70 and wanting pension advise please.

LHW99

One you get quotes from Royal London and from Retirement line, you would want to look at the difference in income, and work out how many years it would take to earn back the £8k.

So assuming the Retirement Line on is a bigger quote, for example you would take:

£8000 divided by ((Retirement Line pa) minus (Royal London pa))

If that was eg 10 years - probably worth it, if 30 years - probably not.

Of course you do need to make sure the quotes are based on the same thing - level (no increases); a fixed (%, 5%…) increase, CPI linked etc.

DRS1

I wonder if it simpler than @LHW99 says. You don't really need to know what annuity rate Royal London gives you since they are not going to paying an annuity for the £8k. What you want to do is to see what annual annuity you would get with £8k via Retirement Line. Then you take £8k and divide it by that figure to get the number of years.

To do that sum you need to divide the annuity quoted by Retirement Line by the capital sum you are spending to get an annuity rate - eg if you are spending £100k and getting £6k pa then the rate is 6%. At that rate you would need 16.66 years to recoup the £8k (ignoring tax).

Have you talked to Retirement Line about this? Would using an open market option be possible to allow you get the higher lump sum and still use the balance of the Royal London pension as part of the overall annuity?

DRS1

Actually thinking about it a bit more if you do have to use all the Royal London pension on a Royal London annuity you do want to know that annuity rate as well. But that would be to see what you would lose compared to the Retirement Line annuity rate on the rest of the Royal London pension (not the £8k but the other £24k).

ETA Sorry its not £24k more like £21.5k.

dunstonh

Royal London no longer offers annuities, but they use a third party with whole-of-market access. If there's a guaranteed annuity rate, they'll make up the difference. If there's not, you'll get the whole of the market rate.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81979317#Comment_81979317

 At that rate you would need 16.66 years to recoup the £8k (ignoring tax).

Unless I am misunderstanding, the OP is not losing £8K, but only that £8K will be taxable rather than being tax free. So the actual loss is only £1600, assuming 20% tax rate?

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81979869#Comment_81979869

Well on one scenario he is getting £8k upfront and on the other he isn't but he is getting let's say £480 per annum so his £8k is being spread over about 16.66 years. That is what I meant by recoup. He gets it all back if he survives that long. If you factor in a tax rate then it is being spread over longer. It is just the usual sort of debate about taking a lump sum or a higher pension.

What may complicate things is what happens to the balance of the Royal London pension and what annuity rate that gets compared to what it might have got.

Salsa2006

Hello again. I have now spoken to Royal London who have confirmed that policy was originally a Crest final salary pension and as such cannot be transferred out, and also has other conditions attached to it. The pension scheme was closed down by the employer in 2003. Royal London are arranging an appointment with their third party agent who will call me back in June - their earliest appointment…..

Retirement Line have advised that they can only administer the other three pensions and have provided me with a new annuity quotation.

I hope when Royal London contact me they will be able to advise on the options available to me for accessing my original pension.

Thank you for explaining the tax situation to me, the advice you all give is really helpful.

Best wishes

xylophone

Is the RL policy pension what is known as a S32 buy out bond?

Apparently RL called them Option 32.

Salsa2006

Yes, I believe that is what the lady said it was and that it couldn't be combined with any other RL policies.

She wasn't able to advise further which is why she booked me in for a call in June with a colleague to discuss the policy in more detail.

Any knowledge or more information on this actually is would be really helpful to me if possible.

Best wishes

xylophone

https://www.royallondon.com/siteassets/site-docs/rlcis/mkt2626_rl_04_2019_p1.pdf

may be of interest but much depends on the terms of your policy - in particular, the transfer to the policy seems to have been from the Crest pension scheme so that you may have defined benefits.

A Google search indicates that the scheme was contracted out of SERPS so that if you were a member of the scheme between 1978 and 1997, your Option 32 will include a GMP - see link.

As I understand it S32 policies could include GMP and protected tax-free cash ( which allowed for a higher-than-standard 25% tax-free lump sum) provided the GMP liability was secured first.

Have you read through any literature you have relating to the terms of your particular policy?

Were you contacted by RL when you reached age 65?