Pensions headache

deandown

I have various private pension pots to the value of approx £80K some are quite small, but a couple are larger.
I'm self employed, 65 next December, may not retire yet but may do in a couple of years. Would like to know what the best options are available, is it best to take the whole monies out, go for an annuity of which would have to bring all the pots together(how easy is that to do on your own) or if there are other options around would this mean loosing some of the costs to charges/fees if any of the above is taken up.

Also, my wife has various small pension pots to the value of £30K approx, made up of company pensions that either changed provider after a couple of years in the scheme or had been made redundant.

Thank you.

kidmugsy

deandown wrote: »

I have various private pension pots to the value of approx £80K some are quite small, but a couple are larger.
I'm self employed, 65 next December, may not retire yet but may do in a couple of years. Would like to know what the best options are available, is it best to take the whole monies out, go for an annuity of which would have to bring all the pots together(how easy is that to do on your own) or if there are other options around would this mean loosing some of the costs to charges/fees if any of the above is taken up.

Also, my wife has various small pension pots to the value of £30K approx, made up of company pensions that either changed provider after a couple of years in the scheme or had been made redundant.

For your wife, if she is 55 or older she can already take out the 25% tax-free from each scheme. She could draw out enough of the tax-exposed 75% to use up her Personal Allowance (£10, 600 for 2015-16) each year, and so get it tax-free. Before April her ability to draw out the tax-exposed part is more limited, but she could draw some; for instance if she's 60 she can draw out up to three pots of up to £10k each. She might chose to gather some of the pots together first, depending on the details.

For you, if you want to simplify the running of your money you could assemble all the pots in one place - you'd want to check that you're not giving up any nice features if you do so (e.g. guaranteed annuity rates). In my experience it's been easy and free: I've filled in forms for the destination provider and they (Hargreaves Lansdown) did all the rest. At £80k you can probably find a cheaper provider than HL; to some extent you pay for the quality of their service, which is very good. The best value for you is, I suggest, that you defer drawing your State Pension for one or two years, drawing income instead, if you want to, from your private pensions. For each year of deferral they will pay you an extra 10.4% on your State Pension when you begin to draw it. That increase is largely heritable (e.g. my widow will get 90% of my Extra Pension). Naturally, this isn't a good idea if you both have objective reason to expect to be short-lived. If you both expect to be long-lived (and in particular if your wife is much younger than you) it can be a bargain. If you then want to start up your state pension at (say) age 67, then you can decide what to do about the private pensions. Some people might opt to draw out just enough to avoid income tax each year. If you've drawn out the tax-free lump sum(s) and bunged them into ISAs to keep them tax-free, you might find you've got a useful income in total.

The combination of judiciously "buying" the Extra Pension, and avoiding income tax, would be attractive to a lot of people.
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/372517/dwp024-102014.pdf

Have you both got pension forecasts from the state scheme?

deandown

Thanks, I will digest your thoughts and then have another look at it all and try to understand, because that is what the problem is, trying to understand it all. My wife is still working so her allowance is taken up yearly anyway. If we got a IFA what costs should we be looking at firstly to set up and then manage on a yearly basis. Thanks again

kidmugsy

deandown wrote: »

If we got a IFA what costs should we be looking at firstly to set up and then manage on a yearly basis.

Sorry, can't help you there: I've never used one. Probably some day I will, when something technical arises that is far beyond my ken.