small pension pot

billozz

wonder if someona can advise me please, i am 55 yrs old and have a personal pension pot that ammounts to about £15000 which i know is not very much but, do i have to draw it as a pension or is there some way that i can have it in a lump sum, im sure i could put it to good use in a lump as opposed to £20 per week os whatever it will be
thank you
Bill

Lokolo

If that is your only pension then you can take it under triviality rules. However not at 55.

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

billozz

oh right thanks for that so i should be able to take it when i am 60? that is the only private pension i have

Linton

You can take a trivial pension for cash taxed as income at 60.

wallpaperman

Point to consider;

Assuming the triviality limit stays at £18000.00 until you reach 60 and your current pot is £15000.00 or thereabouts, you would need your pension pot to grow by less than £3000 or 20% over the next 5 years. Depending on what it is invested in, it is not a stretch to think that it would be worth more than £18K in 5 years.

billozz

thanks again for the answers, i have had a very nice man? call me and tell me he is an independent financial advisor working on behalf of the company my pesion is with, he is saying that i can get 25% of the pot right now....well actually in about 2 weeks on my 55th birthday. firstly is that correct and secondly will this affect what i can do when i am 60 as explained above. if he is correct how do i release the money i dont want to pay someone to do it for me if i can do it myself and im sure he wont do it for nothing.
thanks again for all your help, some really great people on this forum
Bill
ps looking at what "wallpaperman" is saying if i take the 25% i.e. £3750 would that mean that under triviality rules the pot would then have to grow by £6750 which would take the remaining amount over £18000? its a bit confusing

mania112

Yes you can take 25% at 55, Yes it will affect your ability to take the whole lot under triviality at age 60.

billozz

mania112 wrote: »

Yes you can take 25% at 55, Yes it will affect your ability to take the whole lot under triviality at age 60.

thanks for the reply but can you explain the consequences of taking the 25%

kidmugsy

billozz wrote: »

thanks for the reply but can you explain the consequences of taking the 25%

The consequence is that you won't be able to get the other 75% out in one go. You'll either have to buy an annuity or use Income Withdrawal, so that the money comes out as a modest income stream over the years. Whereas if you do the Trivial Commutation at age 60, 25% comes out tax free and the other 75% suffers income tax, but you have both chunks in your hand. I think (correction anyone?) that you are allowed to spread the withdrawal over a twelvemonth period that extends into two different tax years, which might help you keep your tax bill down.

dunstonh

billozz wrote: »

thanks for the reply but can you explain the consequences of taking the 25%

Death benefits reduced and as you have crystallised the pension and you wont be able to use triviality later on.

crystallised is the term when you take any pension benefits. At the moment, your pension is uncrystallised.

GhIFA

billozz wrote: »

thanks again for the answers, i have had a very nice man? call me and tell me he is an independent financial advisor working on behalf of the company my pesion is with, he is saying that i can get 25% of the pot right now....well actually in about 2 weeks on my 55th birthday. firstly is that correct and secondly will this affect what i can do when i am 60 as explained above. if he is correct how do i release the money i dont want to pay someone to do it for me if i can do it myself and im sure he wont do it for nothing.
thanks again for all your help, some really great people on this forum
Bill
ps looking at what "wallpaperman" is saying if i take the 25% i.e. £3750 would that mean that under triviality rules the pot would then have to grow by £6750 which would take the remaining amount over £18000? its a bit confusing

The £18,000 applies to the "pre-crystallised" value, therefore including the 25% i.e. if you were already 60 it would be based on the £15,000 that the fund is currently worth. You would take the £3,750 tax free, with the balance being taxed.

You mention that this is your only private pension, but do not say whether you have any other pensions accrued in the past through employers - do you have any other pension provision other than this one, as this will have a bearing on whether the triviality option is open to you.