Capital Value??

Dunree

Hi Guys,

It's been a while since I posted on here, but I do lurk quite occasionally.

I'm looking at retiring in five years and I'm trying to do my sums just now to get things in place for it.

My pension fund says this:

''The capital value of your £22,354 pension built up to 31 March 2015 is £447,097.''

My question is this.

The figure of £447K, is that how much is in my pension pot? You see, when I retire we'd like to move to Cornwall. We would like to buy two properties. One to use as a holiday let and have a bit of income, the other to live in. We would sell our current home to fund the new home in Cornwall.

With the change in the law, if that is the amount in the pot, can I take that money out and put it into a different account??


veryconfused.com...

ffacoffipawb

Dunree wrote: »

Hi Guys,

It's been a while since I posted on here, but I do lurk quite occasionally.

I'm looking at retiring in five years and I'm trying to do my sums just now to get things in place for it.

My pension fund says this:

''The capital value of your £22,354 pension built up to 31 March 2015 is £447,097.''

My question is this.

The figure of £447K, is that how much is in my pension pot? You see, when I retire we'd like to move to Cornwall. We would like to buy two properties. One to use as a holiday let and have a bit of income, the other to live in. We would sell our current home to fund the new home in Cornwall.

With the change in the law, if that is the amount in the pot, can I take that money out and put it into a different account??


veryconfused.com...

It is just 20 times the pension amount, an arbitrary figure really defined by legislation to compare with the lifetime allowance. The transfer value will be different and could be higher or lower than this amount.

Dunree

ffacoffipawb wrote: »

It is just 20 times the pension amount, an arbitrary figure really defined by legislation to compare with the lifetime allowance. The transfer value will be different and could be higher or lower than this amount.

Thanks for the quick response ffacoffipawb.

So I can't really rely on that for my calculations then?

ffacoffipawb

Dunree wrote: »

Thanks for the quick response ffacoffipawb.

So I can't really rely on that for my calculations then?

No, but you can ask for a transfer value quote to give you an idea of the 'true' worth of your pension.

dunstonh

With the change in the law, if that is the amount in the pot, can I take that money out and put it into a different account??

The changes were not aimed at defined benefit schemes. They were aimed at defined contribution schemes. Historically, the statistics are that around 1 in 10 defined benefit schemes may be worth moving to money purchase. So, the odds are not strongly in your favour to do it.

If you were to transfer the pension to one that allows full withdrawal and then drew that lot out then you would lose almost half of it in tax.

With modern defined contribution pensions, there is no reason to take it out and put it in an account.

Dunree

Thanks for the replies guys.

So it looks like I won't be able to do what I was planning?

It is a company scheme, LRT, and I have transferred previous pensions into it.

Dunree

Ps, I'm also putting in £336 four weekly into an AVC if that helps...

Linton

Dunree wrote: »

Ps, I'm also putting in £336 four weekly into an AVC if that helps...

Putting extra money in a DC schreme is a good idea as it is far more flexible and could allow you retire early without having to take the DB pension early and accept the reduced payment.

Whether an AVC or a private pension is the better way of achieving this depends on the details eg cost and range of funds. Also some DB pensions allow you to take the DB lump sum from the AVC pension. This can be highly advantageous.

Dunree

Linton wrote: »

Putting extra money in a DC schreme is a good idea as it is far more flexible and could allow you retire early without having to take the DB pension early and accept the reduced payment.

Whether an AVC or a private pension is the better way of achieving this depends on the details eg cost and range of funds. Also some DB pensions allow you to take the DB lump sum from the AVC pension. This can be highly advantageous.

Hi Linton,

I can take the AVC money out as a full lump some, thankfully

But I'm going to have to get in touch with the company pension trustees to give me a rough idea of the capital value and what I can actually withdraw on retirement.

If I can't withdraw enough to fund a house purchase then we need to have a rethink of what we're going to do

Thanks for taking the time to respond