Should I take pension

hayleydaley

I have taken one of my pensions it is being processed now .
Lump sum and pay 25% on remainder. But I have just had a statement that I can have a lump sum and rest in pension . Can I take 2 of my pensions out at the same time or have to wait till April for the second one.

hayleydaley

I i have retired , age 61.

jamesd

There is no limit on the number of pensions you can take money from at one time.

What do you mean by "rest in pension"? There are three main ways to change a pension pot into income: buying an annuity, poor value for money for someone as young as you, income drawdown which is leaving the money invested and taking an income from the investments, and using the money to allow you to defer claiming the state pension, so it is increased.

Deferring the state pension is usually the best deal for getting income. For a person who reached state pension age before 6 April 2016 each year of deferring causes their state pension to increase by 10.4%, inflation-linked for life, also inheritable by a spouse, at something between 50-75% or so of the value. for a person reaching state pension age after that date the increase is 5.8%, inflation-linked but not inheritable.

hayleydaley

Sorry what I meant was by rest in pension

I can take a lump sum of £7276.80. With a reduced pension of £1100.00 per annum this is a final salary pension


I have just taken up one of pensions that was 17 years old.
24,630.00
Tax free 6157.69
Taxable cash £18,473.07.

I have another pension worth 24,000.
Don't want to go over the limit so I end up paying 40% tax

jem16

hayleydaley wrote: »

I have just taken up one of pensions that was 17 years old.
24,630.00
Tax free 6157.69
Taxable cash £18,473.07.

Have you informed this pension provider that you have a final salary pension and also another pension pot of £24k?

As the value of your final salary pension plus the value of this pension and your other pension is over £30k you cannot take it as a lump sum as you appear to be saying you are doing.

jamesd

You should urgently contact the place that is currently processing the first request because you are breaking the law and are not yet entitled to take the money as a lump sum. As jem16 wrote, you have too much in that pension pot to use the small pots rule, which has a £10,000 per pension cap, and too much in total pension value, to use triviality, which is available up to £30,000 of total pension value of all pensions combined.

If you don't tell them HMRC will eventually notice and there is a penalty of at least 55% of the pension pot value taken. A big cost for not waiting a few weeks!

This is not a big deal for you because from 6 April 2015 you can take the money as lump sums: the old restrictions that still apply today are removed then.

You can tall the place that is currently processing the first request that you will want to use an "uncrystallised funds pension lump sum (UFPLS) after 6 April and ask if they will process that once the law has changed so they can. Their plan rules might not let the offer this, just let us know if so and we can help you sort out a transfer to places that do.

jamesd

If you don't urgently need all of the money it's best just to wait until after 6 April but if you do there is an option called "capped income drawdown" that would let you take out the 25% tax free lump sum now and some of the rest in this tax year. Then you could change to flexi-access drawdown after 6 April and take out the rest in chunks up to the top of the basic rate income tax band. It's getting to the point where time is too tight to set up capped income drawdown this tax year if a transfer is needed, so if you can afford to wait and take the money in the next tax year and the year after that, your life will be significantly easier.

hayleydaley

So I cannot take any of my pensions is that what you are saying. Not taken any of the other ones they are still sitting there

jem16

hayleydaley wrote: »

So I cannot take any of my pensions is that what you are saying.

You cannot take any of them as lump sums until after the rule change from April 6th as james has told you.

Not taken any of the other ones they are still sitting there

It doesn't matter if you have taken them or not. It's the total value of all your pensions that count just now. As their total value is over £30k you cannot use Trivial Commutation which is what you're trying to do.

After April 6th you will be able to access the 2 non-final salary pots with 25% tax-free and the rest taxable.

As james says, get onto your pension provider asap.

atush

Not as a lump sum, until after April 6th. So get them to hold up ASAP.

Otherwise you could lose 55% when the tax man catches up with you!

hayleydaley

Just been onto them they said it is fine as I am not taking any other payments. From the other pensions.