Old pension

Murphybear

hi all

I was contacted about 6 months ago by the Pension Dept of a major co. I worked for 25 years ago, had forgotten all about it.

After 6 months of letter ping pong about my name (changed without getting married) I got 2 pages telling me I would be paid about £1800 pa. Very nice but I thought I could get 25% lump sum tax free. So my question is, are all pensions eligible for this or are some exempt?

I have looked at their website, it has 8 different documents varying fr 16-38 pages, couldn't see anything obvious. I think it is a final salary scheme. The website said I should also get a lump sum, this wSn't mentioned.

I have written and emailed about 4 times, finally got a letter saying they would contact me. I will contact them again but any ideas would be welcome

Thanks for reading

greenglide

A pension scheme is allowed to pay you a lump sum equal to 25% of the pension fund tax free. It does not have to.

With a Defined Benefit scheme you may be able to swap part of the monthly pension for a lump sum but this is often offered at a very poor rate.

You need to find out if they offer this and then be very careful not to take this if the cost is too high. The "commutation rate" is crucial - this is effectively the number of years it will take to get the money back in your pension payments.

jem16

Murphybear wrote: »

So my question is, are all pensions eligible for this or are some exempt?

They are all eligible for 25% tax-free lump sum. Some Defined Benefit schemes have an automatic lump sum (not necessarily the full 25%) plus a pension and some have a pension where you commute some of this pension to get the tax-free lump sum.

sandsy

Some schemes promise you an income, like your final salary scheme - these often enable you to give up some of the income for a tax free lump sum, which may or may not be a good idea depending on the exact terms.


Other schemes build up a pot of money which can be used to provide an income and these generally offer a 25% tax free lump sum - which would then obviously reduce the income that could be taken from the remaining pot.

dunstonh

fter 6 months of letter ping pong about my name (changed without getting married) I got 2 pages telling me I would be paid about £1800 pa. Very nice but I thought I could get 25% lump sum tax free. So my question is, are all pensions eligible for this or are some exempt?

The forms you were sent to commence the pension would carry the options for you to select how much lump sum you wanted. Did you keep a copy of those?

Murphybear

dunstonh wrote: »

The forms you were sent to commence the pension would carry the options for you to select how much lump sum you wanted. Did you keep a copy of those?

That's the problem, I didn't have any forms! The only paperwork I was asked to complete was about my name change and a single piece of paper declaring I was entitled to this pension

Thanks for the help, I'm sure I'll get it sorted

xylophone

Can you provide a link to the web site and say which years you were employed?

When do you become eligible for state pension?

Murphybear

Update on this.

It's a Royal Mail pension by the way

I had a letter this morning and it seems that because they could not trace me on my 60th birthday my pension benefits were suspended. They tried again using a tracing service and still could not find me. They didn't try that hard as they found me using my NIS No and HMRC eventually, they could have done that 2 years ago. I haven't moved in 6 years and the HMRC and DWP and everyone else know where I am (sorry for a bit of a rant)

The letter states

"Once payment of a members benefits have been suspended and HMRC notified, only the standard options are then payable to the member and the full options are not available"

I assume the Royal Mail know what they are talking about!

Is it worth contesting it, or would I be wasting my time?

One of the reasons I never thought about contacting them is that in 2008 I had a number of seizures and to be frank my memory is just not as good as it was since then

atush

the question remains, why do you want a lump sum if the annual pension is better/more valuable? Have you asked them if they will pay the 2 years of pension not taken as a lump sum? will that be bigh enough for you?

How bad is your health and do you have a spouse? given RM is no longer a public service but a company I assume you could transfer this pension to a DC pension?

Murphybear

I wanted the lump sum to upgrade my 13 year old car, but's not a major issue.

I do have health issues which mean I will probably die younger than the national average for women. I have a partner but we are not married.

It clearly states in the RM pensions website that all pensions are paid with a lump sum but I can't see anything about forfeiting it. I have asked for details of the pension but they just won't give me any

Rant over:D

xylophone

I have asked for details of the pension but they just won't give me any

Have you tried telephoning for assistance? http://www.royalmailpensionplan.co.uk/102/contact-us

You could then ask what the standard options are?



Or TPAS?

http://www.pensionsadvisoryservice.org.uk/