taking pension at 55

grubsup

Hi i will be 55 soon and was looking for some advise. I have a small frozen pension with around ten grand in it from years ago. Was thinking of taking the lot out when 55. How would i go about this and what tax would i have to pay. Thanks.

kidmugsy

Ask the pension scheme whether it lets you take the lot out, and at what cost. Ask them if there are any advantages you could lose by cashing in or transferring out.

If they don't suit, check whether they would charge you for transferring to a scheme that does let you take the lot (e.g. Virgin).

Tax: 25% tax free, 75% taxed as income (unless the pension is of some unusual sort from long ago). Usually the provider will be obliged to take excessive tax from the taxable bit, which you then claim back from hmrc. If you want to know how to avoid that hassle, read one of the hundreds of recent threads that answer your questions.

prowla

Yes - 25% tax free and the remaining 75% as taxable income, which could put you into the next tax bracket.

If it bumps you over 120k (I'm guessing 10k won't!) for the year, then it'll eat away your tax allowance too.

xylophone

small frozen pension

Why "frozen"?

What kind of pension is this?

atush

Is this your only pension? Why do you want to take it now 9instead of when you actually retire).

If you wait til you need it and are no longer working, you might be able to get it all untaxed?

grubsup

atush wrote: »

Is this your only pension? Why do you want to take it now 9instead of when you actually retire).

If you wait til you need it and are no longer working, you might be able to get it all untaxed?

Thanks Atush no this is not my only pension. i have another company pension this one was from 15 years ago. Was wanting to take the smaller one out at 55 and leave my main one in.

bigadaj

grubsup wrote: »

Thanks Atush no this is not my only pension. i have another company pension this one was from 15 years ago. Was wanting to take the smaller one out at 55 and leave my main one in.

Why not transfer the old one into the new one?

xylophone

What kind of pension is the old pension?

You indicate that it was a company scheme - is it a deferred Defined Benefit Pension?

HappyMJ

grubsup wrote: »

Hi i will be 55 soon and was looking for some advise. I have a small frozen pension with around ten grand in it from years ago. Was thinking of taking the lot out when 55. How would i go about this and what tax would i have to pay. Thanks.

Assuming your personal allowance is used and you stay within basic rate then the tax will be around £1,500 being 20% of 75%.