Can you advise me

ROBCMAY

I opted out of SERPS back in 1988 and back in again around 2001 during this period my pension account with Sun Life of Canada amassed approx £34,000. I cannot put anymore into this account but can transfer it to another pension provider, but I do not have another pension that I can add additional funds to. Sun Life are predicting that when I get to retirement age (Nov 2027) the current policy will give me a pension of approx £1000 per annum. This means that if I decided not to take the 25% tax free lump when I retire but leave all the funds in the plan I would have to live for approx 30 years after retirement age to get value out of this plan. As I am overweight and suffer with depression and high blood pressure I think in all probability it is unlikely that I will get to 95. Therefore I am thinking that I would be better off cashing the account in now which they tell me would mean I get approx £24,000 after tax and putting it into a fixed rate cash ISA.

Can you please let me know your thoughts on this matter?

Many Thanks

Robert May

p00hsticks

You may not have an existing pension that allows transfers in, but it's easy enough to set up a new stakeholder pension or SIPP, which would allow you to extract the money in larger chunks over a shorter period rather than having an annual income until you die.

The question may be whether you can easily transfer the Sun Life one to such a pension. Are there any guarantees that come with the pension ?

wjr4

What are your actual objectives? Why don't you leave it in the pension? Contact them to check if there is a Guaranteed Minimum Pension, a Guaranteed Annuity Rate or protected tax-free cash before doing anything.

sevenhills

I opted out and my pension was with the PRU, I cashed it in and it helped me with a deposit on my house.
What age can you claim the pension, how old are you now? I believe some pension can be cashed in on health grounds. Someone that knows more than me may post about this.

MEM62

Do not cash the plan in.

Ask whether this plan allows flexible drawdown. I may not and in that case you can transfer it to a policy or provider that does. Once in there, when you retire you can take as much out each year as you wish. The flexibility will allow you to set the withdrawal amount each your at an appropriate level to suit your needs and compliment your other retirement planning / income.

Linton

ROBCMAY wrote: »

I opted out of SERPS back in 1988 and back in again around 2001 during this period my pension account with Sun Life of Canada amassed approx £34,000. I cannot put anymore into this account but can transfer it to another pension provider, but I do not have another pension that I can add additional funds to. Sun Life are predicting that when I get to retirement age (Nov 2027) the current policy will give me a pension of approx £1000 per annum. This means that if I decided not to take the 25% tax free lump when I retire but leave all the funds in the plan I would have to live for approx 30 years after retirement age to get value out of this plan. As I am overweight and suffer with depression and high blood pressure I think in all probability it is unlikely that I will get to 95. Therefore I am thinking that I would be better off cashing the account in now which they tell me would mean I get approx £24,000 after tax and putting it into a fixed rate cash ISA.

Can you please let me know your thoughts on this matter?

Many Thanks

Robert May

Do not base your retirement plans on the forecast income from your Sun pension. The prediction is calculated by a method defined by the regulators and is highly pessimistic. It is probably based on current prices and an assumption that the income rises with inflation. So your age 95 calculation is wrong. If you put your money in a cash ISA there is a good chance it will decline in value because of inflation.

Also the forecast does not take into account personal circumstances such as the option that you will have when you retire to get a higher income because of poor health.

SonOf

Sun Life are predicting that when I get to retirement age (Nov 2027) the current policy will give me a pension of approx £1000 per annum.

It is not a prediction. It is a projection using a range of assumptions that are likely to be lower than reality.

This means that if I decided not to take the 25% tax free lump when I retire but leave all the funds in the plan I would have to live for approx 30 years after retirement age to get value out of this plan.

That is unlikely to the be case when you use real figures. Especially when you remember that the projection is artificially reduced to reflect inflation to show it in todays money terms and not future money terms.

Therefore I am thinking that I would be better off cashing the account in now which they tell me would mean I get approx £24,000 after tax and putting it into a fixed rate cash ISA.

Almost certainly a pretty dreadful idea.
1 - why draw it from a pension where is is likely making more than a cash ISA?
2 - why pay tax to draw it when you dont need the money now?
3 - why are you working on projections rather than real alternative options?

At the moment, you are making a decision based on a range of assumptions that are not correct or fully informed.

Albermarle

Normally if you 'cashed out ' a £34K pension , you would receive more than £24K after tax .
25% should be tax free and 75% taxed at 20% = £28,900 .
1) It's possible that this old pension is not designed to pay the tax free part ?
2) If you were a 40% taxpayer it would change the calculation.

If you are determined to cash it out ( and I am not offering an opinion on that ) you need to check point 1) with Sunlife first.

xylophone

OP, are you currently aged around 60?

Do you have other private pension provision as well as the Sun Life plan?

Are you currently contributing to a DC pension?

Have you obtained a state pension forecast?

https://www.gov.uk/check-state-pension

Are you currently employed?

Do you have dependants?

Do you have an emergency fund?

Do you have a mortgage?

xylophone

You could consider an interview with Pension Wise for a discussion about your DC pension (s).

https://www.pensionwise.gov.uk/en/appointments?gclid=EAIaIQobChMIg-v47ci15wIVjLTtCh1DjgW1EAAYASAAEgJH6PD_BwE

Marcon

sevenhills wrote: »

What age can you claim the pension, how old are you now? I believe some pension can be cashed in on health grounds. Someone that knows more than me may post about this.

You can only access a pension before age 55 if you can provide medical evidence to show that you are in such poor health that you are unlikely to work again.

'Serious ill health' means you have a life expectancy of no more than 12 months. Again, you need medical evidence from a certified medical practitioner. You can then take the whole pension as a tax free lump sum (known as 'serious ill health commutation') if you are under 75.