New Pension Questions

whu

Hi
I wonder if anyone could help with a few questions about pensions:
1 What is the difference between transfer value/surrender value/current value of fund
2 can you transfer funds from a previous employers group personal pension (which has been frozen) to another employers group personal pension automatically and if so which value is transferred
3 are the fees high for such a transfer
4 if you have a frozen pension it grows each year - is this based on investments/RPI?
I appreciate that I will need to get independent advice before deciding what to do but just wanted an idea of the above before speaking to anyone.
Thanks in advance.

Dick_here

I'll throw in a couple more...

If you're in a company scheme, what else (if anything) can you contribute to, and would you get tax relief on it if you did ?

When you retire do you have to claim all pensions at the same time or not ?

dunstonh

1 What is the difference between transfer value/surrender value/current value of fund

There is no surrender value on a pension. Just current value and transfer value. Current value is the current value. Transfer value is the value if you were to transfer the scheme. There is sometimes a charge taken on transfers which means you get a difference.

2 can you transfer funds from a previous employers group personal pension (which has been frozen) to another employers group personal pension automatically and if so which value is transferred

yes. However, personal pensions are never frozen. Use of that term with personal pensions is incorrect. Paid up is the correct term.

3 are the fees high for such a transfer

depends on the provider and scheme. Can range from zero to very large amounts.

4 if you have a frozen pension it grows each year - is this based on investments/RPI?

A frozen pension would be a defined benefit scheme and would be linked to indexation with a cap. A paid up personal pension would be subject to investment returns.

whu

thanks - i note the terminology - when you say defined benefit scheme does that mean a final salary scheme or something else?

EdInvestor

!!!!!!_here wrote: »

I'll throw in a couple more...

If you're in a company scheme, what else (if anything) can you contribute to, and would you get tax relief on it if you did ?

AVC,personal pension, stakeholder, SIPP>Tax relief up to annual limit.

When you retire do you have to claim all pensions at the same time or not ?

No.You can claim any personal pension and some company pensions from age 50 (55 from 2010).Other company pensions will go by the scheme rules.

You must start receiving payments from a pension by age 75.

dunstonh

whu wrote: »

thanks - i note the terminology - when you say defined benefit scheme does that mean a final salary scheme or something else?

final salary and defined benefit scheme means the same.

Dark_Pariah

dunstonh wrote: »

final salary and defined benefit scheme means the same.

Yes- a Final Salary Scheme is a type of Defined Benefit scheme, but to be precise, not all Defined Benefit Schemes are Final Salary Schemes - some German schemes are Defined Benefits schemes- called Cash Balance Schemes, but are not a Final Salary Schemes.

"You must start receiving payments from a pension by age 75."- almost correct EdInvestor. Following the 2006 Budget, ASPs have allowed deferred phased income drawdown SIPPS to defer annuities past age 75 - although more recent budgets have made it less tax effective- it only really works if you want to leave a large amount of your "post age 75 pension fund" to charity.

Retired_I.F.A.

btw welcome to the forum Dark Parish. Stick around and you'll find Ed Investor rarely gets anything right. Theres been a long on going battle between her and Dunstonh to which I join in sometimes and save Dunstonh typing long explanations why she's wrong by merely telling her to take up knitting instead. ;D

Luv yah really Ed your funnier than Eric and Ernie ever were.

EdInvestor

Dark_Pariah wrote: »

"You must start receiving payments from a pension by age 75."- almost correct EdInvestor. Following the 2006 Budget, ASPs have allowed deferred phased income drawdown SIPPS to defer annuities past age 75

Read what I said again.

You must take a minimum income from an ASP..There is no regulation as with pre age 75 drawdown to take nil income, you must start receiving (taxable) pension payments after age 75 whether through an annuity or an ASP.

Dark_Pariah

EdInvestor wrote: »

Read what I said again.

You must take a minimum income from an ASP..There is no regulation as with pre age 75 drawdown to take nil income, you must start receiving (taxable) pension payments after age 75 whether through an annuity or an ASP.

Does that not directly conflict with the purpose of an ASP (read Hansard 4th July about 7.00 and Ed Balls comments about the Christian Bretheren) . You can take cash (albeit it a small amount) and leave the annuity until later. If you die without taking the annuity, you will be taxed highly unless (and I must admit my surfing of RPSM is less than adequate) you leave the remaining fund to charity.

Let us also not forget that following 6th April 2006, there is no such things as maximum and minimum cash, there is just tax free and non tax free cash. If you want the large headache of sorting out tax and you have a smallish fund in a massive pension scheme (to avoid other nasty taxes being applied to the pension scheme itself) you can take take all of your pension as a cash lump sum.

EdInvestor

Here are the updated ASP rules, which as you can see mandate a minimum income that must be taken and also increase the level of income you can take:

http://www.hmrc.gov.uk/pbr2006/pbrn13.htm