SHP Trivialty Rules

carnet

I have a number of one-off minimum SHP's with various providers (taken out for 'bagging purposes ).

Eventally I will want to either:

(a) amalgamate all these with one provider or

(b) cash them in - which I believe can be done under the "Triviality Rule" - rather than having to purchase an annuity

Would appreciate any advice/clarification on both these alternatives.

Pal

Surely you can only benefit from carpet bagging by being invested in a with-profits fund, and most SHPs do not allow WP fund investment because the charges are not transparent within the 1% limit and transfers cannot be made without penalty?

Irrespective, merging the policies into one might make sense at some point, especially if you are retiring. It should be fairly easy to sort out.

Trivial commutation rules are changing and are up in the air at the moment. Chances are that you will not be able to commute it all if the total amount in all the funds is over £15k at retirement. If the amounts you have invested are small then this might not be an issue anyway.

carnet

Thanks for that


BTW, all the SHP's I have are either WP or otherwise confer membership (made very sure of precisely that before taking any of them out ).

EdInvestor

Carnet

Under the new triviality rule the 15k max covers all your pensions (except state), so unless you are otherwise totally pension free, it won't apply.

You might run across a problem transferring them if they're very small, providers often have a limit.Same problem might well affect any annuity, you'll probably be confined to the existing provider.

Equally if very small it wouldn't be economic to transfer them to a SIPP.

Not very helpful, sorry.

carnet

Thanks Ed.

When you say "otherwise totally pension free" any idea if an occupational pension I am currently receiving would count towards this £15K ?

If it does, how does one know what it's worth in total (all I know is how much I receive per month) ?

Pal

carnet wrote:

Thanks Ed.

When you say "otherwise totally pension free" any idea if an occupational pension I am currently receiving would count towards this £15K ?

If it does, how does one know what it's worth in total (all I know is how much I receive per month) ?

The question of occupational schemes is one that hasn't been answered yet. After all, it seems unreaonable that a person with £1000 in a personal pension would have to buy an annuity because they have a £10k occupational final salary pension, given that you cannot merge them together. The regulations will be out before April so unless you are retiring soon, I wouldn't worry about it for the moment.

To calculate the total value, you get the values of each pension pot at the same date and add them together, then add the value of any tax free cash you can take from any final salary scheme you belong to. Then you can "broadly" take the value of any final salary pension (after taking cash, multiply it by 20) and add it to the total of all the other pension values to give you the total value. If it is less than £15k you should be able to take the whole lot as cash.

Easy init?

If you have more than 10 year to go until you retire then don't worry about it. The rules will have changed again by the time you get there.

EdInvestor

Carnet,

At present I understand the rules are likely to say that all pensions will be counted except state pensions in the 15k.

DavidLaGuardia

carnet wrote:

Thanks Ed.

When you say "otherwise totally pension free" any idea if an occupational pension I am currently receiving would count towards this £15K ?

If it does, how does one know what it's worth in total (all I know is how much I receive per month) ?

Any pension in payment except the State and Protected Rights will be counted as being equivalent to 25 times the annual payment in that year. For example a pension of £500 a year would count as £12,500.

Note this Trivial rule applies to all personal pensions not just stakeholder as in original post.

Footnote ?:
What I am personally unclear about having just thought about it while I was typing the above, is where an occupational scheme in payment includes GMP (the equivalent of protected rights in personal plan) surely this should not count, but what a complex thing to identify! Will find out from somewhere tomorrow if I can!