Pension pot question

K11m

Hello,

I have a question, my husband has recently left employment and we have received his pension account paper work. It currently is £12k

My husband is 36, now self employed but we are in debate about what to do with his pension or what CAN we do with it.

Option 1 - are we able to cash this in now? If we are able to, we would draw the money, use it for a few things that need fixing (property we own has wooden windows that are very much desperate to be replaced now) and hide the remainder in fixed savings as our personnel emergency fund (we have a business one but no personnel one of any decent amount yet) then start up a new private pension for him we pay into. So his pension would be 12k down when he gets to retirement

Option 2 - keep paying into the same company or maybe transfer it to a different company.

I am assuming if we draw it out now we will need to pay tax on it? Does this get deducted when we draw it or would we then need to add this to the SA tax return bits?!

Thank you in advance for your thoughts and wisdom

ajbell

You can't take it before 55 and you can't pay more into it as it's a company pension so leave it or transfer it to a pension you can pay in to.

Spreadsheetman

Option 1 - no, not until at least age 55 depending on the scheme.

Also - you won't be 12k down, you will be 12k compounded at whatever it grows by for at least 19 years down. You will lose way more than you think. Good job you are not allowed to do this in the first place.

Option 2- to continue paying in you would probably need to move it to a new personal pension scheme if the current scheme is tied to the employer.

Or you could just leave it where it is for now and open a new pension with one of the DIY platforms. I would think that is the most sensible thing to start with.

xylophone

He can't withdraw the money from the pension. It could be transferred to another pension provider.

NB Avoid confusion between personnel and personal.

You mention your company - what is the employment relationship between yourselves and the company?

https://www.pensionbee.com/pensions-explained/pension-contributions/private-pensions-for-self-employed?gclid=EAIaIQobChMIyPiVlLG74AIVzLztCh2QTgwYEAAYASAAEgI___D_BwE

As a couple you need to build an emergency fund - current accounts could be the best way of doing this.

https://forums.moneysavingexpert.com/discussion/comment/75458703#Comment_75458703

K11m

oh ok that is weird. I worked for a while (7-8 months) at a company and then left, they had a pension scheme I paid into and when I left I was able to just withdraw the money? It was only £400 but it was withdrawn and I spent it?! This was maybe 7 years ago now?

JoeCrystal

K11m wrote: »

oh ok that is weird. I worked for a while (7-8 months) at a company and then left, they had a pension scheme I paid into and when I left I was able to just withdraw the money? It was only £400 but it was withdrawn and I spent it?! This was maybe 7 years ago now?

Sound like it is a refund of your contribution into a Defined Benefit pension scheme. The disadvantage of having a refund is that you have to pay taxes on the amount and losing the employer's contribution value when you could have transferred the entire amount to another pension pot.

K11m

ah ok I understand that.

Right problem solved then he can decide if he wants to transfer to a new company or leave it be and start up a new one and I will start working on our emergency fund a little harder!

thank you everyone

Brynsam

ajbell wrote: »

...you can't pay more into it as it's a company pension so leave it or transfer it to a pension you can pay in to.

No evidence from OP's post that it is a company pension - I suspect the references are to the pension company rather than the employer. OP, do the words 'Group personal pension' or similar appear anywhere on the paperwork (or just 'personal pension' or 'stakeholder pension')? If so, your husband can continue to pay into it.

If in doubt, look for the contact number on the paperwork and give them a call.

K11m

I actually don't recall what pension type its said. I know the company paid in contributions? It is an Aviva headed paper!

dunstonh

K11m wrote: »

oh ok that is weird. I worked for a while (7-8 months) at a company and then left, they had a pension scheme I paid into and when I left I was able to just withdraw the money? It was only £400 but it was withdrawn and I spent it?! This was maybe 7 years ago now?

This happens with defined benefit schemes. Usually, taking the refund is the worst option. If it cant stay where it is then transfer ist the other option they usually offer and that can be upto 10 times the amount of the refund option.

Albermarle

I actually don't recall what pension type its said. I know the company paid in contributions? It is an Aviva headed paper!

Often a 'company pension ' ( or workplace pension ) means :
The company sets it up in conjunction with a pension provider ( like Aviva) and negotiates charges.
The company and employee make contributions .
When the employee leaves they take the pension with them and it becomes their own personal pension. They can add to it in future if they want .
Best course of action would be to phone Aviva and clarify the status of the pension. Make sure they know you have left the company etc