Pension Questions

oshb5

Hi All

Iv arrived here after asking about taking the tax free lump sum as I am on a income based benefit and I am 56 and have long standing ill health but have a old private pension from a company I left 20 years ago.Which has approx 58k total in it. So could mean as much as 14.5k as the 25% tax free lump I could take now. However I was not thinking of taking that much, But more like 3k-4k. with 5k at the most
So my questions are can I decide how much of it to take?
Then if so what is the best solution to do with what is left?

The pension is being overseen by a retirement solution company at the moment due to the original company no longer trading?
Who should I be using to do this are the people who are looking after it already OK or would you say a third party?
If so any suggestions please.

Thank you regards Os.:beer:

Your_Hero

oshb5 wrote: »

So my questions are can I decide how much of it to take?

Should be possible.

Then if so what is the best solution to do with what is left?

Depends on your personal circumstances. Whatever you do with the remainder it will be treated as earned income so could affect your means-tested benefits.

If you need an income for life, you could look into an enhanced annuity due to your ill-health.

oshb5

Hi

So could I not take a part of it then leave the rest where it is?
Also when you say it would be earned income Imnot looking to get any of the left over money either weekly or monthly Just to leave it either where it is now or into something else like it is in at the moment?

Thanks Os

jamesd

You could take part of it and leave the rest. The problem is whether means tested benefit rules will then cause the capital to be treated as available to give you an income and how the money you take out initially will be regarded.

Collectively this is covered under "deprivation of assets", "notional capital" or "notional income" rules that are intended in part to prevent people who have savings or income that they could take from not taking it, or treat it as taken and reduce their means tested benefits if they don't take it. How this will affect you will depend on the specific benefit that you are receiving.

oshb5

Hi

Firstly I could access a maximum of 25% only being 56. Hence the other 75% is untouchable (well at the moment it is. But apparently that is due to change in 2015 is it not)?.

Right to simplify it lets say you take the 25% which when worked out is only £5999 so under 6k So why wont it be classed as savings/capitol?
I only ask because in reading the rules which apply to mine it says if you have savings/capital of under 6k they are disregarded But if you have 6k to 16k are then on a sliding scale And then over 16k you are not unable to claim anything?.
Hence providing its not over 6k then its still under the savings/capital limit Or if it is 6k - 16k then you are stopped the amount you would have should you have had those savings in the beginning. Or am I reading or have I got it wrong
Because that would mean anything you received be it winnings, inheritance a gift or even from the sale of a car if you could no longer drive?. But I can understand a large lottery win and having to use that to live on.!.

But from what you wrote about "deprivation of assets" and the such reads as though it would applies to anyone who on reaching 55 and on benefits that are means tested and have a pension where they could or can take the 25% as a tax free lump sum. Will then have to because if it is over 6k it could possibly reduce the amount you receive from the state? Yes/No?
That said and if you simply left the pension alone till you was at full pension age of 65/66. Well again it sounds from what you wrote you might be breaking the law just by not taking the 25% simply because you could have taken it when you had been 55?.And it might have reduced what you had been entitled to had the 25% been over 6k? Now that is how I read what you have said when you wrote the following?.
Collectively this is covered under "deprivation of assets", "notional "capital" or "notional income" rules that are intended in part to prevent people who have savings or income that they could take from not taking it, or treat it as taken and reduce their means tested benefits if they don't take it. How this will affect you will depend on the specific benefit that you are receiving".

Like I have said I only ask so I can be fully sure I am not breaking any rules in any way as from the way I read it there seams to be no way of not taking the 25% if its available? Because if It is over 6k and I dont take it then I would actually be avoiding lowering what I receive from the state?.

Wow All this just to be be able to get us I say us as I need my partner for support when we are out of the house. And just to find a way to buy a automatic car as now due to failing knees, legs and back Im unable to use a clutch? (or even walk much more than a few paces).It just makes me wonder if its going to be worth all the hassle? And I may as well resign myself to thinking that where we live will be the limit of my future travels

Thank you and all the best Os.:beer:
(Well thats the only dink I get) LOL Yes you have to laugh as we all far to well know the alternative dont we..?

jamesd

Under current rules you could take the 25% and about 8% a year of the rest using capped income drawdown. From 6 April 2015 you can take an unlimited amount from that 75%. I don't know how benefits means test treat these things in general. It may be the case that you could be treated as deliberately depriving yourself of income if you didn't take the maximum permitted from all available pensions once you've reached the normal date at which they can be taken.

The best place here to ask is over on the benefits board. That's where the people who know the benefits system are and you need some help on that before you can decide what's best.

mgdavid

Doesn't it hinge on the difference between crystallised and uncrystallised pension money? I *think* I read that for benefits purposes money 'locked up' in pensions doesn't count (i.e. uncrystallised) but once you've taken a lumpsum it's crystallised and may be treated differently. Perhaps the current rules for Phased Drawdown would be useful in this case?
Could one of the pros confirm the above (or not!).

jamesd

I think it is when you can take the money that matters, not when you actually do take it. Otherwise those in workplace defined benefit schemes could defer beyond normal retirement date just to claim benefits for longer. But i don't think a person in a defined benefit scheme can be forced to take it before NRD. The trouble with personal pensions is that 55 could be treated as the normal retirement date - and that this might be applied to uncrystallised as well as crystallised once money has been taken from one. But I just don't know the rules well enough to do more than warn about the risk and refer to those who know the area better.

xylophone

You speak of this being an old company pension.

Can you clarify what type of pension this was? (Defined Benefit/Defined Contribution?)

In your post on the Benefits Board you write

I worked on heavy plant and had a private company pension which I had forgotton about and recently when I got to 55 Iv had some company's get in touch with regard to taking a portion of the pension as a lump sum now.

Some company???

You also say that your original company ceased trading? Which company exactly is administering the scheme?

jamesd

Best not to do business with the companys that are sending you letters about getting the 25%. They will probably want excessive charges to do something that's normally free or cheap. or some might require moving the whole pension pot to somewhere that puts the money at risk, like foreign forestry investments or foreign property with claims of guaranteed returns.

oshb5

"Can you clarify what type of pension this was? (Defined Benefit/Defined Contribution?)"
Sorry Im not sure I will ask that question on Monday
Oh it just says on an original policy
" ********* **********Individual buyout policy" and from my reading is also known as a section 32 buyout bond?
does that mean anything

"Some company's???"
Just letters and phone calls various Companies that take you through the procces of getting the 25% for you. But I would not use thses as Iv read all on here about the do's and donts like taking 25% and actually losing the rest? But if I can or decide to do it and who or where to ask?

You also say that your original company ceased trading? Which company exactly is administering the scheme?
Apparently the last company which administered it was Breamar pensions But before they ceased trading made arrangements for Prime Solutions to provide on-going service?

I think the first thing I ought to do is actually find out what and where my pension is and who actually is in control of it at the moment and see where that takes me first..

Now to explain I think the idea of the 25% tax free lump sum was a glimmer of hope about being able to get a car and get out of these four walls as well as paying off a couple of bills that have got on top of us Hence I think it is this that has actually clouded my judgement I saw the prize at the end of tunnel vision without stopping to consider the actual getting there And the only hurdle as I could for see was interrupting my claim for ESA,
But thanks to you and your info it has brought me back down to earth and got me to think beyond the possibility of the final outcome.
But its just that I have had such a bad run of illness's over the last 15 plus years which started back then with a heart attack followed by a triple bypass for open heart surgery then 4 weeks in hospital as the wound from the op got infected Even after that it did not cure the heart problem as I still had most of the symptoms and restraints after the recuperation period ( talk of a new lease of life was originally mentioned but non of that appeared, Unless you include the depression due to it not working?) A couple of years later I find I have the 4 lower vertebra in my back starting to fail which meant attending another hospital and department. But due to the ongoing heart problems the surgeon would not take the risk of a operation on my back because I am no longer a suitable patient for operations with any anesthetic and It is still like that today so I cannot have any operation if I need to be put out, I even had a small amount of surgery and a camera inserted without anesthetic as the pain of the actual problem was worth the 20 mins of pain and unconftableness was worth trying it although I could not sit correctly for a week . But any operations other than without anesthetic or unless it was a life saving situation will not be done according to the Dr's and surgeons .
Also since that time I have had a number of DVTs not from flying but just sitting. The last time was on a car journey which lasted under 3 hours. So now have to have warfarin for the rest of my life. Which immediately made the Dr's stop pain killing injections I had been having for my back pain. Then during the last few years my knees have started to give way plus diabetes has also taken hold as well as other various afflictions, The amount of tablets alone number 15 different types throughout the day and night, That is as well as the injections the nitro spray and liquid doses of morphine I take for breakthrough pain as and when needed.
These are just the physical side The mental side is just as bad as when I was young and was very sporty and active I even represented my country in 2 sports as a school boy
Then I continued with them I even took up Jujitsu and got to 2nd Dan in my late 30s I also played Rugby and still Swam both at club level till in mid twenty's and I still swam and scuba dived till in my 40th birthday But all before the heart problems put pay to everything I did. I admit I used to live a good life and do many hobbies. But these days I can hardly get off my bed and a hobby is to use my radio control transmitter on a flight simulator on the TV.
I still have MOST of my old hobby equipment stored those being from machining and building miniature steam engines to flying scale model aircraft But all the interest has gone never mind having the strength to be able to stand and actually do any of the above. The hobby's enabled me to meet people build friendships, join clubs and attend meeting up and down the country where I would meet and make friends. So now at the time of life when we should be starting to slow down and be starting to enjoy life with everything you have built as well as keeping in touch with all the friends I am in the situation of being stuck with my partner within these four walls. My partner who is some 7 years younger than me said to me the other day "Well 26 years ago I could have never have imagined we would end in this situation 25 years from then when life was so good. Its like life has ended and im only 47 its like my life is over as we are stuck in this" I can totally understand her and its only from her loyalty that I can I see why she has still stayed with me because she does everything in the house and outside in the garden I must admit her life must be crap and has been for a number of years
So I think you may see why the glimmer of hope of getting the 25% was so enticing can you not? As it might have injected a little bit of normality be it only for a short time but even that would have been nice And to be able to treat her to a little something would have felt great,

Regards Os:(

P.S. Im sorry for rambling on and on but once I start the only way to get my anger or feelings out seam to be by putting then down on paper and im sorry its like this has been that medium today,,,