Cash in Pension Pot ?

Dirty_Dick

We’ll have to check if the current provider supports a gradual drawdown.

If the residual amount remains with the provider, will it attract any interest ? I ask this because it may affect any tax implications ?

The amount was initially invested for 5 years, drawing a pension. After that the residual amount was reinvested for 6 years , again drawing a pension, due to expire in mid-January.

The (Pension 1) provider is with Just Retirement and is a Lifetime Annuity , and that pays £1940 pa

The (Pension 2) provider is Primetime Retirement and is a Primetime Retirement Plan, and that paid £4067 pa

MallyGirl

The residual amount is likely to be invested in something - you need to find out what that is.

People are struggling to comment as what you are doing with the 5 year and 6 year thing and interchanging the word pension/annuity is non standard and confusing.
Most people either buy an annuity which continues till they die (or further if there are spouse benefits) or they move to drawdown (either with the current provider if supported or by transferring to one that does) and taking TFLS (if desired) and an income which is taxable. The remainder in the drawdown pot continues to be invested and hopefully grows in the long term

atush

I am again confused. Once you buy an anuuity there is not POT left.

so is pension 1 the annuity or pension 2?

Dirty_Dick

Sorry for all the confusion as there are words I don't understand !

My wife'e pension pot was split

Item 1 is with Just Retirement and is a Lifetime Annuity , and that pays £1940 pa, for life

Item 2 (the remainder of the pot was invested into Primetime Retirement and is a Primetime Retirement Plan, and that paid £4067 pa

A TFLS was taken, 11 years ago,

Primetime paid out for 5 years, then Primetime paid out for a further 6 years, which is coming to an end in mid January.

The net amount of the Primetime Plan was £92444, and the Protected maturity Amount is £77698.

AnotherJoe

Dirty_!!!! wrote: »

We’ll have to check if the current provider supports a gradual drawdown.

If the residual amount remains with the provider, will it attract any interest ? I ask this because it may affect any tax implications ?

The amount was initially invested for 5 years, drawing a pension. After that the residual amount was reinvested for 6 years , again drawing a pension, due to expire in mid-January.

The (Pension 1) provider is with Just Retirement and is a Lifetime Annuity , and that pays £1940 pa

The (Pension 2) provider is Primetime Retirement and is a Primetime Retirement Plan, and that paid £4067 pa

There is no tax on interest dividend capital gains or anything else within a pension. The only tax you pay is when it come out.


Ive looked up "Primetime" Heres the skinny;
Our plan uses a Self-Invested Personal Pension (SIPP) wrapper to hold your client’s investment and help them to control any income they decide to draw during the term. This sets us apart from other fixed-term income providers, giving our plan an added element of flexibility.

OK so it seems OP, that you have a SIPP with money in it that you invested for a fixed period. It also looks, reading that blurb, as if you were sold it by an IFA. Are you no longer with them? Now that period is coming to an end you need to decide what to do with that money and what to invest it in, a choice i presume you had the IFA look after before.


To me, given their example of investing £50k for 5 years and getting back £53k, its a product aimed at people who dont wish to take any "risk" and are most likely losing out since thats only about 1% a year. Shocking if thats an actual number they provide. But anyway it is what is is I'm not going to suggest you want anything riskier especially since you wnat the money now.



I think you need to speak to your adviser and see how you can perhaps move half of it to 3 year and the rest to move to another SIPP provider and drawdown over the next 3 years or so from that new SIPP thus minimising tax and then in 3 years do the same with the other half.

xylophone

Then your wife originally had just one pension through her non contributory occupational pension scheme. She was made redundant some eleven years ago when her employer was taken over - the acquiring company offered a sweetener to transfer out rather than become a deferred member of the scheme (or possibly taking her pension earlier than Scheme Normal Retirement Age).

She transferred out, using part of the money realised to buy an annuity from Just Retirement (non increasing and no spouse benefit?) and the rest was put into a SIPP with Primetime.

She took a 25% PCLS from the cash in the SIPP and the balance was invested (as far as I can make out) in Option 3 ( Income plus Maturity Pan).

https://primetimeretirement.co.uk/products/

For five years she drew an income as described and at the end of the period was left with the "known maturity lump sum".

That lump sum was then invested into another Income plus Maturity Plan which will run until January 2019 when the maturity lump sum will be £77,698.

She needs to make a decision about what to do with that money.

She might choose to stick withe same provider and carry on as heretofore.

She might choose to transfer the whole amount to a new SIPP provider and to minimise risk, hold the entire amount in cash - this would earn a tiny amount of interest - however, she might then decide to defer her state pension so that she could use her personal allowance to draw down around £10,500 a year over around seven years and pay no tax (assuming her only other income is the tiny annuity).

Seven years of foreign holidays, then she draws the deferred state pension- it may be that the state pension plus the annuity would also fit within her personal allowance in around 2026.

Or if she wants to drawdown as quickly as possible, she might take out (January) as much as uses up her personal allowance for 2018-19 and then in the tax year 2019-20 as much as together with the annuity uses up her PA (£12,800 presumably) and the 20% tax band.

She could then take the balance in the next tax year on a similar basis.

Or she might choose to hold as much in cash as would enable her to stay tax free in 18/19, 19/20, 20/21 and invest the balance in the hope of a return better than that offered by her existing company.

She has options but if she does not feel able to make the decision for herself, she may well wish to consult her IFA.

Dirty_Dick

Thanks everybody for the info. We are making an appointment to see our IFA.

Just want to make sure he is truly Independent, and comes up with the best solutions for us .

Will come back with what he suggests

Dirty_Dick

Xylophone, spot on with your summing up, couldn't have described it better !! Well, I didn't !

Sorry for all the confusion

dunstonh

Just want to make sure he is truly Independent, and comes up with the best solutions for us .

The I in IFA stands for independent. If he is not independent, he will be an FA. Only IFAs can use the word independent. Any other word that sounds similar but is not independent means they are not independent.

Over half of people seeing FAs think they are seeing an IFA. Often fooled by the FA using words like impartial, unbiased or whole of market. Only the word "independent" is protected from being used by FAs. IFAs make a point of highlighting their independent status. So, it would usually be on letterheads, the terms of business (which is required to state whether thery are independent or restricted), their website (if they have one) or business card.

Dirty_Dick

Hi everyone

I said I come back with the solution we are using.

My wife doesn't work, so the only income is from 2 annuities.

One is ongoing, but the other stopped as the Pension pot was signed over to Royal London.

The first annuity pays about £1920, and the other paid just over £3000 for part of a financial year = £4920.

We have gone down the route of withdrawing from the pension pot, but keeping below the Personal Allowance for that year .

So , for this financial year, £11650 minus £4920 = £6930

And that was has been released, and is now in the bank !!

NEXT Year, the second annuity has stopped, the Personal Allowance has increased, so a few more "beer tokens" destined for the bank !

Can I just say MANY THANKS, to all the people who have given me information on this topic. CHEERS