Pension/Cash

castle96

Hi,
I have a small penion to come this year from Friends Life.
Cash Fund is £22900 incl a GMP fund of £8050.
I can take tax free cash of £7570 (thought this should be 25% ?).

Didn't I read somewhere that such small pensions could ALL be taken as cash ? (I have no other pensions)

thanks

dunstonh

Didn't I read somewhere that such small pensions could ALL be taken as cash ? (I have no other pensions)

That is correct for money purchase schemes and theoretically correct for section 32 buy out bonds.
When you say GMP fund of £8050, is that the amount of the overall fund that has GMP benefits or the GMP amount? If not, how much is the GMP? Is it pre or post 1988 GMP?

castle96

"your pension fund value includes a GMP fund of £8050"

Source of fund originally, was a Provident Mutual Superannuation Fund (would have assumed Final Salary back in 1981 when I left ?)

With these benefits I bought a Single Premium Sun Life T plan - S32. This became AXA/Friends Life

xylophone

http://www.scottishlife.co.uk/scotlife/Web/Site/faq2.asp?category=S32%20buyout%20bonds

Is there an FAQ like this for your particular plan?

Do you become eligible for state pension before or after 6 April 2016?

castle96

thanks xylaphone, will have a look.

65 in Feb 17. Why is that relevant ?

castle96

"Can the funds be commuted on the grounds of triviality?



This is allowable subject to the following conditions:

• the aggregate value of all benefits provided for the individual from all registered pension schemes does not exceed 1% of the standard lifetime allowance
• the member is aware that the payment will be taxed through PAYE. The tax charge will not apply to that part of the payment that represents allowable maximum pension commencement lump sum
• The individual has reached the age of 60."

Life time allowance is £1.2 million, so 1% is less than my figures - so can't take all as cash.

I am confused by 'Protected rights' and GMP. Part of my sum IS GMP (£8050

castle96

also

"Guaranteed Minimum Pension
Any GMP funds must be used to provide annuities for a widow or widower at a rate of 50% of the member’s GMP.
Protected Rights
Any protected rights money must be used to provide benefits for a ‘Qualifying Spouse’. Where there is no ‘Qualifying Spouse’, the fund value may be distributed as per the member’s instructions or to the member’s estate.

I am long divorced and will not remarry. My benefits quotes include a Widows Pension. 'If' there is no widow, the part taken (away from provision of benefit to me {ie at retirement I will have NO wife}, out of the fund, is 'held/wasted, on providing this widows benefit. That is how I see it. I want the benefit, not a non-existant wife.
Am I looking at this correctly ? Friends Life say they HAVE TOO provide this widows benefit

xylophone

65 in Feb 17. Why is that relevant ?

GMP is split between pre 88 and post 88 because of the way that it increases in payment.

When the state pension comes into payment, increases on the whole of pre 88 GMP and anything over 3% post 88 GMP may be paid with the pre 97 ASP portion of the state pension.

However, people whose GMP has increased in deferment by fixed rate often find that when SP comes into payment, the contracted out deduction exceeds their pre 97 Additional State Pension so that they see no increase at all on pre 88 GMP for a number of years.

http://www.pensionsandannuities.co.uk/Guaranteed_minimum_Pension_GMP.htm Some information here.

But you will be receiving state pension under the single tier arrangements.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210299/single-tier-valuation-contracting-out.pdf

You can request information about your state pension

https://www.gov.uk/state-pension-statement

xylophone

http://www.barnett-waddingham.co.uk/news/2012/07/what-is-a-gmp/

Protected rights are no more.

You might do well to consult an Independent Financial Adviser (who is qualified and has the necessary permission to advise on pension transfers) concerning your particular situation?
http://www.unbiased.co.uk/find-an-adviser?gclid=CJO6947D0b8CFScXwwodK2EAyA

RichandJ

castle96 wrote: »

"Can the funds be commuted on the grounds of triviality?



This is allowable subject to the following conditions:

• the aggregate value of all benefits provided for the individual from all registered pension schemes does not exceed 1% of the standard lifetime allowance
• the member is aware that the payment will be taxed through PAYE. The tax charge will not apply to that part of the payment that represents allowable maximum pension commencement lump sum
• The individual has reached the age of 60."

Life time allowance is £1.2 million, so 1% is less than my figures - so can't take all as cash.

I am confused by 'Protected rights' and GMP. Part of my sum IS GMP (£8050

This is out of date. New triv comm limit (of all registered pension schemes) is £30k since 27/03/2014, however, not all schemes/providers may have updated their literature yet or even allow this.

It used to be 1% of LTA but was decoupled from that a few years back when LTA decreased from £1.8m & was set at £18k until this year's budget.

You do need to be careful about what the GMP annual pension (not the value) figure is though & also whether the policy has any guaranteed rates. These may be better than what you can get elsewhere.

xylophone

http://www.friendslife.co.uk/doclib/rim44_03.14.pdf

http://www.friendslife.co.uk/doclib/Final_customer_website_qa.pdf

But the above do not cover S32 with GMP and it seems to me that you would need to take advice?