Fixed Term Annuities or Cash

cepa

Hi.
I have 2 deferred pensions - DC pension started July 2010 and deferred June 2018. DB pension from Jan 1987 to July 2010.
Both are from my former employer but handled by different administrators.
I am 56 but left employment to ill health June 2018. I haven't claimed benefits as I received money from an inheritance and so would not qualify for any means tested benefits. My Personal Allowance for 2018/2019 is currently £11341
OH has retired, is 67 and receiving several DB pensions.

I am at the point where I would like to take a lump sum from my DC pension pot but do not know what to do with the remainder. I like many others don't trust any pension trustees or providers and so am really tempted to take the whole sum as cash, taking 25% tax free then the remainder in 2 sums split over 2 tax years (2018/2019 and 2019/2020)at BR tax.

My other option would be to take 25% tax free and then use the remainder as a 10 year Fixed term Annuity.

I would like to keep my DB pension untouched for at least another year. Would I still be able to take up to 25% of that pension tax free in tax year 2020/2021 ?

A couple of questions...
1. Do Fixed Term Annuities still exist, as I am struggling to find any details or quotes.
2. If I took all cash then I presume that 25% is tax free and the remainder split over 2 tax years would use my personal allowance for this year and next first and then I would be taxed on the remainder.

Thanks

cepa

Please can anyone help at all ?

OldMusicGuy

Go here to look at various types of annuities available and to compare them: https://www.moneyadviceservice.org.uk/en/tools/annuities.

If your DC pension allows flexible drawdown, you don't have to take all the 25% tax free up front. You can make what are called UFPLS withdrawals and 25% of each withdrawal is tax free, the rest counts as taxable income.

Pension trustees and pension providers are perfectly trustworthy provided that you stick to well known, reputable brands. You may want to transfer it to a SIPP provider that offers plenty of investment choices as well as flexible drawdown if your current DC pension doesn't.

I suggest you read up on the options available to take your DC pension here: https://www.pensionwise.gov.uk/en.

If you have not already had your free appointment with Pensionwise I suggest you do that as they will talk you through all the options (but they won't advise you what to do).

Dazed_and_confused

My Personal Allowance for 2018/2019 is currently £11341

I think you ar mixing your tax code with your Personal Allowance. They are quite separate things and you can only have a Personal Allowance of £11,341 if your income exceeds £100k.

cepa

If only !!
I do mean tax allowance, I have read so much that I am totally dazed and confused !

The money advice service and MSE appear to be better than Pension wise, and getting a pension wise appointment within the next few weeks is impossible !

xylophone

I am at the point where I would like to take a lump sum from my DC pension pot but do not know what to do with the remainder. I like many others don't trust any pension trustees or providers and so am really tempted to take the whole sum as cash, taking 25% tax free then the remainder in 2 sums split over 2 tax years (2018/2019 and 2019/2020)at BR tax.

If your current provider does not support drawdown then you will need to transfer to another provider.

You could then take the PCLS and draw down over the number of tax years that suits your position.

With regard to your deferred DB pension, you will need to check the scheme rules about taking your pension before scheme pension age and the options that would be available to you.

https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/pensions-and-tax/tax-and-the-cash-lump-sum

Have you obtained a new state pension statement?

https://www.gov.uk/check-state-pension