Pension Cash

paulrn_2

HI, I am after advice. Since leaving the RN 3 years ago I have been working for a company and accruing extra pension money with Scottish Widows. To date this amounts to just £13,000. If I am luck enough to stay till retirement It would be about £35,000. Given I have my Service Pension would I be able to draw on this money as cash in any way.

atush

At retirement you would be able to recive up to 25% of your cash as a tax free lump sum. The rest you can use to buy an annuity to provide income each year, or a drawdown plan where the money stays invested and you draw income from it each year.

dunstonh

atush wrote: »

At retirement you would be able to recive up to 25% of your cash as a tax free lump sum. The rest you can use to buy an annuity to provide income each year, or a drawdown plan where the money stays invested and you draw income from it each year.

Exactly what it says on the tin. Who would have thought that

atush

You need to get a projection of the income from this, your RN pension and your state pension to know if that will be sufficient income for your retirement. Along with the interest from other savings you have acquired during your working life.

If you feel that it will Not be sufficient, you need to take action straight away to save more (either inside or outside your pension) and perhaps to work longer before taking retirement.

Loughton_Monkey

paulrn wrote: »

HI, I am after advice. Since leaving the RN 3 years ago I have been working for a company and accruing extra pension money with Scottish Widows. To date this amounts to just £13,000. If I am luck enough to stay till retirement It would be about £35,000. Given I have my Service Pension would I be able to draw on this money as cash in any way.

A pension is a pension. Not a savings account. The rules are there for good reason.

Your RN pension may be 'good' but is it good enough to live on forever? Many people do not fully appreciate the double counting effect of 'spending' retirement money. Every £100 you spend now improves your lifestyle - and your 'comfort level' now. But it reduces you retirement funds by £100, so in effect you have a £200 'drop'. This is hard to take when you're 65 without realistic opportunities to earn more!

paulrn_2

Many thanks, I guess cash draw down will be the best for me, I do not need an additional pension as between us we will have sufficient to travel etc. I chose to put this in a pension as I was unwilling to pay 40% tax on the money the company gives me !!!! So I guess I am using it as a savings account.

ben.bayliss

Not cash draw down as in you can take it out - it means the full amount is invested and you get the dividend income etc. from the shares your pension is invested in.

If you honestly don't think you need the extra pension, then stop paying into it. You're completely restricted to the lump sum and annuity otherwise. Like Loughton Monkey said - it's absolutely not a savings account that you are allowed free access to.