Deferred company pension

eastcorkram

Had a response.

"Your pension at your normal retirement is based on a formula which takes account of your final pensionable pay and your pensionable service less a deduction for state benefits, known as the offset pension. If you retire early, the element that would be deducted at normal retirement age is paid as a temporary pension until your 65th birthday. I can therefore confirm that if you did not take early retirement from the fund you would not receive any payments in respect of the offset pension.
A full transfer out pack will be sent under separate cover in due course "

So still none the wiser regarding my original question.

xylophone

https://worksmart.org.uk/pension-advice/workplace-pensions/common-questions/what-does-it-mean-if-my-salary-related-pension

http://www.web40571.clarahost.co.uk/archive/saga/2000_and_before/990202.htm

http://www.mycompanypension.co.uk/Integrating-With-The-State-Pension-Preserved-Members-DB

You can ask TW exactly how this works in your scheme.

eastcorkram

xylophone wrote: »

https://worksmart.org.uk/pension-advice/workplace-pensions/common-questions/what-does-it-mean-if-my-salary-related-pension

http://www.web40571.clarahost.co.uk/archive/saga/2000_and_before/990202.htm

http://www.mycompanypension.co.uk/Integrating-With-The-State-Pension-Preserved-Members-DB

You can ask TW exactly how this works in your scheme.

Thanks for the links.
Well they've pretty much explained it. It puzzles me why they even bother mentioning the bigger figure, as it seems you can never actually receive it. Retire early, and they'll make that deduction when you get to 65. Retire at 65, and you still only get the lower figure.
Knowing that, might make the transfer out option decision easier. Depending on the figure of course.
What's to stop people telling them they've retired, claiming the offset pension, but just carry on working? Or, actually retire, say now at 58, claim that part of the pension for the next seven years, but just start work again next year? How would they know?
I'm not planning on doing any of that. Just puzzled.

mgdavid

eastcorkram wrote: »

.......
What's to stop people telling them they've retired, claiming the offset pension, but just carry on working? Or, actually retire, say now at 58, claim that part of the pension for the next seven years, but just start work again next year? How would they know?
I'm not planning on doing any of that. Just puzzled.

From the POV of pensions companies 'retire' just means commencing the benefits from a pension, not stopping work.

eastcorkram

Right. I've received all the transfer paperwork.

This does not give a figure of what I'd receive at 65, so presumably I need to assume the figures I gave at the start of the thread. It does give, pension at date of leaving. I left the fund in Nov 1990.

Fund pension built up before 6 April 1997 £979.34 a year.
Offset pension payable to age 65 £677.29 a year.

Guaranteed transfer value £70,025.00
GMP age is 65.

There is a spouses pension of £489.67 a year. This figure is the same whether I die before or after retirement.

There is no mention of a TFLS, so I assume there isn't one..

Thoughts?
If I did transfer out, I've not much appetite for risk with that figure. Current payments into the SIPP are doing fine, but I don't expect that to last. Surely though, even if I put it into the SIPP and left it as cash, if that's possible, would be better than the pension?

jamesd

On those numbers the transfer looks like a sensible option.

You mentioned paying 40% income tax if you took pension income now. You can do much better than that.

You can take 25% of a defined contribution pension like a SIPP from age 55. You can use that to:

1. Help you to afford higher pension contributions in the 40% range.
2. Help you to reduce or eliminate your basic rate income tax bill and generate some tax exempt income by buying VCTs.

eastcorkram

jamesd wrote: »

On those numbers the transfer looks like a sensible option.

You mentioned paying 40% income tax if you took pension income now. You can do much better than that.

You can take 25% of a defined contribution pension like a SIPP from age 55. You can use that to:

1. Help you to afford higher pension contributions in the 40% range.
2. Help you to reduce or eliminate your basic rate income tax bill and generate some tax exempt income by buying VCTs.

Thanks. I don't need or wish to access it while I'm still working, but I see what you mean about the 25%. That seems like another plus about doing the transfer, as in the scheme it's in, there doesn't seem to be an option for that. I'll need to seek advice. The transfer value is valid for three months. Is the charge for advice based on a percentage of the amounts involved?

jamesd

Can be either, likely to cost about a couple of thousand that can be paid for from the pension money. Prices vary between advisers.

eastcorkram

jamesd wrote: »

Can be either, likely to cost about a couple of thousand that can be paid for from the pension money. Prices vary between advisers.

What about finding advice? Is it one of those things where I should find two or three, and then choose one based on price etc etc? If there is a sticky on here somewhere, about how to find and choose an adviser, then I can't see it.

jamesd

Yes, shopping around time.