Can I draw out ALL my pension?

Lynsab · 9 January 2010 at 1:54PM

Hi Newbie here

I have two small works pensions which were 'frozen' some time ago after moving on in jobs etc.

Both after finally tracking them down thru the pensions service are worth approx £12k each so even with a lump sum payout will pay approx £500 per year.

Am I allowed to take ALL of the funds out? I have been trying to find out IF there is a limit on low pensions and cannot find it, but I would like to re-invest it elsewhere for the next ten years. I don,t wish to put it in another pension either, it will go offshore.

I have asked both companies involved and I never get a straight answer, so would like to know if its possible before I continue on.Btw I am 57 and Live in sunnier climes now too:j

Thanks in advance

nearlyrich · 9 January 2010 at 2:03PM

I am not an expert so don't know if this is absolutly correct BUT I think as you are currently over 50 (changes to 55 soon) you can take out 25% as a tax free lump sum. You can't just withdraw a pension fund and invest it elsewhere but you can transfer it to another provider. There are sometimes pesion schemes written that if you leave before a certain time you can take back your contributions but it's usually a short time after commecing the job and not years after you have left. Your providor should be able to give you a straight answer, keep at them till they do.

zzzLazyDaisy · 9 January 2010 at 2:07PM

You are thinking of the trivial pensions rules. Unfortunately they only apply if your total pension pot after adding all the pensions together, is worth less than £17500

More info here....

http://www.litrg.org.uk/news/index.cfm?id=339

dunstonh · 9 January 2010 at 2:07PM

I allowed to take ALL of the funds out?

Not unless you are aged 60 or over and all your pensions have a value (or indicated value) or less than 1% of the lifetime allowance (which equates to £17500 at the moment).

but I would like to re-invest it elsewhere for the next ten years.

what would be the point of that?

I don,t wish to put it in another pension either, it will go offshore.

its more tax efficient onshore.

Aegis · 9 January 2010 at 2:08PM

Lynsab wrote: »

Hi Newbie here

I have two small works pensions which were 'frozen' some time ago after moving on in jobs etc.

Both after finally tracking them down thru the pensions service are worth approx £12k each so even with a lump sum payout will pay approx £500 per year.

Am I allowed to take ALL of the funds out? I have been trying to find out IF there is a limit on low pensions and cannot find it, but I would like to re-invest it elsewhere for the next ten years. I don,t wish to put it in another pension either, it will go offshore.

I have asked both companies involved and I never get a straight answer, so would like to know if its possible before I continue on.Btw I am 57 and Live in sunnier climes now too:j

Thanks in advance

If memory serves, trivial commutation (i.e. taking all the pension at once) is only allowed if your total pension pot is worth up to 1% of the lifetime allowance. As such, with £24k in pensions, you are ineligible for this.

Lynsab · 9 January 2010 at 3:12PM

Thanks for your replies, thats what I suspected its to low also to transfer to a QROPS apparently. So would you suggest leaving well alone and not even take the lump sum so as not to diminsh the pension further, if nothing else its £1k a year for life I suppose. Not to be sniffed at;)

Aegis · 9 January 2010 at 3:31PM

Lynsab wrote: »

Thanks for your replies, thats what I suspected its to low also to transfer to a QROPS apparently. So would you suggest leaving well alone and not even take the lump sum so as not to diminsh the pension further, if nothing else its £1k a year for life I suppose. Not to be sniffed at;)

Unless there are very high guaranteed rates people would usually be better off taking the maximum tax free lump sum and investing it for income elsewhere (25% tax free cash gives you more flexibility but still allows you to invest it for income without the complication of a pension wrapper if you choose). Under your circumstances, however, you will need to find out if the tax free lump sum would actually be tax free, as some countries don't recognise this and instead treat it as part return of capital and part capital gains, subject to their usual taxes. You'll need to find out precisely how your pensions will be taxed before you make any decision as to how to proceed with commencement.

Can I draw out ALL my pension?

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