Former protected rights

theflowerpotman

Hello,

My wife is about to cash in a tiny (less than £1000) pension pot held with Phoenix. However, the small print says, and I quote "This plan includes former protected rights fund and the pension income from that would replace part of your State pension. The Dept for Work and Pensions will send a statement which details your State Pension benefits and that will show a deduction because of the former protected rights, If you cash in your plan the State pension deduction will still be made even though you won't have a regular income from this plan."

What does this mean? Phoenix will not advise. By definition, we are old(!) and confused. Do not know if we can face calling Dept W&P...

Any advice most welcome.

Thanks in advance

xylophone

Protected rights was the term for the government's payments into your wife's own pension arrangement when she contracted out of SERPS/S2P.

This led to a "contracted out deduction" from Additional State Pension.

Your wife can obtain a state pension statement.

https://www.gov.uk/state-pension-statement

When does she become eligible to draw her state pension?

See here https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf if on or after 6 4 16.

theflowerpotman

Thanks Xylophone.

My wife has been drawing state pension since 2009. She had not bothered to do anything about this Phoenix pension as, before the new legislation, the best offer she had was a lump sum of about £200 and an annual income of £1.00!!

She also has an NHS pension.

So where does that leave us?

dunstonh

y wife has been drawing state pension since 2009. She had not bothered to do anything about this Phoenix pension as, before the new legislation, the best offer she had was a lump sum of about £200 and an annual income of £1.00!!

If the pension is only worth £1000 then nothing in the new legislation would have changed what she could do with it now or when she was 60.

So where does that leave us?

Where you want to be. She can draw it as a lump sum.

theflowerpotman

Thanks dunstonh

And no concerns re the 'former protected rights'?

xylophone

Your wife is already drawing her state pension - she should look at the letter she received when first she drew it - it should show the COD from ASP which takes account of the years she was contracted out, whether in the NHS or the protected rights policy.

She is now going to take the whole of the ex PR pension as a lump sum, presumably 25% tax free, with balance taxed - she should check that the deduction for tax is appropriate to her circumstances.