Small Pension Pot - what to do?

d0nnyoz

OK, I have several pensions but my main pension is with BT who I was with for 20 years and will provide me with a good pension. I have two AVC's tied in with my BT pension that will provide additional sums (but nothing to really write home about).
The main question I have is that I have an AVC with the Pru which equates to a pot of just under £15k.
I will be 55 this April (2020) and I wanted to do something with it. Ideally, I need some cash as I am having some building work done on my kitchen. I realise I can take 25% of this pot tax free but the question I have is what should I do with the rest of the pot?
I did speak to the Pru who advised me to 'invest' the remainder into a draw-down pension. The problem is that the Pru state this can ONLY be setup using an IFA (money for nothing IMO). They advised on using their own IFA or I can use my own. As I say, I feel this is slightly unfair as I did speak with their IFA and they stated they would take 3% of the remaining pot value.
So ultimately, the questions I have is:
1) Is this the best option for the remainder of the cash I will have (I want to take 25% tax-free so that is not up for debate)?
2) Is it best to remain with the Pru or are there better options/providers?
Thanks in anticipation.

Albermarle

Is it best to remain with the Pru or are there better options/providers?

You could easily transfer the £15K to another provider with no need for any IFA advice.

If you want to stay with a big household name insurer, then you could look at Aviva or Standard Life(+ others)

Or a retail SIPP with Hargreaves Landsdown, Fidelity, A J Bell etc 

You would need to check the T's & C's as although will be no problem to transfer the £15K , it maybe  below their minimum level to start a drawdown process for new customers.

atush

By all means access your TFLS with this pension.  But dont take a penny of the otehr 75%, otherwise you will be restricted to 4K PA pension allowance.

And it isnt really the point of pensions to pay for a new kitchen.  You should really save for these items in advance.  So seems you may not have enough emergency cash savings for now or pension years.  So whatever you do, save more cash and not take more than your TFLS.

d0nnyoz

And it isnt really the point of pensions to pay for a new kitchen.

I never said it was! The main point here is that a £15k pension is no good to me over the life of my pensionable years and I already have a very good pension (with AVC's) from my years in BT. I have already checked the BT pension to ensure it provides me with a decent monthly pension so using 25% of this £15k pot (which equates to £3.75k) is hardly going to damage my income once I start drawing my pension. The question for me is whether I should put the rest of the £15k pot into a drawdown or re-invest in another pension of some sort. (Is the 25% tax-free amount an annual amount or a total amount for the pot?)

Andrew31

d0nnyoz said:

And it isnt really the point of pensions to pay for a new kitchen.

I never said it was! The main point here is that a £15k pension is no good to me over the life of my pensionable years and I already have a very good pension (with AVC's) from my years in BT. I have already checked the BT pension to ensure it provides me with a decent monthly pension so using 25% of this £15k pot (which equates to £3.75k) is hardly going to damage my income once I start drawing my pension. The question for me is whether I should put the rest of the £15k pot into a drawdown or re-invest in another pension of some sort. (Is the 25% tax-free amount an annual amount or a total amount for the pot?)

Once you take the 25% (you can only take it once) if you dont take an income, your pot will essentially be in drawdown sometime referred to a crystallized.  So not sure what your question is?  

Andrew31

atush said:

By all means access your TFLS with this pension.  But dont take a penny of the otehr 75%, otherwise you will be restricted to 4K PA pension allowance.

And it isnt really the point of pensions to pay for a new kitchen.  You should really save for these items in advance.  So seems you may not have enough emergency cash savings for now or pension years.  So whatever you do, save more cash and not take more than your TFLS.

Pensions are a form of savings.  What is wrong with buying a kitchen with PCLS?  if circumstances suit

xylophone

Are you still contributing to a DC pension?

wjr4

Is this a free standing AVC or one of the ones linked to BT?

xylophone

Is this a free standing AVC or one of the ones linked to BT?

In the first post, the OP said 

OK, I have several pensions but my main pension is with BT who I was with for 20 years and will provide me with a good pension. I have two AVC's tied in with my BT pension that will provide additional sums (but nothing to really write home about).
The main question I have is that I have an AVC with the Pru which equates to a pot of just under £15k.

The Pru AVC seems to be a separate arrangement?

OldBeanz

Be careful wasting your pension on a kitchen as it may leave you short for your Lamborghini.

atush

Andrew31 said:

atush said:

By all means access your TFLS with this pension.  But dont take a penny of the otehr 75%, otherwise you will be restricted to 4K PA pension allowance.

And it isnt really the point of pensions to pay for a new kitchen.  You should really save for these items in advance.  So seems you may not have enough emergency cash savings for now or pension years.  So whatever you do, save more cash and not take more than your TFLS.

Pensions are a form of savings.  What is wrong with buying a kitchen with PCLS?  if circumstances suit

other savings should be used. And if there arent other savings to pay for it, that is a red flag. Pensions are for retirement, not redecoration.