Nat West Deferred Pension

CathA

I left Nat West in 1989 with a non-contributory pension held until retirement. I've just had a transfer value of approx £70 k. I also found out that if I die before I claim the pension, this fund disappears (?), although there is some discussion about 5 years pension being paid to my estate in this circumstance. The reason the fund disappears is that it's a 'benefit', not a pension? Due to rules at the time, I only qualify for 1 years widows and orphans pension, which means my husband would only get about £100 per year. I'm planning on ringing soon and checking this information but I'm seriously considering taking the money out and putting it in a DC or personal pension so at least the money is not lost. I'm not able to take anything from the pension fund yet, qualifying age being 55 so got about 18 months to go. I'm in good health but could get run over by a bus tomorrow, so what to do? Anyone else got a deferred Nat West pension that they have info on?Any suggestions gratefully received. Thanks.

mrschaucer

Are you saying that this is a Defined Benefit pension scheme, ie one based on your salary when you left Natwest? If so, you don't have a "fund" as such to lose but rather the promise of specific amounts at a specific age, and the experts on here will doubtless be along to tell you what a very valuable resource you are sitting on. (Especially as it was non-contributory.) You do need to check exactly what you've got before anyone can advise - does your deferred pension contain any GMP for example. If it is a DB scheme, I think it might be difficult to get it properly "signed off" for a transfer as it would normally be against your interests to do so.

Your_Hero

CathA wrote: »

I left Nat West in 1989 with a non-contributory pension held until retirement. I've just had a transfer value of approx £70 k. I also found out that if I die before I claim the pension, this fund disappears (?), although there is some discussion about 5 years pension being paid to my estate in this circumstance. The reason the fund disappears is that it's a 'benefit', not a pension? Due to rules at the time, I only qualify for 1 years widows and orphans pension, which means my husband would only get about £100 per year. I'm planning on ringing soon and checking this information but I'm seriously considering taking the money out and putting it in a DC or personal pension so at least the money is not lost. I'm not able to take anything from the pension fund yet, qualifying age being 55 so got about 18 months to go. I'm in good health but could get run over by a bus tomorrow, so what to do? Anyone else got a deferred Nat West pension that they have info on?Any suggestions gratefully received. Thanks.

What type of pension is it? If it is a DB scheme, the death benefit does not sound normal. I'd suggest you have mis-read it or perhaps you could quote the full source where it says this?

If it is a DB scheme, it would be extremely unwise to give this up for the sake of better death benefits when your pension will suffer long term. It is far better just to take out life insurance to cover for this if you are that concerned (assuming the death benefits are as poor as you've described it).

Drp8713

Yes, sounds like a defined benefit scheme. A 5 year death grant and widowers pension based on service from 6/4/88 sounds about right.

Would be a bad idea to transfer it out as you will almost certainly lose money in the long run.

Does your husband not have his own pension? Seems a bit silly to lose a huge amount of your pension just to increase the death benefits, which on a fund of 70k and i assume phased drawdown will probably run out anyway if you start taking it at 55.

Either way probably wont be able to find an IFA silly enough to sign it off anyway.

CathA

Thanks for the replies. Yes it is a DB scheme and non-contributory. I got the information about the death benefit from the letter they sent me, tho I think I've mis-read that. It says about paying the balance of 5 years pension if death occurs within the first five years of claiming, but nothing if it happens before that. I recall the advisor said that if I die right now that's it, which was what lead me into thinking about getting it out now. mrschaucer yes there is fixed rated GMP revaluation. Your Hero the information re the death benefit and spouse pension came direct from staff at the Nat West pensions department, tho I'm ringing again with a list of questions to ask. Drp8713 yes we both have pensions, although this is my biggest one. Surprisingly, it's always been an option to transfer out at any time and when I asked about the latest value they sent me a transfer form when I asked for one. I can take an actuarially reduced pension from 55, either with a lump sum and reduced pension or just the reduced pension. I guess it's the lure of £70k in my hand now (or at least in 18 months) against the possibility of not having it at all? Any further thoughts? Thanks.

xylophone

https://www.moneyadviceservice.org.uk/en/articles/transferring-out-of-a-defined-benefit-pension-scheme

Any receiving scheme would almost certainly insist on your taking advice from an IFA.

atush

My best thought is you dont know enough about your pension. Educate your self? then come back

mgdavid

to sum up -
you are 53.5 and in good health.
This deferred bank DB pension is your biggest.

What is your plan for funding the next 35 years (normal life expectancy roughly)? Do you still work, & will you work up until SPA (67?) thus have 14 more years to earn additional pension?

Or will you get hold of the 70k, retire early, spend it all, and afterwards live on state pension alone at poverty level?

Or something in between?

jamesd

Whether you want to transfer it out or not will mostly not matter because it is unlikely that the reason you have given would be sufficient to persuade an IFA that it was good financial advice to transfer out to a personal pension.

There are exceptions, though:

1. If you have been diagnosed with a medical condition giving you a life expectancy of a year or less. After a transfer you would have access to the whole transferred value as a tax free lump sum at any age.

2. If you have medical conditions that substantially reduce your life expectancy, to the point that even the lower expected reward from a personal pension will probably exceed the value you would get from the DB pension before you died.

3. Sometimes for schemes that are in financial trouble or due to severe financial trouble yourself.

If you want to protect against early death and are not in poor health I suggest that you look at term life insurance. It's quite inexpensive for those in good health at your sort of age and that will eliminate the worry.

CathA

Thanks for all the replies. I'm in the process of asking my pension provider in-depth questions and seeing an IFA soon. The help and advice given by most people here has been very beneficial, so thank you all. I must admit I'm leaning towards leaving it alone, although the thought of the whole fund/benefit disappearing should I die before I start claiming it is a bit of a worry. This fact was confirmed again by the Nat West pension staff today, apparently it's one of the rules of the scheme. I'm getting a copy of the rules sent to me to have a read through. I'm not sure if I can transfer it to my old civil service pension, another task to look into!! Anyone got any thoughts on that? By the way, that is definitely a final salary scheme. Thanks again.

greenglide

I'm not sure if I can transfer it to my old civil service pension, another task to look into!! Anyone got any thoughts on that? By the way, that is definitely a final salary sche

You cannot transfer the pension into your old civil service scheme if you have left the civil service. You could have (and probably should have) transferred it when you started your employment with the civil service.