Release pension cash

bikerbri

Quote from web page.

"If you have a pension pot totalling more than £30,000

If you have more than £30,000 saved in your pension and you're 55 or over, then once you have unlocked your pension you can either:

Take 25% of the fund as a tax-free lump sum, using the rest to buy an annuity or to provide an income directly from the fund, or

Take the 25% tax-free lump sum and leave the rest of the pension invested, ready to take the rest at your rate of tax when the new pension rules come into force in 2015."

So what you are saying is that a pension provider only has to offer one of the options and not both? , and the new rules I was referring to were the ones implemented earlier this year " regarding the £50000 limit" - I understand that I would not be able to withdraw the full amount from my pension until april 2015 and only then if it is passed by parliament.
As I don't want an annuity it looks like I will have to find a new provider!
Thanks Bri

torbrex

I have a small former works pension held with Friends Life (£12,528) that has had no deposits into it other than income from the plan itself. I would like to release this plan if possible as the growth rate after charges was actualy negative last year.

I would take the 25% lump sum and would like to take a drawdown monthly income of a fixed amount to subsidise the meagre income I am getting from the zero hours contract I am currently on.
This income (£150/month) would deplete the balance of my remaining fund in 5 years but this would not be a problem for me as I have 2 other pension funds available that I can access after that.

Can anyone suggest if this idea is 'doable'

dunstonh

I would like to release this plan if possible as the growth rate after charges was actualy negative last year.

What about looking at other investment options? Maybe what you have isnt suitable for your needs.

Can anyone suggest if this idea is 'doable'

If you are over 55, then yes. If under 55, then no. It almost certainly will not be an option on the plan you have though. It will probably need transferring to a plan that facilitates income drawdown. You would have to wait until the new legislation is in force next year to do exactly what you want whereas this year would have a cap on income.

dunstonh

So what you are saying is that a pension provider only has to offer one of the options and not both?

They dont actually have to offer that option. The legislation changes dont not require the providers to offers products with those terms. Legacy/heritage pensions or basic pensions are unlikely to offer the functionality you want and it would require to a transfer to one that does.

torbrex

dunstonh wrote: »

What about looking at other investment options? Maybe what you have isnt suitable for your needs.



If you are over 55, then yes. If under 55, then no. It almost certainly will not be an option on the plan you have though. It will probably need transferring to a plan that facilitates income drawdown. You would have to wait until the new legislation is in force next year to do exactly what you want whereas this year would have a cap on income.

The fund was a 'money for nothing' works pension wher I put minimum in to get maximum contributions from my employer and I had no intention of porting it if I lost my job for any reason.


Would another investment option give the lump sum and 5 years worth of the monthly income I am looking for though?

I am now over 55 and earning under £5000/annum so I did not think that any income that I was hoping to receive from this particular fund would be enough to break the tax threshold.

torbrex

I have spoken to a financial adviser and he has said that under current rules it would be difficult to do what I have planned without getting hit with a tax bill but it should be easily possible from next April so my semi-retirement is on hold for 6 months

bmm78

torbrex wrote: »

I have a small former works pension held with Friends Life (£12,528) that has had no deposits into it other than income from the plan itself. I would like to release this plan if possible as the growth rate after charges was actualy negative last year.

I would take the 25% lump sum and would like to take a drawdown monthly income of a fixed amount to subsidise the meagre income I am getting from the zero hours contract I am currently on.
This income (£150/month) would deplete the balance of my remaining fund in 5 years but this would not be a problem for me as I have 2 other pension funds available that I can access after that.

Can anyone suggest if this idea is 'doable'

If you are taking a fixed income it probably makes more sense to do it via a Fixed Term Annuity than conventional drawdown.

On that size pension fund the sums are likely to stack up better.

greenglide

I have spoken to a financial adviser and he has said that under current rules it would be difficult to do what I have planned without getting hit with a tax bill but it should be easily possible from next April so my semi-retirement is on hold for 6 months

What exactly does he think will change that will change you tax situation?

torbrex

greenglide wrote: »

What exactly does he think will change that will change you tax situation?

The rules relating to pension drawdown figures, at the moment, I am limited on how much of an income I can take in relation to the size of my pot but that changes in April.
Currently I would need to withdraw the whole pot and that would be liable for basic rate tax.

greenglide

torbrex wrote: »

The rules relating to pension drawdown figures, at the moment, I am limited on how much of an income I can take in relation to the size of my pot but that changes in April.
Currently I would need to withdraw the whole pot and that would be liable for basic rate tax.

But the ability to crystallise the pot, takes the 25% tax free now and withdraw the rest over a few years exists now - doesn't it?