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penison help on mvr
aujme
Posts: 12 Forumite
I have a pension pot of about £22,500 in protected rights due to Mature in June after April protected rights pensions are treated equally I believe,
my Question is if I take MVR by transferring it to another provider this reduces it to about £17,000 I believe as it is below £18,000 I could then take it as a cash lump sum and if I Reinvested it in a cash ISA over 3 years at about 4% in a fixed rate Bond in 3 years time I will be receiving more income then I would be getting in an annuity and still keeping my £17,000 after initially losing £5000 or so,
Am I missing some pitfalls?
my Question is if I take MVR by transferring it to another provider this reduces it to about £17,000 I believe as it is below £18,000 I could then take it as a cash lump sum and if I Reinvested it in a cash ISA over 3 years at about 4% in a fixed rate Bond in 3 years time I will be receiving more income then I would be getting in an annuity and still keeping my £17,000 after initially losing £5000 or so,
Am I missing some pitfalls?
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Comments
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Oo-err missus. Love the title
You're not really comparing like with like. The annuity pays out for life. And how are you going to get your putative £17k into cash ISAs other than taking four years over it? I suppose if you get your skates on you could almost make it three using this year's allowance, but it's only a shade over £5k pa I believe.0 -
You can only have it all as cash if ALL of you pension plans are <£18,000, so do you have ANY other (non state) pensions?0
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Oo-err missus. Love the title
It does sound painful.
As Warwicktiger notes, you can only make a trivial commutation if ALL your benefits are less than 1% of the Lifetime Allowance (currently £18,000).
The Lifetime Allowance will go down to £1,500,000 on 5 April so I think the triviality limit will fall as well (though in certain circumstances the Lifetime Allowance can be protected but I have not checked if that could be done for triviality purposes).
Note, though, that if you take a trivial lump sum it is taxable.0 -
The MVR is normally put to zero on selected retirement age.
Annuity rates are higher than 4% and that is without you losing the tax on the 75% of the amount under triviality.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
magpiecottage wrote: »**Triviality and LTA**
Triviality limit's moving to a fixed amount (initially £18k) rather than an LTA %ge so it won't decrease.0 -
Thank you all but a don't i will go down that route I will just bite the bullet0
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