valuable Guaranteed Annuity Rates (GARs) or Guranteed Minimum Pension (GMPs) attached to them.

These could mean he will get a much higher pension than with a normal fund.Sometimes these GARs have strict rules attached, meaning you must take them on a certain date or by a certain age, otherwise they lapse.So that needs checking.

One of them is less than £15,000 - can he draw the whole fund from this even tho' he has a total of more than £15K (invested in different companies)?

No, as mentioned.

I know that no-one can give specific advice but I just need a few pointers please - what's the best thing for him to do?

There are a lot of issues. Has he received info about his state pension as well? How about his tax situation?

Also - will he have to stop paying into them once he reaches 65? I know that he doesn't have to draw them yet but he'll have to before he's 75.

Can't really say without seeing some details of the pensions. Certainly if he's receiving a pension he will have stopped paying in.His tax position will be important: he may wish to defer receiving some pensions till later, is it can be done without loss.He may also need to shop around for annuities.

Job for a good pension IFA really, if you can find one.

tracyk

Mortgage_&_debt_free wrote:

I'm fairly sure that you can only cash a "trivial" pension if your total pension holdings are less than £15k, otherwise we could all invest £14999 in loads of pensions, get tax relief and get the cash.

So if he'd only got this one in particular (something like £14960) then he could just cash it in but because he has more with other companies he can't? Even if he doesn't cash the other's in....

EdInvestor

You've got it.

dunstonh

Some GARs also increase annually and that can mean that its not worth taking them until a later date.

He should get to an IFA and ask about the open market option. If the IFA can beat the income payable, he can move them over and get a better income. If he/she cant, then they will sort out the paperwork. With most IFAs it wont cost a penny as the pension provider will pay around 1% to the IFA for doing it. If you do it yourself, the pension provider will by the 1% to the person that originally set up the pension or keep it for themselves. This one is really a no brainer as you cant lose.

tracyk

dunstonh wrote:

He should get to an IFA and ask about the open market option. If the IFA can beat the income payable, he can move them over and get a better income. If he/she cant, then they will sort out the paperwork. With most IFAs it wont cost a penny as the pension provider will pay around 1% to the IFA for doing it. If you do it yourself, the pension provider will by the 1% to the person that originally set up the pension or keep it for themselves. This one is really a no brainer as you cant lose.

Thank you - wish you lived a bit closer....