Pension Advice

Theark

After speaking to a friend today about how he had taken cash lump sums from his pension pot I thought I'd see if I could get some general advise.

I took voluntary redundancy from my company in 2005 after 22 years service, my pension was a final salary scheme. I've had a few jobs since but now do not work. I am now 55 an wondering about my options with the pension, could I pull some cash down from it or doesn't it work like that.

My husband also worked for the same company and took redundancy and is in the final salary scheme, he also has another smaller pension with another company which he no longer pays into.

We have a large amount of equity in our property and minimal mortgage so would be financially secure in our retirement.

I have also started to question pensions in general, my father worked hard all his life and was told to cater for his old age in the form of pensions, which he did, but he is now taxed so heavily they are almost worthless and he struggles to manage financially.

So I was thinking of perhaps cashing mine in, what are peoples thoughts.

Hope this makes sense

xylophone

but he is now taxed so heavily they are almost worthless and he struggles to manage financially.

High tax generally implies high income - what is causing him not to be able to manage?

With regard to your deferred FS pensions, your scheme booklet should contain information on Scheme Pension Age and when you can access your benefits with/without actuarial reduction.

With regard to transferring out,

http://www.royallondon.com/Global/documents/GoodWithYourMoney/COMPANY-PENSIONS-FIVE-REASONS-TO-TRANSFER-OUT-AND-FIVE-REASONS-NOT-TO.pdf

Have you both obtained new state pension statements?

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

ThinkingOutLoud_2

I can't but feel that as you are not wholly confident that the best option is to try to collate all the documents and facts you can, as suggested above, and then get an IFA to do a proper assessment with you.

55 leaves along way to go (let's hope) and long way till your state pension will arrive. Many would love to retire then - but very few are truly financially sorted to do so.

This is huge decision that will affect you future life, happiness and peace of mind. Get it as right as you can.

Not something to be rushed or done without some support perhaps or based on what someone else reckons was right for them (no disrespect to your friend intended).

Good luck.

Theark

I just got my state pension statement, full state pension in 2028 at age 67, I should also point out my husband is 7 years younger than myself so will continue working when I get to state pension age.

With regards to my father, it's high rent, higher cost of living, he is being taxed on his private pension so has less income than he thought he would after working 55 years, and he didn't retire till he was 70

Theark

I'm going to make an appointment with Pension Wise, I have asked for an update DB statement, the last one I can find was when I left the company 11 years ago which says I can expect to receive £9986 per annum and £29960 at 60 which is 4 years time

Theark

the pension pot could be worth around 300k to transfer out and my husbands one is worth about the same

atush

With regards to my father, it's high rent, higher cost of living, he is being taxed on his private pension so has less income than he thought he would after working 55 years, and he didn't retire till he was 70

Well renting in general can mean a poorer retirement- is he renting privately? Has he been on a list from council accommodation? Sheltered housing? If you yourself own, you take high private rents out of the equation.

Has he checked with age concern or others to see he is claiming all he should be doing? such as reduced rates, etc?

jamesd

It would be good for him to ask Citizen's Advice to check his tax and benefits situation.

jamesd

So, at the moment you and your husband could expect each to receive about £18,000 a year from the defined benefit and state pension combined. That's a household income of about £36,000 before tax, about £33,400 after tax.

On top of that there are the lump sums and the personal pension values and potential income, while it seems that you will own your home. And whatever can be built up before you have both retired. Long term it seems that the two of you combined should be very well off, with a household income about one and a half times that of the averaged retired household.

jamesd

So, what are your objectives? Do you want you both to retire when you alone are 55? At some other age or as soon as possible? On what sort of income level? What resources are there now in savings and investments, other pensions and other income e to achieve that goal?

So far you have mentioned a proposed solution but you haven't really said what your objective is, so it's very hard to suggest how you can achieve it.

Theark

I think really we want flexibility and choice, I'll try and summarise our current situation as best I can.

Currently we have no debts apart from a small mortgage and have at today's values about 450k equity in our property.

My husband is 50 next year, so has about another 15-20 years of working life, he works abroad at present but this will end next year and he will come back and work for a company of which he is director (a silent partner at present), this company will provide a salary + dividends + another pension pot. He will receive previous company pension of around 8k per annum in 2028, age 60, he has another small pension of 3k per annum, full state pension in 2035, plus whatever the pot is in new pension he will be paying into next year.

I am 55 at present, will get previous company pension of around 10k per annum in 2021 and full state pension in 2028. I do not work at the moment as I provide free child care for my grand children.

I am mindful that I am 7 years older than my husband and my health might start failing before his, so would like to enjoy life possibly buy a small place abroad for us and family to enjoy while we can which is why I was thinking of transferring out, taking advantage of the 25% tax free lump sum putting what's left into another income generation scheme plus we would add to this pot any equity released when we sell our property.

Hope this helps