Pension - keeping options open?

okydoky

I have 4 pensions built up over my working life.

I am 56 and am intending to retire early - problem is I can only afford a level annuity and do not like the probable impact of inflation eating away at my annuity/drawdown.

Can I "take" 3 of my pensions now i.e. take an annuity or drawdown now, but keep my other pension going for another 5 years or so as a hedge? If I can, can I continue to contribute to this pension at £3600pa although I will have no earnings?

Any guidance appreciated.

Linton

okydoky wrote: »

I have 4 pensions built up over my working life.

I am 56 and am intending to retire early - problem is I can only afford a level annuity and do not like the probable impact of inflation eating away at my annuity/drawdown.

Can I "take" 3 of my pensions now i.e. take an annuity or drawdown now, but keep my other pension going for another 5 years or so as a hedge? If I can, can I continue to contribute to this pension at £3600pa although I will have no earnings?

Any guidance appreciated.

You can take some pensions now and others later. You can contribute 2880 to a pension even if you have no income, the government will refund the 20% tax that you didnt actually pay and raise the contribution to £3600.

I would personally be very nervous about having no inflation cover when retiring early. If in good health now you could certainly expect to live another 30-40 years. 30-40 years at 3% inflation decreases the real income by 60%-70%.

dunstonh

Taking an annuity on level basis at age 56 is very risky. Potentially more risky than doing drawdown (which has investment risk but allows you to increase the income over the years).

atush

If you can 'only afford' a level annuity now, you really basically can't afford to retire early.

Keep working, but try to live on the annuity amt if you can and bank the rest of the money in your pension or ISA. The still retire early just not so early.

Trying to live ont he same amt of money for 30 years or more w/o increases is not going to be possible due to the effects of inflation.

ATF101

Linton wrote: »

You can take some pensions now and others later. You can contribute 2880 to a pension even if you have no income, the government will refund the 20% tax that you didnt actually pay and raise the contribution to £3600.

Out of interest. Is it permissible, while not paying tax, to contribute £2880 (£3600) to an existing pension fund and then in the same tax year exercise a triviality option?

With no other income and a low pension fund say £10k then in theory the 20% tax refund is free cash.

Is this too simple?

jem16

ATF101 wrote: »

Out of interest. Is it permissible, while not paying tax, to contribute £2880 (£3600) to an existing pension fund and then in the same tax year exercise a triviality option?

With no other income and a low pension fund say £10k then in theory the 20% tax refund is free cash.

Is this too simple?

The total of all your pension funds, not just one of them, must be no greater that £18k to exercise triviality.

ATF101

jem16 wrote: »

The total of all your pension funds, not just one of them, must be no greater that £18k to exercise triviality.

I am thinking of just one (and only) pension pot with a value of £10K.

jem16

ATF101 wrote: »

I am thinking of just one (and only) pension pot with a value of £10K.

You mentioned 4 pots in your 1st post. How have they got to one now?

ATF101

jem16 wrote: »

You mentioned 4 pots in your 1st post. How have they got to one now?

Sorry I’m not the original poster, didn’t intend to hijack the thread.

jem16

ATF101 wrote: »

Sorry I’m not the original poster, didn’t intend to hijack the thread.

Sorry - didn't look at the username.

Linton

ATF101 wrote: »

Out of interest. Is it permissible, while not paying tax, to contribute £2880 (£3600) to an existing pension fund and then in the same tax year exercise a triviality option?

With no other income and a low pension fund say £10k then in theory the 20% tax refund is free cash.

Is this too simple?

AFAIK you could do this if the £10K is your only pension, but I am not an expert. Some relevent points..

1) After the first 25% the encashment is subject to income tax. So the gain would not be as large as you may have hoped.
2) You can only claim triviality once - this isnt an ongoig income stream.
3) If this is the only retirement provision the problems are much larger than can be resolved by a £700 tax gain. Perhaps that is where someone in the position you put forward should be devoting their attention.