Old Private Pension

R1chP

Hi folks, In 2007 I transfered my Sun Alliance/Phoenix private pension into my employers LGPS with a transfer value of 23k.

Ever since I have been getting annual statements from Phoenix saying I have a fund value of around 50k, is this too good to be true or an error. I have contacted them several times by phone and they say it's all true.

If legit I would like to use pension release of around 37k after tax to pay off 38k outstanding mortgage. I earn 19k pa does that push me into a higher tax bracket.

57 year old single male btw.

Many thanks for any advice.

Brynsam

I'd do two things: check that the transfer into the LGPS actually took place; then write to Phoenix pointing out that a transfer took place in 2007 and asking them to confirm in writing that the £50K or so is definitely available and checking you can take it all in cash. It's just possible it came from another source (hope so!).

25% of the £50K would be tax free, the balance would be taxable at your marginal rate, so yes, you'd be a higher rate taxpayer if you took the lot in one go. May be better to spread over two tax years - although you may need to transfer out to a more modern pension policy if the Phoenix policy doesn't have the flexibility to permit this.

Linton

Sorry, dont understand. If you transfered your pension into LGPS in 2007 why should it still be with Phoenix? Are you sure they are the same pension? Are you sure the transfer actually happened?


Also you say you have been receiving statements since 2007 saying that the value is £50K? Seems odd that the value hasnt increased over time.

xylophone

Did you receive confirmation from LGPS that a transfer had taken place?

What does your LGPS statement for 2007/2008 show?

If you continued to receive statements from Sun Alliance/Phoenix after the transfer was supposed to have taken place, why did you not query this immediately?

Did you have more than one policy with Sun Alliance?

dunstonh

Ever since I have been getting annual statements from Phoenix saying I have a fund value of around 50k, is this too good to be true or an error. I have contacted them several times by phone and they say it's all true.

possible reasons:
1 - Transfer never took place
2 - Only the non-protected rights was transferred and the protected rights was not.
3 - mistake

Obviously, £50,000 is not a figure that you can easily mislay. Phoenix would have sent a closing letter and statement and issued a statement annually thereafter if money was still in the pension. So, 11 years later you are only now looking at it?

If legit I would like to use pension release of around 37k after tax to pay off 38k outstanding mortgage. I earn 19k pa does that push me into a higher tax bracket.

That is usually a bad thing to do.

R1chP

Thanks for all the replies.

Yes I have letters saying transfer took place, it bought me 8 years LGPS contributions.

The old Phoenix pension has about £25 a year annual bonus added but as I am no longer contributing it only goes up slightly.

It is the only policy I had with them.

I did query it with them by phone originally, they said it is there but then I forgot about it until the annual statements arrive.

When I was 55 and they brought in pension release I got a retirement pack from them and was going to use it to buy a new car but bottled out due to tax implications.

I can only have all of it out in one go.

But now I want to use it to pay off mortgage and find an easier job or a few months off work.

Paul_Herring

R1chP wrote: »

Hi folks, In 2007 I transfered my Sun Alliance/Phoenix private pension into my employers LGPS with a transfer value of 23k.

Ever since I have been getting annual statements from Phoenix saying I have a fund value of around 50k, is this too good to be true or an error.

£23K to £50K over 11 years equates to a compound interest rate (insomuch as it applies to non-cash of course) of around 7.5%. Not beyond the bounds of probability.

If legit I would like to use pension release of around 37k after tax to pay off 38k outstanding mortgage. I earn 19k pa does that push me into a higher tax bracket.

57 year old single male btw.

Withdrawing more than 25% of that (~£12.5K) will restrict any further contributions to any scheme to £4K annually.

The remainder, if taken, would take your income up to ~£56K upon which you'll be paying 20% tax up to around £46K and 40% on everything thereafter.

R1chP

Paul_Herring wrote: »

Withdrawing more than 25% of that (~£12.5K) will restrict any further contributions to any scheme to £4K annually.

I can only have all of it out. I currently contribute £98 a month to the LGPS (low paid manual worker) and would leave soon after, so that should not affect me.

Thanks.

xylophone

Firstly write to Phoenix to query why, since you understood that your pension was transferred to LGPS in 2007, there still appears to be a pension with them.

If the pension is indeed still there, presumably you can transfer out to a SIPP which would enable you to draw down gradually.

hyubh

Paul_Herring wrote: »

Withdrawing more than 25% of that (~£12.5K) will restrict any further contributions to any scheme to £4K annually.

Any money purchase scheme. The OP's main LGPS pension will be unaffected.

Paul_Herring

hyubh wrote: »

Any money purchase scheme. The OP's main LGPS pension will be unaffected.

If, indeed, it is in the LGPS scheme - that appears to be ambiguous at the moment.