£20K PENSION POT. WANT TO CASH IN!

molerat

Far simpler to arrange your taxable income around your reduced code than mess around removing and re-instating the marriage allowance later.

24Tweezers

Thanks for the input, everyone.  Out of the blue this morning I received a letter from Utmost saying 'as you are approaching the retirement date we have recorded for you'  and a sheet of options to tick, before returning the form to them.  I set the original pension plan up, with Equitable Life in 1987 or 1988.   I have no idea, from memory, what age back then that I told them I hoped to retire at.
I will be 57 in a few weeks time. 
Going back to 1990, personal life events and then the mess the Equitable Life were reported to be in, meant I stopped making any payments into the Plan, around thirty years ago.  Intermittently over the years I received letters, but as they all were above my head and I hadn't paid much into the plan I didn't bother getting any advice, etc...   
Roll on to today, this letter has shown up. 
This is the reason I thought a bird in the hand is worth two in the bush, so am trying to work out the best way of having the money in my hands instead of dribs and drabs I may get from keeping the pension going.  I admit to being naive, but I can't help but see more value in £20K now-ish, than whatever pension I am likely to get from a pot with an overall value in it of little over £20K.

dunstonh

Thanks for the input, everyone.  Out of the blue this morning I received a letter from Utmost saying 'as you are approaching the retirement date we have recorded for you'  and a sheet of options to tick, before returning the form to them.  I set the original pension plan up, with Equitable Life in 1987 or 1988.   I have no idea, from memory, what age back then that I told them I hoped to retire at.
I will be 57 in a few weeks time. 

It doesnt mean you need to take it now.  Its just an age used to trigger paperwork and use on projections with the statement.    You can tell them you dont want it now and it will stay where it is.

This is the reason I thought a bird in the hand is worth two in the bush, 

The bird in the hand is worth exactly the same in the bush.

, so am trying to work out the best way of having the money in my hands instead of dribs and drabs I may get from keeping the pension going. 

You dont get it in dribs and drabs.  That is just one of the options available to you.   Don't make a mistake of taking it out unnecessarily if you dont need it.   You can always access it in ad-hoc lump sums in the future.

 I admit to being naive, but I can't help but see more value in £20K now-ish, than whatever pension I am likely to get from a pot with an overall value in it of little over £20K.

You are 57.   At 67, you could have £40k in that pension.   You could draw that £40k in one go or do £10k a year for 4 years or whatever.

24Tweezers

Thanks for that reality check, dunstonh.   I/we have things to mull over.  (Having dug out some old paperwork from Equitable Life.  I took the plan out in January 1989, a tad later than I originally said).  

Albermarle

and a sheet of options to tick,

Presumably one of the options is to do nothing and leave it alone until  a later date ?

mgdavid

dunstonh said:

............

You are 57.   At 67, you could have £40k in that pension.   You could draw that £40k in one go or do £10k a year for 4 years or whatever.

Surely it would be more tax-efficient to draw most of the pension pot out before 67, from which point a large chunk of the PA will be used up by SP?

dunstonh

mgdavid said:

dunstonh said:

............

You are 57.   At 67, you could have £40k in that pension.   You could draw that £40k in one go or do £10k a year for 4 years or whatever.

Surely it would be more tax-efficient to draw most of the pension pot out before 67, from which point a large chunk of the PA will be used up by SP?

That could well be a scenario that makes sense.   However, you would do it in your 60s and but not yet.
Other potential scenarios could be to draw only the excess over state pension to personal allowance (so tax free).  Or transfer it to the main pension where it may never get drawn but then passed to spouse/children outside of the estate.