How to cash my pension in ?

Floydhound

I am 60 years old and have a redundant 50k pension pot with Zurich which was a pension mortgage that was never required in the end. I wish to cash it in under the new pension rules
Can I do this with no tax to pay ?
Do I have to meet face to face with an IFA to cash my pension in ?
Thanks in advance
Floyd

molerat

You can access 25% tax free, the rest is subject to tax. Drawdown may be a more tax efficient option.

You should not need advice for this but some providers do insist on it so transferring to a provider who does not may be an option.

dunstonh

Do I have to meet face to face with an IFA to cash my pension in ?

Depends on the provider and the terms of your pension. There are some lines of defence to stop people doing silly things. Such as drawing a £50k pension in one go (as the tax bill would be large and partly avoidable).

atush

Before you came here, did you talk to your provider and ask what they offer?

did you contact the free information from the govt on your options?

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

kidmugsy

molerat wrote: »

the rest is subject to tax at your marginal rate.

No it isn't; it's taxed as part of your income.

xylophone

No it isn't; it's taxed as part of your income.

See http://www.thisismoney.co.uk/money/pensions/article-2640677/What-tax-I-pay-retirement-income-pensions-revolution.html

http://money.aol.co.uk/2015/01/20/new-pension-rules-how-to-avoid-a-huge-tax-bill/

Floyd999

Thanks for all your comments so far ...
Since I have spoken to Zurich my pension provider who scared me a little saying once I had said yes to taking my pension pot there was no going back !
They informed me the pension has no end term of bonus's.
Draw down is not available.
Further information on my circumstance:
I currently and for the last 2 years have no other form of income.
I have not in past nor do I claim benefit of any form in the present.
My partner (not married) pays for all I need to exist on.
I would like to have as much of my pension as possible as a fall back. (who knows the future)
Anyone's advice with the extra facts will be more than welcome.
Floyd

xylophone

Transfer the pension to a provider with drawdown?


You could take 25% tax free , then an amount up to your tax free allowance tax free (although this would initially have tax taken off - you would have to apply for a refund).

You could then drawdown up to your tax free allowance in subsequent years.

Obtain a state pension statement.

https://www.gov.uk/state-pension-statement

kidmugsy

Floyd999 wrote: »

Draw down is not available.

That must mean that it is not available at Zurich. So you'll need to transfer it somewhere else. Consider Hargreaves Lansdown and their competitors. In your shoes I wouldn't invest the money in the pension: your time horizon is short so I'd just leave it in cash. In my experience there's not the remotest need for an IFA for this job, though I admit I've never dealt with Zurich.

Floyd999 wrote: »

Further information on my circumstance:
I currently and for the last 2 years have no other form of income.
I have not in past nor do I claim benefit of any form in the present.
My partner (not married) pays for all I need to exist on.
I would like to have as much of my pension as possible as a fall back. (who knows the future)

You could drawdown the 25% tax-free lump sum immediately after transfer (=£12,500). You could also withdraw £10,600 tax-exposed, but free of tax because you have no other income. Note that the pension provider would be required to deduct some tax, which you can then claim back from HMRC.

Then next tax year (6/4/16 - 5/4/17) you can withdraw another tax-exposed amount that would be again be tax-free by virtue of your Personal Allowance against income tax. The same warning applies. Over three years or so you should have got the whole lot out free of income tax.

Moreover, each tax year you should consider contributing £2880 to a personal pension of some sort; the provider claims money from HMRC to make it up to £3600. In due course you draw that lot out tax-free again, using the same logic.


P.S. After April '16 you should get yourself a forecast of the new-style State Pension that you'll be due at your State Pension Age. If you won't have the full 35 years' worth of National Insurance Contributions you could consider buying more.

atush

If you want your partner to inherit any pension left over, and for you to inherit his, I would get married.

Keep_pedalling

atush wrote: »

If you want your partner to inherit any pension left over, and for you to inherit his, I would get married.

Or get wills in place if you have not already done so.