3 Pensions Total under 15k

col553

I have 3 small pensions with pearl in total they are 14500. I am in ill health (53) Will not be returning to work. Pearl tell me i can cash them all in with a Doctors letter but will only be able to take 25% tax free the rest will be taxable. Any advice on what to do with the funds or shall i tranfer to another company or take it all and invest it in mine and my wifes next years ISA allowance.

dunstonh

Pearl are correct in what they are saying. It wouldnt matter if they were elsewhere.

If you intend to leave them invested, then you should certainly moved them away from Pearl if they are V1, 2, 3 or 4 pensions (often referred to as prosperity pensions). If they are pre 1988 retirement annuity contracts, then these can have quite valuable guaranteed annuity rates and in a few cases, guaranteed minimum fund values. Very desirable but they only kick in at age 60 but have a big hike in the guaranteed rates at 65, 70 & 75. There is no increase in the interim years. i.e. 61,62 etc.

There would be no point investing it in an ISA even if you could as pensions are able to invest in exactly the same funds as ISAs. So the returns would be virtually identical. At least in the pension, it isnt using your ISA allowance.

ReportInvestor

If you won't be earning then not all of the remaining 75% is necessarily taxable at basic rate income tax.