Pension help!!!

Brauny

Brauny

The optimistic pessimist
My mum's private pension which she inherited after my dad passed away 3 years ago as gone down from £140+ to £120 + a month. I know that's a very small pension but it all helps top up the state pension. I don't understand why it's dropped though.
Once you draw on a pension shouldn't that then be guaranteed? I know the fund varies when saving for the pension, because it depends on whether the investments are up or down, but once you have finished your contributions and taken your pension, is that not guaranteed?
I know state pensions have gone up in line with inflation so the increase would be about 10%..
I know that you are allowed to earn something like 12k before paying tax, so any increase in income would result in paying more tax. Surely though the overall income would still increase albeit you pay more tax, but your money would not go down unless you entered an higher tax bracket (40k +).
So anyone know why that pension as decreased ?
 
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Depends what kind of pension it is. If it wasn't a final salary it's down to how the money was invested.
Annuity gives you a guaranted amount per month, Income drawdown can fall as well as rise.
 
I assume that they bought an annuity with the pension pot. Not all of these are transferable so I would advise getting a clever person to have a look into this
 
With great respect to my Dad I doubt he took proper advice on it. As Hackney pointed out it might well be a drawdown one ?
 
Brauny said:
My mum's private pension which she inherited after my dad passed away 3 years ago as gone down from £140+ to £120 + a month. I know that's a very small pension but it all helps top up the state pension. I don't understand why it's dropped though.
Once you draw on a pension shouldn't that then be guaranteed? I know the fund varies when saving for the pension, because it depends on whether the investments are up or down, but once you have finished your contributions and taken your pension, is that not guaranteed?
I know state pensions have gone up in line with inflation so the increase would be about 10%..
I know that you are allowed to earn something like 12k before paying tax, so any increase in income would result in paying more tax. Surely though the overall income would still increase albeit you pay more tax, but your money would not go down unless you entered an higher tax bracket (40k +).
So anyone know why that pension as decreased ?
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It sounds like it's an annuity but if so it is still income and, assuming that your dad has already taken the 25% tax free lump sum, any part of it that takes total taxable earnings above 12k (including the state pension) will be taxed. If she has had other income in the past they may also be making adjustments for under payment (nothing dodgy). If it is just this pension and the state one it sounds like it would be below the threshold still but if you can try checking if her tax code changed, any change will reflect in this pension not the state pension. Annuity providers will usually calculate payments based on this.
 
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