Aged 50. Take 25% & leave the rest?

ceegee

Is this right? I have approx £4000 sitting in my personal pension pot. I do not pay into it any more. As I am 50, can I take 25% of it now as a tax free lump sum and leave the rest to fester/grow for the next few years?

Thank you.

dunstonh

What would you do with it? I take it that you wouldnt be investing as all the areas avaiable elsewhere are available in pensions. In which case spending it will be your only thought.

ceegee

Thank you for you reply. Yes, I would be looking to finish off doing the house with it. This would bring me more satisfaction than the income from £1000 would! I've been here for over 20 years and it's about time it was finished.

The trouble is that the money was invested in an index-linked fund (RPI, not an index tracker) and I stupidly (it now appears!) thought that meant my pot would keep pace with inflation. However, it is going down and I want to get something worthwhile out of it.

If I could have all of it, I would still use the £1000 as above, but I would put the remaining £3000 into a top paying ISA or savings account or NS&I index linked certificates because I do not like risk. I don't have a lot of money (nor debt, apart from the mortgage which has just under 7 years to go) and I really, really do not want to see it going down like this.

dunstonh

The trouble is that the money was invested in an index-linked fund (RPI, not an index tracker) and I stupidly (it now appears!) thought that meant my pot would keep pace with inflation. However, it is going down and I want to get something worthwhile out of it.

Index linked funds had a poor start to the year but would have outperformed a FTSE100 index tracker over the last 5-7 years.

If I could have all of it, I would still use the £1000 as above, but I would put the remaining £3000 into a top paying ISA or savings account or NS&I index linked certificates because I do not like risk.

A tracker fund is medium/high risk but the indexed linked fund is a closer match to your risk profile.

and I really, really do not want to see it going down like this.

In the last 20 years, the index linked sector has only suffered one negative year and that was -2%. Most index linked funds float between 5 and 7% p.a. average. Whilst the first 6 months have seen a small drop, a rolling 12 months would see you around 6% up. £3000 in January would now be around £2930 but April/May saw an increase. £3000 12 months ago would be £3180 now.

The risk here is tiny.

derrick

Can the whole pot not be taken under "trivial pension" rules?

dunstonh

Not at that age

EdInvestor

ceegee wrote:

Is this right? I have approx £4000 sitting in my personal pension pot. I do not pay into it any more. As I am 50, can I take 25% of it now as a tax free lump sum and leave the rest to fester/grow for the next few years?

Thank you.

You can. To do this you need to transfer the money into a low cost Sipp and then take benefits, which means the 25% tax free cash will be paid out to you and the 75% remaining will be put into income drawdown, where it will be invested.You can take an income from the drawdown fund from age 50 onwards,but not the capital.