Crystallised Defined Benefit Pension

julian44

Hi,

Has anyone been down this road? I took a lump sum from a defined benefit pension and then the remainder was crystallised. This pays monthly. I didn't appreciate the seriousness of crystallising the remaining pension. That money is now locked away. I cant touch it.

This fact wasn't made clear to me by my very well known IFA firm. OK. I should have done my own research more thoroughly. 

I have since learnt that after a divorce ( i am not getting divorced btw ) you can transfer a lump sum to a pension setup by an ex-spouse out of the defined benefit pension. There is provision in UK law for this specifically.

Has anyone found a way of getting capital from a crystallised defined benefit pension? And yes I know what I am doing and it is for my better financial health.

Thx

JoeCrystal

No is the answer. There is no money that is locked away. Are you not getting annuity from this scheme as well? Or are you referring to a DC pension scheme linked to the DB pension scheme?

Dazed_and_C0nfused

julian44 said:

Hi,

Has anyone been down this road? I took a lump sum from a defined benefit pension and then the remainder was crystallised. This pays monthly. I didn't appreciate the seriousness of crystallising the remaining pension. That money is now locked away. I cant touch it.

This fact wasn't made clear to me by my very well known IFA firm. OK. I should have done my own research more thoroughly. 

I have since learnt that after a divorce ( i am not getting divorced btw ) you can transfer a lump sum to a pension setup by an ex-spouse out of the defined benefit pension. There is provision in UK law for this specifically.

Has anyone found a way of getting capital from a crystallised defined benefit pension? And yes I know what I am doing and it is for my better financial health.

Thx

With a defined benefit pension the normal situation is you have to start taking the pension when you get any PCLS/TFLS that is due under the scheme rules.

So what has happened seems to be what would be expected and perfectly normal.

Are you possibly getting confused between DB and DC (defined contribution) pension?

Pat38493

julian44 said:

Hi,

Has anyone been down this road? I took a lump sum from a defined benefit pension and then the remainder was crystallised. This pays monthly. I didn't appreciate the seriousness of crystallising the remaining pension. That money is now locked away. I cant touch it.

This fact wasn't made clear to me by my very well known IFA firm. OK. I should have done my own research more thoroughly. 

I have since learnt that after a divorce ( i am not getting divorced btw ) you can transfer a lump sum to a pension setup by an ex-spouse out of the defined benefit pension. There is provision in UK law for this specifically.

Has anyone found a way of getting capital from a crystallised defined benefit pension? And yes I know what I am doing and it is for my better financial health.

Thx

If I am understanding you correctly, the money is not locked away - it is paid to you in monthly installments for the rest of your life.  That is how DB schemes are supposed to work.  

As far as I know, once the DB is in payment, you cannot transfer out anymore.  The divorce scenario you mentioned does not help you anyway as it would be your spouse who got the money if you got divorced - you would still continue to receive a (further reduced) monthly payment.

If you think the IFA gave you incorrect information or poor advice, you might have grounds for a complaint, but this would depend on exactly what advice they gave you and whether there was clear negligence on their part, but this is unlikely as IFAs are highly regulated in how they come to their advice.

It's also worth noting that it's also not that easy to transfer a DB pension away even if you have not accessed it - you are obliged to take financial advice which costs several thousand pounds, and if the advice is that you should not transfer it, you then have to jump through further hoops and tricks if you are really determined to go ahead anyway.

hyubh

julian44 said:

I took a lump sum from a defined benefit pension and then the remainder was crystallised. This pays monthly. I didn't appreciate the seriousness of crystallising the remaining pension.

That's how DB pensions work - uncrystallised lump sum withdrawals are a (modern) DC thing.

That money is now locked away. I cant touch it.

There is no money locked away, there is a promise to may you an income, probably with an element of inflation proofing, until death.

I have since learnt that after a divorce ( i am not getting divorced btw ) you can transfer a lump sum to a pension setup by an ex-spouse out of the defined benefit pension. There is provision in UK law for this specifically.

Yes, to allow for a clean break with a so-called 'pension sharing order'. That's not about the original member transferring out though, it's the ex-spouse doing so upon taking a proportion of the former's pension.

Has anyone found a way of getting capital from a crystallised defined benefit pension?

On dying, there may be a death grant for a beneficiary.

And yes I know what I am doing

Well you've been thinking of a DB pension in DC terms, so maybe not completely so

dunstonh

 I took a lump sum from a defined benefit pension and then the remainder was crystallised. This pays monthly. I didn't appreciate the seriousness of crystallising the remaining pension. That money is now locked away. I cant touch it.

That is unusual to use that terminology with DB pensions.  Indeed, I cannot ever recall seeing it used as you have used it.

This fact wasn't made clear to me by my very well known IFA firm. OK. I should have done my own research more thoroughly. 

Most IFAs are not well known.  The vast majority are small localised firms of 1-5 advisers.  I'm trying to think of a well known IFA firm but cannot.     

However, I wouldn't expect an IFA to describe DB pension commencement in the way you have.  So, maybe that is why?

I have since learnt that after a divorce ( i am not getting divorced btw ) you can transfer a lump sum to a pension setup by an ex-spouse out of the defined benefit pension. There is provision in UK law for this specifically.

That isn't how it normally works with defined benefit pensions.    Are you thinking about defined contribution pensions where a percentage of your pension can be transferred to the other partner?  With DB pensions, its usually a share of the income or entitlement?

Has anyone found a way of getting capital from a crystallised defined benefit pension? And yes I know what I am doing and it is for my better financial health.

Never heard of such of thing.   So, its a good job you are not getting divorced.