What type of pension is needed?

John_SE1956

Hello,

I am new to this forum, however I have searched around for a couple of days and still I cannot find a definitive answer to the type of pension I am seeking. I hope someone better informed may be able to help.

I was 55 last year and my personal pension matured on my 55th birthday, as the total fund is just over 17k it falls into the trivial category, I am now not working because of disability and find myself needing cash, I am aware that I can take 25% tax free and purchase some type of annuity with the balance but is it possible for me to to the following and what type of pension policy/annuity is this called?

I wish to take 25% tax free and leave the rest invested or on hold until I am 60, this seems so simple to me but I cannot find what type of policy this is, any help of guidance would be helpful.

Thank you

John

atush

This is possible, it would be called 'drawdown'. Ie you leave your 75% pot invested and draw an income now or in the future. Your current provider may not have this facility, and some have min amts they will do drawdown for. So you may need to look aroudn to find a plan that has drawdown for under 15K.

dunstonh

I was 55 last year and my personal pension matured on my 55th birthday, as the total fund is just over 17k it falls into the trivial category, I am now not working because of disability and find myself needing cash, I am aware that I can take 25% tax free and purchase some type of annuity with the balance but is it possible for me to to the following and what type of pension policy/annuity is this called?

Very rarely do pensions mature on a given age (unless forced to at age 75 or a specific type of scheme that requires benefits to be paid at a certain age). What you normally get is an indicated scheme age for provision of annual statement projections. It doesnt mean you have to take benefits at that age.

I wish to take 25% tax free and leave the rest invested or on hold until I am 60, this seems so simple to me but I cannot find what type of policy this is, any help of guidance would be helpful.

It is possible. However, if you are on means tested benefits then the amount of the hypothetical income you could take would be taken into account even though you are not taking it. It will also prevent you utilising triviality in future.

John_SE1956

dunstonh wrote: »

Very rarely do pensions mature on a given age (unless forced to at age 75 or a specific type of scheme that requires benefits to be paid at a certain age). What you normally get is an indicated scheme age for provision of annual statement projections. It doesnt mean you have to take benefits at that age.

Yes thank you, I should have made it clearer that the selected retirement age had been reached and the company was no longer taking payments towards my pension.

dunstonh wrote: »

It is possible. However, if you are on means tested benefits then the amount of the hypothetical income you could take would be taken into account even though you are not taking it. It will also prevent you utilising triviality in future.

As for the triviality I did not think it could be claimed twice anyway, I think I would also easily be able to find an enhanced policy because of my health even despite the DWP taking it from me.

It is sad that we work all our lives scrimping and saving only to find that the very state that encouraged you to do just that then removes it from you in real times of need through no fault of your own!

Who are the ones who get it right, people like us who do the right thing or people that never work and never save? I sometimes wonder!

Thanks for the replies thus far.

John

dunstonh

Yes thank you, I should have made it clearer that the selected retirement age had been reached and the company was no longer taking payments towards my pension.

One of the options should be the option to defer to a later age (unless it is one of those rare schemes that wont let you)

It is sad that we work all our lives scrimping and saving only to find that the very state that encouraged you to do just that then removes it from you in real times of need through no fault of your own!

The state is not there to provide extra. Just the bare minimum.

Who are the ones who get it right, people like us who do the right thing or people that never work and never save? I sometimes wonder!

With respect, your pension pot is trivial. If you had done it right then it would have hundreds of thousands of pounds in it.

For whatever reason it is (which we dont know) you did fail to provide bar a trivial amount. So, the state will ensure you get a minimum. However, the deduction is not a £1 for £1 reduction so you will still be better off than had you done nothing.

John_SE1956

dunstonh wrote: »

With respect, your pension pot is trivial. If you had done it right then it would have hundreds of thousands of pounds in it.
For whatever reason it is (which we dont know) you did fail to provide bar a trivial amount.

I opted to pay my mortgage off with all of the extra cash I had available each month.

But knowing as I do now about the way pensions have gone and the value of them, I do regret taking a personal pension at all. If I had to choose over again I would not take the pension option.

dunstonh wrote: »

So, the state will ensure you get a minimum. However, the deduction is not a £1 for £1 reduction so you will still be better off than had you done nothing.

That is something at least.

Thank you for the time to answer my question.

John

atush

You are forgetting that you would have gotten more for your money in a pension due to tax relief at your normal rate.

And you are 55 which is young. So your money didn't have enough time to grow.

John_SE1956

atush wrote: »

You are forgetting that you would have gotten more for your money in a pension due to tax relief at your normal rate.

And you are 55 which is young. So your money didn't have enough time to grow.

Hello, thank you.

I can see your point but, as my house is free from mortgage it can be sold at any time if needed and all of the funds are mine immediately or my families at least, if I die soon then the only winner will be the pension provider.

Non of us can see the future, I certainly did not expect to be in my current position at my age, it is not something I asked for or wanted!

Thank you

John

jamesd

Not knocking you but just for education, if you had a pension you'd taken no money from, 100% of it would be inherited by whoever you nominate on your death. After you've taken something from it your spouse or financial dependents, if any, can get 100% into a pension pot of their own or it can be paid to anyone after deducting 55% charge that goes to HMRC. Also if you were diagnosed with a condition expected to kill you within a year you'd get 100% yourself.

So the pension provider isn't really the winner, they don't get to keep the money unless you buy an annuity, and that's been optional for some years now. But it does restrict how much you can get how quickly compared to say a S&S ISA or paying off a mortgage.

Best wishes for living with whatever puts you into this unfortunate position.

atush

No, the winner will be your wife who can inherit the pension in full if it hasn't been taken, or what is in the drawdown pot. Other non dependant beneficiaries will have to pay a tax charge (to repay the govt the tax and NI).

If you buy an annuity (which you don't have to) that may or may not have widow's pension.

You can't sell your house if you need somewhere to live although you can downsize.

No one knows what will happen. My father died at 57 a few months after he retired early from an annuerism (the doc said he probably had it most his life). My mother then deposited his Life insurance and other funds into mutual funds and stocks just before the crash of 87. Things happen. But by the age of 50-55 one would hope to have made better provision- this is the main reason why most of us here say to start early.