How to help my dad?

Albermarle

n terms of the second point, that's the beauty of no win, no fee right? If they decide that he's isn't worse off then he's lost nothing by getting it checked. If they decide he is, then he gets more than the 117k, even after their 20% plus VAT.

When you consider Xylophones post , it does look very likely that it was a very bad idea to transfer out and it probably is a case of misselling .

Am I right in thinking that he could leave the 117k as it is and take the 3k out each year as lump sums instead (the amount that he'd maybe get from an annuity) until it reduces to zero, rather than committing to the annuity? 

Normally with a DC pension you have three choices, once you are over 55 :

Take it all out in one go - 75% taxable all in one tax year means a big tax bill 

Buy an annuity - this can be for a fixed period, until death , inflation linked or not , widows pension or not . The more benefits the less it pays ( my £3K estimate was including those benefits ) ..

Drawdown the pension - Leave it largely invested and  take payments from it at your leisure . 25% is tax free . Obviously the quicker you take it the quicker the pot goes down . If he dies whilst some of the pot is left it goes to his beneficiaries.

Probably not a good idea to touch this pension if the legal action is ongoing ??

Throwaway1

Albermarle said:

Probably not a good idea to touch this pension if the legal action is ongoing ??

Definitely!

Throwaway1

I convinced my mam to check her state pension forecast last night, she has 34 years of contributions. She is 59 years old but will definitely not be working before state pension age. She was on disability payments for those 34 years but they ended just before she qualified for the 35th year. I'm guessing I should advise her to buy the extra year as she'd make the payment back in just over 3 years of pension payouts? I'm tempted to tell her to buy it now so she doesn't forget as there's not a chance she will work and gain it otherwise (and we don't have kids to she won't qualify for looking after a grandchild or anything like that). Does it make sense to wait though as, of course, there's no guarantee that she will be around at pension age and I believe she will always have the option to buy it later. She potentially may also be allowed disability payments again although she has given up trying to appeal now as it upset and confused her too much so I think her situation will remain the same. It says the price of buying a year's contribution may go up, is that just inflation or does it get more expensive for any other reason?

[Deleted User]

The 35 year point does not apply to your mother (it only applies to the youngsters). What exactly does the state pension forecast say and is there any mention of a COPE

xylophone

What exactly does the forecast say?

Throwaway1

Deleted_User said:

The 35 year point does not apply to your mother (it only applies to the youngsters). What exactly does the state pension forecast say and is there any mention of a COPE

xylophone said:

What exactly does the forecast say?

Parents! I've just phoned her and it turns out she hadn't checked it all, she'd just added up in her head what she thought would have qualified. I've now given her the number to phone and she's said she will give them a call. I can't do it online with her like I did for my dad as she doesn't have a passport, p60, driving licence or anything else and she has never had credit or anything like that to use the verify service instead.

Throwaway1

Still no update from mam yet regarding state pension. I have been reading about the £2880 payments though and believe this is something she should/could be doing? I've been working my way through the massive thread and believe her case is very straightforward but I'd just like to be 100% sure before advising her.

As she has zero wage/benefits and zero pension built up (except for whatever her state pension is which she cannot claim until 66 anyway), she doesn't have any income to take into account. Does this mean that she can set up a SIPP, pay £2880 into it each tax year, the government adds £720 after a few months and then she can withdraw pretty much all of it straight away depending on provider? And she can do this every year until the age of 75, unless the rules change between now and then?  (She is currently 59).

She has transferred part of her tax free allowance to my dad but of course she would still be well under that until her state pension kicks in, at which point she may then pay some tax if she withdraws the full amount from the SIPP (depending on what amount she actually receives from her state pension).

She will of course be extremely skeptical about this, and will need quite a bit of persuading to convince her that it's not too good to be true, so I want to make sure that all is definitely as it sounds.

molerat

Yes.  Pay £2880 in, wait for the £720 to be added and withdraw.  If using HL you need to keep £1000 in the account to stop it from being closed.  So in the first year you can only really withdraw £2600 of which £1950 will be taxed and will need reclaiming.  In year 2 HMRC should allocate a tax code to the pension so the full £3600 can be withdrawn tax free at the right time.  Pay in £2880 before May 6th, tax added late June and withdraw immediately as the tax free amount by month 3 will be sufficient to prevent any tax being due.

Throwaway1

molerat said:

Yes.  Pay £2880 in, wait for the £720 to be added and withdraw.  If using HL you need to keep £1000 in the account to stop it from being closed.  So in the first year you can only really withdraw £2660 of which £1950 will be taxed and will need reclaiming.  In year 2 HMRC should allocate a tax code to the pension so the full £3600 can be withdrawn tax free at the right time.  Pay in £2880 before May 6th, tax added late June and withdraw immediately as the tax free amount by month 3 will be sufficient to prevent any tax being due.

Thank you. Now I just have to be able to convince her to do it! I know her first question will be 'how do I withdraw it?' Is it just as simple as clicking a button online/phoning up HL and asking to withdraw it to her normal bank account?

molerat

The on line guides within the HL site are pretty good but basically yes. A few forms to fill in, mainly regulatory waffle to ensure you understand what you are doing, and the money appears in your bank account.