Pheonix Life question

xylophone

If she were able to retire at 60 but still was not eligible for full New State Pension, she could  consider making  voluntary contributions. 

LateStarter

xylophone said:

Has your SIL  kept  her Statement of Deferred Benefits on leaving?

I'll ask - she's not the most organised, and had had about 3 house moves.

green_man

W.r.t. the Phoenix Life pot.  I also have some money with them (an ex Standard Life policy). Most of Phoenix’s policies were inherited/ acquired from other providers, some of these may have had some guarantees. However in this case Phoenix (based on what happened to me) may have offered to increase pot value in order to ‘buy out’ the guarantees.  If this is the case with your SiL then it’s important to find out if the policy does still have some guarantees.

If there are no guarantees then in order to access the funds you will need to transfer to a another provider. Phoenix doesn’t (as far as I know) support drawdown options. Once transferred elsewhere then your SiL can simply drawdown the cash once she is over 55.  Note - The transfer value is not guaranteed, the ‘fund value’ usually is guaranteed. 

dunstonh

 get what you're saying 20k is above the small pots limit, but SiL could simply withdraw 10k per year as required?

Yes.   That is known as UFPLS.   If she did 50% of the value over 2 years, then each payment would get 25% tax free and 75% taxable.  If she did it in a year with no other income, it could be free of tax altogether as it would be within the personal allowance.     it is possible that by the time she gets there, it could be enough to do it over 3 years.

 Will a transfer require any kind of financial advice (I think I got confused by reading somewhere that you need approval for transfers over 30k)? 

Only if there are safeguarded benefits on the pension (such as guaranteed annuity rates).  It may not need transferring.   Phoenix are a company that have bought a lot of unwanted insurance and pension books from old providers or bought out old brands.   Some of the pensions they have allow partial UFPLS.  Some require it on the whole amount.  If the latter, she can then transfer it to another pension first and split it.    

 And as a general rule, would it make more sense to leave the funds in Phoenix for a couple of years and hope the transfer value goes up?

There is no general rule. Phoenix have plans that are gems that are worth keeping and cannot be improved upon with modern options.  They also have some expensive dross.   So, without analysis, it is impossible to say.

LateStarter

Albermarle said:

Lets speculate that she worked there 8 years on an average salary of £8Kpa and she left in 1998 .
Her pension on leaving would have been around £1300 pa + inflation for 22 years = approx £2000 pa .
So CETV could be expected in region of £60K .
Just as an example .

The maths was pretty spot on - she worked there for just over 4 years, and got got the CETV - it's £33k.

LateStarter

I'd planned to come back earlier to update this and ask some further questions; but SiL has taken her own time following up. The CETV for the Halifax pension is abouy 33k - so this means financial advice would be requried for a transfer to take place? Is that a difficult thing to do for what is still a small amount? Any ideas about fees? Do you just pick somebody on unbiased?

Between this and the Pheonix pension, she's beginning to dream of retiring 5 years ealier.

AlanP_2

LateStarter said:

I'd planned to come back earlier to update this and ask some further questions; but SiL has taken her own time following up. The CETV for the Halifax pension is abouy 33k - so this means financial advice would be requried for a transfer to take place? Is that a difficult thing to do for what is still a small amount? Any ideas about fees? Do you just pick somebody on unbiased?

Between this and the Pheonix pension, she's beginning to dream of retiring 5 years ealier.

Fees are likely to start at £3k'ish, if you can find a qualified pension transfer IFA that wants to do it which may not be easy as there aren't many still providing the service due to high-risk nature of the transaction as perceived by their insurers (and built into their annual premiums).

What is the annual pension at 60 that relates to the CETV? Why does your SiL not want the guaranteed income that is being offered?

No use to your SiL but for anyone else that ends up reading this - when you get the opportunity to join a DB scheme like the LGPS ask AT THE TIME OF JOINING what your old pension pots / schemes would "buy you" in the LGPS / NHS etc. Asking doesn't commit you to transferring but gives you the information to make an informed judgement on what is best for you and your situation / plans.

I transferred my previous DC pot in to the LGPS back in 2009, when I start taking my LGPS benefits in a year or so I will have an effective 9% annuity rate, inflation linked for life with spouse benefits. Yes, I have missed out on investment ups and downs since then so my pot would have grown (quite well actually from 2009!) but you will struggle to find a better "no risk" return in my opinion.

AlanP_2

One option for your SiL if she is over 55 and she can access the DC pot, even if it has to be transferred from Phoenix.

She could take an amount annualy over the next 2 years using SMALL POTS rules. She would pay BR tax of £3k so on £20k she would end up with £17,000. She could, providing she has the salary and taxable income to cover it, pay 450 pm for 4 years into the AVC scheme that is offered alongside the LGPS DB. This would reduce her take home by £360 pm but would be eligible to be taken tax free at the time LGPS benefits are taken.

Effectively she would get the £3k tax back but it must be done using SMALL POTS route.