Annual Pension Statement Question

arkwright01

Hi,

I've just received my latest statement from Phoenix Life and it says that the guaranteed pension fund is made up of 38k Personal (non-protected rights) and 42k Former protected rights. I take it that the fund is the total of the two (80K)? Also, as this pays out when I'm 55 and I'm not retiring can I still take 25% tax free lump sum and buy an annuity with the rest? The policy contains a guaranteed minimum annuity which I'll lose if I do something else I believe?

mgdavid

Yes, yes and yes.
Is this a Section 32 pension from a former employer's scheme back in the 1980's? 55 seems young to be able to take it? (I had one of these which kicked in at 65).
Do you need the annuity income now, because if you are still working you will pay income tax on it. A better option might be to wait until proper retirement, when the annuity will be higher due to having to pay out for shorter lifespan.

Linton

arkwright01 wrote: »

Hi,

I've just received my latest statement from Phoenix Life and it says that the guaranteed pension fund is made up of 38k Personal (non-protected rights) and 42k Former protected rights. I take it that the fund is the total of the two (80K)? Also, as this pays out when I'm 55 and I'm not retiring can I still take 25% tax free lump sum and buy an annuity with the rest? The policy contains a guaranteed minimum annuity which I'll lose if I do something else I believe?

If you dont take the annuity at the due date it is likely that you will lose the guarantee, but there could be other things that can be changed. For example lump sum, spouses %, guarantee payment period etc. Its worth asking.

arkwright01

No it doesn't say it's a section 32 pension. It's a with-profits Personal pension but was taken out in 1988 so that might explain it.

kidmugsy

Is the GAR (grteed annuity rate) available at 55? Since the pension fund is With Profits, is there a date on which a terminal bonus might be available?

jamesd

Find out the terms of the guaranteed minimum annuity, more commonly called a guaranteed annuity rate (GAR). It is almost certainly going to be worth taking that when it is available, just depends on how high it is. A GAR could pay out twice the amount of a open market annuity today.

As well as the amount of the GAR, as a percentage, you'd need to know the type of annuity it allows you to buy. That could be level, inflation linked or something else, with or without spousal pension after your death. These factors affect how good the rate is, as does your age.


The GAR will probably make it unwise to take the lump sum since the GAR is likely to pay out so much that it wouldn't be economic to sacrifice that to get a lump sum. But not always.

I'm assuming that you are in normal good health or close to it and do not have any conditions that could significantly limit your life expectancy. Say if that is not so.

Why are you interested in the lump sum? There are often alternative options that are better. With a GAR around that's even more likely, since much common borrowing would be a better deal.

arkwright01

Sorry for the late reply!

Not sure if I'll take the lump sum or just get an an annuity to be honest. Another question, my retirement age is set as 55 and the non-protected rights reflects this but the former protected rights says age 65. Does this mean that the GAR won't apply to the former protected rights part? I thought they were supposed to be treat the same, but not in this case perhaps? Is this why they keep them separate?

arkwright01

Anyone know the answer please?

Linton

Call Phoenix and ask. I always found them very helpful. The exact terms of your pension will depend on that pension's rules and its impossible for people here to give you definitive answers.

dunstonh

Another question, my retirement age is set as 55 and the non-protected rights reflects this but the former protected rights says age 65. Does this mean that the GAR won't apply to the former protected rights part?

The age is not set at anything. You can choose whatever you like. The age on the policy is purely for indication purposes.

However, the GARs may only apply from a certain age. e.g. ex Pearl plans with Phoenix tend to start their GARs at age 60.