Internet connection

[Tundra]

Hoping that someone can provide some information/ advice regarding whether or not I can “cash in” a private pension plan that I have in the United Kingdom. And if yes, some advice on how to do so would also be appreciated (eg., the process, considerations, etc.). Some details that might be relevant here. Its current value is a relatively small amount –GBP 21,000. The plan was opened in 1996 when I was briefly employed (4 years) with a UK based company. I paid into the plan as did my then employer. I am not a UK citizen. Am Canadian currently residing in Thailand on a Retirement Visa. Thank you.

[Upnotover]

There are age and value limitations on doing this, I thought it was 60 years old and GBP18000. I am sure the best people to ask are the pension providers.

[yoshiwara]

There's a whole army of financial spivs in Thailand with weird schemes to surrender pension policies.

They will be along in a few minutes to tell you 'how'.

[manhattan55]

l believe you cannot cash in as your total pension pot is above the triviality amount of £18,000. To make sure, though, you should talk to your pension scheme administrator. For further information, go to HMRC at http://www.hmrc.gov.uk/pensionschemes/small-pen.htm#7

[rak sa_ngop]

Ypu need to find a pension expert.

i have a private UK pension from 1990, Single contribution of 8,000 GBP. The total value of the plan has slowly grown to 18,000 GBP. However the Transfer Value of the plan is worth 66,000 GBP, which I think means I can buy an annuity for 66,000 GBP (without taking the allowed lump sum of about 25 pc).

So the plan was not such a bad investment after all.

First off try and find out the Transfer Value of your fund.

[rayongchelsea]

Get in touch with your provider. What age was the private pension until? Are you 55, if so you can cash out 25% the remainder will provide a monthly taxable annuity amount of about 50 pounds a month. The provider will send you details and options and amounts.

[PattayaPhom]

60 yo and 18k pot maximum so not possible. You could vest if you are 55 and take 25% tfc and remainder buys an annuity, shop around for best rates and just take a level with 10 year guarantee...Switching your funds to a lesser performer with fees may reduce the tv to below 18k allowing a trivial pension payment.

Edited July 3, 2013 by PattayaPhom

[breadbin]

Ypu need to find a pension expert.

i have a private UK pension from 1990, Single contribution of 8,000 GBP. The total value of the plan has slowly grown to 18,000 GBP. However the Transfer Value of the plan is worth 66,000 GBP, which I think means I can buy an annuity for 66,000 GBP (without taking the allowed lump sum of about 25 pc).

So the plan was not such a bad investment after all.

First off try and find out the Transfer Value of your fund.

If your plan is work 18,000 then that's the transfer value. It won't be worth nearly 4 times value.

The plan may be worth 66,000 on your retirement in many years but not to transfer now.

As to the op post, no you can't cash it in.

You need to wait until probably retirement but it depends on your provider and also the employer.

If you were allowed to cash them then I suspect many many people would do it!

[Tundra]

Thank you all very much for your replies. Greatly appreciated!!

[rak sa_ngop]

Ypu need to find a pension expert.

i have a private UK pension from 1990, Single contribution of 8,000 GBP. The total value of the plan has slowly grown to 18,000 GBP. However the Transfer Value of the plan is worth 66,000 GBP, which I think means I can buy an annuity for 66,000 GBP (without taking the allowed lump sum of about 25 pc).

So the plan was not such a bad investment after all.

First off try and find out the Transfer Value of your fund.

If your plan is work 18,000 then that's the transfer value. It won't be worth nearly 4 times value.

The plan may be worth 66,000 on your retirement in many years but not to transfer now.

As to the op post, no you can't cash it in.

You need to wait until probably retirement but it depends on your provider and also the employer.

If you were allowed to cash them then I suspect many many people would do it!

Sorry to contradict you but:

Total payments in 1991 8,358 GBP one off payment

Estimated yearly pension in 2018 2,420 GBP

Total Unit value of plan 2013 18,680 GBP

Total Transfer Value of plan 66,113 GBP

The Transfer Value according to my annual statement increases every year.

The Transfer Value is explained as:

"You may decide you want to invest the value of the plan in a new pension scheme, The transfer value is the amount available to invest elsewhere"

And I can take the benefits of the paln between 55 and 75.

So not a bad investment after all!

[breadbin]

Double check.

If you invested £8k in a bank in 1991 there's no way it'd be worth £66k now.

Sorry, don't mean to argue the point but I just can't see it.

I got a L&G pension from 1988-1992. Paid in £6,700 and now worth £17k.

The transfer value is £17k.

Good luck.

[rak sa_ngop]

Double check.

If you invested £8k in a bank in 1991 there's no way it'd be worth £66k now.

Sorry, don't mean to argue the point but I just can't see it.

I got a L&G pension from 1988-1992. Paid in £6,700 and now worth £17k.

The transfer value is £17k.

Good luck.

up2u

[Chivas]

You need to be 55 now to take the Pension proceeds if UK based (not sure of where you reside is relevant)

Used to be 50 but changed in 2010 literally 3 weeks before I was due to take mine (swines !!) HMRC did it retrospectively on all policies not just new ones taken out.

Not sure where the £18,000 figure comes from ??

There are plenty of Guys out there promising that you can take money from your Pot. I have a letter from HMRC from this year stating 100% the opposite

[manhattan55]

Ypu need to find a pension expert.

i have a private UK pension from 1990, Single contribution of 8,000 GBP. The total value of the plan has slowly grown to 18,000 GBP. However the Transfer Value of the plan is worth 66,000 GBP, which I think means I can buy an annuity for 66,000 GBP (without taking the allowed lump sum of about 25 pc).

So the plan was not such a bad investment after all.

First off try and find out the Transfer Value of your fund.

If your plan is work 18,000 then that's the transfer value. It won't be worth nearly 4 times value.

The plan may be worth 66,000 on your retirement in many years but not to transfer now.

As to the op post, no you can't cash it in.

You need to wait until probably retirement but it depends on your provider and also the employer.

If you were allowed to cash them then I suspect many many people would do it!

Sorry to contradict you but:

Total payments in 1991 8,358 GBP one off payment

Estimated yearly pension in 2018 2,420 GBP

Total Unit value of plan 2013 18,680 GBP

Total Transfer Value of plan 66,113 GBP

The Transfer Value according to my annual statement increases every year.

The Transfer Value is explained as:

"You may decide you want to invest the value of the plan in a new pension scheme, The transfer value is the amount available to invest elsewhere"

And I can take the benefits of the paln between 55 and 75.

So not a bad investment after all!

Were you a member of defined benefit pension scheme? This would mean that your future annual pension income is calculated based on your salary paid to you at the time and then index-linked into the future, until you reach retirement age. In your case, this would be GBP 2,420 in 2018.

In order to achieve this benefit payment to you in 2018, the pension scheme has to set aside a certain amount of capital in order to make an annual payment of GBP 2,420 by then. The scheme must benchmark the interest rate it assumes against UK Gilt rates. Because Gilt rates are quite low right now, at around 2.25%, the capital or transfer value in 2018 would need to be in excess of GBP 100,000 in order to achieve your pension income.

My guess is that if you retired today, you would receive a lower annual pension income and therefore, based on current Gilt rates, your transfer value today is GBP 66,113. Not sure without more info.

This article explains these issues in more detail: http://bit.ly/18ZLTOP

The problem with defined benefit schemes is that they put tremendous stress on the employer's pension fund, given low interest rates. The lower Gilt rates are, the bigger the fund needs to be in order to achieve the promised returns. There are many big UK firms which have equally large pension deficits because of this. Nowadays you don't find defined benefit schemes anymore; almost all pension schemes are now based on defined contributions by the employees where money is invested into a pot and made to grow (or not).

[davejones]

You need to be 55 now to take the Pension proceeds if UK based (not sure of where you reside is relevant)

Used to be 50 but changed in 2010 literally 3 weeks before I was due to take mine (swines !!) HMRC did it retrospectively on all policies not just new ones taken out.

Not sure where the £18,000 figure comes from ??

There are plenty of Guys out there promising that you can take money from your Pot. I have a letter from HMRC from this year stating 100% the opposite

This website says you need to be 60 --> http://www.litrg.org.uk/pensioners/life-events/coming-up-retirement/triv-comm.

Where did you read that it was 55?

[sustento]

You need to be 55 now to take the Pension proceeds if UK based (not sure of where you reside is relevant)

Used to be 50 but changed in 2010 literally 3 weeks before I was due to take mine (swines !!) HMRC did it retrospectively on all policies not just new ones taken out.

Not sure where the £18,000 figure comes from ??

There are plenty of Guys out there promising that you can take money from your Pot. I have a letter from HMRC from this year stating 100% the opposite

This website says you need to be 60 --> http://www.litrg.org.uk/pensioners/life-events/coming-up-retirement/triv-comm.

Where did you read that it was 55?

That's for cashing in a 'trivial' pension not taking an ordinary pension.

http://www.nidirect.gov.uk/options-when-you-take-your-personal-pension

Edited July 5, 2013 by sustento

[davejones]

You need to be 55 now to take the Pension proceeds if UK based (not sure of where you reside is relevant)

Used to be 50 but changed in 2010 literally 3 weeks before I was due to take mine (swines !!) HMRC did it retrospectively on all policies not just new ones taken out.

Not sure where the £18,000 figure comes from ??

There are plenty of Guys out there promising that you can take money from your Pot. I have a letter from HMRC from this year stating 100% the opposite

This website says you need to be 60 --> http://www.litrg.org.uk/pensioners/life-events/coming-up-retirement/triv-comm.

Where did you read that it was 55?

That's for cashing in a 'trivial' pension not taking an ordinary pension.

http://www.nidirect.gov.uk/options-when-you-take-your-personal-pension

I thought that's what we were discussing - withdrawing the whole lot.

[davejones]

You need to be 55 now to take the Pension proceeds if UK based (not sure of where you reside is relevant)

Used to be 50 but changed in 2010 literally 3 weeks before I was due to take mine (swines !!) HMRC did it retrospectively on all policies not just new ones taken out.

Not sure where the £18,000 figure comes from ??

There are plenty of Guys out there promising that you can take money from your Pot. I have a letter from HMRC from this year stating 100% the opposite

The £18,000 is the maximum amount that's considered a trivial pension. This means that you can withdraw all of it instead of taking a small pension.

[davejones]

Here's a good explanation --> http://www.bbc.co.uk/news/mobile/business-12468282.

[Chivas]

You need to be 55 now to take the Pension proceeds if UK based (not sure of where you reside is relevant)

Used to be 50 but changed in 2010 literally 3 weeks before I was due to take mine (swines !!) HMRC did it retrospectively on all policies not just new ones taken out.

Not sure where the £18,000 figure comes from ??

There are plenty of Guys out there promising that you can take money from your Pot. I have a letter from HMRC from this year stating 100% the opposite

This website says you need to be 60 --> http://www.litrg.org.uk/pensioners/life-events/coming-up-retirement/triv-comm.

Where did you read that it was 55?

Referring to a Private Pensions and the age they can be taken from

[rak sa_ngop]

Ypu need to find a pension expert.

i have a private UK pension from 1990, Single contribution of 8,000 GBP. The total value of the plan has slowly grown to 18,000 GBP. However the Transfer Value of the plan is worth 66,000 GBP, which I think means I can buy an annuity for 66,000 GBP (without taking the allowed lump sum of about 25 pc).

So the plan was not such a bad investment after all.

First off try and find out the Transfer Value of your fund.

If your plan is work 18,000 then that's the transfer value. It won't be worth nearly 4 times value.

The plan may be worth 66,000 on your retirement in many years but not to transfer now.

As to the op post, no you can't cash it in.

You need to wait until probably retirement but it depends on your provider and also the employer.

If you were allowed to cash them then I suspect many many people would do it!

Sorry to contradict you but:

Total payments in 1991 8,358 GBP one off payment

Estimated yearly pension in 2018 2,420 GBP

Total Unit value of plan 2013 18,680 GBP

Total Transfer Value of plan 66,113 GBP

The Transfer Value according to my annual statement increases every year.

The Transfer Value is explained as:

"You may decide you want to invest the value of the plan in a new pension scheme, The transfer value is the amount available to invest elsewhere"

And I can take the benefits of the paln between 55 and 75.

So not a bad investment after all!

Were you a member of defined benefit pension scheme? This would mean that your future annual pension income is calculated based on your salary paid to you at the time and then index-linked into the future, until you reach retirement age. In your case, this would be GBP 2,420 in 2018.

In order to achieve this benefit payment to you in 2018, the pension scheme has to set aside a certain amount of capital in order to make an annual payment of GBP 2,420 by then. The scheme must benchmark the interest rate it assumes against UK Gilt rates. Because Gilt rates are quite low right now, at around 2.25%, the capital or transfer value in 2018 would need to be in excess of GBP 100,000 in order to achieve your pension income.

My guess is that if you retired today, you would receive a lower annual pension income and therefore, based on current Gilt rates, your transfer value today is GBP 66,113. Not sure without more info.

This article explains these issues in more detail: http://bit.ly/18ZLTOP

The problem with defined benefit schemes is that they put tremendous stress on the employer's pension fund, given low interest rates. The lower Gilt rates are, the bigger the fund needs to be in order to achieve the promised returns. There are many big UK firms which have equally large pension deficits because of this. Nowadays you don't find defined benefit schemes anymore; almost all pension schemes are now based on defined contributions by the employees where money is invested into a pot and made to grow (or not).

Thanks for your reply;

The Personal Pension Plan I have is a 100pc With-Profits plan.

The intial contribution was a one-off payment made when I quit my UK job, transferring my company and my own pension contributions to this personal plan. (my own initiative so no mis-selling).

The final estimated pension at 65 is not fixed on the basis of final salary. The figure goes up and down annually but is usually between 2000 and 2500 GBP Per annum.

I understand the reasoning behind increased Transfer Values and gilt rates for fixed pay-out plans.

I would greatly appreciate if you could answer the following:

Is my high Transfer Value also affected by low gilt rates bearing in mind there is no fixed pension pay-out figure?

Is the Transfer value likely to drop or stay the same in a few years time once gilt rates start recovering?

Would it therefore be better to take the current Transfer Value now (I am 59) rather than wait?

If the Transfer Value is not growing because of increasing gilt-rates would not this be offset by increasing annuity rates which should also start rising once gilt rates start increasing?

In answer to the OP's original questions, I have been through my policy and can find no provision for an early cash-in of my policy. However if the OP is approaching 55 he MAY be surprised by the performance of his fund once he finds out what the Transfer Value is worth.

Thanks

[AnotherOneAmerican]

Transferring out of a company pension plan is rarely a good idea.

Private pension plans are usually a crock of shit, fund managers make all the profit, then you buy an annuity that works out at less than 5% of the fund amount. The annuity company can't lose either.

Edited July 6, 2013 by AnotherOneAmerican

[manhattan55]

Transferring out of a company pension plan is rarely a good idea.

Private pension plans are usually a crock of shit, fund managers make all the profit, then you buy an annuity that works out at less than 5% of the fund amount. The annuity company can't lose either.

Under UK law, you can transfer your private pension into a SIPP (Self Invested Pension Plan) or, if you are an expat living abroad, offshore into a QROPS (Qualified Recognized Offshore Pension Scheme). In both cases, you don't have to buy an annuity, instead you take control over your capital and draw an income for life. You can also pass your pension capital on to your heirs. The problem with a SIPP is your estate pays a 55% 'death' tax on the capital, with a QROPS you don't. More here: http://bit.ly/10QlQJV

[AnotherOneAmerican]

Transferring out of a company pension plan is rarely a good idea.

Private pension plans are usually a crock of shit, fund managers make all the profit, then you buy an annuity that works out at less than 5% of the fund amount. The annuity company can't lose either.

Under UK law, you can transfer your private pension into a SIPP (Self Invested Pension Plan) or, if you are an expat living abroad, offshore into a QROPS (Qualified Recognized Offshore Pension Scheme). In both cases, you don't have to buy an annuity, instead you take control over your capital and draw an income for life. You can also pass your pension capital on to your heirs. The problem with a SIPP is your estate pays a 55% 'death' tax on the capital, with a QROPS you don't. More here: http://bit.ly/10QlQJV

The SIPP and Qrops leave you in the same situation, pension manager and IFA take all the profits, often making investments that give your plan huge losses. (many IFAs make a capital loss of 5% on the investment each year, not a profit)

For example, costs on a typical SIPP in full drawdown mode, 400ukp per year + IFA fees + fund management fees.

On an 18k pension fund, 25% tax free at age 55, leaving 13.5k in the fund, yearly income on drawdown 675UKP - drawdown fee of 400UKP = leaving you with an income of 275UKP per annum (assuming max GDP)(Qrops usually have higher fees)

Your only choice with a fund this small is an annuity, so 25% tax free then 5% of remaining fund value (13.5k) = 675UKP/year income. Fixed for ten years costs very little extra, so even if you die next week, at least your beneficiaries will get 10 years of the annuity.

Once you have a fund less than 50k UKP, annuity is really the only choice you have.

If you use drawdown on a 100k UKP SIPP fund, it will be reduced to approx 50k UKP fund in about 5 years.

(assuming current market conditions)

Not to mention IFAs operating outside the UK are not governed by FSA rules or British laws, no comeback if they mis-advise you or worse.

Edited July 7, 2013 by AnotherOneAmerican

[manhattan55]

Once you have a fund less than 50k UKP, annuity is really the only choice you have.

Agree

[davejones]

Once you have a fund less than 50k UKP, annuity is really the only choice you have.

Agree

No it's not. Under £18K and you have the option to take the whole lot. For any amount you also have the option to keep growing the fund and defer taking an annuity. Lots of options, not just one.

[AnotherOneAmerican]

Once you have a fund less than 50k UKP, annuity is really the only choice you have.

Agree

No it's not. Under £18K and you have the option to take the whole lot. For any amount you also have the option to keep growing the fund and defer taking an annuity. Lots of options, not just one.

The OP states, Total Unit value of plan 2013 18,680 GBP

Therefore it exceeds the trivial pension lump sum, and must be taken as an annuity.

[davejones]

Once you have a fund less than 50k UKP, annuity is really the only choice you have.

Agree

No it's not. Under £18K and you have the option to take the whole lot. For any amount you also have the option to keep growing the fund and defer taking an annuity. Lots of options, not just one.

The OP states, Total Unit value of plan 2013 18,680 GBP

Therefore it exceeds the trivial pension lump sum, and must be taken as an annuity.

I agree. I'm disagreeing with the comment that your only option is an annuity if fund is under £50K. Anyway, this whole thread is getting way off topic. OP is over limit. But he has teh option of finding a bad fund so that the value drops below £18K, then he can take the whole lot. LOL.

[AnotherOneAmerican]

I agree. I'm disagreeing with the comment that your only option is an annuity if fund is under £50K. Anyway, this whole thread is getting way off topic. OP is over limit. But he has teh option of finding a bad fund so that the value drops below £18K, then he can take the whole lot. LOL.

That's quite a good idea.