Pension

[a.rutley]

My wife is retiring in June. She has a small private pension. How do you contact other companies with a view to getting a better annuity.

[Hymie]

Check out the rates here, offered by various companies for your wife�s given circumstance (age/pension value etc).

Remember that she can take a 25% lump sum tax free, and buy an annuity with the rest.

http://www.fsa.gov.uk/tables

[Hymie]

Omitted to mention that if your wife�s total pension value is less than �16,500, it is deemed a �trivial sum� and she can apply to have it all in cash to spend as she pleases (with 25% tax free) � rather than having to buy an annuity.

[annie0000]

She should already have received a "wake up pack" telling her about her pension. At least 6 weeks prior to her selected retirement date, her pension company must give her a value that allows her to shop around with other companies. The letter she receives should give her all the details she needs such as whether there are any protected rights or specific benefits to her vesting her pension with her current provider. This is called the open market option. You can then use the tables provided by Hymie to select some companies to ask for a quote - keep the info recieved in the quote as you will need to give these details to the companies you call so that you can get a good comparison.

[alifbae]

This site will clear all your doubts about the best pension plans with better annuity and hoe to approach for that. Check out this site for sure.
http://insurance-plan-guide.blogspot.com

[a.rutley]

Many thanks to Alifae, Annie and Hymie for your informative adviceThe amount we are discussing is a total of �5,400.My wife hs been given the figures of �1340 lumper and an annual pension of �203. It hardly seems worth bothering with the pension as she will need to live another 20 years just to get her money back, plus it is not transferable on her death. Any ideas on the rate of tax for the remaining 75% of the fund?

Thanks again,
Andy.

[Hymie]

Since the total fund is less than �16,500 she should ask her pension fund for the lot � mentioning that it is a �trivial sum�, to the provider. The reason pension funds don�t offer this up-front is that they loose out on the annuity (admittedly small), plus dependent on your wife�s precise circumstance, she may not qualify (unlikely).

25% is tax free, the remainder will be taxed at the applicable rate (20% or 40%), depending on whether she is a high rate tax payer or not.

[annie0000]

Not saying that triviality is not the best option for you, but you can ask them to calculate out the pension in any way you want, you can reduce or remove the lump sum, have a fully transferrable pension, have a pension for the surviving partner of a percentage of her pension e.g. 50%, she can put in a guarantee so that in the event of her death, the pension could continue to be paid in full for a set number of years. All these options of course will change the amount of pension payable. Whether her pension can be paid as triviality will depend on what other pension provision she has, her provider should ask for details.

[Hymie]

Buying an annuity is like investing in an account which pays out interest only, where upon your death � the bank gets to keep your money.

You have already worked out that it will take 20 years to get your money back � you don�t need to have any financial acumen to realize what a bad deal a pension annuity is, compared to having the investment sum in hand � to do with as you please.

Providing that taking the cash does not cause your wife to become a higher rate tax payer - it is a no-brainer as to what to do.

[a.rutley]

Wth NHS Fund and OAP "my better half" will have an income ofapprox �200 per week before tax.

We will probably go for the lumper as suggested by Hymie and hopefully do something positive with it.

Again, many thanks to all for your excellent advice and for the time you have taken in assisting us.

Kind regards.

Andy.