MSE News: New pension freedom means it pays to know when you'll die

SALTY69

I currently have a small annuity of £26 a month from a job i took in 2001 until 2012, I would love to be able to cash it in, roughly about £312 a year it may be worth about £10000? better in my pocket and can use it?

jamesd

If it is a level single life annuity and you are about 68 years old you might expect that the possible value from a sale would be less than £4,000. This is because the total income payable would be about £6,240 and the buyer has to make an investment profit on the purchase on top of that, so they must reduce the price to deliver that profit.

cb3011

"pension freedom'. This means anyone aged 55 and over can take the whole amount as a lump sum,..."

Isn't one also taxed 5% for each year if taken earlier than their respective pension age e.g. 65 or 67?

jamesd

Not with standard defined contribution and personal pensions. An actuarial reduction like 5% per year before normal retirement age is common in defined benefit systems. Defined contribution ones have the same general effect built in by not having the growth for the extra years before income starts to be taken.

kidmugsy

Clifford_Pope wrote: »

But with the tontine, surviving members see their hopes of a bigger pay-out rising as their fellows die off.

Yes, that's the point of the tontine, which is why it's potentially attractive. It would keep CID busy too.

Triumph13

I think it might be time to watch 'The Wrong Box' again!

MaxwellTat

I have noticed that there's all this talk about drawdown and the like, I have a company pension and I had i rang them up because I am off sick and I asked the pensions department I don't have to pay my pension when I am only on SSP do I? and they said no you don't, I said well its only for a couple of months and then they said this to me;
They said because your going on SSP you won't pay your £109.00 and they pay X 2 of that is as well, they said what we will have to do is stop your pension and close it down and then give you another policy number and you open a new one that's the way it works.

I then said well I am 56 and according to the new rules I can take my pension on the drawdown policy and then they said well no you can't, the only way you can do that is to transfer this out to another company and then do the draw down with them because the trustees will not let you do that. Now this raises a few points and I asked my trade union rep about this and he said they can't do this the law says you can. he then said well if you want to take it and they object then we will have to take these cases 1 at a time and take out a grievance with them and do it through the law.

The only thing wrong with that is that there's no real advice of which company you go to and how you do that about, because the government have said that these companies cannot give and finical advice out your stuck again. my mate told me what you have to do is go to the CIB and make an appointment and then get a certificate off them to say you have had the advice, and then you have to get a finical advisor you then end up with paying money to get it transferred which it seems is anything from £95.00 - £500 and then it takes about 2 - 3 months to get any money.


The other thing I did notice as well back in 2009 I had an accident and I was off work 7 months leaning to walk again, at that time I had ran out my company sick pay and my SSP as well, but what i did notice was that although I was only getting SSP they still took my pension out of that, I asked the pensions department about this and they said they should not have taken anything out of your SSP that's an illegal deduction, not only that but then when I had rang everything out I didn't have any money off anyone for 3 months and I asked the pensions department about this, they said well even back then if that's the case they should again have closed your pension down and opened a new one with a new reference number but they didn't, what happened was as soon as I started back earning a full wage they started taking the £109.00 a month out, so it looks like the HR department dropped a bit of a clanger on this one.
I thought that this was supposed to be easy not hard?

jamesd

Is this a defined benefit pension like finakl or average salary, or a defined contribution pension with a pot in your name and a chance for you to pick which investments to use?

It's OK for the firm/trustees to have a rule saying that they don't do drawdown. they don't have to. The pensions department is correct that a transfer to another pension is the way to go if you want to do that and that is something they have to allow if it's defined contribution. It's just drawdown in their scheme that they aren't forced to allow.

If this is a defined contribution pension there is no legal need for any financial advice to be taken before transferring.

Talk of suspending and issuing new numbers for routine events like sickness seems very strange. Suspending contributions is a routine event. Maybe they have some weird pension software that can't handle suspensions.

dunstonh

I then said well I am 56 and according to the new rules I can take my pension on the drawdown policy and then they said well no you can't, the only way you can do that is to transfer this out to another company and then do the draw down with them because the trustees will not let you do that.

That will likely remain the case for most occupational pensions. it's not a problem though.

I asked my trade union rep about this and he said they can't do this the law says you can.

Your trade union rep is wrong. There is no legal requirement for them to offer every option available.

he then said well if you want to take it and they object then we will have to take these cases 1 at a time and take out a grievance with them and do it through the law

.

Which will be doomed to failure. Although it would never get that far as the union solicitors will almost certainly be more aware of the law than he is.

The only thing wrong with that is that there's no real advice of which company you go to and how you do that about, because the government have said that these companies cannot give and finical advice out your stuck again.

You can use regulated advice companies for advice.

my mate told me what you have to do is go to the CIB and make an appointment and then get a certificate off them to say you have had the advice, and then you have to get a finical advisor you then end up with paying money to get it transferred which it seems is anything from £95.00 - £500 and then it takes about 2 - 3 months to get any money.

It doesnt work that way. Advisers are the ones giving the advice. Not the CIB (CAB?). it will cost more than £95-£500. Add a zero to that range.

MaxwellTat

jamesd wrote: »

Is this a defined benefit pension like finakl or average salary, or a defined contribution pension with a pot in your name and a chance for you to pick which investments to use?

It's OK for the firm/trustees to have a rule saying that they don't do drawdown. they don't have to. The pensions department is correct that a transfer to another pension is the way to go if you want to do that and that is something they have to allow if it's defined contribution. It's just drawdown in their scheme that they aren't forced to allow.

If this is a defined contribution pension there is no legal need for any financial advice to be taken before transferring.

Talk of suspending and issuing new numbers for routine events like sickness seems very strange. Suspending contributions is a routine event. Maybe they have some weird pension software that can't handle suspensions.

I think its a defined one because you have to pick what you invest into, I started this in Feb 2008 and i got something back last year that said in that time it had made 33,000 but i have this years to go on so that's will be about another 5,000 to go on there, what I wanted to know was there's nothing on the net where companies are saying free transfers or what the rate is.

What they did say at our pensions was that they were waiting for these new rules to come out and then they would be informed what they can or cant do, but the girl said for the moment you would have to transfer it to another company and then you could do the draw down.

dose anyone know how long the process takes once they get the ball rolling?