Impaired Life pension advice

[Broomsticklady]

As above really - I have a final salary pension which I'm about to take early due to redundancy but as I have what the quacks call a 'poor prognosis' with breast cancer, I wondered if I may be better off taking the lump sum and getting some advice on a impaired life annuity? No idea how to start!!

[nomisesor]

Your employer's HR dept and your union rep should be able to advise you on your options. You've probably had a fairly frank discussion with your oncologist & the breast care nurse about prognosis. No-one can give you a definite life expectancy, but they can say how long say, 75%, 50%, 25% of a group of patients with your stage of disease survive - and the pension actuaries certainly should have that data! Then you'll be in a better position to decide.

[The Leaper]

As you are in a final salary plan your impaired health will not make any difference to the pension from that plan. However, you probably have a tax free lump sum option and it's possible that your lump sum may be enhanced to allow for the impairment. You can take the lump sum then seek an individual annuity on an impaired life basis which will provide enhanced income. I'd recommend you deal with your HR people/pensions department, and then once you've sorted out your benefits and options from the plan, get independent financial advice about taking the lump sum and the impaired life annuity.

R.

[The Leaper]

Following on from my post above, you could look into taking a transfer value of the total capital value of your accumulated benefits in the final salary pension plan and put the money either into a personal pension plan for later or into an immediate annuity, although the latter will be minimum age dependent. You'll need to consider all the costs, identified and hidden, as well before taking this decision because you could be giving up a lot of benefits on a net basis.

Is the impairment sufficient to apply to the trustees of the final salary plan for an immediate ill health early retirement pension which will not be age dependent? You can get details simply by asking for them, including what criteria will need to be met as per the pension plan documents.

You could, therefore, have a number of options, and as only you know what your personal finances, impairment, financial objectives are, you can begin to see why you may need to get independent advice.

R