Pension buyout whilst outside the uk

hillendale

I have a pension plan with an old company I used to work for and left a number of years ago, I only worked for them for a few years so i will only receive a very small peppercorn monthly pension at retirement. So I recently contacted them to obtain a buy out figure and wanted to start to research my options with what to do with the buyout should I take it.
My situation is I live and work in Canada now so not too sure what my best option would be with the buyout.
Any help / advise welcome

dunstonh

What do you mean by buyout? You cannot buy out a pension (as in being paid a lump sum prior to age 55)

xylophone

https://forums.moneysavingexpert.com/discussion/comment/73359171#Comment_73359171

Presumably OP is now aged 47+.

It looks like a deferred DB pension.

He says that he can take it from age 50 but it is not clear whether this would be with actuarial reduction.

I seem to remember that there is no approved Canadian QROPS?

Presumably he could only take advantage of trivial commutation from age 55?

But could take the company pension (PCLS and regular payment) from age 50?

Silvertabby

xylophone wrote: »

https://forums.moneysavingexpert.com/discussion/comment/73359171#Comment_73359171

Presumably OP is now aged 47+.

It looks like a deferred DB pension.

He says that he can take it from age 50 but it is not clear whether this would be with actuarial reduction.

I seem to remember that there is no approved Canadian QROPS?

Presumably he could only take advantage of trivial commutation from age 55?

But could take the company pension (PCLS and regular payment) from age 50?

Depends on the scheme rules and dates of membership. In the case of the LGPS, for example, if the member has a GMP then trivial commutation can only be taken from GMP age (still 60 for a woman, 65 for a man).

hillendale

Buyout may have been the wrong description,
The pension company have sent me a statement with a transfer value.
The original pension I have with them does offer me a pension (a very small peppercorn one in my case due to my short years of service at the company) from the age of 50 yrs or I can accept the transfer value and move it to a private pension fund.

Silvertabby

Looks like all Canadian pension schemes have been removed from the QROPS list because of the new rules allowing Canadians access to their pension 'pots' at any age, typically for house purchase.

HMRC rules won't allow your UK pension provider to transfer your benefits to a non-approved scheme, so that appears to be out of the window.

If your pension benefits are as low as you say (and one person's definition of 'peppercorn' may not be the same as another persons) then it may be that your only option is to take your pension benefits from this scheme. You may be able to access these from 50, but that doesn't mean that they wouldn't be actuarily reduced for early payment, so you could to leave it until no reductions apply.

A trivial commutation has been mentioned - ie, take the whole lot as a one-off lump lump with 25% being tax free and the remaining 75% classed as taxable income. Depending on the scheme rules, you may have to wait until you are 65 to take that option - and it will only apply if the total value of all of your UK private/occupational benefits is less than (currently) £30k. To find the notional value of your DB fund (for triviality purposes only) multiply your annual pension by 20 and then add on any automatic lump sum. £30K sounds a lot, but a tiny pension of just £125 per month with no automatic lump sum busts it. (£125 x 12 = £1,500 per annum...... £1,500 x 20 = £30K).

hillendale

Sorry for the delay with my reply
My old uk pension scheme has offered me a transfer payment of approx £50k , but this would have to be transferred to a private pension which as I understand would incur costs and couldn’t be accessed then until I am 55 yrs old. The alternative is to leave it with current provider and take a very small annual pension @ 50yrs or 55yrs around £1000/£1200 per year combined will a small lump sum of around £5k.I now live in Canada so I am trying trying to find what if any other options would be available to me now I no longer contribute to the old uk company pension and as I only originally contributed to the scheme for about 4 yrs.

xylophone

This is a DB pension with benefits valued in excess of £30,000 so the advice of a Pension Transfer Specialist will be required - you will have to pay for this.

You would need to find a provider to accept the transfer.

You could not access the pension until age 55.

https://www.aesinternational.com/wealth-management/tax-on-pensions may be worth a read.