Pension Options

mike_L · 9 September 2017 at 10:54PM

I've just had 2 years temp' work working via an umbrella company and managed to accumulate a pension of £600. (I didn't even know I was accumulating a pension!) It's not enough to retire on obviously. I also have pension from previous employment of about £9000.

I'm 63 and due to retire (technically) in two years but will be working until I drop which is ok by me. I have nothing but the state pension and the £9000 and the £600.

To get to the point. What do I do with the £600? The benefit statement says if I'm over 55 I can take up to 25% of the fund. I don't plan to do anything with the £9000 at the moment. I'd like to take the whole 600 plus 9000 if possible though I assume that isn't possible? I'm sure a while ago the chancellor (George Osborne?) introduced legislation allowing people to take all their pension at once.

Anyway, I'd appreciate some suggestions from the pension experts here.

bigadaj · 9 September 2017 at 11:20PM

You can take it all out, though the current provider may not offer that as an option. If that's the case you'll need to transfer it to so,done who does allow it.

If you take it all out then you get 25% tax free, and are taxed in the remainder as if it was added to your wages. The pension provider will deduct tax, this could be too much or too little as they wont know your wider situation, so you'll need to contact Hmrc to check this assuming you dint do a tax return currently.

Taking it all will also mean that you can't contribute any more than £4K per year into a pension in future, though it seems as though you don't intend to do that anyway.

xylophone · 9 September 2017 at 11:59PM

I also have pension from previous employment of about £9000.

What kind of pension?

Have you obtained a state pension statement?

Taking it all will also mean that you can't contribute any more than £4K per year into a pension in future,

Possibly not.... See http://www.pruadviser.co.uk/content/knowledge/technical-centre/small_pots_defined_benefit_trivial_commutations/

mike_L · 10 September 2017 at 12:05AM

Thanks. So I'll need to find out the amount the pension providers will allow me to take. Seems to be 25% on the £600 pension.

I thought it was law that you're allowed to 'take it all'? Seems like the pension providers decide what you can take? Don't really get that. Can I transfer the pension to any other provider and take the lot? If so surely there's a catch?

I also can't believe the tax man taxes any amount you take out, haven't they already taxed the earnings?

mike_L · 10 September 2017 at 12:14AM

xylophone wrote: »

What kind of pension?

Have you obtained a state pension statement?

Possibly not.... See http://www.pruadviser.co.uk/content/knowledge/technical-centre/small_pots_defined_benefit_trivial_commutations/

Yeah, I'm entitled to just a basic pension, have had very few periods of unemployment since leaving school. The £9000 pension comes from my last PAYE employer where they operated a contributory pension scheme, first employer I've ever had where I've had this option. I was there for six years. The pension is just sitting there since I left that company. Mentions somewhere in the yearly statement I get that the £9000 pension entitles me to about £5 a week! Hence why I like to take the lot.

xylophone · 10 September 2017 at 12:22AM

Yeah, I'm entitled to just a basic pension, have had very few periods of unemployment since leaving school

Do you mean that you are entitled to a full new state pension, no more no less?

The £9000 pension comes from my last PAYE employer where they operated a contributory pension scheme,

This was not a defined benefits pension?

https://www.moneyadviceservice.org.uk/en/articles/defined-benefit-schemes

mike_L · 10 September 2017 at 12:27AM

Not sure what you mean by a 'full new state pension'. I've worked since leaving school at 15 and have had no options of any other pensions except for my last employer where I opted in to their scheme.

I've had a pension forecast which will give me the basic single persons pension. The £9000 is a separate company pension.

This pension has been transferred to different providers twice since left the company, it is now with 'Friends Life' and I think yes it a 'pension scheme defined contribution'.

Just been looking though the many papers I have and it states it has a Transfer value of £10,760. It provides a gross pension of £258 a year.

xylophone · 10 September 2017 at 12:34AM

https://www.gov.uk/check-state-pension

You applied above? What does your forecast say?

The £9000 is a separate company pension.

Yes, I understand that but what kind of pension was it?

https://www.gov.uk/pension-types

xylophone · 10 September 2017 at 12:47AM

If you haven't used the check state pension service I think it would be worth your while to do so.

I've now looked over your previous posts, and as far as I can see you may have a very small deferred DB pension which was closed to fresh accrual and a couple of years in the DC scheme which succeeded it?

https://www.unison.org.uk/content/uploads/2014/11/TowebSocial-Housing-Pension-Scheme-2014-changes-briefing-for-branches1.pdf

bigadaj · 10 September 2017 at 7:40AM

mike_L wrote: »

Thanks. So I'll need to find out the amount the pension providers will allow me to take. Seems to be 25% on the £600 pension.

I thought it was law that you're allowed to 'take it all'? Seems like the pension providers decide what you can take? Don't really get that. Can I transfer the pension to any other provider and take the lot? If so surely there's a catch?

I also can't believe the tax man taxes any amount you take out, haven't they already taxed the earnings?

No, just read people's posts and understand what they are saying, including xylophones point about what the other pension is; does this primarily pay you a set amount at a certain age or is it always quoted as a sum?

Don't rely on your financial information from the daily mail or similar, do a little research, alternatively just moan about how companies just rip you off because you can't be bothered to do a bit of research.

Assuming you have defined contribution pensions then you would it ally sign up to a product, these products vary and particularly over time, for example any pension prior to osbornes pensions freedom reforms may well not offer immediate access because it wasn't allowed when they were set up.

Lastly the whole point of pensions is that they are tax efficient, so contributions are made before tax or the tax is claimed back. Therefore it's logical that when you take the money it may be subject to tax, it's only taxed the once.

mike_L · 10 September 2017 at 8:47AM

xylophone wrote: »

If you haven't used the check state pension service I think it would be worth your while to do so.

I've now looked over your previous posts, and as far as I can see you may have a very small deferred DB pension which was closed to fresh accrual and a couple of years in the DC scheme which succeeded it?

https://www.unison.org.uk/content/uploads/2014/11/TowebSocial-Housing-Pension-Scheme-2014-changes-briefing-for-branches1.pdf

I've had a pension forecast as I said earlier, I'm due an ordinary single persons pension when/if I retire.

The bigger pension was a 'defined contribution scheme' (group stakeholder?) but changed in 2013 to a 'SHPS DC' scheme. It was originally with AXA, then transferred to Friends Life, now it's with Aviva. It does mention I can take 25% or all of it with a tax deduction.

The little pension is one of these: http://www.onescheme.co.uk/

The documentation says "Contributions Type: Regular contributions". and that the contributions are 100%. This one mentions I can take up to 25% tax free but doesn't mention taking the full amount at all.

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