Annuity, Defined, Lump Sum at 55. I'm lost and I could really use some advice. Please

peter_barnes

Thanks in advance for any help offered, I really need it. 
I think I've got the answer to my problem but I could really use a reality check.  I'm lost in a spiral of terminology, rules and blind panic as I don't have a lot of time:
 I find myself in the sad situation where I have just turned 55 and I need to raise a large (£100,000+) sum to put down as a deposit on a house purchase. The remainder (approx £60,000) will have to be through a 10 year mortgage, assuming my thinking is correct - this of course could be pie in the sky.
I have an Annuity from a very old employer. I left over 20 years ago but it looks as if they have around £155,000 as my transfer value. I have three other smaller types of pension. One with The Civil Service - again, very old, 5 years service. I'm still trying to obtain information from that and also another from my local council employment which I believe has a transfer value of around £50,000 but advised me that due to the type of pension that it is, I can claim today, a lump sum of £9000 and receive a yearly amount of around £1,200. The final pension is with my current employer. I envisage staying with this employer until I retire at 68 tears old. I may even stay on until 70. I can however, take a lump sum from my present employment pension scheme of £8,000 but I'm very reluctant to do this as I believe, although I could be wrong, that I'll lose my 4 times salary death in service if I did so.
Now. My Plan! Would it be possible for me to transfer my three dormant forms of pensions (annuity, civil service pension and defined benefit) to a new private pension and then withdraw the maximum possible cash lump sum  within weeks or a couple of months of doing so? If so, it seems to easy, although I am very aware that this is a very bad long term decision. I have little to no choice. I have to explore any options available to get a house purchase organised.

AlanP_2

For your old "annuity" do you mean it is a Defined Benefit pension that will pay you an annual amount once you start to claim it?

OR

Is it a Defined Contribution pot that can be used to purchase an annuity from an insurance company that will pay you an annual amount once you start to claim it?


Your options are very different depending on what type it is.

Civil Service & LGPS are Defined Benefit schmes and you can transfer out from LGPS but not from Civil Service as the underlying funding models are different.

An LGPS transfer value will be very low compared to a typical private sector scheme as calculation rules are different. 

If you want to transfer any DB scheme with a notional value of >£30k you must, by law, take independent financial advice as for most people it is an unsuitable approach to funding their retirement. Advice is likley to cost £3-5K per scheme analysed for transfer. It is also likley to take 3-6 months from starting the process to being able to access the funds.

Is this your only option for buying the house as it sounds to me, from the brief details you have given, that you will struggle to get there via this route?

Dazed_and_C0nfused

The quick answer to your overall plan is no.

If you do actually have an annuity (doubtful) then it is no to all three.

If however you have a deferred DB pension from the old (not civil service or local council) employer then it might be possible to get a CETV and turn the promise to pay £x for life into a "pot" in a DC pension.  From which you could take 25% TFLS.  As soon as you take 1p in taxable income you limit further contributions to £4k/year.

But the chances of any of that happening this side of Easter are probably slim and you may baulk at the (usually justifiable) cost of transferring.

LHW99

You will not be able to transfer the local council DB without advice from a specialist IFA, which would cost probably 5k upwards. This may be the case with the civil service one, if its transfer value is more than £30k.

Not sure what you mean by "Annuity" that's usually what you buy with a DC pension fund (if you want to, rather than drawdown).

If you take any taxable cash from a DC pension you will be restricted to £4k per annum maximum contribution to your current pension going forward.

You could draw the DB pensions now, which would provide some tax free cash (but probably not £100k) although they would probably be severely reduced due to early drawdown (that wouldn't reduce your pension contributions to the employer's scheme though I believe).

Tealblue

peter_barnes said:

Thanks in advance for any help offered, I really need it. 
I think I've got the answer to my problem but I could really use a reality check.  I'm lost in a spiral of terminology, rules and blind panic as I don't have a lot of time:
 I find myself in the sad situation where I have just turned 55 and I need to raise a large (£100,000+) sum to put down as a deposit on a house purchase. The remainder (approx £60,000) will have to be through a 10 year mortgage, assuming my thinking is correct - this of course could be pie in the sky.
I have an Annuity from a very old employer. I left over 20 years ago but it looks as if they have around £155,000 as my transfer value. I have three other smaller types of pension. One with The Civil Service - again, very old, 5 years service. I'm still trying to obtain information from that and also another from my local council employment which I believe has a transfer value of around £50,000 but advised me that due to the type of pension that it is, I can claim today, a lump sum of £9000 and receive a yearly amount of around £1,200. The final pension is with my current employer. I envisage staying with this employer until I retire at 68 tears old. I may even stay on until 70. I can however, take a lump sum from my present employment pension scheme of £8,000 but I'm very reluctant to do this as I believe, although I could be wrong, that I'll lose my 4 times salary death in service if I did so.
Now. My Plan! Would it be possible for me to transfer my three dormant forms of pensions (annuity, civil service pension and defined benefit) to a new private pension and then withdraw the maximum possible cash lump sum  within weeks or a couple of months of doing so? If so, it seems to easy, although I am very aware that this is a very bad long term decision. I have little to no choice. I have to explore any options available to get a house purchase organised.

Annuity - I'm assuming this is not actually in payment, given you say it has a transfer value. Does it have any sort of guarantee or anything else which means it would be classed as having 'safeguarded rights' (ask the provider if you're not sure). If so, you will need to take financial advice before any transfer could proceed.

Civil service - you won't be able to transfer as you propose because it's an unfunded public sector scheme and transfers to the DC arrangement you have in mind aren't permitted.

DB - your transfer value is over £30K so you will need to find an adviser willing to give advice before any transfer could proceed. It is unlikely the actual transfer would go ahead much before March or April.

Remember that any cash you take from your new private pension would be tax free up to 25% of the value of that new pot, with tax payable at your marginal (highest) rate on anything else you take from it. If you take anything over and above the 25% you will trigger a restriction on how much you can pay to any future defined contribution arrangement - £4,000 per annum including any tax relief on personal contributions and any employer contribution.

Tealblue

LHW99 said:

You will not be able to transfer the local council DB without advice from a specialist IFA, which would cost probably 5k upwards. This may be the case with the civil service one, if its transfer value is more than £30k.

Can't transfer the civil service pension.

peter_barnes

Thank you for the very helpful advice. The biggest pot that I have is an "Annuity Policy" and is currently held with a pension insurance company. I have to be honest, I really don't understand the differences. The issue I think I have is,  I appear to be currently property and cash poor but (potentially) pension (not very to be honest) rich. Life, relationship breakdown, long term dependant child etc. is bringing about my situation.
Having looked through the very kind advice that you guys have offered, if I understand it correctly, I can transfer my Annuity Policy (transfer value £155,000) to a standard (excuse my terminology) pension and then take as much lump sum as possible. Is that correct? 
I am aware that my intentions - of sorts are not the best options but I'll deal with later life as it comes at me. I just need to raise as much capital as I can, within the next 12 months, at most.
I'm very grateful for your advice. I'm way out of my depth and as soon as I get a better understanding, with your very kind help, I'm going to book an appointment with the Pension Wise Service

Tealblue

peter_barnes said:

 if I understand it correctly, I can transfer my Annuity Policy (transfer value £155,000) to a standard (excuse my terminology) pension and then take as much lump sum as possible. Is that correct? 

Check with the provider of the Annuity Policy - only way you can be sure what your options are.

Don't forget you can always contact TPAS for free, expert information (might be useful if you have to wait a while for a PensionWise appointment): https://www.pensionsadvisoryservice.org.uk/contacting-us

peter_barnes

Apologies. I should have mentioned. I am not in receipt of any annuity or pension payments as yet. With regard to future restrictions on amounts I can accrue / pay in to pensions, I'm afraid that will be what it has to be because my absolute priority is raising as much capital as possible and securing a 10 - possibly 12 year mortgage so that I can purchase a property for my disabled son and myself.
The only other option I have is quite extreme but possibly doable. That is to save around £1500 per month, renting as cheap as possible in the meantime and purchasing something with cash at my retirement age. That's quite a daunting task to consider but it would give me around £180k. 

peter_barnes

Me again. I have confirmed that the "annuity policy" is a Defined Benefit Pension. I've had an online chat with an advisor at Pension Bee who as advised that I am not able to transfer the annuity policy to a 'standard pension' so it looks like that particular door is closing. 

Brynsam

peter_barnes said:

Apologies. I should have mentioned. I am not in receipt of any annuity or pension payments as yet. With regard to future restrictions on amounts I can accrue / pay in to pensions, I'm afraid that will be what it has to be because my absolute priority is raising as much capital as possible and securing a 10 - possibly 12 year mortgage so that I can purchase a property for my disabled son and myself.
The only other option I have is quite extreme but possibly doable. That is to save around £1500 per month, renting as cheap as possible in the meantime and purchasing something with cash at my retirement age. That's quite a daunting task to consider but it would give me around £180k. 

Peter - from what you've said, there are major financial decisions to be taken with long-lasting consequences. This really might be one of those occasions where advice from an IFA (preferably one with specialist knowledge of dealing with families who need to make long term provision for a disabled child) would be of real value. A reasonable starting point might be one of the many charities who offer assistance to parents of children with special needs; it doesn't necessarily have to be one set up specifically for the sort of disability your son has.