Pension - cashing in

angleseykayaker

Hi all,

I'm a first time poster, and have read a number of threads regarding pensions and cashing them in, annuities etc., but am still a little lost. I'm asking on behalf of my father who will be 65 in July.

He has a personal pension with Pearl, valued at £10,000. My father hasn't worked for nearly 10 years due to ill health and has been receiving benefits during this time. He does have another pension but we haven't received details of the value of the pot yet by the provider (local authority pension as a former employee) but he receives around £100 per month already, and has been receiving payments since he stopped working in 2000. He also received a lump sum payment at the time.

A couple of questions -

Do the pension pots get added together to reach the magical figure of £18,000, or does each pot get considered individually?

If he were to cash this pension with Pearl in, how much of it will be taxed, and at what rate?

Many thanks

angleseykayaker

Linton

All pension pots are added together and the total compared with £18K.

RichandJ

£100 pm x 12 x 20 = £24,000. Assuming £100 is the gross amount and valuing on lowest HMRC multiple.

Therefore, assuming that the £100 you mention is the amount he is receiving from the LGPS, he is already over the triviality limit and may not take the whole of the other pension as cash.

atush

He can have 25% of this pot now, and the rest to provide an income unless his condition is terminal. Don't take the entire 25% if it will put his savings over any limit that would affect his benefits.

When looking for an annuity for the rest, consult an IFA who specialises in Enhanced annuities as ever condition which he suffers from will make sure he gets more per month/yr as he won't be likely to live as longas someone who is healthy at the time of retirement.

wallpaperman

angleseykayaker wrote: »

Hi all,

but he receives around £100 per month already, and has been receiving payments since he stopped working in 2000.
A couple of questions -

Do the pension pots get added together to reach the magical figure of £18,000, or does each pot get considered individually?

If he were to cash this pension with Pearl in, how much of it will be taxed, and at what rate?

Many thanks

angleseykayaker

Bad news I'm afraid, as Richard J has said. It's not just the value of benefits that have yet to be taken that must total under £18K.

It's sometimes forgotten but you have to take private pensions already in payment into account. Pensions in payment before A-Day have a factor of 25 to 1.

Therefore if you receive £100.00 per month (though you would have to use the gross monthly payment before tax) you multiply by 12 to get the annual amount, and then multiply by 25.

EG £100 x 12 x 25 = £30000.00. As the pension in payment is valued at £30K, this means that you can't (or shouldn't!) take any unvested pensions on a trivial basis.