Pensions

Brynsam

Hekifump said:

Hi. I'm 55 in January and will be looking to take my 25% tax free lump sum from my Defined benefit pension. The Pension provider won't allow me to do this & keep my pension, so I will be looking to put this and other pensions I have in a drawdown pension option. 
My question is: Have I got to wait until I'm 55 to transfer into a drawdown pension or can I do it now, but not drawdown until I'm 55?
Thanks in advance.

If you are currently contributing to a DB pension, you will only be able to transfer it to another pension arrangement once you stop being an active member (someone who is building up benefits/contributing to the scheme). If you are no longer an active member (but are a 'deferred' member) you can investigate the transfer now - but remember you will be required to prove to the DB scheme that you have received advice fro a suitably qualified and authorised individual if the transfer value is upwards of £30K.

dunstonh

Hi. I'm 55 in January and will be looking to take my 25% tax free lump sum from my Defined benefit pension. The Pension provider won't allow me to do this & keep my pension, so I will be looking to put this and other pensions I have in a drawdown pension option. 

Your post contains some conflicting information.

1 - If its a DB pension, you don't get 25% tax free lump sum.  You get  a tax free lump sum but its calculated differently as there is no fund value

2 - You say pension provider but you say its DB pension.  Providers handle DC schemes (which do have a 25% TFC).  So, are you talking about a DB scheme or a DC scheme?

3 - You cannot do drawdown on a DB scheme.

My question is: Have I got to wait until I'm 55 to transfer into a drawdown pension or can I do it now, but not drawdown until I'm 55?

If it is a DB scheme, you would actually need to transfer the whole pension out.   That is not as simple as you think and in the majority of cases it would not be the right thing to do.  It is also quite expensive to do.

LHW99

And for a DB pension, 55 is likely to be below the NRA (often 60 or 65). So the pension would be reduced once it is put into payment, maybe by as much as 5% per year taken early.

Hekifump

dunstonh said:

Hi. I'm 55 in January and will be looking to take my 25% tax free lump sum from my Defined benefit pension. The Pension provider won't allow me to do this & keep my pension, so I will be looking to put this and other pensions I have in a drawdown pension option. 

Your post contains some conflicting information.

1 - If its a DB pension, you don't get 25% tax free lump sum.  You get  a tax free lump sum but its calculated differently as there is no fund value

2 - You say pension provider but you say its DB pension.  Providers handle DC schemes (which do have a 25% TFC).  So, are you talking about a DB scheme or a DC scheme?

3 - You cannot do drawdown on a DB scheme.

My question is: Have I got to wait until I'm 55 to transfer into a drawdown pension or can I do it now, but not drawdown until I'm 55?

If it is a DB scheme, you would actually need to transfer the whole pension out.   That is not as simple as you think and in the majority of cases it would not be the right thing to do.  It is also quite expensive to do.

Apologies - Terminology is important.
I'm in a DB as a deferred member. There is no option to take 25% tax free from the pension, so I would need to transfer out. I'm only allowed to ask for a CETV once a year, so haven't asked yet as I want to see what the options are first - but it was £560k last June. I am looking into moving my DB pension into a DC drawdown scheme. I plan to unofficially retire (& therefore not withdraw pension) . Some of the 25% tax free will be spent on extending our home so we can have more rooms. My wife is a Foster Carer, so that will be our main source of income. I intend to buy a property to rent with what is left.
Am I wrong in thinking I can move my CETV into a different pension scheme without paying tax? (obviously I would pay tax on withdrawals if I drawdown). If I can do this, why is it quite expensive to do? 
Many thanks in advance for your advice.

AlanP_2

Search on here for numerous DB transfer threads, they will all go in to detail about why it is expensive to do. Essentially, by law, you have to take advice from a suitably qualified person (IFA) to transfer out of a pension scheme with guarantees valued at over £30k and that costs money.

You can transfer the CETV amount without paying tax, that only comes in to play when you start accessing the money.

Jab64000

I am looking for some pensions advice. I recently checked the gov pension page and it told me that I am entitled to the full pension of £175 per week when I reach 67. I am currently 56 and in a final salary pension scheme, The gov website informs me that I am currently only entitled to £155 per week as I have been contracted out by my final salary pension scheme so that I paid less national insurance presumably. Can anyone tell me if it is worth while trying to pay the extra amounts to guarantee me the full pension ( the Cope amount) or i this paid by my final salary scheme. I am likely to be offered Voluntary redundancy and if I do that I am concerned that I will not pay enough to reach the maximum state pension if I am not working, so do I try to pay the additional Cope amount as a one of payment? I do not see how this will be financially viable as a reduction of £20 per week versus the amount that I will have to pay seems that I would have to know I would live to a ripe old age to make it viable?

Any advice welcome as I am a wee bit confused.

Linton

Jab64000 said:

I am looking for some pensions advice. I recently checked the gov pension page and it told me that I am entitled to the full pension of £175 per week when I reach 67. I am currently 56 and in a final salary pension scheme, The gov website informs me that I am currently only entitled to £155 per week as I have been contracted out by my final salary pension scheme so that I paid less national insurance presumably. Can anyone tell me if it is worth while trying to pay the extra amounts to guarantee me the full pension ( the Cope amount) or i this paid by my final salary scheme. I am likely to be offered Voluntary redundancy and if I do that I am concerned that I will not pay enough to reach the maximum state pension if I am not working, so do I try to pay the additional Cope amount as a one of payment? I do not see how this will be financially viable as a reduction of £20 per week versus the amount that I will have to pay seems that I would have to know I would live to a ripe old age to make it viable?

Any advice welcome as I am a wee bit confused.

This should be in a new thread as it is nothing to do with the previous postings.  If this reply is not sufficient I suggest you start a new thread.

However....
You dont "repay Cope" as Cope is just a number used in the calculation of the £155 and as an indication that contracting out has reduced your SP.

Is the forecast of £155/week what you have earned to date or is it the amount you would receive if you worked until 67?
I assume its the former and so every NI year you earn from now until the year before you reach SP age will add to your SP until you reach the full amount.  Each NI year gets you 1/35 of the full pension, which works out as £5/week.  So it would seem you only need another 4 years NI.

If you are not working you can pay voluntary NI for about £800 each year.  This is an extremely good deal since you will get the money back in increased SP in 3-4 years.  So if you live longer than this you will be in profit by £££s.

xylophone

On 6/4/16  ( when contractong out ceased for your DB Scheme) two calculations were done.

NI years (up to 30)/30 x £119.30 + ( Additional State Pension - Deduction for  Contracting out) (Old)

(NI years (up to 35)/35 x £155.55) - Contracted Out Pension Equivalent) (New)

Your  Starting Amount was the higher of the two. It was almost certainly given by the first calculation above.

Each year since then has increased the Starting Amount by 1/35 of the new state pension.

It would seem that you need about four more years to reach a full NSP.

If you are not paying or being credited through employment, you can make voluntary contributions to reach the full amount.