cash in pension

shiredeon

should i cash in my executive pension early (selected retirement date 65) fund about 150k and use it to increase my hyp or leave it to run full term, i also have my opted out of serps fund, 50k, i have now opted back in.

EdInvestor

You can't cash in a pension.

You could move it to a Sipp and invest it in shares there if you like, taking 25% of it in tax free cash on the way out.

But you can't move proetcted rights money into a Sipp at present - you'd have to leave that money behind ( probably starting a new pension for it). You will probably be able to move the PR money to a Sipp next year when Sipps get regulated.

dunstonh

Hybrid Sipps will take protected rights funds. Hybrids will only offer unit trust funds though rather than single shares. However, that could be attractive as it isnt ideal stick the lot in a HYP anyway

shiredeon

sorry i should have made it clearer, i have enquired and i can take 90k from it the remainder buying an anuity, should i take the cash now and defer the anuity.

dunstonh

Why take the funds out of the pension tax wrapper which is tax free and place them into a different tax wrapper offering the same or virtually the same investment options but with less tax advantages?

You can do what you want within the pension wrapper.

shiredeon

makes sense, i see, thanks,

EdInvestor

shiredeon wrote:

sorry i should have made it clearer, i have enquired and i can take 90k from it the remainder buying an anuity, should i take the cash now and defer the anuity.

Issue 1

Are you confident there's going to be no change to the ability to take the tax free cash? ( There are industry rumours that GB might abolish TFC)

Issue 2

Is an annuity likely to be what you want to do with the rest of the money? If so, you will get a truly awful rate now as you are so young.

Issue 3

Or are you likely to want to do income drawdwon ( includes HYP) via SIPP? In which case, there is the temporary problem with the PR money.

One suggestion:

You could split it into 3 bits: this might be worth doing as it gives you flexibility on when you take the income.


1 Split fund into PR and Non PR money.Open new conventional pension for PR money, with view to leaving it till 65 and taking at same time as state pension, either as annuity or as drawdown in SIPP.

2.Take TFC from non PR money,add to big pile of investable money for use now in France

3.Despatch rest of nonPR money to new low-cost online SIPP ( eg https://www.sippdeal.co.uk ) and invest in HYP. Reinvest dividends for now with view to taking income later if needed. This could be a useful topup in case you need more in a few years time, or the currency goes against you or whatever. Otherwise, just activate when you need the income.

If you did the above however, it might affect your tax free cash, which is more than 25%, right? [Also, have you checked if there are any Guaranteed Annuity Rates/ GMPs on the policy?]Is there any post A day protection issue with the TFC?

You might need to see an IFA about this,it's an area which can get rather complex and it's easy to make a mistake which could lose you quite a lot of money.

shiredeon

i see, There are no guaranteed annuity rates, the tax free cash i believe is safe under the pre 87 rules, mind you nothing seems safe in this life, it would be anoying to lose the tax free cash, i could just leave it along with the opted out money and take it later should the need arise, i just wanted to make sure i wasn't missing anything,

shiredeon

EdInvestor wrote:

Issue 1

Are you confident there's going to be no change to the ability to take the tax free cash? ( There are industry rumours that GB might abolish TFC)

Issue 2

Is an annuity likely to be what you want to do with the rest of the money? If so, you will get a truly awful rate now as you are so young.

Issue 3

Or are you likely to want to do income drawdwon ( includes HYP) via SIPP? In which case, there is the temporary problem with the PR money.

One suggestion:

You could split it into 3 bits: this might be worth doing as it gives you flexibility on when you take the income.


1 Split fund into PR and Non PR money.Open new conventional pension for PR money, with view to leaving it till 65 and taking at same time as state pension, either as annuity or as drawdown in SIPP.

2.Take TFC from non PR money,add to big pile of investable money for use now in France

3.Despatch rest of nonPR money to new low-cost online SIPP ( eg https://www.sippdeal.co.uk ) and invest in HYP. Reinvest dividends for now with view to taking income later if needed. This could be a useful topup in case you need more in a few years time, or the currency goes against you or whatever. Otherwise, just activate when you need the income.

If you did the above however, it might affect your tax free cash, which is more than 25%, right? [Also, have you checked if there are any Guaranteed Annuity Rates/ GMPs on the policy?]Is there any post A day protection issue with the TFC?

You might need to see an IFA about this,it's an area which can get rather complex and it's easy to make a mistake which could lose you quite a lot of money.

I presume i can use the TFC along with the house sale proceeds to buy a hyp, will this have to be independent from the hyp invested in the sipp.