Wife's pension found - but what to do?

jibblyjabbly

From our point of view the best answer we have right now is that "we don't need to do anything now". The pension people literally gave us about 10 days to decide one of three options we knew nothing about for a pension we had forgotten about. Now I think we are armed with more knowledge and, for now, it seems we can wait and learn more and assess our own personal situation.

The support and advice here has been amazing. Thanks so much!

R

fuzzzzy

jibblyjabbly said:

fuzzzzy said:

But no-one has established if there is any advantage to deferring a pension which has a normal retirement age of 60. 

The OP has stated that Lloyds have said that the pension will increase by the same amount whether in deferment or payment.

What they need to find out is if they did not have it paid out until the wife is 67, would they effectively just lose everything which would have been paid out between 60 and 67.

Yes I am not sure on this. We will lose it either way, as UC will take it back pound for pound, but is the taxpayer losing out if we don't take it now as opposed to in 7 years?

So you need to ask Lloyds what will happen if you do not start taking the pension at 60 but leave it until 67. 

Will they pay a lump sum covering the payments you have not had between 60 and 67 or will you just lose these.

born_again

DE_612183 said:

jibblyjabbly said:

I (finally) spoke to the Lloyds pension people and they said that if the pension is in deferral it will increase every year in line with inflation (5% he said). It's a "final salary" pension. It seems it will increase the same whether my wife begins to take it now, or not. So it looks like the easiest option will be to just start taking the pension now (option 2) and inform DWP / UC of the pension income as and when it happens. Anything else seems like an unnecessary headache.

Edit: It also seems to be "the right thing to do" because we will be using less of the taxpayer's money.   

best wishes

R 

I disagree - the pension ( Lloyds is there to be taken when she is 67 ) - taking it early will see a reduction in the pension amount that you get.

The "taking it early" is an exception rather than the rule - leaving it there is what Lloyds expect you to do - so thats really what you should do - otherwise what you are doing is taking money early that will stop some of your UC, and because you take it early you'll also get a lesser amount in retirement - you're robbing yourself twice.

If it is anything like our work one, which it sounds like it is.
You set a date you would like to take the pension, but that can be changed at any point. So you can defer to SPA. 

If I was OP, I would defer it till SPA.

fuzzzzy

If this is the scheme then it does say she may get a bigger pension if deferred

https://experience200.ehr.com/lloydsbankinggrouppensions/s/retire/plan-to-retire/when-you-can-retire

DE_612183

If it's anything like the pension I have with an employer ( bit like Lloyds ) - the off was your pension at 67 will be £1000 - if you choose to take it early it gets reduced by a % for each year early you take it - so 66 would be £975, 65 - £950.

You don't actually lose anything it's just your "virtual pot" get spread over more years and is therefore reduced.

If Lloyds say it's £1000 now or £1000 ( plus RPI uplifts etc ) at 67 - then you would normally be better of taking now - but as that has UC implications you need to work out the difference between the loss of UC and the loss of pension income...

jibblyjabbly

DE_612183 said:

If it's anything like the pension I have with an employer ( bit like Lloyds ) - the off was your pension at 67 will be £1000 - if you choose to take it early it gets reduced by a % for each year early you take it - so 66 would be £975, 65 - £950.

You don't actually lose anything it's just your "virtual pot" get spread over more years and is therefore reduced.

If Lloyds say it's £1000 now or £1000 ( plus RPI uplifts etc ) at 67 - then you would normally be better of taking now - but as that has UC implications you need to work out the difference between the loss of UC and the loss of pension income...

UC will take back pound for pound anything we receive now, so it seems better to defer it considering that it may grow befgre we need it.

Newcad

@jibblyjabbly

You really, really, need a copy of the policy document.
If you don't have one already then ask LLoyds to send you a copy - they have to.

You say that the person you spoke to at LLoyds was vague about what increase applies when in deferral as opposed to when in payment

.. they said that if the pension is in deferral it will increase every year in line with inflation (5% he said).
.. It seems it will increase the same whether my wife begins to take it now, or not.

"It seems" is not a good enough basis to make a decision that will affect your future finances.
(Plus the person you spoke to doesn't even appear to know what the inflation rate is now, never mind for the comming years).

The policy document will set out EXACTLY what happens both when in deferral and when in payment.

Look again what I said about my own 'Final Salary' pension - https://forums.moneysavingexpert.com/discussion/comment/81449326/#Comment_81449326 - it is increasing substantially more in deferral than if it were in payment.
And that is usually the case for any deferred pension.

Before you are pushed into a hasty decision by LLoyds you need to know the facts, not some vague and possibly misleading ramblings from a phone jockey.

What you should do now:-
If you let a pension go into deferal (If you don't sign the 'Commencement Quotation') then once in deferral you can request a new Commencement Quotation anytime that you like. So:-

• Don't take the pension yet, if you don't sign and send back the 'Commencement Quotation' it will automatically go into deferral.
• Get the policy document and compare the facts of what the increase will be in deferral and what they will be if it were in payment.
• If you then decide that you want to take the pension before State Pension Age simply ask LLoyds for a new commencement quotation, sign it and send it back.

If you do sign and send back the Commencement Quotation now then the pension will commence payments (which will be deducted £>£ from UC) and your choices are gone.
Once commencement is accepted you can't change your mind.

jibblyjabbly

Newcad: Yes we are waiting for access to the policy documents. First step is to get access to the website, which we are still waiting for. I'll update once I have more information!

jibblyjabbly

Got an email from the pension people who said that once you reach SPA the annual pension would be reduced by £222. "Once a pensioner becomes eligible to draw their state pension, state pension deduction will be stopped since the pensioner is no longer reliant solely on their occupational pension".

Still no policy documents but am working on it.

I assume this new information doesn't change the notional unearned income issue I'm wrestling with? 

Also, I am going to request (again - see below) a copy of the policy document. Can someone tell me what I should look for in this?

I asked for it in my last email but the reponse was "we cannot send the policy document to your address". Doesn't really make much sense. They also ignored my request for help accessing my wife's pension account via the website. So something else to do today, or on Monday.

Warm regards

R
 

Newcad

I'm not at all sure what they are talking about there, unless it's some specific term in the policy?

But from the wording it would appear to apply anyway whatever you do.
In other words it appears to say the pension it will be reduced at SPA - whether you take it now or not?

Reading again what it says it appears to be contradictory.
If a 'deduction' is stopped then surely the payment should go up not down?

I asked for it in my last email but the reponse was "we cannot send the policy document to your address". Doesn't really make much sense. They also ignored my request for help accessing my wife's pension account via the website. So something else to do today, or on Monday.

They are obliged to provide a copy when requested by the policyholder - how else are you going to check that what they are saying/doing is correct?

However the pension in question here is your wife's, she is the policyholder.
So if you asked for it that could explain why they refused, she would have to ask for it.

PS. I thought my own pension providers (the Pru) were reluctant to give information when asked - however they sent me a copy of the policy document which arrived within a week of my asking for it.
LLoyds seem to be being particularly obstructive with you, is that simply because the pension is not in your name?.