What To Do , How to Do it

moomoo1965

Hi there 

I have £ 111,000 in some old pensions and my partner has £66,000 they don’t  give us an living  income so we want to take the pots . We have no rush for the cash I am just 55 but like it all out by the time I’m 60 .
What is the best way and most tax efficient way of getting the cash out .
many thanks in advance 

eskbanker

If these pots aren't already held on a platform that supports flexi-access drawdown then get them on one, and then withdraw £16,666 each per tax year, 25% of which is tax-free and the other £12,500 equates to your personal tax allowance, so no income tax payable if withdrawing at that rate (assuming no other taxable income).  You obviously wouldn't fully deplete your pot by 60 at that rate so would have the choice of waiting another couple of years to finish the job off or paying some tax on it if you can't wait....

xylophone

I have £ 111,000 in some old pensions 

These are old Defined Contribution Pensions? Your partner's pension (s) too?

How much is in each pension?  Any "Small Pots" ? Any Guaranteed Annuity Rates?

Are you both currently contributing to DC pensions?

Have you both obtained state pension forecasts?

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

And think carefully before combining pensions - it may not always be to your advantage.

https://www.express.co.uk/finance/personalfinance/1171833/pension-calculator-contributions-pots-consolidate-my-uk-news

"Steve Webb, Director of Policy at Royal London, said: “One of the questions I am asked more often than any other is whether people should combine all of their pensions in one place.

“Whilst that may seem the tidiest thing to do and can have some advantages, there are also a number of unexpected disadvantages to merging pension pots.

“Older pension policies may have attractive features which would be lost if transferred, whilst small pots benefit from certain tax privileges which do not apply to larger pots.

“As ever, the best approach is to seek impartial advice or guidance before consolidating pension pots.”

You can seek guidance at Pension Wise. 

https://www.pensionwise.gov.uk/en

coyrls

moomoo1965 said:

Hi there 

I have £ 111,000 in some old pensions and my partner has £66,000 they don’t  give us an living  income so we want to take the pots . We have no rush for the cash I am just 55 but like it all out by the time I’m 60 .
What is the best way and most tax efficient way of getting the cash out .
many thanks in advance 

How will getting it all out by the time you are 60 address the issue that it's not enough for a living income?

Marcon

coyrls said:

moomoo1965 said:

Hi there 

I have £ 111,000 in some old pensions and my partner has £66,000 they don’t  give us an living  income so we want to take the pots . We have no rush for the cash I am just 55 but like it all out by the time I’m 60 .
What is the best way and most tax efficient way of getting the cash out .
many thanks in advance 

How will getting it all out by the time you are 60 address the issue that it's not enough for a living income?

...and where will you put it to get a better return?

dunstonh

What is the best way and most tax efficient way of getting the cash out .

If you don't need the money, why do you want to take it out?  Its tax free, outside of the estate and probably doing a lot better than your savings account in terms of returns.   

moomoo1965

hi there 

thank you for all the reply’s much appreciated. 

Our thoughts were to buy a flat and rent it for a few years creating a better income than the pensions gave. Then when we are older we sell our house and move into the flat. That would free up the money in the house and give us an income together with the pensions we have running at the moment .
But we just wanted to get the money the most tax efficient way .

kind regards 

Mark 

MEM62

moomoo1965 said:

Our thoughts were to buy a flat and rent it for a few years creating a better income than the pensions gave.

Once you have properly looked into being a landlord you will realise that it won't do that.  Contrary to what is still popular belief, BTL is not the holy grail of money making.  It is not, by any means, tax efficient, you take on legal responsibilities and almost all potential landlords vastly underestimate both their costs and the amount of work involved.    
The money will better serve you left where it is.       

Albermarle

BTL makes more sense if your are either already an experienced landlord and/or you are involved in some way in the building/house maintenance trades and can get things done yourself or at mates rates .
Otherwise it is a lot less hassle taking the income from a well invested pension pot.

MEM62

Albermarle said:

BTL makes more sense if your are either already an experienced landlord and/or you are involved in some way in the building/house maintenance trades and can get things done yourself or at mates rates .

Or, as in my case, you have owned your flat for 25 plus years and when you buy a house with your girlfriend you don't sell it.  Having said that, the decision to keep it was not driven primarily by finances.  It was driven partly by the fact that it is an expensive area (West London) and if I ever sold it I would never be able to afford to buy there again.  Therefore, by keeping it, we have the option of moving back to the areas at some point if we so desire.  From a purely financial viewpoint it is not a good investment.  If I sold it and invested the money in the stock market I would expect to see a better return.          

dunstonh

Our thoughts were to buy a flat and rent it for a few years creating a better income than the pensions gave. 

What rental yield are you looking at?  A decent rental yield is harder to find than it used to be.  A blind monkey could pick a property and make money on it pre-credit crunch.  Now it takes some skills and knowledge.   And after tax, its unlikely the property would beat the pension unless you buy a run down and do it up.    Why do you think property will give a higher return than the investments in the pension?