Dormant pension stuck in limbo till I'm 60

irishbhoy67

Hi, guys. I have recently turned 55 and have a 'dormant' pension with a previous employer. The pension policy was taken out by my previous employer and commenced in 1987. The last payment was made in May 1994 when the employer went bust.

I contacted the pension company and found out that the pension funds are in a Conventional With-Profit Defined Benefit Policy and the Transfer fund value is about 7k. The pension company have told me that as the 'Defined Benefit' age is set at 60 for this pension I cant touch it. I thought after reading an article on t'internet' I could access this money when I was 55 but they say No because of defined benefit age of 60. They say I can either pay more in or transfer to another company. In truth they were not very helpful and so it turned to the wise old heads here.

The question I have is can I get hold of the money in the dormant pension pot? Can I get it all or do I have to take 25% (as I read on another post).

I should also say here that I started a new job shortly after my ex employer went bust and have been enrolled in a pension scheme since 1995 which I am more than happy with as it should cover all my retirement needs.

Much thanks

xylophone

Conventional With-Profit Defined Benefit Policy

Is this a traditional non unitised policy? The "defined benefit" is some sort of Guaranteed Annuity Rate/annual pension at age 60?

Marcon

irishbhoy67 wrote: »

I contacted the pension company and found out that the pension funds are in a Conventional With-Profit Defined Benefit Policy and the Transfer fund value is about 7k. The pension company have told me that as the 'Defined Benefit' age is set at 60 for this pension I cant touch it. I thought after reading an article on t'internet' I could access this money when I was 55 but they say No because of defined benefit age of 60. They say I can either pay more in or transfer to another company. In truth they were not very helpful and so it turned to the wise old heads here.

I'm not sure what else you were expecting from them. You've been told what your options are: leave the pension with them until you reach the age of 60, add to it or transfer it. If you transfer it to a modern personal pension contract, then yes, you can access the whole pot (25% tax free, the rest taxed at your marginal rate) if that's what you want to do.

Be aware that if the transfer value is £30,000 or more, and there are guarantees offered in this scheme (and sounds as if there are), you will have to take financial advice if you wish to consider transferring out of the scheme. You'll need to find an adviser who has the necessary FCA permissions to advise on such transfers and it won't be cheap - upwards of £3K+VAT is likely.

MallyGirl

also if you take any taxable income from the pension it will invoke MPAA and limit future contributions to your current pension

Malthusian

MallyGirl wrote: »

also if you take any taxable income from the pension it will invoke MPAA and limit future contributions to your current pension

If the value is only £7k it could be taken under small pot rules, which doesn't trigger the MPAA.

It may well be a bad idea though as it sounds like the plan has valuable benefits which would be lost by transferring or cashing it in.