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  • FIRST POST
    • mike L
    • By mike L 9th Sep 17, 10:54 PM
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    mike L
    Pension Options
    • #1
    • 9th Sep 17, 10:54 PM
    Pension Options 9th Sep 17 at 10:54 PM
    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.
Page 1
    • bigadaj
    • By bigadaj 9th Sep 17, 11:20 PM
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    bigadaj
    • #2
    • 9th Sep 17, 11:20 PM
    • #2
    • 9th Sep 17, 11:20 PM
    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
    • By xylophone 9th Sep 17, 11:59 PM
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    xylophone
    • #3
    • 9th Sep 17, 11:59 PM
    • #3
    • 9th Sep 17, 11:59 PM
    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
    • By mike L 10th Sep 17, 12:05 AM
    • 145 Posts
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    mike L
    • #4
    • 10th Sep 17, 12:05 AM
    • #4
    • 10th Sep 17, 12:05 AM
    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?
    Last edited by mike L; 10-09-2017 at 12:22 AM.
    • mike L
    • By mike L 10th Sep 17, 12:14 AM
    • 145 Posts
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    mike L
    • #5
    • 10th Sep 17, 12:14 AM
    • #5
    • 10th Sep 17, 12:14 AM
    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/
    Originally posted by xylophone
    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.
    Last edited by mike L; 10-09-2017 at 12:18 AM.
    • xylophone
    • By xylophone 10th Sep 17, 12:22 AM
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    xylophone
    • #6
    • 10th Sep 17, 12:22 AM
    • #6
    • 10th Sep 17, 12:22 AM
    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
    • By mike L 10th Sep 17, 12:27 AM
    • 145 Posts
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    mike L
    • #7
    • 10th Sep 17, 12:27 AM
    • #7
    • 10th Sep 17, 12:27 AM
    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.
    Last edited by mike L; 10-09-2017 at 12:38 AM.
    • xylophone
    • By xylophone 10th Sep 17, 12:34 AM
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    xylophone
    • #8
    • 10th Sep 17, 12:34 AM
    • #8
    • 10th Sep 17, 12:34 AM
    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
    • By xylophone 10th Sep 17, 12:47 AM
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    xylophone
    • #9
    • 10th Sep 17, 12:47 AM
    • #9
    • 10th Sep 17, 12:47 AM
    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
    • By bigadaj 10th Sep 17, 7:40 AM
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    bigadaj
    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?
    Originally posted by mike L
    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
    • By mike L 10th Sep 17, 8:47 AM
    • 145 Posts
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    mike L
    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
    Originally posted by xylophone
    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.
    Last edited by mike L; 10-09-2017 at 8:50 AM.
    • mike L
    • By mike L 10th Sep 17, 9:05 AM
    • 145 Posts
    • 39 Thanks
    mike L
    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.
    Originally posted by bigadaj
    I said earlier that the bigger pension provides a sum of £258 a year. It currently has a value of £10,760.

    The documentation also mentions that HMRC limits the amount a person can withdraw without facing a tax charge (£1 million, so I'm ok there) but doesn't mention any figures like 25%. I can take "more than the standard lifetime allowance" but will face a tax charge of 55% if I take a lump sum, or 25% if I use it to buy a regular income.

    I know these pensions are trivial amounts so the object is to take as much as possible at once. I won't be retiring in luxury on the monthly amounts stated.
    • greenglide
    • By greenglide 10th Sep 17, 11:08 AM
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    greenglide
    I've had a pension forecast as I said earlier, I'm due an ordinary single persons pension when/if I retire.
    Was this "recently", the state pension scheme changed from April 2016. You really need a current forecast.

    If you have worked and paid NI for most / all of your working life and you havent been in an employer pension for most of this time you should have accumulated additional pension under SERPS / S2P which would increase your State Pension.

    So is your "ordinary single persons pension" £122.30, £159.55 or something else?
    • bigadaj
    • By bigadaj 10th Sep 17, 11:14 AM
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    bigadaj
    I said earlier that the bigger pension provides a sum of £258 a year. It currently has a value of £10,760.

    The documentation also mentions that HMRC limits the amount a person can withdraw without facing a tax charge (£1 million, so I'm ok there) but doesn't mention any figures like 25%. I can take "more than the standard lifetime allowance" but will face a tax charge of 55% if I take a lump sum, or 25% if I use it to buy a regular income.

    I know these pensions are trivial amounts so the object is to take as much as possible at once. I won't be retiring in luxury on the monthly amounts stated.
    Originally posted by mike L
    Nearly 11 grand isn't trivial.

    The £1 million amount refers to the lifetime allowance, almost all pension pots will now pay out 25% tax free and the remainder will be taxed as it it was income.

    This sounds like a defined benefit, effectively a final salary pensions, which the company are offering as a lump sum. If it were more than £30k you'd have to pay an adviser to approve it but as its lower you should avoid that.

    So you'll need to move the pension first, and then take the money out.

    You'll need to contact companies to arrange this, virgin or Hargreaves lansdown might be options to make enquiries with. You don't necessarily have to take it all at once, so if you split over two tax years then that might help in reducing any tax liability.
    • xylophone
    • By xylophone 10th Sep 17, 11:22 AM
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    xylophone
    I've had a pension forecast as I said earlier,
    I hate to labour the point but do you realise that you come under the new state pension scheme?

    https://www.gov.uk/new-state-pension/how-its-calculated

    If you have indeed obtained a new state pension forecast, what exactly did it say?
    • mike L
    • By mike L 10th Sep 17, 11:37 AM
    • 145 Posts
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    mike L
    I hate to labour the point but do you realise that you come under the new state pension scheme?

    https://www.gov.uk/new-state-pension/how-its-calculated

    If you have indeed obtained a new state pension forecast, what exactly did it say?
    Originally posted by xylophone
    I'll have to dig the documents out, it was a few years ago. I normally scan everything but can't find the forecast presently.

    However, if things have changed recently hence the 'new state pension scheme' you refer to then I'll get a new forecast. I assume I'll only be getting a basic single person's pension anyway whatever that is?
    Last edited by mike L; 10-09-2017 at 11:43 AM.
    • bigadaj
    • By bigadaj 10th Sep 17, 11:47 AM
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    • 6,969 Thanks
    bigadaj
    I'll have to dig the documents out, it was a few years ago. I normally scan everything but can't find the forecast presently.

    However, if things have changed recently hence the 'new state pension scheme' you refer to then I'll get a new forecast. I assume I'll only be getting a basic single person's pension anyway whatever that is?
    Originally posted by mike L
    Yes, you need to check.

    Pension could be anything between nothing and £159 for new pension, could be over £250 under the old rules which are used if they show more pension than under the new rules.
    • mike L
    • By mike L 10th Sep 17, 11:52 AM
    • 145 Posts
    • 39 Thanks
    mike L
    Nearly 11 grand isn't trivial.

    The £1 million amount refers to the lifetime allowance, almost all pension pots will now pay out 25% tax free and the remainder will be taxed as it it was income.

    This sounds like a defined benefit, effectively a final salary pensions, which the company are offering as a lump sum. If it were more than £30k you'd have to pay an adviser to approve it but as its lower you should avoid that.

    So you'll need to move the pension first, and then take the money out.

    You'll need to contact companies to arrange this, virgin or Hargreaves lansdown might be options to make enquiries with. You don't necessarily have to take it all at once, so if you split over two tax years then that might help in reducing any tax liability.
    Originally posted by bigadaj
    As I said earlier it was a 'defined scheme' but was changed to a SHPS later. So I can take 25% and take the rest in two lump sums over two years which will save a bit of tax?

    It does mention it can be transferred but why do I need to 'move' the pension anyway?
    • xylophone
    • By xylophone 10th Sep 17, 11:53 AM
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    xylophone
    However, I wish to clarify the position on the two little pensions also.
    I have now looked a little further back in your posts.

    http://forums.moneysavingexpert.com/showthread.php?p=63535289#post63535289

    I've never worked for a company or state industry where a pension came with the job until four years ago where the company run a quite generous pension scheme. They match your monthly contribution which in my case is £109. That is the amount I've paid in since that time. I'm 60 so I realise that this pension would be very modest indeed when drawn.

    Two months ago the company decided to change to the new SHPS DC scheme, in fact you could opt out of this but very few did including myself. My previous pension scheme I understand is now ended and exists as a separate entity. I can leave it untouched but have the option to transfer it to the new SHPS scheme.


    The original company scheme was not in the SHPS DB (or any other DB) scheme?

    It was a DC company scheme?

    The SHPS DC scheme became available and you opted to transfer the old DC into the new DC?

    You left that company two years ago - naturally company contributions ceased but you had the option to continue to contribute if you wished?

    Would it be possible to transfer the "Umbrella" pension to the Aviva policy?

    Would you wish to transfer both policies to (say) a SIPP which would give you the flexibility of drawdown?

    You say that you intend to continue to work for the foreseeable future - you might wish to continue to contribute to the SIPP?

    You might at some stage choose to stop work and live off your state pension and as much of your SIPP as would leave you paying no tax in retirement?

    https://www.pensionsadvisoryservice.org.uk/content/publications-files/uploads/Taking_small_pensions_Detailed_SPOT008_V1.5.pdf

    The above may be worth a read.

    You might find an appointment with Pension Wise of assistance.

    https://www.pensionwise.gov.uk/en/appointments
    • Chickereeeee
    • By Chickereeeee 10th Sep 17, 11:59 AM
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    Chickereeeee
    I'll have to dig the documents out, it was a few years ago. I normally scan everything but can't find the forecast presently.

    However, if things have changed recently hence the 'new state pension scheme' you refer to then I'll get a new forecast. I assume I'll only be getting a basic single person's pension anyway whatever that is?
    Originally posted by mike L
    The reason people are getting a bit insistant that you get a new forecast is that there is no such thing as a "basic single person's pension". The state pension no longer takes account of marital status, and 'basic' has no meaning in this context anymore.

    C
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