'new pension freedom'

JennyF

SomeUser: do I understand you correctly, in that I could take the 25% tax free cash lump sum now and take the entire 75% remainder out in April? I didn't think I could do that - at least my pension company says I cannot do that. if I take my 25% now, I HAVE TO buy an annuity with the remainder, unless I wait until next april, according to them.

JennyF

I'd be very grateful if someone could clarify the point I made above, re the 'transitional rules'; am I misinterpreting this point? it would shed a completely different light on my situation if so, thank you.

SomeUser

Yes, you can take your 25% now and leave the rest until April, when you withdraw the entire 75%.

Who's your provider? And have you spoken to them since July?

JennyF

no way. my provider is windsor life, now reassure. I know several people (who I used to work with) that have the same pensions as me with the same company, so I'm sure they don't know about this - I should tell them. I spoke to my provider only last week and they said nothing about this; they insisted that I had to either take 25% now and buy an annuity, or wait until april 2015 and take the lot, even though I turned 55 last november. might they not be aware of these new transitional rules, as they are so recent? do these rules really apply to everyone?

SomeUser

Speak to TPAS. The scheme definitely can let you do take the cash now and the remainder in April, I'm not sure that they have to.

http://www.pensionsadvisoryservice.org.uk/home.aspx

JennyF

also are there any tax disadvantages to doing it this way? assuming it's the same; first 25% tax-free, remaining 75% taxed at basic rate, after applying tax allowance? I would really love to help my daughter with a deposit on a flat, and this would solve so many problems for us.

JennyF

thanks so much, I will phone them on tuesday. when you say that you're 'not sure that they have to', do you mean that the actual pension company might not be legally obliged to cooperate with this transitional rule - that it might be optional for the pension company? if the rules were only passed in july then it's quite likely my pension company might not be fully aware of them. when I speak to the pension advisory service can you tell me the best way to refer to these supposed 'transitional rules' so that they know what I'm talking about? thanks so much for your help - I really appreciate it.

Thrugelmir

JennyF wrote: »

when you say that you're 'not sure that they have to', do you mean that the actual pension company might not be legally obliged to cooperate with this transitional rule - that it might be optional for the pension company?

The changes will come at a large cost to the providers to implement. Windsor Life is a closed book. So there's no possibility of the costs being recouped. Lenders will have the flexibility to decide what they offer. In time new products will be launched, by who, we will have to wait and see to find out. Hence why you'll need to transfer to benefit from the new rules. Albeit at a cost as the investment in technology will have to be paid for.

JennyF

thank you thrugelmir. I thought there might be a catch! there is already a penalty to take or transfer the pension prior to turning 60 of about £1,500 (for a £50K pension), so I suspect it might be roughly the same again to take it out early from another pension company prior to 60. seems a lot to spend to simply avail myself of just 25% 7 months early.

JennyF

incidentally, I was just going to say, that it seems odd that lenders 'have the flexibilty to decide what they offer' despite these new guidelines. it seems to beg the question why on earth would any provider actually choose to release funds early when they weren't obliged to?