Puzzled. How much will I get???

dleafy

Just read that last post now.
It looks like taking the lot at 55 is the worst possible thing to do.
I like the sound of taking chunks yearly.
I think that’s what I’ll end up doing.

What would everyone’s advice be?
I’m interested to know.
Thanks again

AnotherJoe

dleafy wrote: »

What would everyone’s advice be?
I’m interested to know.

If you time it right, depending how and when you finish work you could get all of it without paying any tax. Or it may be you need to pay some tax, take it in chunks, lose 15%.

Or you could take it in one go and lose half it it to tax.

The people who would advise the latter option cant reply as internet access isn't possible from those type of care facilities..

xylophone

What would everyone’s advice be?

Advice not permitted - only comments.

You have looked at the Pension Wise link?

You can also book an appointment to discuss your options face to face.

It is quite possible that your existing arrangement does not support flexible access so you might have to move providers.

Under current rules, you would be able to take a 25% tax free lump sum at age 55. You could draw down the balance as best suited your tax position but would need to be aware that if you take out anything above the tax free lump sum you would be restricted by the Money Purchase Annual Allowance with regard to contributions to any other DC pension.

Audaxer

dunstonh wrote: »

No, its not worth £500 a year. Even if it didnt grow a penny more it would pay over £2000 a year.

dunstonh, I must be misunderstanding your comment, but if his pension currently is worth £42k, I'm puzzled as to how it would definitely pay out over £2,000 per year without any growth?

AnotherJoe

Because you can buy an annuity at about 4%.

You give the annuity company £42k, they pay you £2k a year for the rest of your life.

shinytop

Or you could have £32k right now by taking £15k tax free, borrowing the rest (even from "Big Mick") and paying it back when you get the rest. Minus a bit of interest of course ...

cloud_dog

dleafy wrote: »

Just read that last post now.
It looks like taking the lot at 55 is the worst possible thing to do.
I like the sound of taking chunks yearly.
I think that’s what I’ll end up doing.

What would everyone’s advice be?
I’m interested to know.
Thanks again

My opinion is... that you don't know what you want the money for (other than having ££££ eyes), and you don't really have a plan. When are you planning to stop work (retiring)? Why aren't you looking at this money as a way of retiring early and using the capital as income before other pensions kick in?

If this were me, that is what I'd do. Plan how best to use it so that I could stop work sooner and enjoy it then. Obviously if you have life restricting condition(s) or a family history of such then that may change my thought process and opinions.

Dazed_and_confused

If you took the whole lot in one go in the current tax year then the pension company would deduct tax of £12,530 (from the £31,500 which is taxable).

You might get some of that back, you might have more to pay (unlikely) but that all depends on what other income you have in the tax year. The most you would normally ever expect to get back is £8,600

Audaxer

AnotherJoe wrote: »

Because you can buy an annuity at about 4%.

You give the annuity company £42k, they pay you £2k a year for the rest of your life.

Okay thanks, I didn't realise he was talking about an annuity. £2k pa from £42k is 4.76% which is a higher income than I thought you could get from annuities these days.

dleafy

Lots of helpful replies.....and lots to think about.
I'm hoping to retire at 60. I'm toying with buying another property to rent out and paying it off by the time I reach 60. This would either give us an income, or we could could sell both flats and use the money to live until we get our state pensions.
Alternatively, we could down size our home to release some cash.
I'd love to sell up and move to Spain, but with a grandchild on the way, I don't think the wife would go for that now, although it's always been my dream. Maybe we'll buy a small holiday home.
Life is hard....I need a drink!