Pension pot

Ken-b

Hi
Just a quickie I hope.
My wife has just requested the value of a deferred pension from her employer and stated that she wants to take the whole pension as a cash lump sum.
We know 25% will be tax free and tax paid on the rest.
Can her pension provider refuse to do this.
After three requests they have still not confirmed the total size of the pension pot just keep coming up with 2 options tax free lump sum and yearly pension.
Is there anything I can do

Silvertabby

Ken-b wrote: »

Hi
Just a quickie I hope.
My wife has just requested the value of a deferred pension from her employer and stated that she wants to take the whole pension as a cash lump sum.
We know 25% will be tax free and tax paid on the rest.
Can her pension provider refuse to do this.
After three requests they have still not confirmed the total size of the pension pot just keep coming up with 2 options tax free lump sum and yearly pension.
Is there anything I can do

This sounds like a DB (final salary) scheme. Is she eligible for trivial commutation (which is what she seems to want)? The limit for a triv comm is £30K of this and any other pensions other than the State pension.

The notional value of a DB pension for triv comm purposes is 20 x standard annual pension plus 1 x any automatic standard lump sum.

Even if she does qualify, then it may be that her pension scheme doesn't offer the option of triv comm. Some don't.

Ken-b

Hi unfortunately I haven’t a clue about what you just put.
What she wanted to do was follow what I did, took my pension as a lump sum and paid the mortgage off, she wants to clear all debts and enjoy life a bit

JoeCrystal

Ken-b wrote: »

Hi, unfortunately, I haven’t a clue about what you just put.
What she wanted to do was follow what I did, took my pension as a lump sum and paid the mortgage off, she wants to clear all debts and enjoy life a bit

Well, find out then. You need to understand what is your wife's pension scheme precisely. It does sound like it is a DB pension scheme.

SonOf

Can her pension provider refuse to do this.

Yes.

1 - if its a DB scheme there is no pot.
2 - its a legacy pension or a stakeholder pension then it may not offer that option.

After three requests they have still not confirmed the total size of the pension pot just keep coming up with 2 options tax free lump sum and yearly pension.

This seems to suggest that is is a defined benefit (DB) pension. There is no pot with those.

What she wanted to do was follow what I did, took my pension as a lump sum and paid the mortgage off, she wants to clear all debts and enjoy life a bit

In most cases, that would be a bad thing to do if you are still of working age and not retired.

Albermarle

It would seem that the two pensions are different types .
Hers looks like a DB or Final Salary scheme - She is entitled to a guaranteed yearly pension OR a lump sum and smaller guaranteed yearly pension.
Your pension was probably a DC or money purchase scheme . This is just a pot of money with no guarantees. Once 55 you can with draw all the money if you want .
Suggest to read these links
https://www.moneysavingexpert.com/savings/discount-pensions/#need-9
https://www.pensionsadvisoryservice.org.uk/about-pensions/pensions-basics

Ken-b

Hi all thanks for the quick response, just to confirm we are both in our 60’s, unfortunately my wife can not retire till she is 66.
Have just received another letter, actually 30 minutes after I posted on here, still the same options but have quoted a value to transfer to another scheme.
Would that be an option for her.

Silvertabby

Ken-b wrote: »

Hi all thanks for the quick response, just to confirm we are both in our 60’s, unfortunately my wife can not retire till she is 66.
Have just received another letter, actually 30 minutes after I posted on here, still the same options but have quoted a value to transfer to another scheme.
Would that be an option for her.

It depends on many things. Can you post the transfer value quoted, plus the annual pension and lump sum she would be giving up? She would also need to factor in the (probable) requirement of obtaining - and paying for - independant financial advice.

Incidentally, if you both cash in your pensions, what will you live on when you actually retire? Even if you both get the full single tier State pension, that will only cover the basics leaving nothing to 'enjoy life'.

AlanP_2

Ken-b wrote: »

Hi all thanks for the quick response, just to confirm we are both in our 60’s, unfortunately my wife can not retire till she is 66.
Have just received another letter, actually 30 minutes after I posted on here, still the same options but have quoted a value to transfer to another scheme.
Would that be an option for her.

It's an option but there are pitfalls.

If the "benefit value" is greater than £30k then, by law, she must take advice from a suitably qualified person (in effect an Independent Financial Adviser with the relevant pension transfer qualification).

That advice won't be cheap.

The advice may be "take CETV" or it may be "keep DB pension", until the adviser has done a full analysis on overall financial situation, other retirement income sources, the fine detail of the DB scheme etc. etc. nobody knows.

The legal requirement btw is to "take advice". You then have the choice whether to accept the advice or to ignore it and do the opposite.

Worth noting that, typically, for 9 out of 10 people staying with the DB option is the better financial option.

If you care to put some numbers up on here you'll get some thoughts on whether it looks like even a half sensible idea.

(Crossed with Silvertabby above)

Ken-b

Hi, thanks again..
Transfer value £47k
Lump sum £6.5k and a yearly pension of £971 per year.
Full pension of £1521 per year.
Not large sums I know but that’s life.

SonOf

Ken-b wrote: »

Hi, thanks again..
Transfer value £47k
Lump sum £6.5k and a yearly pension of £971 per year.
Full pension of £1521 per year.
Not large sums I know but that’s life.

To take that pension as a lump sum it would need to be transferred. It would need an IFA to sign off on it (costing around £5000). And an IFA is unlikely, based on very limited info you have given, to recommend such as course of action.