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Rakhi Vasavada
Rakhi Vasavada, Financial Advisor
Category: Finance
Satisfied Customers: 4526
Experience:  Attorney and Financial Expert. Have specialization in Financial Laws.Practice experience of over 13 years
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I am 56 yrs old and have been working for the same company

Resolved Question:

I am 56 yrs old and have been working for the same company for around 37 years. Soon to be made redundant. I still have around 120k on a mortgage. But no other major loans. I have a pension statement which would give me a lump sum now of approx 58k and a yearly payment of £8,800. I do not know what the best thing to do. I am told i should take it becouse if i died before 65 my spouse would not get the lump sum just a spouses pension. Can someone please point me in the right direction.
Submitted: 2 years ago.
Category: Finance
Expert:  Rakhi Vasavada replied 2 years ago.
Dear Friend,

Hello and welcome. Thank you for providing an opportunity to assist you.

Is this your Defined-contribution pension OR Defined benefit pension ? Let me explain why I am asking this.

To begin with, as a rule of the thumb, you should avoid taking lump sum as you will remain with LESS amount of money to buy yourself an annuity. If it is your defined contribution pension, you have an option to take tax free lumpsum anything up to a quarter (25%) of the accumulated value of your pension pot. But there are different rules for people who have a protected higher entitlement or a pension pot larger than the Lifetime Allowance.

In case of Defined benefit pensions, these pensions generate a retirement income that’s calculated as a proportion of your salary. The amount of pension lump sum you can take will be determined by the rules of the specific scheme you’re a member of.

Taking this further, note that rules for how you can access your pension pots were made more flexible from 27 March 2014, and will be made even more flexible from April 2015.

Coming to the core of your question, it is incorrect that your spouse will not be entitled a lump sum. Here is the HMRC link that deals with this.

http://www.hmrc.gov.uk/pensionschemes/death.htm#4


To summerize, what I am trying to explain is that you should not go for lump sum, in part or in whole, unless your require your money NOW. Otherwise, it is bound to leave you with lesser amount in the older age. Read the following for your general reference.

https://www.moneyadviceservice.org.uk/en/articles/should-you-take-a-pension-tax-free-cash-lump-sum


I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards
Rakhi Vasavada, Financial Advisor
Category: Finance
Satisfied Customers: 4526
Experience: Attorney and Financial Expert. Have specialization in Financial Laws.Practice experience of over 13 years
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