Pension Pot

System

i am 55 next year and plan to draw all my small personal pension as a lump sum
it is around 3000 pounds
on that figure can someone tell me how much i will recieve after tax please?

kidmugsy

trev1865 wrote: »

i am 55 next year and plan to draw all my small personal pension as a lump sum
it is around 3000 pounds
on that figure can someone tell me how much i will recieve after tax please?

You'd expect £3000 x (0.25 + 0.75 x 0.8) = £2550, less charges.

If the provider deducts too much tax you just complete a form from HMRC to get the excess back.

P.S. I've assumed that the taxable bit will pay income tax at 20%. Only you know about that.

atush

While a 'for dummies' type post, I think while correct this might be slightly confusing. BTW, 'for dummies' is not meant as a pejorative as pension terms tend to be very selective and difficult.

as a 55 yr old with an income unspecified, we can assume you will get 750 tax free and will have to pay BRT on your remainder of 2250. which would leave 1800 or 2550 in money received and 450 in tax paid.

If you have no income or a very low income we can assume you will pay less tax and gain more pension.

It remains a question

i am 55 next year and plan to draw all my small personal pension as a lump sum
it is around 3000 pounds

How and when you plan to retire if you spend all your small pension now.

Ceres1

Thanks to all who have continued to post on the thread in particular about the situation with regard to smaller pension pots


Thanks too to Xylophone for highlighting a site that should help to clarify things further


Trev I see that you've asked about your £3000 pot I don't know what you earn / your income is like at all but basically you are allowed an income of around £10,000 tax free per year. So say if you are not working and on Job Seekers allowance and have an income of £2982 to £3764 :eek::( your £3000 pot will be well within the income tax relief limit. I don't know if having anything in a pension pot would then impact on getting some types of benefit :undecided Maybe some reader on here could answer that? I'm just mentioning this by the way .... it may not apply to you ... as there may be many people out there in this position with little money coming in but having some money lying in pension pots. I also see that there are a number of agencies that can help search for 'lost' or 'forgotten' pension pots.


Now that I know that I don't have to buy an annuity I'm still a bit confused as to whether I can lift my 25% tax free NOW and leave the rest with the current provider until next April. I will contact them and make enquiries but just wondered if anyone has any thoughts about this?


If any individual has any further information that would help me and others make sense of the pension pot situation please pass on your information / share your knowledge. Additionally if anyone else has any pension pot queries please feel free to post on the thread as Trev did

Your_Hero

Ceres1 wrote: »

Thanks to all who have continued to post on the thread in particular about the situation with regard to smaller pension pots


Thanks too to Xylophone for highlighting a site that should help to clarify things further


Trev I see that you've asked about your £3000 pot I don't know what you earn / your income is like at all but basically you are allowed an income of around £10,000 tax free per year. So say if you are not working and on Job Seekers allowance and have an income of £2982 to £3764 :eek::( your £3000 pot will be well within the income tax relief limit. I don't know if having anything in a pension pot would then impact on getting some types of benefit :undecided Maybe some reader on here could answer that? I'm just mentioning this by the way .... it may not apply to you ... as there may be many people out there in this position with little money coming in but having some money lying in pension pots. I also see that there are a number of agencies that can help search for 'lost' or 'forgotten' pension pots.


Now that I know that I don't have to buy an annuity I'm still a bit confused as to whether I can lift my 25% tax free NOW and leave the rest with the current provider until next April. I will contact them and make enquiries but just wondered if anyone has any thoughts about this?


If any individual has any further information that would help me and others make sense of the pension pot situation please pass on your information / share your knowledge. Additionally if anyone else has any pension pot queries please feel free to post on the thread as Trev did

The question has already been answered my friend. It's a Yes and No scenario. YES, you can take the tax-free 25% now, and leave the remainder fund untouched until next April. But NO it's unlikely that you can do this with your current pension provider in my experience.


You will probably need to transfer your pension to a new provider who can activate drawdown for you. There may be other complications though, such as exit fees, or as other users have pointed out you may be forgoing valuable guarantees within your pension (apologies if you have already clarified if there aren't any, I have not read through all the posts).


Does this make sense?

System

thanks for all the quick and precise answers.
one last question
my 55th birthday is on jan4
would it make much difference if i took my pension pot then,or waited till april 6th when the full new measures come in?

kidmugsy

trev1865 wrote: »

my 55th birthday is on jan4
would it make much difference if i took my pension pot then,or waited till april 6th when the full new measures come in?

You are going to have to wait until April, because currently you can only take that small pension if you are 60.

System

thanks
can i take the 25% on my birthday and the rest on apr 6th?

atush

only if your pension provider allows it.

If they don't, then you'd have to transfer. which will reduce your pot further (as 75% will be taxed anyway).

kidmugsy

trev1865 wrote: »

thanks
can i take the 25% on my birthday and the rest on apr 6th?

With the right provider you can take 25% as soon as you're 55. Then, but depending on what the law is after parliament has finished with it, presumably you can take the rest on 06/04/15. But with only £3k you'd face two sets of disproportionate charges to do it that way. Far, far better value to wait and do the lot as a one-off in the new tax year.