Draw Down on a small Prudential pension pot

swanny65

Hi
My brother-in-law, aged 56, has an old Prudential pension that is valued at approximately £70K. His personal circs mean he wants/needs to clear his £16K mortgage which costs him £650.00 pcm. His wife. aged 58, recently stopped work, and is not likely to work again - he may need to give up work in the next 2 or 3 years to care for her. He has a small NEST pension with his current employer and no other pensions.
One option he is considering is taking his Prudential pension now and using the 25% lump sum to clear his mortgage, giving him the monthly payment to live on an. I have suggested he considers using some kind of flexible draw-down scheme to get at the lump sum now and reinvest the remaining £50K until he stops work and needs it for an income until he and his wife draw their Retirement Pensions. His wife has an elderly father who owns 4 properties that she will eventually inherit. They have a property in Spain which they want to keep and will prevent them from claiming benefits prior to getting their Retirement Pensions.
The question is what should he consider doing with his Prudential pot now and should he move it from Prudential to get a better product/return and if so where?

xylophone

Have he and his wife obtained State Pension Forecasts?

https://www.gov.uk/check-state-pension

His wife. aged 58, recently stopped work, and is not likely to work again 

Is she entitled to PIP (non means tested)?

https://www.gov.uk/pip

Has he checked that the old Pru pension has no safeguarded benefits (eg Guaranteed Annuity Rate)?

If not, and the old pension does not support drawdown, he should be able to arrange a transfer (without advice) to a modern plan that does.

He could indeed then just take the PCLS and leave the balance invested - this would not trigger the MPAA.

https://www.moneysavingexpert.com/savings/cheap-sipps/

As he would then be free of  the monthly mortgage payment, he could consider increasing his contributions to his NEST pension to take advantage of tax relief.

If he leaves employment at age 60 (say), his NEST and Drawdown Pension (together with any pension his wife might have) could see them through to SPA?

Does his wife have any pension provision?

swanny65

Thanks, xylophone for your quick reply - answers below.....

Have he and his wife obtained State Pension Forecasts? Yes, both will have 100% Retirement Pensions

Is she entitled to PIP (non means tested)? Good point - pretty sure it is in hand but will remind them

Has he checked that the old Pru pension has no safeguarded benefits (eg Guaranteed Annuity Rate)?

If not, and the old pension does not support drawdown, he should be able to arrange a transfer (without advice) to a modern plan that does.

He could indeed then just take the PCLS and leave the balance invested - this would not trigger the MPAA.

All I know is the pot is from his SERPS contributions and is drawable from 55. No guaranteed annuity. Prudential have offered to move it to a draw-down product - would it be better elsewhere....

https://www.moneysavingexpert.com/savings/cheap-sipps/   Thanks will check out with him

As he would then be free of the monthly mortgage payment, he could consider increasing his contributions to his NEST pension to take advantage of tax relief. Good point but not really possible with the loss of wifes wage

If he leaves employment at age 60 (say), his NEST and Drawdown Pension (together with any pension his wife might have) could see them through to SPA?  That would be the hope but he may need/want to leave work sooner. 

Does his wife have any pension provision? Unfortunately no pension

xylophone

His wife has an elderly father who owns 4 properties that she will eventually inherit. 

Is father in a position to make regular gifts out of income now in order to ease his daughter's financial position?

No guaranteed annuity. Prudential have offered to move it to a draw-down product - would it be better elsewhere....

He would need to compare the Pru's offering  with what was available elsewhere.

Albermarle

The question is what should he consider doing with his Prudential pot now and should he move it from Prudential to get a better product/return and if so where?

The potential return is linked to the investments within the pension and not the pension itself. So just moving it to another provider in itself is unlikely make any difference , if the money is then invested in similar type of funds.

It will probably be  possible to find an alternative pension with lower charges but for a modest pot and for a only a few years this is unlikely to have much impact . 

One reason to move would be poor customer service /slow to respond to queries .