Prudential Works Pension ? 26 July 2005 at 6:13AM edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning 14 replies 1K views

joe2cool

Hi just wondered if anyone could help I have personal pension with Prudential which I paid into for just over a year & was wondering about cashing in ?

Not sure if possible ? I have have a pension with NHS & Social Care.

Appreciate any help

Thx

dunstonh

You cant cash a pension in. It has a value which can be matured between the ages of 50-75. The maturity allows 25% tax free lump sum with the remainder being used to purchase an annuity.

Annuity rates are based on age and options. Ideally, you want to leave this to at least over 60 to get the best rates.

You could investigate transferring the pension into the NHS scheme. There are pros and cons depending on your circumstances.

joe2cool

I thought as much ..........appreciate your help..........

EdInvestor

The maturity allows 25% tax free lump sum with the remainder being used to purchase an annuity.

Alternatively you can transfer the remainder into an income drawdown scheme which will allow the fund to keep growing while you take an income and enable you to retain control of the capital and leave it to your heirs.

dunstonh

Arrrghhh

EdInvestor

dunstonh wrote:

Arrrghhh

Just thought it would be sensible to point that out - in the run-up to the changes next year, people should be advised of the new options.

You can easily see a wave of misselling cases emerging post A-day, particularly involving annuities, which are irrevocable, if people haven't been advised of the alternatives.

Frankly the current way people advise on drawdown (which is not based on clear-cut guidelines from the FSA) is very questionable IMHO in the light of the arrival of the new cheap online SIPPs.

dunstonh

You can easily see a wave of misselling cases emerging post A-day, particularly involving annuities, which are irrevocable, if people haven't been advised of the alternatives.

I cant see a wave of misselling at all. Especially on annuities which are sold on the basis of risk.

Its funny how we have a wave of endowment complaints from people saying they are too risky, yet you think that these same people would be interested in drawdown.

Frankly the current way people advise on drawdown (which is not based on clear-cut guidelines from the FSA) is very questionable IMHO in the light of the arrival of the new cheap online SIPPs.

Seeing as you do not do drawdown and have not experienced a drawdown transaction and drawdown is very much a minority transaction on retirement, what do you base your opinion on?

EdInvestor

dunstonh wrote:

Its funny how we have a wave of endowment complaints from people saying they are too risky, yet you think that these same people would be interested in drawdown.

You can make a misselling complaint about any financial product, not just endowments.Before endowments, the majority of misselling involved pensions.

Seeing as you do not do drawdown and have not experienced a drawdown transaction....

Wrong.

Pal

So you are suggesting that someone who only paid into their personal pension for about a year should consider a SIPP and drawdown? Just how big do you think their pension pot is currently going to be?

If their earnings are above the earnings cap (£105k) their pension might be worth about £40k, but is almost certainly going to be much less than that.

I have no problem with you repeating your SIPP/Drawdown mantra when it is relevant, but try and use your head before blurting it out on every thread. It is fast becoming a form a spam, and we all know what happens to that.

Of far more relevance is that if Joe is aged over 50/55 he might be able to retire with it immediately and trivially commute for cash, particularly after the rules change post April 2006.

Joe - how much is the fund worth and how old are you?

Pal

A rewording of your previous statement:

What_EdInvestor_should_have_said wrote:

The maturity allows 25% tax free lump sum with the remainder being used to purchase an annuity.

Alternatively you can transfer the remainder into an income drawdown scheme which will allow the fund to keep growing or falling in value while you take an annual income that might be higher or lower than available from purchasing an annuity and enable you to retain control of what might be left of the capital while spending your time keeping an eye on your investments (or paying for an IFA to do it for you) and crossing your fingers that they do well so that you can possibly leave some or all of it to your heirs.

I am more than happy for you to use the above wording in any thread you like.

EdInvestor

Pal

Bear in mind that people are thinking of flinging tens/hundreds of thousands of pounds into SIPP pension funds annually when the rules change next year.

What I say may not apply to the OP in this thread, but there are many people coming up to retirement now - the large babyboomer generation - to whom it may well apply.In addition the rules are changing next year: complusory annuities will be dropped.

Is there any harm in trying to avoid misselling in advance?

We already have one thread in this forum from someone asking if they can reverse an annuity purcahse because the person thinks they got a bad deal.

It's not hard to see that this could become a trend, because when they think about it, people get very annoyed at the idea of giving all their hard-earned away to an insurance company.

If it hasn't even been mentioned to them that there is an alternative (albeit that it may be quite unsuitable) then you can easily see trouble ahead - and I believe this is happening, particularly with the Pru (which is why I mention it on this thread, as many public sector employees have Pru AVCs.)

Just trying to save you lot from yourselves, that's all, as you (not speaking personally of course) seem to walk into one misselling pit after another, causing a large amount of hassle and worry for people getting it all sorted out.:(