Mum can't get her full pension pot even though she hasn't taken anything

buckster

She opted not to take her pension years ago as she was still working and living comfortably. She was working for Barclays before she took ill and before she had her heart attack.

She has worked for them non stop for 25 years although the first 5 to 8 years were mixed between agency contract and staff. She has now been full staff for around 16 to 18 years I think.

She knows she can now get her pension and will need it from February onwards but she wanted to leave it until April and get the full amount (under new rules) if and when she wanted it instead of doing the annuity route. It seems now that the 1964 pension doesn't allow this unfortunately

jem16

buckster wrote: »

She opted not to take her pension years ago as she was still working and living comfortably. She was working for Barclays before she took ill and before she had her heart attack.

She has worked for them non stop for 25 years although the first 5 to 8 years were mixed between agency contract and staff. She has now been full staff for around 16 to 18 years I think.

Ok that looks like she was still building up service as she had not reached the maximum for the scheme so that was a good idea. At the most she has 25 years of service, and possibly less, so she would never get a full pension from Barclay's.

She knows she can now get her pension and will need it from February onwards but she wanted to leave it until April and get the full amount (under new rules) if and when she wanted it instead of doing the annuity route.

She was never going down the annuity route as her pension isn't the type that needs an annuity. Her pension is based on a set of benefits that pay out and is dependant on her years of service and final salary. This type of pension is called a Defined Benefit pension and the new rules don't apply to this type of pension. The new rules are for Defined Contribution schemes which are usually less valuable.

It seems now that the 1964 pension doesn't allow this unfortunately

Not really unfortunate as, unless your Mum has a short life expectancy, the pension she has is much more valuable. It also includes a spouse pension which is normally 50% of hers should she die first.

Does your Mum have a short life expectancy?

buckster

Hopefully not but with a heart attack and another bad illness you can't be sure. If my dad gets 50% in the vent of her death at least that will be something. Many thanks

lovinituk

There was never going to be an annuity. If she has 18 years pensionable service then her yearly pension would be...

18/60 x her final salary (eighteen/sixtieths of her final salary)

Although I'm not sure if it is enhanced by deferring it past 60 years old.

jem16

buckster wrote: »

Hopefully not but with a heart attack and another bad illness you can't be sure. If my dad gets 50% in the vent of her death at least that will be something. Many thanks

Well the only way to be sure is to get a transfer value and then contact an IFA to work out the critical yield to see if it would be in her best interests to transfer or not.

For most it will not and an IFA has to be used to sign off such a transfer as normally it is not in your best interests to do so.

jem16

lovinituk wrote: »

Although I'm not sure if it is enhanced by deferring it past 60 years old.

Unlikely if she is still building up service which appears to be the case.

buckster

So does this mean she has wasted 9 years of payments? Was it a bad decision to wait until 69?

xylophone

Is your mother drawing her state pension?

buckster

Yes I think she is

jamesd

It doesn't mean that she has wasted nine years of payments. her pension entitlement continued to increase for each year worked.

Her health is a very significant consideration because defined benefit pensions like this one work on the basis of average life expectancy. Someone who knows that they have reduced life expectancy can often do considerably better by asking for a transfer value and transferring out. It depends on how bad their health is, the worse it is, the greater the benefit of transferring out.

After a possible transfer out, she could do things like getting an enhanced annuity that pays more than normal annuities would, more the less good her health is.

She'd also have the option to defer claiming the state pension. However, given her health it's probably not a good idea to do that. If she hasn't claimed it yet she probably should.