There’s no such thing as a silly question. If you can’t find the answer you’re looking for here please contact The Pension House Helpline: Tel 01604 588293
What is a Pension Annuity?
A Pension Annuity converts the pension fund you have built up into an income for life. Because it’s paid until you die, it ensures you won’t run out of money before you die.
What illnesses qualify me for an Enhanced Annuity?
You may qualify for a larger pension income, sometimes called an Enhanced Annuity or an impaired health annuity, if you suffer from one or more health issues. Here are some conditions which may qualify you for a higher income. It is not an exhaustive list but identifies the most common conditions:
Cancers including leukaemia, Hodgkin’s disease, lymphoma
Heart conditions, including heart attacks, heart bypass, angioplasty, angina, irregular heartbeat
Kidney disease or failure
Liver disease or complaint
Lifestyle conditions: In addition to medical conditions, we’ll take into consideration smoking, obesity, high cholesterol and high blood pressure.
If you would like to know if you qualify for an Enhanced Annuity or an impaired health annuity please contact The Pension House helpline: Tel 01604 588293
Will I have to pay tax on my income?
Pension and Annuity income payments are treated as earned income and income tax is deducted at source via the PAYE tax system. The amount of tax you pay depends on how much income you get, whether you receive any other income and your personal allowance.
Do I have to buy an annuity through my pension provider?
No. You can choose to buy your annuity from any annuity provider – it doesn’t have to be with the company that you used to build up your pension fund. You should shop around for the best annuity rate available to you; this is known as using your open market option. The amount of income you get from your annuity will vary between different insurance companies, so it’s a good idea to do some comparisons before making your decision. The Pension House can perform a market comparison for you. Call our helpline for assistance: Tel 01604 588293
How long will it take to receive my pension cash?
We will require your authority to speak with your pension providers on your behalf. From receipt of your authority the process would normally take 4 to 5 weeks. Some pension providers have quicker turnaround times than others. It may be possible for you to have your pension cash within 3 weeks, but it can take longer.
What is Pension Release?
Pension Release or unlocking your pension is where you access your pension earlier than your normal retirement age. Money can be released both from personal pensions and company pensions any time after your 55th birthday as long as you are not already drawing funds from it and it is not necessary to cease work to do so. Pension release is not suitable for everyone and should not be seen as any easy option for raising cash, this is because a pension is designed to provide you with benefits when you retire. There are many reasons why people release cash early and in recognition of this, pension providers have designed new and innovative products that are flexible in order to accommodate this growing demand. In addition, “Pension Freedom” had woken up consumer to understand that they are able to access their pensions without having to buy an Annuity.
How does it work?
First we look at where your pensions are and whether there would be any penalties or loss of guarantees if they were disturbed. Once we are satisfied that we have all the information we will then guide you to which method of pension release is best for you and your circumstances. It may be possible to release money from your existing arrangements via Uncrystallised Fund Pension Lump Sum (UFPLS) but often a transfer to a flexi access drawdown will be necessary. Once it’s been decided where the money is to be generated from, the amount of tax free cash is calculated and paid to you. The remaining fund will be used to accommodate your additional needs, depending on what they are, they could continue to be invested until retirement at a later date, or the fund could be used to provide you with an income immediately.
How much cash can I release?
This depends on where your pension is held. The rules for Occupational Pensions are different to Personal Pensions. Under personal pension rules you are allowed to release a cash sum of up to 25% of the value of your pension fund. This lump sum is known as a pension commencement lump sum or sometimes it’s called Tax Free Cash, because it is tax free. You don’t have to release the full 25%, it is possible to take less and may be possible to draw the balance later depending on the type of pension income product you buy.
The rules to release a cash lump sum from an Occupational Pension are different and depend on the length of service and how much you earned when you worked there. It could be lower than 25% and could be as high as 100% of the pension fund. If it was lower than 25% it may be possible to transfer the fund to a personal pension, as above, and the qualify for 25% under the personal pension rules. Sounds technical, but don’t worry. Your adviser at The Pension House will provide clear guidance on what is the right course of action for you and how much you can release.
Where do I start?
The quickest way is to complete our Contact Form, without obligation, or call our helpline number: 01604 588293 then we can start gathering your pension information straight away.
Where else can I get help?
Useful numbers to contact, if the lump sum is required to repay debts:
National Debt Line – 0808 808 4000 – www.nationaldebtline.co.uk
Consumer Credit Counselling – 0800 138 1111 – www.ccs.co.uk
Citizens Advice – www.citizensadvice.org.uk
Money Advice Service – www.moneyadviceservice.org.uk
How much will it cost?
Our initial consultation is free of charge if held virtually or by telephone, and during the consultation we will let you know if we can help you. If we can’t add value to your situation we will tell you. If we can help you, you may appoint us to carry out a Stage 1 Assessment. Our fee for a Stage 1 Assessment is £500. From this we will be able to determine what course of action is most appropriate for you. You may then wish to instruct us to proceed to Stage 2 which would cover the cost of remedial work to improve your situation. Our fee for Stage 2 is 3% of the first £100,000 and 1% thereafter (of the funds being advised upon). Please note that if the assessment is for our abridged advice service specifically intended for defined benefit plans or plans with ‘safeguarded benefits’ the stage 1 fee is £1,000 and the procedure for the advice process and costs of Stage 2 will also be priced based on the risk, the technical nature of the work and the investment amount involved. Individual costs can be provided upon request.
Our fees will be in accordance with the amount of work we need to undertake. Different types of pension income products require different levels of advice and where a pension fund remains invested on-going investment advice will be necessary. When we have accessed your situation under Stage 1 we will be able to give you a clear indication of the cost of our services. You are not obliged to proceed with us until we tell you what our fees will be and you have agreed. It may be possible for the fees to be paid from your pension fund, in this instance it will not be necessary for us to invoice you directly.
Will a salesperson call or visit?
For safety reasons all our meetings are held either ‘virtually’ or at our offices in Upper Harlestone, Northampton. If you are unable to reach the office and a home visit is necessary a call out fee of £250 + VAT will be charged to cover the cost of a chaperone. Alternatively, our entire process can be conducted online, email, telephone and via post.
If you are a Company or Corporate client looking for assistance with Auto Enrollment then a face to face to meeting will be essential. We cover a 40 mile radius of Northamptonshire but could be willing to consider longer distances for larger employers for a fee to cover the cost of travel.
Is this a loan?
No. The money is yours already, you are simply accessing it now. Warning: Be aware of websites claiming that they can help you cash in your pension early. Accessing a pension before age 55, unless you are terminally ill, could result in an ‘unauthorized payment’. If you agree to this you could face a tax bill of more than half your pension savings. These websites provide no protection from the Financial Conduct Authority (FCA). In fact the FCA warn you against them, see link: https://www.fca.org.uk/consumers/protect-yourself-scams
Do I qualify to take my pension benefit early?
To be eligible to release money from your pension you must:
- Be over 55 years old
- Your pensions need to be from a UK source and you must not already be drawing from it.
I still have questions!
Releasing money from your pension is a big step to take. Your future financial situation could be affected so it is natural to want as much information on the subject as possible.
If there is information you would like that you have not found on our website then please fill out the form below and we will endeavor to answer any additional queries you have have.