Got some pension figures and I`m confused please can anyone helfp?

katies_mum

Hi,

I have received some quotes for my Abbey National pension (I left Abbey 14 years ago) I am now 50!! thats scary and have quotes to take now, in 2016 and 2018. Was pleasantly surprised as I thought it would be pence!!

I am confused (whichis nothing new at my age) and was wondering if anyone can help with these figures:

Option 1 now

Annual pension £4953.99
or
tax freee lump sum £24880.92
reduced annual £3732.14

contracting our requirements
don`t get serps but something called GMP
GMP upto 6.4.88 £2183.48
GMP after 5.4.99 £2200.64

Option 2 2016

Annual £5756.28
or
lump sum £27943.60
pension £4191.54

GMP the same

Option 3 2018

Annual £5756.28
or
lump sum £27700.60
pension £4155.09

GMP same

I have a few queries,

I was thinking of taking the pension now and putting the lump sum into an interest paying account, and the reduced pension.
The interest I may get on the lump sum in 8 years would be more than what they want to give me then!! also I would have received 8 lots of £3732.14!
This is my logic! as also anything can happen next week, next month and at least we`d have the lump sum etc (I don`t need the lump sum to spend as we have other savings) any comments much appreciated.

My next Q is - when I get to 60 do I get the reduced pension amount of £3732 plus the GMP pension figures they have given me - I am rather confused as to what this GMP is!

Will I get the old age pension that everyone gets off the government which I think I might have to be 65 to get that if I am entitled.

Sorry, hope this makes sense, just trying to make the best decision, but not knowing what else I may get is a bit confusing. Is anyone able to explain to me in plain english.

Many thanks

CLAPTON

The GMP is paid as part of your pension and not in addition to it I'm afraid.

You really ought to find out the full details of your pension and in particular whether its inflation linked.
I would expect the figures for option 2 and 3 are estimates rather than quotes

the equivalnet rate of return of taking the higher figure rther than the cash is

(4943-3732)/24880 = 5%
if this is index linked to inflation then this is an excellent return ..as I say you really need to find out the full details of the scheme.

Dick_here

Just looking at your figures, taking it now seems the best option. There isn't a great improvement for waiting another 8 or 10 years is there.

CLAPTON

and assuming you have 30 years worth of NI contributions (or credits) then yes will get the state pension in addition to the abbey one.

dunstonh

I would want clarification on the assumptions made in giving the future options. These could be understating the likely position or even worse (but have seen a few times) could be using current figures with no indexation with the only difference being the penalty that is applied for taking it early.

katies_mum

Hello,

Thanks for the info:

clapton - how do I find our the full details of the scheme? do I just write to these pension peole who sent me the quote?
I only to get paperwork back to them by 2nd July if I want to take the money now.

!!!!!! here - I tried to work it out with a bit of interest, that I`d get taking it 8 years early, means I`ve got 8 years with something paid each year and a lump sum (which at the moment i don`t need) but you never know what is around the corner!

Clapton - I worked for 18 years in emplyment. I have been self employed for the last 14 - but only pay the basic NI now its about £26 a month! but don`t know what that gives me.

dunstonh - letter that came said figures are no way guaranteed - will they give me other figures if I know what to ask for?

Why can`t things be simple! may have worked for Abbey Nat for 15 yrs but lately my brain doesn`t seem to function logically.

Thanks

katies_mum

Hi

I just rang the basic state pension people and have 34 years so will get full basic pension - does this info help?

CLAPTON

to get more info about the scheme phone them up and ask for a booklet that explains the scheme... they're sure to have one
I would probably go for the immediate pension option .. most people do for the reasons you gave in your first post (sometimes people defer it if it would make them 40% tax payers)

its good that you will get the full state pension (about £100 a week.. can't quite remember) although this doesn't affect the Abbey Pension.

katies_mum

Thanks, think I am going to go with that as well. Will be nice to have a few extra ££ each month, and the rest tucked away safely.

dunstonh

katies_mum wrote: »

Thanks, think I am going to go with that as well. Will be nice to have a few extra ££ each month, and the rest tucked away safely.

Remember that this is a once in a lifetime decision. Once you have done it there is no turning back and changing it. Based on the comments on this thread, you dont know the basis on what the future projections are being shown. Those figures could be understating the likely figures (although they could also be realistic).

So, doing it could be the right thing but I do suggest you check out the assumptions made in the projections to see if they are likely to be correct or not.

katies_mum

Hi,

Thanks, I still have all paperwork.. I have rung the firm who does the quotes and they are going to send me a scheme booklet and a letter showing the breakdown of the figures, is that what I need?