Trivial Commutation DB Pension

iwblue

A friend of mine is ill with Bone Cancer. He's just turned 65 and has a statement from the "old british steel pension" which says they are still working towards completing the move to PIC through a buyout.  I don't understand this myself and neither does he. He's to ill at the moment to get to CAB and ask for help, so asked me if I could help at all.  He's worried about this and everything else to be honest, he said he can't cope with sorting it out and doesn' know what to do for the best.

I live a long distance away and so I thought if I could get some info here as a starter for him, and then see what I can support him with goimg forward.

On the statement he got a couple of days ago they've given him two options 

£4974 TF and 138PM - Lifetime allowance 3.55%
£8995 TF and 111PM - Lifetime allowance 3.33%

He's currently living on benefits, ESA Income related and PIP. He understands this will affect his benefits.  As it seems a small pension and he's never going to recover from Bone Cancer - The drugs have stabilised his condition - I don't know his prognosis - could/would it be possible to turn this into a cashpayment.

I emailed the company dealing with this to ask, I got an automated response just saying it will be several weeks before they can respond.

Any intial advice gratefully received.

Silvertabby

Based on those figures, he's over the (£30K) limit for normal trivial commutation.

The scheme MAY have scope to offer alternative payment options on ill health grounds, but he will probably have to wait for a response from the scheme administrators.  Is there a number he/you can ring to try to hurry things along?

xylophone

You mention that he is 65 - he will be eligible for state pension within the year?

Is he up to getting a state pension forecast?

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

I am assuming that the scheme administrator has been in contact because your friend has reached normal scheme pension age - under these circumstances, a transfer out to a DC Scheme might not be a possibility, at least not without Trustee consent.

It may not be relevant to you friend's circumstances but there are certain tax considerations (see para 358

 https://www.fca.org.uk/publication/research/pension-transfer-advice-to-bsps-members-by-fca-authorised-firms.pdf)

if there is death within two years of a transfer out of a DB Scheme.

Is there a telephone number for the Administrator?

iwblue

I'm just helping him get a state pension forecast online, his SP is due in 11 months time.

He doesn't have up to date ID, so I'm helping him with that.  He's not brilliant with IT, so avoids it. 

The Scheme admin sent a letter a few days back which is when he asked for some help.

Finally got an answer machine at the Pension company and left a message. 

thank you for the responses.  

Marcon

iwblue said:

A friend of mine is ill with Bone Cancer. He's just turned 65 and has a statement from the "old british steel pension" which says they are still working towards completing the move to PIC through a buyout.  I don't understand this myself and neither does he. He's to ill at the moment to get to CAB and ask for help, so asked me if I could help at all.  He's worried about this and everything else to be honest, he said he can't cope with sorting it out and doesn' know what to do for the best.

I live a long distance away and so I thought if I could get some info here as a starter for him, and then see what I can support him with goimg forward.

On the statement he got a couple of days ago they've given him two options 

£4974 TF and 138PM - Lifetime allowance 3.55%
£8995 TF and 111PM - Lifetime allowance 3.33%

He's currently living on benefits, ESA Income related and PIP. He understands this will affect his benefits.  As it seems a small pension and he's never going to recover from Bone Cancer - The drugs have stabilised his condition - I don't know his prognosis - could/would it be possible to turn this into a cashpayment.

I emailed the company dealing with this to ask, I got an automated response just saying it will be several weeks before they can respond.

Any intial advice gratefully received.

In case it helps anyone reading this thread - trivial commutation isn't an option (because the total capital value of his pension is, as Silvertabby says, too high for this), but total commutation on grounds of serious ill health would become an option if (a) someone is so ill their life expectancy is certified by a medical professional to be no more than 12 months; and (b) they have not yet started to draw their benefits.

You say you don't know his prognosis, but I wonder if he does? Not exactly an easy question to drop into conversation...

xylophone

Does your friend have any entitlement to  other pension(s)?

The BSP is very small, indicating a short employment period with BS.

iwblue

Nothing....its from many years ago

xylophone

Nothing....its from many years ago

He was not a member of any other pension scheme after leaving BS?

If not, and assuming that he has been in full employment up to the time he became ill, he may well have a state pension in excess of a full NSP.

snowlaser

The buyout with PIC shouldn't really affect him much - all that means is that the scheme is being transferred to an insurance company (in this case Pension Insurance Corporation, or PIC) who will pay the pensions instead.  

Buyouts can sometimes change the terms for tax free cash,  so it might make the second option a bit better or worse vs the first, but if he's already passed 65 it may be that those options he's been quoted now stand.

As others have said above, it might be possible to transfer the pension out or take a Serious Ill Health Lump Sum to access more money faster, but also it might not be possible.

iwblue

Thank you for the information all.....pension company sent a form for serious illness, it came less than 24 hours from a call I made to them....super easy to complete, talked him through it, a neighbour posted it back for him....