Small Pension Pot - Lump Sum

tony_cluedo

My father has a small pension of £6,000. About 10 years ago he transferred his main pension pot form this account to another investment fund. This £6,000 was left behind. He has is approaching retirement age and has received the forms for to claim this pension. He's asked me to look through annuities for him. I've read the annuity guide from the site and I noticed that it is possible to claim the full amount of the pension (25% of it tax free) for smaller funds.

Do you buy an annuity to do this? Or do you approach your pension company and they will do it for you?

Linton

tony_cluedo wrote: »

My father has a small pension of £6,000. About 10 years ago he transferred his main pension pot form this account to another investment fund. This £6,000 was left behind. He has is approaching retirement age and has received the forms for to claim this pension. He's asked me to look through annuities for him. I've read the annuity guide from the site and I noticed that it is possible to claim the full amount of the pension (25% of it tax free) for smaller funds.

Do you buy an annuity to do this? Or do you approach your pension company and they will do it for you?

I am afraid it doesnt work like that. You can only claim the full value of a pension if your TOTAL, from all sources, is less than 1% of the life time allowance - ie £18K in 2011-12 and £15k in 2012-2013. So he will have to either merge the two funds or get a very small annuity from the £6K.

tony_cluedo

I've just re-read the relevant paragraph and realised that. He's over the £18,000 threshold.

Cheers.