Pension question

mwilson12

Hi
I have an deferred Akzo Nobel final salary pension with approx. 50k in the pot... I am 55 in jan 2016 and have been offered 25 per cent lump sum but I would like the whole amount how do I go about releasing it... I intend to work until my state pension age which is 66... any advice is appreciated...

kidmugsy

mwilson12 wrote: »

I have an deferred Akzo Nobel final salary pension with approx. 50k in the pot...

That's confusing. If it's a final salary pension there is no "pot", because what you have is a promise of a pension linked to your final salary irrespective of the cost to the scheme.

Do you mean that the transfer value is £50k?

mwilson12

Hi


I left the company a few years ago and the transfer value is around 50k... they have offered me 14k in jan 2016 and an annuity of 2000.00 per year .

xylophone

I don't understand this.

You are a deferred pensioner of the Akzo Nobel FS Pension Scheme - you do not have a pot but you might have been told that this is a transfer value?

Be aware that if you are attempting to transfer out of a DB Scheme, the receiving Scheme will almost certainly require an IFA sign off because it is not usually to a person's advantage to transfer out of a DB Scheme.

What is the Normal Retirement Age in the Scheme? Are you trying to draw your pension early on an actuarially reduced basis?

As for releasing the whole amount, even under the new rules that are supposed to be introduced in the next tax year, your case will not be covered see
http://www.moneysavingexpert.com/news/protect/2014/03/budget-2014-pensions

"The new rules do not apply to final salary pensions, where your retirement income is based on your final salary at the company that provides it, and your length of service."

mwilson12

Hi I am only 53 at the moment ... I left the company where I paid into a final salary pension... They are allowing me to take my pension at 55 and have offered 14k lump sum and 2k per year..


The normal retirement age for the pension is 65..


What other options do I have as its so confusing...x

xylophone

They are allowing me to take my pension at 55 and have offered 14k lump sum and 2k per year..

You approached the Trustees of the Akzo Nobel Scheme and asked to take your deferred pension at 55 ( which is, I assume, some 5-10 years before Scheme Retirement Age)?

The Trustees of the Scheme have advised that you can take your pension at age 55 on an actuarially reduced basis?

On that basis you will receive a tax free pension commencement lump sum of £14,000 and a pension of £2000 a year from the Scheme?

mwilson12

Yes That is correct.x

xylophone

Yes That is correct.x

Do you need to take your pension before Scheme Retirement Age?

mwilson12

Hi


The money would come in handy...lol...

xylophone

The money would come in handy...lol...

No doubt, and taking an AR pension might be suitable for your personal circumstances.

But be aware that the reduction might be high (the Scheme Administrator will be able to tell you the exact percentage) and that if you are still earning a salary, the pension income could take you into a higher tax bracket.

With regard to the state pension https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf would be worth a look.

[Deleted User]

mwilson12 wrote: »

The money would come in handy...lol...

The money would come at a potentially significant cost though, you would get much more money (assuming you're healthy) if you held on until the normal retirement age.

The biggest consideration (in my opinion) is what you plan to do for actual retirement: do you have any other pensions or retirement provisions? If you're sitting on a bunch of other pensions then this might be a viable decision, if this is your only pension it could be a huge mistake to take the pension in a reduced form at 55.