Thinking of taking my pension in a lump sum

shaun1952 wrote: »

I am a bit concerned with what may happen to them if BREXIT goes and upsets the stock markets . I have some STL shares that have nose dived this last few months.
The savings market is no good i know but 2% is better than non .

Over the medium term that's a compounding loss of 1% p.a.

The obvious answer to BREXIT is, err, don't hold UK mid and small cap stocks, although there's a good argument to be made that most of the hazard of Brexit is already in the price. And yes, valuations are high despite the minor wobblies of late. FWIW Brexit has lifted the nominal value my stock market holdings by about 20%, basically by making the £ 20% smaller, I am internationally diversified. I'm no wealthier in real terms, but it's better than if I'd held it in GBP cash. Cash in GBP is not a safe haven against British collective economic foolery. You're taking that hit in inflation and may take more...

And yes, the stock market has been on a tear for the last few years, which makes valuations less attractive. I look at Brexit as a way of making myself feel less bad about the plunge that will no doubt happen in the next five years or so

Take a read of Monevator on passive investing and why. If you've only just retired you could have a possible retirement of 30 years ahead of you. There's now't wrong with keeping your next five years worth of pension in cash, but there's a lot wrong with keeping a stash of three decades' worth in cash.

The trick to stock market wobblies is to move in slowly over years and move out over years, which integrates some of the volatility over time.

have some STL shares that have nose dived this last few months.

Diversify! Nobody should hold a significant percentage of their equity holdings in one company share. Although it doesn't apply to you now, in particular you should get out of shares in your employer ASAP - I took Sharesave because, well, it's rude not to, but got the hell out of those shares as soon as I could. Because if there's one thing worse than taking a hit on shares in the market, it's your employer taking a hit at the same time and losing your job.

OP, consider suspending (aka "deferring") your State Pension, so that you can drawdown your other pensions across roughly five years without any income tax to pay, just using your Personal Allowance against income tax.

Then when you restart your State Pension, it will have increased by 5.2% for each year of suspension, so by about 25% in all, plus inflation-linked rises in the meantime. If you are in good health this is a decent idea if you really want to pay no tax at all on the other two pensions. The extra State Pension is index-linked so you will have inflation-protection built in.

shaun1952 wrote: »

So I could transfer both the pensions.. £45,000 into a SIPP, would I be liable for any tax on this , I am at my limit for this year ? .

If you transfer this money to a SIPP, you are not actually taking it out, but maintaining it in a pension wrapper so you will not pay tax on it. Until you take it out.

So you could, as described above, take a tax free lump sum of 25%, then take out more in each tax year until it is gone. Any extra you will take out will be subject to tax. You can have about £45,000 in income before you pay 40% tax. Anything up to that (45k-13k=£32k) will be taxed at 20%. With the money you have, you could probably do this across two tax years. If the transfer happened quickly, this could be March this year and then April (it might not happen that quickly).

With SIPP funds, I would imagine you just want to hold in cash. As you'll be taking it out so quickly with little time to worry about charges/inflation.

shaun1952 wrote: »

By the way if I sold my shares would I be liable to pay tax on these , they were company shares in their shares scheme .. may be a better way of getting some savings into my account .

Only if you made more than ~£11k Capital Gains. That is the amount you sell it for minus the amount you spent on buying the shares, not the total amount you would realise if you sell the shares now. There are specific terms for transferring sharesave or ESIP into an ISA which let you transfer up to 20k totally tax-free into an ISA but only within 90 days which probably doesn't apply to you?

The proceeds of the shares is not income and doesn't add to your income tax burden for the year, because you bought the shares from taxable income.

shaun1952 wrote: »

This looks interesting but I want savings I can actually see in a savings account , I worked out roughly if I cash in these pensions plus my shares plus my wives pension pot from the same company I /we will have £80,000 plus in my savings account, then I intend to draw off that carefully over the next 10 + years or so , with interest (around2%) this should last me until I'm around 80 ..I am still alive by then ! ..hopefully we are , I don't think I will need so much money per year to live on ...if I live way behind that then its a bonus but it may be in a nursing home and them having all my house and savings anyway ..

Do you definitely need it to be cash?

If you keep some of the pension and other investments, there are chances to have some income and also see capital gain in the remainder, so it keeps up with inflation.