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  • FIRST POST
    • shaun1952
    • By shaun1952 13th Feb 18, 3:05 PM
    • 28Posts
    • 4Thanks
    shaun1952
    Thinking of taking my pension in a lump sum
    • #1
    • 13th Feb 18, 3:05 PM
    Thinking of taking my pension in a lump sum 13th Feb 18 at 3:05 PM
    Hi
    What would be the costs in terms of tax if i was to take all of my pension pots now i have retired. ? I have 2 old works pensions , one has £15,000 , the other £30,000 .
    I would like to take these and then put the total into a savings account or Bonds .
    I am concerned that i may pay 40% tax if this total is added to my pensions i get now (total of £13,000 per year , including my OAP ) .
    What is the best way to do this to avoid too much tax .

    Thanks Shaun
Page 2
    • redux
    • By redux 14th Feb 18, 10:40 AM
    • 17,994 Posts
    • 23,199 Thanks
    redux
    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 ..
    Originally posted by shaun1952
    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.
    • PeacefulWaters
    • By PeacefulWaters 14th Feb 18, 10:42 AM
    • 7,702 Posts
    • 9,669 Thanks
    PeacefulWaters
    This looks interesting but I want savings I can actually see in a savings account
    Why?......
    • IanSt
    • By IanSt 14th Feb 18, 11:26 AM
    • 243 Posts
    • 183 Thanks
    IanSt
    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 ..
    Originally posted by shaun1952
    You say that you will have enough money to live until you are 80, but have you considered your wife's position?

    You've not put any of her details, but she could still have many years of living left. Will she have enough to enable her to have a comfortable life?
    • shaun1952
    • By shaun1952 14th Feb 18, 11:08 PM
    • 28 Posts
    • 4 Thanks
    shaun1952
    Why?......
    Originally posted by PeacefulWaters
    Just for peace of mind really , I wouldn't want my pension pot to go down cove the next couple of years with so much uncertainty around Brexit ... I am an old fashioned worrier .
    • shaun1952
    • By shaun1952 14th Feb 18, 11:17 PM
    • 28 Posts
    • 4 Thanks
    shaun1952
    You say that you will have enough money to live until you are 80, but have you considered your wife's position?

    You've not put any of her details, but she could still have many years of living left. Will she have enough to enable her to have a comfortable life?
    Originally posted by IanSt
    Yes a good point , she has her own Government pension at the moment £160 per week plus a NHS pension , I also have a pension form Massey Furguson , She will get that if I died so she will be able to live a comfortable , not rich life .
    To be honest we don't need much , we are not going our people , we don't smoke or drink , we like our holidays , but in between them we are happy to potter around our home , walking , gardening, seeing our children and grandchildren . I have seen too many of my friends and my family grow old and end up in-firmed or worse dead , if you are lucky enough to live past 80 you may be in a home which will by then cost the earth ..so we have decided to look no further than 15 years into the future .. if we are still fit and healthy then great , but I don't suppose we will need as much then as we do now .
    • maximumgardener
    • By maximumgardener 15th Feb 18, 11:17 AM
    • 272 Posts
    • 115 Thanks
    maximumgardener
    Its good that you look at your whole household income and balance that with your needs (and wants).

    do you have other savings e.g. in ISA's etc, elsewhere?

    from what you have said already yours and your wife incomes put you both just over your tax allowance of 11850 from April 18? you at 13k your wife at similar ? pensions in payment.......

    your question really poses how quickly you require monies from your 45000 additional pensions.
    If you don't need it all quickly then you could draw it down at 5k /yr (pay 1k tax) so nett 4k OR

    draw it down faster over say 2 or 3 years and pay the relevant tax. does not seem to make sense for you to take it all in one tax year unless you desperately need it .you would pay more tax.

    Do you know you should have the option for the tax free lump sum from your 45k . i.e. approx 11k
    (25%) and could drawdown the balance over a timeframe to suit you . consider investing the 11k in S&S isa's and you can draw that down as well tax free
    • maximumgardener
    • By maximumgardener 15th Feb 18, 11:20 AM
    • 272 Posts
    • 115 Thanks
    maximumgardener
    you do have another option.....just leave the 45k invested in a pension
    • maximumgardener
    • By maximumgardener 15th Feb 18, 11:32 AM
    • 272 Posts
    • 115 Thanks
    maximumgardener
    or ....if you really are that risk averse........ just annuitise the 45k ?/ 80k ?

    get whole of market quotes.
    • shaun1952
    • By shaun1952 16th Feb 18, 11:17 AM
    • 28 Posts
    • 4 Thanks
    shaun1952
    or ....if you really are that risk averse........ just annuitise the 45k ?/ 80k ?

    get whole of market quotes.
    Originally posted by maximumgardener
    Could you please explain what this consists of , Thanks Shaun
    • Malthusian
    • By Malthusian 16th Feb 18, 11:58 AM
    • 3,689 Posts
    • 5,746 Thanks
    Malthusian
    Could you please explain what this consists of , Thanks Shaun
    Originally posted by shaun1952
    You would exchange your pension pot for an annual guaranteed payment. The payment can be indexed to inflation (so unlike sticking all the money in a bank account, the annual payments aren't losing value every year) and you can have part or all of the pension continue to your wife.

    If you do go down this route, you should be sure to get quotes for enhanced annuities (taking your health and lifestyle into account) rather than just using a bog-standard comparison site. It would be worth seeing an IFA, as the fees they charge are often cheaper than the commission paid by annuity providers to comparison sites (it comes out of your pension either way). Many IFAs will be willing to provide annuity advice on a total fund of £80k.

    However this is generally an extremely expensive option, and it is possible for deferring the State Pension for a few years while living off the drawdown fund to be a better option.

    This looks interesting but I want savings I can actually see in a savings account
    Pension providers issue you with a regular statement, like a savings account. All modern DIY SIPPs have online access, like a savings account. Why do you think you won't be able to see the money if you keep it in the pension?
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