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  • FIRST POST
    • KingKenny
    • By KingKenny 13th Mar 18, 3:00 PM
    • 219Posts
    • 20Thanks
    KingKenny
    SERPS Former Protected Rights with Benefits Pot
    • #1
    • 13th Mar 18, 3:00 PM
    SERPS Former Protected Rights with Benefits Pot 13th Mar 18 at 3:00 PM
    I just got an annual pension pot statement from the Pru.
    Its a Former Protected Rights with Benefits Pot. It's called a With Profits Fund.
    I opted out of SERPS in the early 90's. In my 20's.
    My estimated transfer value of this pot as of today is £24,200.00
    It was £22k last year. Big yield for one year...£2200
    It estimates I can take £9340 tax free in 2033. So 25% of the pot value in 2033...
    Can I ask. As the money is from NI contributions as I opted out of the second state pension. I pay no more money into this pot. I have no other pension pots. I have never paid any money into this pension pot.
    Can I take 4 equal lump sums, one every year for four years starting in 2033 until the pot has gone.
    I don't want an annuity you see. I know I will only get 25% of each lump sum tax free. But my only income will be any handouts from the state in 2033.... So state pension if there is one then.
Page 1
    • dunstonh
    • By dunstonh 13th Mar 18, 3:26 PM
    • 92,982 Posts
    • 60,366 Thanks
    dunstonh
    • #2
    • 13th Mar 18, 3:26 PM
    • #2
    • 13th Mar 18, 3:26 PM
    As the money is from NI contributions as I opted out of the second state pension.
    You didnt opt out. You contracted out. Opt out has a different meaning. Commonly mixed up though.

    Can I take 4 equal lump sums, one every year for four years starting in 2033 until the pot has gone.
    Yes you can as long as you are over age 57 (55 now but slated to go to 57 by then - may or may not happen).

    It may not be the best option but it is one of the number of options available.

    But my only income will be any handouts from the state in 2033.... So state pension if there is one then.
    If you go for any form of means-tested benefits after blowing your pension like that, they may treat it as deprivation of assets and reduce your benefits.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • xylophone
    • By xylophone 13th Mar 18, 3:29 PM
    • 25,565 Posts
    • 15,099 Thanks
    xylophone
    • #3
    • 13th Mar 18, 3:29 PM
    • #3
    • 13th Mar 18, 3:29 PM
    You are now around age 51? You contracted out into a personal pension.

    Are you employed?

    If so, does your employer not provide a pension scheme?

    Have you obtained a new state pension statement?

    https://www.gov.uk/check-state-pension

    You propose taking the Pru pension when you are 66?

    Under current rules you could take 25% tax free when you commence the pension and draw down the balance as best suits your circumstances.

    You could also opt for

    https://www.pensionwise.gov.uk/en/take-cash-in-chunks

    You might find that the Pru would not facilitate drawdown - in that case you would transfer to another provider.
    • KingKenny
    • By KingKenny 13th Mar 18, 3:37 PM
    • 219 Posts
    • 20 Thanks
    KingKenny
    • #4
    • 13th Mar 18, 3:37 PM
    • #4
    • 13th Mar 18, 3:37 PM
    You didnt opt out. You contracted out. Opt out has a different meaning. Commonly mixed up though.



    Yes you can as long as you are over age 57 (55 now but slated to go to 57 by then - may or may not happen).

    It may not be the best option but it is one of the number of options available.



    If you go for any form of means-tested benefits after blowing your pension like that, they may treat it as deprivation of assets and reduce your benefits.
    Originally posted by dunstonh

    Thanks for the reply...

    Me and my mate, same age, both work minimum wage; same situation really, not a pot to p*ss in..

    I contracted out of SERPS in 1989, now have a pot in total for £24k. Growing very nicely, 9% last year.....

    He never opted out of SERPS.


    At ages between 55 and 66 I can withdraw £6k a year or more dependent on growth for four years. Then not have a pot to !!!! in.


    He still has nothing, but we both receive the same state pension at 66.

    Seems to good to be true. I guess if I leave it until I am 66, withdraw £6k a year or more until I am 69, the pot will have grown somewhat, and it will not effect my state pension?


    At 66 living on state pension alone will be tough, its why I was going to drawdown for four years, by 70, well I will be popped off my perch...


    Thanks again for your extremely informative reply...
    • PeteWhittle
    • By PeteWhittle 13th Mar 18, 3:38 PM
    • 2 Posts
    • 0 Thanks
    PeteWhittle
    • #5
    • 13th Mar 18, 3:38 PM
    Not sure about SERPS
    • #5
    • 13th Mar 18, 3:38 PM
    I am due my state pension soon and have full NI contributions, one of my past employers contracted me out for a few years, that pension was commuted post divorce and I got 40%.
    Do I get a serps pension? Why did my employer contract me out ? If im on the losing side can I complain to anyone?
    • KingKenny
    • By KingKenny 13th Mar 18, 3:38 PM
    • 219 Posts
    • 20 Thanks
    KingKenny
    • #6
    • 13th Mar 18, 3:38 PM
    • #6
    • 13th Mar 18, 3:38 PM
    You are now around age 51? You contracted out into a personal pension.

    You propose taking the Pru pension when you are 66?

    Under current rules you could take 25% tax free when you commence the pension and draw down the balance as best suits your circumstances.

    You could also opt for

    https://www.pensionwise.gov.uk/en/take-cash-in-chunks

    You might find that the Pru would not facilitate drawdown - in that case you would transfer to another provider.
    Originally posted by xylophone


    Thankyou for the reply...
    • xylophone
    • By xylophone 13th Mar 18, 3:52 PM
    • 25,565 Posts
    • 15,099 Thanks
    xylophone
    • #7
    • 13th Mar 18, 3:52 PM
    • #7
    • 13th Mar 18, 3:52 PM
    Me and my mate, same age, both work minimum wage;
    Is your employer providing a pension?

    https://www.gov.uk/workplace-pensions

    Have you and your mate not joined the pension scheme?
    • xylophone
    • By xylophone 13th Mar 18, 4:04 PM
    • 25,565 Posts
    • 15,099 Thanks
    xylophone
    • #8
    • 13th Mar 18, 4:04 PM
    • #8
    • 13th Mar 18, 4:04 PM
    I am due my state pension soon
    Have you obtained a state pension statement? https://www.gov.uk/check-state-pension

    What exactly does it say?
    • sandsy
    • By sandsy 13th Mar 18, 9:49 PM
    • 1,335 Posts
    • 802 Thanks
    sandsy
    • #9
    • 13th Mar 18, 9:49 PM
    • #9
    • 13th Mar 18, 9:49 PM
    The type of payment you refer to (where 25% of each payment is tax free) is called UFPLS (uncrystallised funds pension lump sum). As long as the provider offers that sort of payment, there is no reason you cannot use it.

    Remember your annual statement just shows illustrative values, there is no guarantees. In fact, I will guarantee you that the figure by then will be different from the illustraive value you have been given!
    • KingKenny
    • By KingKenny 14th Mar 18, 8:19 AM
    • 219 Posts
    • 20 Thanks
    KingKenny
    Just wondering.
    If you were claiming full state pension. But you had say 30k in a private pension pot, yet you were Not receiving any income from this private pension pot as it was still invested. Would this pot of money invested in a private pension pot effect how much state pension you were awarded. Is it classed as savings or shares or investments.

    Also in one particular month or year, if you drew down 25% of this private pension pot while receiving full state pension. Would this drawdown be classed as additional income so reduce your state pension for that month or year.....
    • KingKenny
    • By KingKenny 14th Mar 18, 8:21 AM
    • 219 Posts
    • 20 Thanks
    KingKenny
    The type of payment you refer to (where 25% of each payment is tax free) is called UFPLS (uncrystallised funds pension lump sum). As long as the provider offers that sort of payment, there is no reason you cannot use it.

    Remember your annual statement just shows illustrative values, there is no guarantees. In fact, I will guarantee you that the figure by then will be different from the illustraive value you have been given!
    Originally posted by sandsy
    Cheers buddy. Thanks for the reply.
    • KingKenny
    • By KingKenny 14th Mar 18, 8:23 AM
    • 219 Posts
    • 20 Thanks
    KingKenny
    Is your employer providing a pension?

    https://www.gov.uk/workplace-pensions

    Have you and your mate not joined the pension scheme?
    Originally posted by xylophone
    Nope. We have not been offered one. We labor for a builder. Small outfit. Don't think he has heard of pensions.
    • Mnd
    • By Mnd 14th Mar 18, 9:03 AM
    • 545 Posts
    • 644 Thanks
    Mnd
    Just wondering.
    If you were claiming full state pension. But you had say 30k in a private pension pot, yet you were Not receiving any income from this private pension pot as it was still invested. Would this pot of money invested in a private pension pot effect how much state pension you were awarded. Is it classed as savings or shares or investments.

    Also in one particular month or year, if you drew down 25% of this private pension pot while receiving full state pension. Would this drawdown be classed as additional income so reduce your state pension for that month or year.....
    Originally posted by KingKenny
    no , it would make no difference to your state pension.two separate things
    • mgdavid
    • By mgdavid 14th Mar 18, 9:10 AM
    • 5,611 Posts
    • 4,942 Thanks
    mgdavid
    Just wondering.
    If you were claiming full state pension. But you had say 30k in a private pension pot, yet you were Not receiving any income from this private pension pot as it was still invested. Would this pot of money invested in a private pension pot effect how much state pension you were awarded. Is it classed as savings or shares or investments.

    Also in one particular month or year, if you drew down 25% of this private pension pot while receiving full state pension. Would this drawdown be classed as additional income so reduce your state pension for that month or year.....
    Originally posted by KingKenny
    No. State Pension is not a means-tested benefit.
    The questions that get the best answers are the questions that give most detail....
    • KingKenny
    • By KingKenny 14th Mar 18, 9:35 AM
    • 219 Posts
    • 20 Thanks
    KingKenny
    https://pensioncreditcalculator.dwp.gov.uk/pension-credit-calculator.php?new

    What's the point of the above link then...Say you have only made 16 years of NI payments...

    Pension Credit topup, for people with no other provisions and not full NI payments...
    • Silvertabby
    • By Silvertabby 14th Mar 18, 10:42 AM
    • 2,847 Posts
    • 4,064 Thanks
    Silvertabby
    https://pensioncreditcalculator.dwp.gov.uk/pension-credit-calculator.php?new

    What's the point of the above link then...Say you have only made 16 years of NI payments...

    Pension Credit topup, for people with no other provisions and not full NI payments...
    Originally posted by KingKenny
    State pension accrued from the 16 years of NI payments is not means tested and will be paid regardless of any other household income.

    Pension credit, however, IS means tested and will only be paid if the household income/savings (and by that I mean spouse's/partner's income/savings as well) is below a certain limit.
    Last edited by Silvertabby; 14-03-2018 at 10:59 AM.
    • KingKenny
    • By KingKenny 14th Mar 18, 2:23 PM
    • 219 Posts
    • 20 Thanks
    KingKenny
    State pension accrued from the 16 years of NI payments is not means tested and will be paid regardless of any other household income.

    Pension credit, however, IS means tested and will only be paid if the household income/savings (and by that I mean spouse's/partner's income/savings as well) is below a certain limit.
    Originally posted by Silvertabby
    Pension Credit. Is 30k held in a SIPPs account perceived as savings or investment.
    6k drawdown from the SIPPs account once a year is this perceived as a one off income payment.
    • xylophone
    • By xylophone 14th Mar 18, 4:32 PM
    • 25,565 Posts
    • 15,099 Thanks
    xylophone
    We labor for a builder. Small outfit. Don't think he has heard of pensions.
    Is he your employer?

    https://www.gov.uk/workplace-pensions/joining-a-workplace-pension
    • KingKenny
    • By KingKenny 18th Mar 18, 11:04 AM
    • 219 Posts
    • 20 Thanks
    KingKenny
    What does this mean.....

    Projection investment will grow by 3.5%. Every year. This growth rate assumes inflation is at 2.5%....every year.

    Are they assuming 6% growth nominal so 3.5% growth real. That seems very high. Its a former protected rights with benefits/profits fund....The Pru.
    6% is crazy surely. So £24k in the pot today. At 66 that pot will grow by 3.5% compounded each year, allowing for an RPI of 2.5%. On my calcs in today's money that pot will stand at £42k. At 6% growth the pot will be £60k.
    Last edited by KingKenny; 18-03-2018 at 11:14 AM.
    • sandsy
    • By sandsy 18th Mar 18, 12:22 PM
    • 1,335 Posts
    • 802 Thanks
    sandsy
    What does this mean.....

    Projection investment will grow by 3.5%. Every year. This growth rate assumes inflation is at 2.5%....every year.

    Are they assuming 6% growth nominal so 3.5% growth real. That seems very high. Its a former protected rights with benefits/profits fund....The Pru.
    6% is crazy surely. So £24k in the pot today. At 66 that pot will grow by 3.5% compounded each year, allowing for an RPI of 2.5%. On my calcs in today's money that pot will stand at £42k. At 6% growth the pot will be £60k.
    Originally posted by KingKenny
    No, it means growth rate of 3.5% nominal, 1% real. Pension providers aren’t allowed to use rates as high as 6%. The current maximum is 5% but with profits funds generally don’t return that sort of rate so the pension prover has to use a lower rate.
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