Pay extra to get flexible drawdown?

paparossco

I have a small personal pension with Aegon with a value of circa £17.5K (inc bonus) and will retire in June at 60. My main pension is with the NHS so this was a wee extra either to cash in one go or to take over 6 years until my state pension arrives. As I will be in the new tax year no matter what I do it won't push me into a higher tax bracket. My most recent plan had been to take 25% tax free and then flexible drawdown for the rest.

Aegon have just told me I need a minimum £20K for flexible drawdown so my question is would you add £2.5k from other savings or just cash the lot in one go and pay the full whack of tax. I'm not sure seeking out an Advisor is worth it for this amount? The Fund is a 'With Profits High Equity' as it has been since I started it 25 years ago.

dunstonh

Aegon have just told me I need a minimum £20K for flexible drawdown so my question is would you add £2.5k from other savings or just cash the lot in one go and pay the full whack of tax.

The most logical thing (assuming what you are doing is the right thing) is one you have not mentioned and that is to transfer the pension to a plan that offers drawdown on your value.

Linton

If Aegon cant offer you the flexible drawdown you want you should be easily able to transfer the pension to another supplier who will. If you are happy and able to do a bit of research on the net you should be able to find someone suitable and arrange the transfer yourself.

NOTE - first check whether this personal pension includes any guarantees which may ensure an annuity far higher than available under current rates. Old WP schemes may do so. Under these circumstances transfer may possibly not be in your interests. Although in general an IFA needs to be involved with transferring pensions with guarantees this does not apply to those below £30K.

Malthusian

If you were planning on putting £2,500 into a pension fund anyway it may be the most hassle-free option, but I wouldn't make a contribution purely for that reason. Have you considered transferring the pension to another provider that doesn't apply a minimum?