Free Standing Pension matures this month

wroughtironron

I'm 59 this month, in full time employment (and good health) with around five or six occupational pensions lined up for when I do eventually retire - hopefully around the age of 65.


I owe around £87k on my current mortgage and by the time I retire, it will still be around £66k, so I plan to use some of my pensions lump sums to pay this off.


I also have a free standing pension taken out with Skandia 20 years ago, paying a gross £70 per month into it. This matures this month and is valued at £37,268.


My options are to
1 buy an annuity and take 25% tax free,
2 set up an unsecured pension arrangement (Skandia are offering to do this)
3 Leave it as it is and continue making payments.


Ideally, I'd have liked to pay as much as possible off my mortgage, but I don't think I can do this until pension rules relax next year?


Any suggestions please?

mgdavid

what interest rate are you paying on the mortgage at the moment? Is it tracking base rate or have you got a fixed rate for a period?

wroughtironron

mgdavid wrote: »

what interest rate are you paying on the mortgage at the moment? Is it tracking base rate or have you got a fixed rate for a period?

It's tracking base rate, so its low and I'm paying £300 off the capital monthly.

atush

I would use the 25% TFLS for the mtg, but leave the rest to grow. As even if you took the rest of it, you'd lose some to tax.

If tracking BR, the rate is probably low ( I am paying just over 1%)

wroughtironron

atush wrote: »

I would use the 25% TFLS for the mtg, but leave the rest to grow. As even if you took the rest of it, you'd lose some to tax.

If tracking BR, the rate is probably low ( I am paying just over 1%)

When you say that, is it possible to take the 25% and leave the rest with Skandia until I want to take it?

kidmugsy

wroughtironron wrote: »

When you say that, is it possible to take the 25% and leave the rest with Skandia until I want to take it?

It's possible in the sense that it's lawful; Skandia are allowed to do it. Whether they actually offer it, you must check. Given "2 set up an unsecured pension arrangement (Skandia are offering to do this)" I'd think that they do: I expect you could withdraw the lump sum and ask for an annual income withdrawal of zero, if that's what you want. If Skandia don't allow it, transfer to a provider that will.

wroughtironron

kidmugsy wrote: »

It's possible in the sense that it's lawful; Skandia are allowed to do it. Whether they actually offer it, you must check. Given "2 set up an unsecured pension arrangement (Skandia are offering to do this)" I'd think that they do: I expect you could withdraw the lump sum and ask for an annual income withdrawal of zero, if that's what you want. If Skandia don't allow it, transfer to a provider that will.

I've contacted Skandia to ask if they will do this, and they said yes, but they won't do it without going through my IFA (which I don't have currently).

kidmugsy

wroughtironron wrote: »

I've contacted Skandia to ask if they will do this, and they said yes, but they won't do it without going through my IFA (which I don't have currently).

Pah! Do they charge much for a transfer out? If it's not too awful transfer to Hargreaves Lansdown, or Cavendish Online or one of the other companies that people around here think well of, having first ensured that they'll do what you want without your needing to pay an IFA.

atush

37K is a bit small to pay an IFA to do it, so I would advise transferring it as above.

wroughtironron

just had a thought - I started with a new employer last November and I'm now in their pension scheme (administered by Aviva).


Would it be possible to transfer the matured free- standing pension to my new scheme?


Thanks