Found old pension documents?

greenglide

When I find out ill let you know. (and the taxman).

There is nothing to tell the taxman about. Pensions grow tax free!

HMRC will know about it anyway - they keep the records which are used by DWP when calculating State Pension and the AP and COD / GMP.

plantsandflowers

Just a quick update. I finally got through to Prudential (after listening to Vivaldi for what seemed an age) and was told that yes indeed, I do have a pension with them which is now worth a little over £7,000 before Tax and fees are paid out.
So far so good but by cashing it in It will be classed as earnings and this will raise my income which in turn will be deducted from any working tax credits I am entitled to. So out of this nice juicy £7000 pounds I will actually end up with about £3000. Whats more, the reduction in tax credit wouldn't happen for another year when by that time the £3000 will be well spent. Once again, thank you for all your replies, they really helped.

xylophone

You are entitled to 25% tax free with the balance counted as income in the year of receipt.

Would income of £5250 take you into a tax band higher than 20%?

If not (and assuming that these fees are not disproportionate to the value of the pot), you'd expect more than £3000?

xylophone

See also https://www.gov.uk/personal-pensions-your-rights/how-your-pension-is-paid

https://www.gov.uk/tax-on-pension/getting-taxfree-pension-income

https://www.pensionwise.gov.uk/tax

https://www.gov.uk/claim-tax-refund/you-get-a-pension

plantsandflowers

£5250 minus fees (£?). Leaves me with perhaps £5000. However, I will have to declare the £5000 when I renew my Tax credits. This will boost up my annual income by £5000 which will lose me nearly £2000 in tax credit entitlement. It's like, give with one hand and take away with the other.

mgdavid

so don't draw it now, but keep it invested until you are of retirement age.

PeacefulWaters

plantsandflowers wrote: »

£5250 minus fees (£?). Leaves me with perhaps £5000. However, I will have to declare the £5000 when I renew my Tax credits. This will boost up my annual income by £5000 which will lose me nearly £2000 in tax credit entitlement. It's like, give with one hand and take away with the other.

There will come a point when you don't qualify for tax credits.

That might be the point to decide what to do with this money.

For now, doing nothing seems to make sense.

bowlhead99

plantsandflowers wrote: »

This will boost up my annual income by £5000 which will lose me nearly £2000 in tax credit entitlement. It's like, give with one hand and take away with the other.

It's like, you have your own income, so you don't need free tax credits that other people with that level of income don't get?

When you invested in this personal pension the purpose was to provide an income to you in old age from retirement to 100. By only bothering to invest a few thousand quid, it is not going to provide much of an income over 40 years. A few hundred pounds a year. If you choose to take the income all at once (which was presumably never your original intention as that option didn't exist back in the day), it will look like you have earned a lot in one year and reduce your benefits.

So, the logical thing to do is to keep it as a pension and have it provide an income over the next 40 years as per original plan. Or wait until you are in a situation when new income does not reduce benefits.

xylophone

Will the Prudential permit you to draw only the tax free lump sum and leave the rest invested?

Otherwise you might transfer to another provider which would permit this?

gadgetmind

bigheadxx wrote: »

the stock market is at about the same level as 1999 so could not be worth much more.

The UK market isn't the only one in the world, and many of the others have done much better, and you're also ignoring dividends.

As per the OPs recent post, the value had gone up 2.5x despite the FTSE itself still being at the same level.