Pension Annuity advice

Oldgasman

I am already receiving a Company pension and am soon to reach retirement age. I also have a couple of other company pensions which will mature at the same time. Am I still eligible for the part cash part annuity option? How much am I eligible to take as a tax free option? Can I combine my pot with my wife's private pension, which is also soon to mature, to form a joint annuity? Sorry for the length and involved questions.
Thanks for any help.

MoneySavingUser

You can take 25% as a tax free lump sum.

You don't have to buy an annuity anymore you can go into drawdown, or from April use the new rules to take a UFPLS. I'm sure someone will come along soon with some links for you to read through.

Oldgasman

Thanks but can you explain/decipher UFPLS?

atush

of your DC pension, 25% is tax free, the other 75% is taxed at whatever rate of tax you pay (less your Personal allowance).

Tends to be best to take such taxed lump sums in a tax year before any DB pension starts to save tax.

xylophone

Thanks but can you explain/decipher UFPLS?

http://adviser.royallondon.com/personal-pensions/updates/2014/ufpls-explained/

Will you be eligible for state pension under current or new rules?

https://www.gov.uk/new-state-pension/overview

Would it be a good idea to consult an IFA?

https://www.unbiased.co.uk/

jamesd

You cannot normally combine pension pots from two or more people into one pot or annuity, though scheme pensions can be used they aren't generally applicable.

You can take a 25% tax free lump sum from each defined contribution pot. Any defined benefit pensions may also offer the option to take a 25% tax free lump sum but this is usually a less good idea than taking the higher income.

Once you have the 25% tax free lump sum from a defined contribution pot the question then is what to do with the remaining 75%. From April 2015 you can take out as much as you like using the flexi-access drawdown option and it will be added to your taxable income for that tax year. repeat as desired. You can also use any part of it to buy an annuity.

Buying an annuity is usually a poor option for those who reach state pension age before the flat rate state pension comes in because deferring claiming is a cheaper way to get higher income, since the state pension is increased by 10.4% a year for each year of deferral. Better to defer and use the money that would have been used to buy the annuity to live on instead. The main exception to this is those who are not in normal good health, who may not live long enough to benefit, in those cases an enhanced annuity or drawdown at a high rate can be a better deal.

For those reaching state pension age after the flat rate comes in the deal for deferring if in good health is still normally better than for buying an annuity.

Buying a standard non-enhanced annuity at such young ages should be a minority option because the state pension deferral is a better choice. The limit is how much deferring can usefully be done, up to perhaps 5-7 years maximum without an excessively high chance of dying before breaking even, though even beyond that someone might choose to defer to provide for a long life case.

kidmugsy

Oldgasman wrote: »

Can I combine my pot with my wife's private pension, which is also soon to mature, to form a joint annuity?

You can each separately take a joint annuity, if annuities are what you want. As jamesd says, deferral of State Retirement Pension is likely to be far more remunerative. Not so remunerative, perhaps, but a possible addition to your quiver of possibilities is the purchase of additional state pension by buying 3ANICs.
https://www.gov.uk/government/publications/state-pension-top-up-class-3a-voluntary-national-insurance-contributions

We have both done deferral, and are actively considering 3ANICs too.

UPDATE
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/298208/state-pension-top-up-pricing-table.csv/preview

Noodles220

Another question along same lines... Can taking 25% out as lump sum affect your state pension payments? Thanks

Foxy77

hi, do you know an easy way to release funds from an Australian (AMP) superannuation fund that all foreign workers working in Aus were forced to take out while working there? thanks alot...

atush

Start your own thread, this is not the place for the answers you seek.

mgdavid

Noodles220 wrote: »

Another question along same lines... Can taking 25% out as lump sum affect your state pension payments? Thanks

no. State pension is not means-tested and has no connection or bearing on private pensions.