Advice on cashing in 2 smaller pensions please.

AVENUE

Hi There


I have two smaller pensions which I am probably going to cash in entirely. A Legal & General one of £3000 and an Aviva one of £12000. My Salary is £25,000 pa.


I can cash my L&G one in now (I'm 59) but not the Aviva one till I'm 60 in August. Please could you tell me if after I've cashed in the first one, do I have a limited amount of time to cash in the second one or is there no time limit?


Also as my salary & pension still comes under the 40% tax liability, will HMRC or the pension companies still deduct a higher rate of tax than the 20% I am liable for? If so how do I claim back any overpaid tax once ive been paid? I'm assuming I wont have to wait till the end of the tax year in order to do this will I?


Many Thanks.


Avenue

dunstonh

I can cash my L&G one in now (I'm 59) but not the Aviva one till I'm 60 in August.

What is preventing the Aviva one being done earlier?

Please could you tell me if after I've cashed in the first one, do I have a limited amount of time to cash in the second one or is there no time limit?

No time limit.

Also as my salary & pension still comes under the 40% tax liability, will HMRC or the pension companies still deduct a higher rate of tax than the 20% I am liable for?

In most cases, yes.

If so how do I claim back any overpaid tax once ive been paid?

By filling in the appropriate P form. There are several versions depending on your scenario.

I'm assuming I wont have to wait till the end of the tax year in order to do this will I?

No.

AVENUE

Thanks for that helpful info.


Aviva have said that the Pensionmaker Policy I had is not available to be taken until my 60th birthday. I asked several times about this but that's what they have said.


Do you have any info on how quick & easy it is to claim back the tax if I will have overpaid this please?


Thanks


Avenue

kidmugsy

Are you still contributing to a pension and do you still expect to do so after age 60?

AVENUE

kidmugsy wrote: »

Are you still contributing to a pension and do you still expect to do so after age 60?

No I'm not and I don't think I will be doing after age 60.


Many Thanks.
Avenue

dunstonh

Aviva have said that the Pensionmaker Policy I had is not available to be taken until my 60th birthday. I asked several times about this but that's what they have said.

I don't recognise that product name. That is quite unusual for me. Personal pensions do not have restrictions that require starting at 60. So, that suggests it would be something else. S226 RACs (the product that existed before personal pensions began in 1988) used to have a minimum age of 60 but that no longer applies. Section 32 buy out bonds with GMP would be restricted to 60. APPPs used to be restricted to 60 too but that stopped in 2006. Some hybrid plans (which Aviva has a lot of) can be limited to 60 due to safeguarded benefits like GMP. These often have different tax free cash amounts. So, either this is a mistake or more likely a section 32 buy out bond or a hybrid plan. In which case, you may find you are unable to cash it in without advice and/or it may be unsuitable to cash in as it is worth more paid as income than the surrender value being paid.

AVENUE

dunstonh wrote: »

I don't recognise that product name. That is quite unusual for me. Personal pensions do not have restrictions that require starting at 60. So, that suggests it would be something else. S226 RACs (the product that existed before personal pensions began in 1988) used to have a minimum age of 60 but that no longer applies. Section 32 buy out bonds with GMP would be restricted to 60. APPPs used to be restricted to 60 too but that stopped in 2006. Some hybrid plans (which Aviva has a lot of) can be limited to 60 due to safeguarded benefits like GMP. These often have different tax free cash amounts. So, either this is a mistake or more likely a section 32 buy out bond or a hybrid plan. In which case, you may find you are unable to cash it in without advice and/or it may be unsuitable to cash in as it is worth more paid as income than the surrender value being paid.

The Policy was previously a Commercial Union Pensionmaker Policy which was taken over by Norwich Union (Aviva). Its a policy which I havn't paid into since that takeover.


The forms I have been sent out seem to indicate that the only option I'm not able to take would be to Take some of the money as & when I need it either as cash sums or as flexible income?


Many Thanks.


Avenue

xylophone

My Salary is £25,000 pa.

No occupational pension?

dunstonh

The forms I have been sent out seem to indicate that the only option I'm not able to take would be to Take some of the money as & when I need it either as cash sums or as flexible income?

That is quite normal with most legacy plans. They were built years or decades before drawdown was introduced in 2006. It is not commercially viable to spend tens or even hundreds of millions of pounds making them compliant with recent changes when there may only be a few thousand people left with that type of policy. So, in those cases, these legacy plans would need transferring to a modern plan.

However, the point we need to look at is what guarantees exist that are preventing you from accessing the pension prior to age 60. Are these guarantees valuable and worth more than the transfer value.?

AVENUE

xylophone wrote: »

No occupational pension?

Previously had a small one but not now, due to several reasons & family carer.


Avenue

AVENUE

dunstonh wrote: »

That is quite normal with most legacy plans. They were built years or decades before drawdown was introduced in 2006. It is not commercially viable to spend tens or even hundreds of millions of pounds making them compliant with recent changes when there may only be a few thousand people left with that type of policy. So, in those cases, these legacy plans would need transferring to a modern plan.

However, the point we need to look at is what guarantees exist that are preventing you from accessing the pension prior to age 60. Are these guarantees valuable and worth more than the transfer value.?

The Policy does have a Guaranteed Annuity Rate it says, but I have been sent info that says my transfer value is just over £12,000. It is a policy I only paid small monthly sums into & havn't paid into it for many years and certainly not since Aviva took it over.


Best Regards


Avenue