Pension Fund being wound Purchase an annuity or transfer?

Floyd_uk

I have just been informed that a previous employers pension fund is being wound up and have been given the option to Transfer to a Friends Life Deferred Annuity Contract (with profits fund) or transfer to another pension.

Transferring to the annuity would mean that I do not not incur a transfer penalty of around £17000.

If I transfer the fund to one of my other pensions I would not only lose due to the transfer penalty but will also lose any protected tax free cash sum.

I can still at a later date transfer out of the annuity with the same transfer penalties and the yearly management fees are £31 per annum increasing by £1 each year.

I am 48 and currently out of work due to long term sickness (if this is relevant)

Would the annuity be the best option?

Many thanks in advance.

xylophone

Was the scheme a contracted out salary related scheme?


Were you a member between 1978 and 1997?

Is this a block transfer to a S32 policy?

Did the scheme now in wind up offer members a protected tax free cash lump sum in excess of 25%?

Did it also offer a protected retirement age earlier than 55?

jamesd

Does the pension have a provision for paying an ill health pension? Some schemes do and if so it might pay you to seek one of those instead of either of the options being offered to you.

xylophone

Does the pension have a provision for paying an ill health pension?

I had thought of this but the OP is long term sick and presumably on benefits.

If he took a lump sum and/or received a pension, he might find himself in a position (loss of means tested benefits etc) where he was very little better off/possibly worse off than he is now?

He is only 48.