Pension Freedom

dunstonh

but my question is do i have to invest the rest somewhere else

Possibly, depending on the versions of pension you have. Royal London do have a drawdown plan but most of their historic plans dont allow income drawdown.

also will taking this do anything to my state pension.

not a thing.

nandrews

You certainly need to something to get rid of the debt, as that will be costing you more than you could ever get by way of interest putting the equivalent cash elsewhere. If you can get a cash free sum from your pension pot that would be a good source to clear the debt.
I am at about the same position as you, but with no debt and a bigger pension. I have used an IFA to sort out the best route for me. It's expensive advice, but worth it for me.
Have you tried the governments Pensionwise service? It's not advice but guideance. So they won't tell you what you should do, but explain the options to help you make the choice.
Chances are that you will get a better deal by moving your pension to another company, but check if yours will charge a fee to move it.
If you go for the paid advice then maybe get your pension company to combine the pensions into one. It sounds very messy having 5 and all with one company they should be able to give you just the one.

jamesd

lisajaynec wrote: »

hi looking for some advice i am 57 years old i work self employed but very part time (10 hurs at most a week) as i have been ill and wont return full time. I have a pension pot of 85k which is 5 separate pensions all held with royal london)

How much do you expect to earn this year? You could plan to take the difference between that and your income tax personal allowance as taxable income from part of one of the pots, in addition to the 25% taken tax free.

Say you're going to have £6,000 taxable income. That would leave £4,600 of personal allowance available this tax year. So you could take benefits from £4600/75 x 100 = £6133.33 of pension this ta year and pay no income tax. £1,533.33 of that would be the tax free lump sum, the rest taxable income on which no tax is due. One reason this can be interesting is that there is a new option called the "Uncrystallised Funds Pension Lump Sum" that allows doing it quite easily, you just say you want whatever as total lump sum and the pension providers splits it 25%/75% automatically for you.

You could perhaps do the same next tax year, though better to use more 25% money if you're not on cheap interest deals. Of you could accept paying some income tax and using UFPLS again.

If you do go with the option of taking just 25% tax free you will need to move the remaining 75% into "Flexi-access Drawown". This allows just leaving the money invested, though not all plans allow this, particularly older ones, so you might have to transfer the money to a suitable plan to do this. Not hard, just a bit more to learn about.

jem16

Alexandramarsden wrote: »

Hi,

If you give us a call at xxxxxx we can talk you through your options and are happy to help.

Thanks
Alexandra

Alexandra - you need permission from MSE to post in an official capacity.

jamesd

Alexandra, please do work with the MSE folks when they get in touch, helpful company reps are a good thing!

captaintee

Hi I have a small pension fund maturing shortly and my pension holder has given me options which seem ridiculous either I take it all and pay 25% tax on some or I take an annuity which will take 20 years before I receive it all plus if I die my relatives receive nothing and the balance vanishes. It is only about £14000 and I'm 68 and will be retiring in July this year. Can I not take an annuity which pays quicker and leaves the balance to my relatives.

nandrews

captaintee,
They may sound ridiculous but the options seem about right.
It is a small amount as you say so you can't expect them to pay much from it.
The pension will be arranged to pay you until you are expected to die. So therefore an annuity paying you until then won't be much either.
The lump sum is taxed by the government, so the pension company can't change that. It's meant to discourage people from spending all their pensions and then falling back on
the sate in old age.
It sounds like you may be best to draw down - take a small amount from your pension pot and then use it or invest it in something better.
I assume you have another (larger) pension to keep you in you retirement?

Good luck
Nigel

captaintee

Yes I have other investments but not pensions. It was the fact that if I died anytime after about 4 years any balance would disappear and not go to my dependents.

PensionTech

Hi I have a small pension fund maturing shortly and my pension holder has given me options which seem ridiculous either I take it all and pay 25% tax on some or I take an annuity which will take 20 years before I receive it all plus if I die my relatives receive nothing and the balance vanishes. It is only about £14000 and I'm 68 and will be retiring in July this year. Can I not take an annuity which pays quicker and leaves the balance to my relatives.

What you are describing is drawdown. You take 25% tax-free, and the remaining 75% stays invested. You can then withdraw as much or as little as you want in taxed income. If there is any left when you pass away, that can be passed on to your relatives.

However, it doesn't sound like your current pension provider will support drawdown (and they don't have to), so you will need to find another provider that does, and transfer the money to them. There may be charges from your old scheme for transferring out, charges from your new scheme for setting up a new arrangement, and/or ongoing charges from your new scheme for managing the drawdown arrangement and investments. You should also be aware that, as this is quite a small amount of money, you might find it more difficult than most to find a provider who will accept a transfer.

xylophone

It might be possible to transfer the pension to the likes of Hargreaves Lansdown - you would be able to take the PCLS and then gradually withdraw the balance over a couple of years to suit your tax position.