My Late Husbands Pension/Retirement Plan with St James Place

Moakey

My husband died January 2019, age 68, I let his pension advisor know when he passed away. In February this year I had a meeting with the St James Place advisor to discuss my options, they advised that I have my husbands pension turned over to me, I am unsure what to do, In respect of this, due to current worldwide health crisis, The St James Place advisor doesn’t seem to want to offer a cash sum in respect of my husbands pension, I am not sure of my rights here. The pension paid my husband approx £350 per month.
Thank you

dunstonh

 The St James Place advisor doesn’t seem to want to offer a cash sum in respect of my husbands pension,

If the pension was in income drawdown, then on death before 75, a cash lump sum is nearly always the best option (not always as income for you from it would also be tax free for life).       It is probably best to think of SJP as a sales rep.   They want to keep the money.    

However, if your husband bought an annuity (not sure if SJP did those themselves) then there is no cash lump sum.  Just the benefits arranged under the annuity on death.

 I am not sure of my rights here.

Its your right to choose from the available options open to you.    

TBC15

If the OP was already using her full personal allowance would the payments from the pension still be tax free?

Linton

TBC15 said:

If the OP was already using her full personal allowance would the payments from the pension still be tax free?

Yes, if you die earlier than 75 your DC pension pot can be passed to a spouse or other beneficiary completely free of tax on both capital and resultant income for the rest of his/her life. See https://www.pensionwise.gov.uk/en/when-you-die for example.

Albermarle

I am unsure what to do, In respect of this, due to current worldwide health crisis,

Your available options will not be affected by the current epidemic .

As above you need some more clarity under what method the £350 a month is being paid . By Drawdown or via an annuity.

LHW99

May be best to put the question as given by Albermarle to them in writing, and ask for their reply the same way.

You can always come back here to check when you have received it if itis not clear.

Malthusian

Now would be a good time to see an Independent Financial Adviser. They will find it easier to figure out what kind of pension plan you have and explain your options.

dunstonh If the pension was in income drawdown, then on death before 75, a cash lump sum is nearly always the best option (not always as income for you from it would also be tax free for life).

I disagree. A cash lump sum is strictly inferior to taking the money as a nominee / dependent's flexi-access drawdown plan, from which all income drawn will be tax free. The reason it is strictly inferior is because if you take it as a nominee flexi-access drawdown plan you can always change your mind and draw the whole lot as a cash lump sum, still tax free. However if you take it as a cash lump sum, you won't be able to move it all back into a tax-free growth environment. Option B cannot be better than a free choice of Option A or B.

Keeping the benefits in the pension wrapper means it continues to grow free of tax and any unspent funds can be passed onto your own heirs in due course, still in the pension wrapper (if you die after 75, withdrawals become taxable as income for the successors).

It only makes sense to draw it as a tax-free lump sum if you are going to spend it all, or need to hold it as cash (in which case cash returns are likely to be higher in your own hands using loss-leader accounts than in a pension, despite the tax disadvantages). I don't think that amounts to "nearly always".

Moakey

Hello further to my query about my late husbands ST James Place  Pension at the time of his death the fund at the date of his death was £71010.07pence, the pension was flexi draw down amount he drew monthly was £350 per month, , SJP. have told me if I continue with flexi drawdown at £350 monthly then the fund will only last until I am 84 years old approx. I am still awaiting a figure in respect of taking a cash lump sum and have put my decision on hold until I get this figure. I get state pension of £725.75 a month and an annuity of £204. 25 per month, I am really worried that we may go into global recession and the effect it could have if I opt to stay with flexi drawdown, I have no dept, but may have to renew the lease on my flat , which could be costly. Thank you so much for your help

LHW99

SJP. have told me if I continue with flexi drawdown at £350 monthly then the fund will only last until I am 84 years old approx

If you are a similar age to your husband (mid / late 60's) my maths says SJP isn't expecting any growth on that sum over the next 17 years or so, which seems odd.

Albermarle

This makes sense now. The withdrawal rate of £350 per month is a bit on the high side for a pot of £71,000, if you wanted the pension to last until you are say over 90, although predicting these things is not an exact science . So what SJP is saying is approx. correct on this front.
You should be able to take the cash instead if you want to, but of course you will then forego the £350 a month .
Maybe you could take 50% as cash with a reduced income , or some other proportion. It should be possible to do this I think.
I am really worried that we may go into global recession and the effect it could have if I opt to stay with flexi drawdown
I would not worry about this part too much as it is an unknown ./trying to predict the future .