We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
We're aware that dates on the Forum are not currently showing correctly. Please bear with us while we get this fixed, and see Site feedback for updates.
25% Tax Free Lump Sum and Still Work

ohio
Posts: 5 Forumite
Hello
I'm considering surrendering my endowment policy to pay off credit card debts.
If I do that I will need to "find" £15000 to pay off the balance of my part endowment/part repayment mortgage in 2017.
I can take 25% of my personal pension tax free from age 55 (in 2015) and that would more than adequately cover the £15000 and in good time before the end of my mortgage term but my pension provider (scottish widows) tells me that if I do take the 25% in 2015 that I have to start receiving my pension in 2015 - is that the case please? I would like to take the 25% - pay off the final £15000 of my mortgage - and keep my pension pot in tact until I want to draw on it.
Any advice greatfully received please.
Thanks,
Ohio
I'm considering surrendering my endowment policy to pay off credit card debts.
If I do that I will need to "find" £15000 to pay off the balance of my part endowment/part repayment mortgage in 2017.
I can take 25% of my personal pension tax free from age 55 (in 2015) and that would more than adequately cover the £15000 and in good time before the end of my mortgage term but my pension provider (scottish widows) tells me that if I do take the 25% in 2015 that I have to start receiving my pension in 2015 - is that the case please? I would like to take the 25% - pay off the final £15000 of my mortgage - and keep my pension pot in tact until I want to draw on it.
Any advice greatfully received please.
Thanks,
Ohio
0
Comments
-
I can take 25% of my personal pension tax free from age 55 (in 2015) and that would more than adequately cover the £15000
Depending on investment returns of course: they said the same about endowments 10 years ago.......but my pension provider (scottish widows) tells me that if I do take the 25% in 2015 that I have to start receiving my pension in 2015 - is that the case please?
Not if you move it to a SIPP, put it in income drawdown and take no income.Trying to keep it simple...0 -
Thank you EdInvestor, I appreciate it. To show my naivety what is a SIPP please and also I was under the impression that my pension funds could not go down from their current value - is that not the case please? Thanks again, Ohio.0
-
A SIPP is a self invested personal pension.I was under the impression that my pension funds could not go down from their current value - is that not the case please?
A personal pension is usually invested in funds whose value fluctuates from day to day. Is your pension not a PP but some other type? What is the money invested in?
Some pensions have guarantees, but these are normally fixed to a specific retirement date (normally 60 or 66) and would be invalidated if the pension was taken early.Trying to keep it simple...0 -
Scottish Widows were one of the last to have guaranteed annuity rates (as late as 1995). Scottish widows will only give you information relating to your policy. They will not provide advice or options that are available to you generically or could be available by other types of pensions.
A SIPP is an experienced investor product and income drawdown is a high risk transaction. So, make sure you know what you are doing before you go down that route.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
I don't know about Income drawdown particularly, but you can't take the lump sum and not the pension that goes with it, Scottish Widows are right in what they say. whether Ed's suggestion will work I have no idea!
Your pension fund is still an investment, which is subject to risk, so the value of it can go down as well as up.I have worked for 5 years as a Pension Administrator and then a further year in a non-administrator pension role. I am not (and never have been) an adviser. Do not take anything I say as advice, it is information given on the best of my knowledge.0 -
jonathon_hart wrote: »I don't know about Income drawdown particularly, but you can't take the lump sum and not the pension that goes with it, Scottish Widows are right in what they say. whether Ed's suggestion will work I have no idea!
It will.This is an A-day change brought in last year,based on the new rule that drops the requirement for people with drawdowns to take an income before the age of 75.
The only thing that could cause a problem is if there is any protected rights money in the fund.However it sounds as though the pension fund is quite large, so Widows could probably provide an answer for that, if necessary.And even if not, by the time the OP wants to do the deal, chances are the PR money problem will have been solved.:)Trying to keep it simple...0 -
You can do drawdown with protected rights so that isnt a problem.
However, Scot widows dont allow it with their pension so they will not offer it as an option. We also dont know if the Scot Widows pension is an RAC or a PPP (or an SHP or SIPP). So, guranteed annuity rates may exist.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Thanks v much for your comments, much appreciated, Ohio.0
-
Thanks v much for your comments, much appreciated, Ohio0
This discussion has been closed.
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 348.3K Banking & Borrowing
- 252.1K Reduce Debt & Boost Income
- 452.4K Spending & Discounts
- 240.9K Work, Benefits & Business
- 617.2K Mortgages, Homes & Bills
- 175.7K Life & Family
- 254.1K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 15.1K Coronavirus Support Boards