Final State Pension question

kellbells

My Mum retired today. She is in receipt of a very small payment from her previous employer. She called them and asked someone questions (I don't know what) but she was told her pension is a final salary one and has been deferred for the last 11 years.

They are going to send her out a form but she just wonders what the options are for her.

Does this mean a lump sum could be coming her way??

Thank you in advance.

kidmugsy

kellbells wrote: »

My Mum retired today.

Do you mean that she has stopped work? That she has started her State Pension? How old is she?

kellbells wrote: »

She is in receipt of a very small payment from her previous employer. ..but she was told her pension is a final salary one and has been deferred for the last 11 years.

That's puzzling: if the pension was deferred why is she receiving money from it?

kellbells wrote: »

Does this mean a lump sum could be coming her way??

Usually a final salary scheme pays out both a tax-free lump sum and a monthly pension. Often there's a choice: you can get a bigger pension by avoiding the lump sum, or a bigger lump sum by reducing the pension.

Sometimes if the value of the pension is small enough the scheme might offer one lump sum, partly tax-free, to settle both liabilities.

P.S. How does the title of your post relate to what you've said?

kellbells

Thanks for your reply.

She's 64 and has been receiving state pension. Her last day of employment was today.

The woman on the phone couldn't understand what my Mum was saying as she said were not paying you a pension but when she checked the records that's when she said it been deferred for the last 11years.

I guess we'll wait for the form and go from there

Thank you

xylophone

Your mother is in receipt of a state pension, that much seems clear.

Is the deferred FS pension from the company she has just left?

Is the small payment to which you refer from this company or another?

kellbells

The deferred fs pension is from her previous employer as is the small amount she receives.

I'm sorry if I didn't explain things clearly in my first post.

Thank you for your reply.

pathtofreedom

I think you're getting yourself a bit confused. Just becase someone leaves work at any age doesn't mean a lot of things automatically happen where you get money.

State pension is claimable when you get to the right age depending when you're allowed to claim it. You can defer this if you don't need it straight away which can work out quite a good deal.

You can also get different sorts of private pensions, some through work, some you setup yourself, some are based on contributions, some are funded by work and can be based on the salary when you finally leave.

From what you've said your Mum already has started her state pension, she decided to stop working but hasn't been paying into a private pension for the past 11 years. She has an old pension with another company so once you find out what sort of pension this is, and how big it is then there are different options about lump sums and getting an anuity or not.

I don't know how old you are but it is worth learning how all of this works better as it sounds like you're in need of pension advice yourself as well to make sure you're on track for your own retierment as well.

xylophone

Why is she receiving the small payment? What kind of payment is it?

For example, did the company she has just left used to have a Final Salary Pension Scheme which closed, (making all existing members deferred members of that scheme), replaced by a defined contribution scheme?

Is the payment she is receiving then the benefit from the late employer's defined contribution scheme?

Does she have a booklet giving details of the Final Salary pension scheme?