best way to cash in pension?

spendulix

funnymonkey wrote: »

Thank you for all of your answers...
Just to clarify I fully intend to move overseas and rent my house out which will give me far greater income that my pension would do but in order to do this I would need to pay off the last 50k on the mortgage in order to have 100% ownership so thats where my pension would be going and not wasted....thank you

Renting a property is not as easy as you may think.

Have you factored in the costs, tax, periods it's empty, insurance, renovations, repairs.
And then there is the complication of living abroad, have you factored that in.

Good luck SD

zagfles

To answer your question instead of trying to give you financial advice...

You should ask the provider what options they offer. They might not offer all the flexibilities, or they might insist you take advice.

If they do offer the option to cash it in, you'd get 25% tax free and the rest would be taxed at your marginal rate. So £41250 would be taxable, this will be added to any other taxable income you have so unless your other income that tax year is very small you're likey to pay higher rate tax on some of it.

An alternative might be to draw it down over a couple of years if that suits, you'd likely pay less tax that way. Your tax situation depends on your other earnings.

If your provider doesn't offer these option or insists you take advice, you could transfer it to a SIPP which offers full flexibilites, HL might be a good option as they're good value for small'ish amounts (and no charge for cash).

Check your pensions doesn't have any valuable guarantees eg guaranteed annuity rate etc.

fatbeetle

With interest rates as they are, I let my house out, and the rents paid off the mortgage. Worth considering?

atush

With interest rates as they are- do you expect them to tay that way? i dont.

there are a lot more expenses other than the mtg to take into acct when you let. Such as commission to letting agents, tax on income, insurance, maintenance, depreciation of goods such as white goods, carpets, decor etc.

In a general sense, pensions are free from income tax in accumulation phase (ie before you take an income) and capital gains.

Rental property is heavily taxed- on income (and deductables are being phased out) and capital gains, plus an increase on stamp duty for rental properties. I think you might find that property brings less PA than a conservative investment portfolio.

mgdavid

fatbeetle wrote: »

With interest rates as they are, I let my house out, and the rents paid off the mortgage. Worth considering?

That was in the past so obv was a good decision. But 'the past is no indication of the future', and there have been enough recent changes in the tax treatment of lettings to realise that the future is a very different place hence probably not worth doing. Hence the thoughts from other posters.

funnymonkey

Thank your all our anew....so very helpful.
My work pension put 1% so very poor but it might be worth considering topping up my private pension.
If I do this how many %does the government put in pls?
Can anyone please recommend a good pensions advisor please?
Thank you

dunstonh

My work pension put 1% so very poor but it might be worth considering topping up my private pension.

If you need to pay in x% to hit your income target then 1% from the company is better than nothing. They will have to improve on that in the coming years as it was a staged process to help companies afford it.

If I do this how many %does the government put in pls?

You get basic rate relief if you are basic rate taxpayer or lower (i.e. 20%). You get higher rate relief relative to your income if you move into higher rate.

Can anyone please recommend a good pensions advisor please?

Nowadays most of them are good.