Confused family member

NEH

My mum is due to receive a small pension from Equitable Life. It's been 8 years since she retired but for this pension a mistake was made many years ago with her date of birth and it resulted in this one being later...

Anyway my mum wanted to take a lump sum but has been told this is not possible as gets a teachers pensions and they have to take into account that she will live possibly for another 25 years.

So she's been told that she should get a small amount each month below £50. She was also told though that she should see a financial advisor as she could get more if she transferred it to another pension provider but we're concerned how much that would cost given it's a small amount.

So my question is it really worth shopping around, paying an advisor when it's not going to be an awful lot each month?

I'm a bit out of my depth here with what to advise so any suggestions would be grateful.....

dunstonh

So my question is it really worth shopping around, paying an advisor when it's not going to be an awful lot each month?

An IFA will cost around £500 minimum as a rough guide. Commission is payable on the pension annuity. So, that will offset it somewhat. However, we need to know the fund value to say whether it is worth it not.

NEH

dunstonh wrote: »

An IFA will cost around £500 minimum as a rough guide. Commission is payable on the pension annuity. So, that will offset it somewhat. However, we need to know the fund value to say whether it is worth it not.

Sorry I've forgotten I believe the lump sum was around £14,000 but I'll have to double check tonight...

dunstonh

Probably not worth using an IFA unless she has a family one already who does everything for the family and could just slide it through easily. Or, if she qualifies for an enhanced annuity rate (due to illlness or prescribed medications). With the latter, the £500 can be taken from the pension pot and costed in over the life expectancy and given enhanced rates are better than standard rates, it could still easily come in better than Eq life.

NEH

dunstonh wrote: »

Probably not worth using an IFA unless she has a family one already who does everything for the family and could just slide it through easily. Or, if she qualifies for an enhanced annuity rate (due to illlness or prescribed medications). With the latter, the £500 can be taken from the pension pot and costed in over the life expectancy and given enhanced rates are better than standard rates, it could still easily come in better than Eq life.

I haven't heard about an enhanced Annuity rate due to illness etc, what does that mean?

bilbo51

NEH wrote: »

I haven't heard about an enhanced Annuity rate due to illness etc, what does that mean?

Start here: http://www.which.co.uk/money/retirement/guides/annuities-explained/enhanced-annuities/

xylophone

Does your mother have secure income (Teacher's pension and state pension combined) of more than £20000 per annum? If so, might she be able to transfer the Equitable pension into a SIPP and enter flexible drawdown?
I think various firms offer the facility - I believe Hargreaves Lansdown offer booklets etc and you can speak to a pensions expert on the phone to clarify? Try the website?
The Pensions Advisory Service might also offer information. They also have a website.

NEH

bilbo51 wrote: »

Start here: http://www.which.co.uk/money/retirement/guides/annuities-explained/enhanced-annuities/

Thanks for that, something worth looking into as she has a couple of health problems.

xylophone wrote: »

Does your mother have secure income (Teacher's pension and state pension combined) of more than £20000 per annum? If so, might she be able to transfer the Equitable pension into a SIPP and enter flexible drawdown?
I think various firms offer the facility - I believe Hargreaves Lansdown offer booklets etc and you can speak to a pensions expert on the phone to clarify? Try the website?
The Pensions Advisory Service might also offer information. They also have a website.

I'm not sure of the figures....

Might try the Pensions Advisory service presumably they charge for advice?

Seriously wondering if it would be getting advice as myself and mum are out of our depth here...

dunstonh

Might try the Pensions Advisory service presumably they charge for advice?

They dont give advice. You need an IFA.

NEH

dunstonh wrote: »

They dont give advice. You need an IFA.

I think we'll look into getting her one as we believe we can go for the enhanced annuity rate given her conditions....

Thanks for the advice it's been very helpful

NEH

dunstonh wrote: »

Probably not worth using an IFA unless she has a family one already who does everything for the family and could just slide it through easily. Or, if she qualifies for an enhanced annuity rate (due to illlness or prescribed medications). With the latter, the £500 can be taken from the pension pot and costed in over the life expectancy and given enhanced rates are better than standard rates, it could still easily come in better than Eq life.

Mum's spoken to Aviva and an Independent Financial Advisor over the phone and the enhanced rate isn't much better than the standard rate. It was less than £10 a month more so probably not worth seeing the Financial Advisor properly with his fee.......

Aviva say they'll seek all the commission from the company she chooses which I am a bit wary of anyone heard of this?