help...pension?

SINDYGIRL

Hi...I have a BT pension from when I worked for them some 35 years ago...it's only £18 per month...should I 
accept small pot lump sum which comes to £2079...I'm 63... and in need of the money...tia

Dazed_and_C0nfused

Are you certain you are eligible for the small pot lump sum?

If you have other pension savings (more than £30k inclusive of the BT one I think) this option may not be available.

Would you not be better off financially taking a small loan for £2k and keeping the pension?

£18/month doesn't seem much but it's presumably got an inflation link of some sort and if it is paid to you for the next 30 years that's going to be £6.5k even without any inflation increases. 

A much costlier option than a personal loan.

Silvertabby

£216 per year is indeed a very small pension - but the offer of £2079 is even lower.  That's less than 10 X the annual pension given up, instead of the more usual 20(ish) X.

xylophone

I have a BT pension from when I worked for them some 35 years ago...it's only £18 per month..

Is this pension already in payment?

xylophone

Are you certain you are eligible for the small pot lump sum?

If you have other pension savings (more than £30k inclusive of the BT one I think) this option may not be available.

See this (from BA Scheme but rules for BT would be similar).

https://www.mybapension.com/naps/scheme/can-i-exchange-my-pension-for-a-one-off-cash-lump-sum

biscan25

Dazed_and_C0nfused said:

Are you certain you are eligible for the small pot lump sum?

If you have other pension savings (more than £30k inclusive of the BT one I think) this option may not be available.

Would you not be better off financially taking a small loan for £2k and keeping the pension?

£18/month doesn't seem much but it's presumably got an inflation link of some sort and if it is paid to you for the next 30 years that's going to be £6.5k even without any inflation increases. 

A much costlier option than a personal loan.

A small pension like this from 35 years ago sounds like a EPB, which are non-increasing.

Should be eligible for a lump sum, as this is a small lump sum (under £10,000), which requires only:
Aged over 55
Extinguishes entire benefit in the scheme and any related schemes
No lump sums taken from the scheme in last 3 years.

That said, the terms of 10:1 are terrible, if even the pension is not protected against inflation.

steve0510

EPBs stopped in the 70's, unlikely to be that. 

biscan25

steve0510 said:

EPBs stopped in the 70's, unlikely to be that. 

Duh silly me, you are correct. 2022-1975 is 47 years. Doesn't change the process at all though really whether it is an EPB or not as OP is over 60.

OP you can transfer the pension if you want. The pension scheme doesn't need your express consent to pay it out if they wanted to play that game. It's not really good value for money to transfer, so consider whether you actually need the money. A quarter is tax free, the other 75% will be taxed at your marginal rate.

xylophone

 A quarter is tax free, the other 75% will be taxed at your marginal rate.

Not if this is a commutation of a pension already in payment.

See link above FAQ re tax.

SINDYGIRL

Thanks for all replies...I'm retired so don't pay tax...the letter from BT said that as my BTPS benefits have a value of less than £10000 I'm eligible to receive small pot lump sum governed by HMRC rules (I don't know what this means)...I am in receipt of a pension of £450 a month from a previous job and I live on that and some savings...I could do with the £2000 and calculated that it's about 10 years worth of £18 per month... Just don't know what to do...

SINDYGIRL

I'm 63 by the way