State pension - contracted out

LHW99

Can anyone also offer a view  on how does row 4 in the image a couple of posts up (pension earned)  differ from row 2 and 3 (GMP or pension above GMP earned) ?

Well, Rows 1-3 only apply after ages 60 / 65 because they relate to the GMP (if any).

Row 4 relates to what happens to pension earned before 1997, and before reaching the GMP age(s) of 60/65.

player1_2

xylophone said:

This is not like the standard "hybrid from the start" scheme.
It is very unusual to be able to combine what you term a stakeholder pension with a closed DB Scheme in this way.

Is the value of the "stakeholder" as you term it £91,000?

Thank you for your very clear and helpful explanation of the various tranches of pension earned.

In my ignorance I mistakenly referred to the DC element as a 'stakeholder pension'. Also, the value of the DC element is indeed £91k. 

The options pack states the following :
Option 1 - Take combined tax free cash and a DB pension
Under this option your DB pension is combined with your AVC / (DC plan name) funds to calculate the maximumm tax-free cash available. Your AVC / (DC plan name) funds are then used to provide your combined total tax-free cash before exchanging any of your DB pension for tax free cash.

xylophone

I think that were I in your position, (  mortgage paid off,  no widow, children, the deferred pension after PCLS well north of £20,000 and at least partially inflation protected, another modest fully index linked DB to come, full NSP to come , a  personal pension valued at close to £200,000 and savings of £190,000), I would be inclined to take  option 1

1. TFLS of  £173k with residual pension of £26k.
2. no lump sum, £29.4k + whatever annuity £91k can purchase 
3. transfer out (pension valued at £664k

and use  the lump sum towards the purchase of the new home.  Presumably you will be choosing the new property on the basis that it will be your ideal "see me into the hereafter"?

player1_2

xylophone said:

I think that were I in your position, (  mortgage paid off,  no widow, children, the deferred pension after PCLS well south of £20,000 and at least partially inflation protected, another modest fully index linked DB to come, full NSP to come , a  personal pension valued at close to £200,000 and savings of £190,000), I would be inclined to take  option 1

1. TFLS of  £173k with residual pension of £26k.
2. no lump sum, £29.4k + whatever annuity £91k can purchase 
3. transfer out (pension valued at £664k

and use  the lump sum towards the purchase of the new home.  Presumably you will be choosing the new property on the basis that it will be your ideal "see me into the hereafter"?

Thanks - that is precisely the view I have come to. Option 1 works for me. I can use (part of) the lump sum + funds from sale of existing house to fund the new property which will indeed see me into the hereafter and then form part of my estate. 

I then have plenty of time to decide what to do with my current employer PCLS before state pension retirement age ( take 25% lump sum or full pension ). I can leave the personal pension alone unless  needed and I think it is protected from inheritance tax ? 

Only thing I need to watch is if I took PCLS from the previous employer, current employer and personal pension ( at different times ) then I’d breach the cap.

what do you mean by ‘the deferred pension after PCLS well south of £20,000 and at least partially inflation protected’ though ?

xylophone

well south 

Apologies! I meant "north"!!

I have now corrected it!

As for "at least partially inflation protected", the situation on the deferred private sector pension re increases post GMP age on pre and post 88 GMP is as explained above and the other increases pre/post GMP age may or may not fully align with inflation.

The Civil Service pension is fully inflation protected.

xylophone

I can leave the personal pension alone unless  needed and I think it is protected from inheritance tax ? 

See https://techzone.abrdn.com/public/pensions/Tech-guide-pensions-IHT

Have you nominated your beneficiary?

https://techzone.abrdn.com/public/pensions/death-benefit-nominations