Withdrawing Pension Entirely

Johnh123

Can anyone give me an answer to this please. I will reach the grand old age of 58 in January and I have a small pension pot of just over £30k in a SIPP so annual costs and poor investment returns suggest it will keep getting smaller. I really could do with this cash now and I am familiar with the 25% plus annual annuity rule but I heard that if a pension pot is quite small you can withdraw the whole amount in cash. Is this true and if so what are the rules re value/how much age etc... Thanks in anticipation.

Lokolo

Has to be less than £18000.

http://www.pensionsadvisoryservice.org.uk/workplace-pension-schemes/final-salary-schemes/cashing-in-pensions-(triviality)

jayship

For Triviality rules go to pensionadvisoryservice.org.uk.
The maximum limit for triviality is £18000 for all combined private pensions. Yours exceeds that amount.

There may be other options and other forum readers with experience will have their input soon.

jamesd

You have far too much to use triviality and that only applies from age 60, and is only allowed for a single one year period of taking triviality for all pensions you want to do it for.

In your case you could do something like starting Income Drawdown. A place like Hargreaves Lansdown will do that for an ongoing cost of just £25 a year for a GAD Limit calculation once every three years until you reach 75, then £75 a year for annual calculations.

With £22,500 left after taking a tax free lump sum you could take between 4% and 6% income, ignoring the GAD limit that'll restrict the upper part a bit for a while, and that's from £900 to £1,350 income a year, before deducting the £25 average cost.

If you're not familiar with Income Drawdown, you'd use funds like Invesco Perpetual Monthly Income Plus and Invesco Perpetual Distribution to generate ongoing income and still have some potential for growth to keep up with inflation. You'd also want to keep at least two years of anticipated investment income in a savings account to smooth out the income and allow for temporary drops. Better three years worth.

dunstonh

I wouldnt recommend drawdown here as the OP doesnt understand investing (not a criticism but understanding it is vital when doing drawdown).

atush

I agree, if you had a SIPP and didn't understand investing this would explain your losses/no increases.

So the lump sum and an annuity might be best for you. Unless...are you still working? Might be best to leave it ride (or at least the 74%) if you are still working and don't need the income.