Trivial Pension Fund - Where to invest

[Absolutelyalan]

We will be moving to France within one year. My wife is about to turn 60 and her private pension will mature on her birthday. She has been told that her fund quailifies as a 'Trivial Amount' (about £13000), which means she can take the whole lot out if she wants, rather than being limited to a tax-free lump sum and purchasing an annuity. Does anyone know if she would be better off drawing it out, paying the tax and purchasing a QOROPS (or whatever they call the overseas funds), or investing it in the UK? I appreciate that individual circumstances vary, but has anyone else been in a similar position?

[AnOther]

I doubt you will find a QROPS provider who would give you the time of day for such a small sum, it's the very reason such funds are treated as trivial in UK as it is simply not worth an annuity providers time to convert them to annities and even if they did the charges would decimate them. I've seen it mentioned that €150k is about minimum.

In any case though a QROPS is not appropriate for what will in fact be simply a cash sum, they are intended for pension funds held under HMRC rules hence the name, Qualifying Recognised Overseas Pension Scheme, and are subject to HMRC scrutiny for a period of 5 years from date of transfer to ensure that the Qualifying aspect of the title is adhered to.

Depending on your own thoughts about the future of the UK and French economies you'd do better to invest it in a UK ISA or something similar whilst you are still UK resident, or a Livret in France.

[Benjamin]

[quote user="Absolutelyalan"]We will be moving to France within one year. My wife is about to turn 60 and her private pension will mature on her birthday. She has been told that her fund quailifies as a 'Trivial Amount' (about £13000), which means she can take the whole lot out if she wants, rather than being limited to a tax-free lump sum and purchasing an annuity. Does anyone know if she would be better off drawing it out, paying the tax and purchasing a QOROPS (or whatever they call the overseas funds), or investing it in the UK? I appreciate that individual circumstances vary, but has anyone else been in a similar position?[/quote]

Careful!!!!!!

You would need to check out the following but I think, and I stress "think", that the fund will be subject to a tax deduction which does not take into account your wifes' circumstances or any allowances and may be as high as 40%. Call HMRC and let us know the outcome.

[Gastines]

Yes. My wife has just had the same UK grab.20% off her lump sum. Classed as Trivial  [but not to us!!] We then have the usual months of trying to recoup it involving months of back and forth letters and "Not received or Lost in the post". I think it it a cunning plan by HMRC to keep UK solvent.

Regards.

[gosub]

Check out this link for a comparison of annuities.

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

[Absolutelyalan]

Many thanks to everyone for their advice. It seems that she would be subject to tax. We just have to work out if we'll be better off taking the hit and investing it in an ISA, or leaving it and taking the hit on charges on a annuity.

Either way, you get screwed!