ill health retirement and pensions

[Lighttouch]

Once again this is a new experience for me and it's tricky getting the right information.

The government wants you to work and save towards your own pension so you don't have to rely on the state.

When you're younger the last thing you think about is your pension as that's years away and you'd prefer to spend that money on fun things.

I funded a former pension at a former place of work. When I stopped working there the pension froze. I also opted out of SERPS (State Earning Relating Pay System) commonly know as the 'second pension'. This also froze when I lost my job ohh nearly 20 years ago.

Up until April this year you could access these small pensions at 50. Now the age has gone up to 55. However, if you have to retire through ill health you can take them at an earlier age.

Typically I've just discovered that it's not as straightforward as you think!

The SERPS pension - you can only take 25% of the value as a tax free lump sum - the remainder has to buy an Annuity which pays about £200 a year and is taxed too - £3 a week!

My other private frozen pension - I stopped paying into it 20 years ago - I 'm not allowed to take it all out as a tax free lump sum because it's value is just over £18k. This means I can only take 25% as a tax free lump sum - the remainder has to buy another ruddy poor performing Annuity that pays next to nothing and is taxable too.

My advice to anyone is get advice about pensions if you happen to work. We only think about then when it's time to retire - by which time it's all too late!

[Trecelyn]

You've started me thinking here.
Where ever I've worked I've always had a pension (since I was 18) . I have transfered these to my new employer now. I have also opted out of SERPS . Technically tho I'm still employed ; if my GP signs me off they have to find me an equivalent job. This is not the company's intention tho as I've been thru independent medicals etc. , with their insurance scheme (which has started me thinking on another line)

If you have any other info or links I'd be grateful for them.

[Lighttouch]

You've started me thinking here.
Where ever I've worked I've always had a pension (since I was 18) . I have transfered these to my new employer now. I have also opted out of SERPS . Technically tho I'm still employed ; if my GP signs me off they have to find me an equivalent job. This is not the company's intention tho as I've been thru independent medicals etc. , with their insurance scheme (which has started me thinking on another line)

If you have any other info or links I'd be grateful for them.

Hi Trecelyn,

Yes it's all very confusing asthe government want to simplyfy the State Pension too.

As I opted out of SERPS and joined a private pension I can access this money now. If I was contracted in I couldn't touch a pension until I was 66! However it's reduced due to my age, life expectancy etc.
I need to speak to afinancial advisor.

I'm aware that changes are happening in 2012 regarding SERPS - I think the government want to pull them back in - all very confusing but check this link out -
http://www.activewealth.co.uk/pdf/fs...acting-out.pdf

[Trecelyn]

Thanks for the link Lighttouch. Given me food for thought , but easily confused by facts & figures so going to have to speak to someone to help. I think my employer recommends one so will get in touch with them.

[andypandy]

It is all very confusing LT, I think I contracted out of SERPS but I was only about 19 at the time, so I didnt take much notice of what I was signing to be honest.

I now receive a very small NHS pension and have no idea about this SERPS thingy. I am only 39 so don't know if it even affects me ?

Whats the saying ? All the gear - no idea !

[Lighttouch]

Well I saw my financial advisor on Friday last week. As I had opted ot of SERPS years ago as advised. I used tha small amount of money to set up a 'private pension'. Because it's no longer linked to the State Pension I could draw the money earlier from 55 years old or, if medically retired draw it now.

There are rules about private pensions. I could draw it as a pension in the form of an Annuity and I could take 25% as a lump sum. Then you have to make a decision as to index link the remainder at 3% or 5% increase each year or don't inflate it's value at all in which case inflation will erode the money away year by year. Incidentally to give you an idea the pot is worth £16,000 so I could take £4000 take free. An Annuity based on £12,00 would generate about £300 a year if linked tp 3% increase each year minus PAYE @20% =£240 per year or £4.61 a week!

I've decided not to take it but reinvest the £16k in a stocks and share ISA. The advisor will cream off 3% commission eg £480 for 30 minutes chat!

So as I stand my occupational pension will be taxed more than a single person for some reason. Most people will get a tax allowance of £7450 before paying PAYE. I'm being given a smaller tax free amount of £3270 then taxed at 20%.

Not entitled to any ESA, Council Tax rebates, I have to pay for prescriptions, glasses and pay all my bills. Now they'll be after my DLA - I've been sent so much paperwork to fill in - it's all a bit overwhelming. Not to sure which way to turn. JCP want me to send in another 'well note' as they said the last one ran out on 25 May. That's a lie as I think they're lost it.

Have you ever tried to phone JCP - nobody is ever available to talk - call back later their automatedvoice tells you.

I just want a quiet life - not much chance of that!

[Lighttouch]

Sorted.

No ESA but no medical, questionnaires and my file is closed with JCP

Pension - tax code back to where it was now that the Inland Revenue know I'm not getting ESA.

I'm just beginning to feel that at least I know where I stand financially and can now budget accordingly.