Pension Advice Please

xylophone

Which is why I'm now here, getting useful advice 

Not advice, (not permitted on the board), just comments.  

Sheba42

xylophone said:

Yeah taking the 25% 4k is a good idea but I was thinking I may aswell take my full tax free allowance for the year which is around 12k I think.  Do you agree? 
Then take 7k next year? 

You seem to be indicating that at the minute, you have no personal income of any kind (salary/benefits/interest) so are not using your Personal Allowance at all?

You don't even make use of Marriage Allowance?

For a person with no income whatsoever, not using Marriage Allowance, and £19,000 in the pension pot.

the PCLS is tax free.

The balance counts as taxable income.

Thus after the PCLS  he could take £12, 570 in the current tax year from the taxable income and pay no tax.

This gives £4,750 + £12,570 = £17320.

The balance ( £1680) could be taken in the following tax year, using only a tiny amount of  the PA so tax free.

When  comparing any SIPPS that may be available don't forget to check for drawdown ( or any other) charges there might be.

Yes thanks xylo, we did eventually find out that hubby could use that marriage allowance, pitiful as it is, every little bit helps. 

Do you, or anyone reading, happen to know why my provider won't allow me to just cash in my 19k rather than having to transfer it ? 
I'm thinking, what difference does it make to them, whether they give me 19k or let me transfer 19k to another provider.
Either way, they give me 19k so why not just send me a cheque ?? 

xylophone

Yes thanks xylo, we did eventually find out that hubby could use that marriage allowance, pitiful as it is, every little bit helps. 

In which case your PA is reduced and you would need to make adjustments to your drawdown to take account of this when you consider the tax situation.

https://www.litrg.org.uk/tax-guides/tax-basics/what-tax-allowances-am-i-entitled

Do you, or anyone reading, happen to know why my provider won't allow me to just cash in my 19k rather than having to transfer it ? 

You did read this post from Silvertabby (retired LGPS administrator)?

https://forums.moneysavingexpert.com/discussion/comment/78657697/#Comment_78657697

But note  tax treatment of TC (if the option is available)

https://www.litrg.org.uk/tax-guides/pensioners/how-do-i-cash-my-small-pension

A quarter (25%) of the value of most pension schemes can be converted into tax-free cash when the pension starts to be paid. This is the same for trivial commutation lump sums. A quarter (25%) will be free of tax and the remaining three quarters (75%) will be taxable as normal income in the year in which it is paid.

£19000 - £4750 = £14,250 (which is higher than your PA for the year - therefore some tax would be payable.

If it is possible to transfer to a SIPP, this could give greater control over when you drew down the pension and therefore the tax situation.

Yeah my husband was always on at me to pay voluntary contributions after I left my job but I've never done it. Do you think I should? 

What exactly does your state pension forecast say?

Have a look at the blue box at the end of this article

https://www.thisismoney.co.uk/money/pensions/article-6928583/Saver-buys-ups-count-DONT-improve-state-pension.html

By next month, it may be easier to get through to the Future Pension Service and explore the question of Voluntary Contributions.

Sheba42

Silvertabby said:

This is under the £30K limit for trivial commutation (ie, being able to take the whole lot in cash straight from the LGPS) yet you seem to have been told that you can't do that.

There are 3 reasons for that:

1.  You have other pension benefits elsewhere which take you over the £30K limit.

2.  You have a GMP (pre 1997 service).  A trivial commutation with GMP can't be taken before GMP age, which remains 60 for women.

3.  Your LGPS is one of the few who don't offer trivial commutation.

Do you have an up to date estimate of the pension you would be giving up?  As has been mentioned before, have you considered asking if you are eligible to take these benefits on ill health grounds?

Thanks for reply silvertabby. 

It's not number 1 as I have no other pensions or income. 

I wasn't with this pension before 1997 so it can't be the GMB I assume ? 

So I'm assuming it's Number 3 and they don't allow trivial commutation, do you think? 

The pension I would be giving up is currently £700 per year.  

Do you know if the CETV value would go down if I decided to hang on until I was 60 before cashing it in ?  

Appreciate your comments and help, thanks again 

Sheba42

xylophone said:

Yes thanks xylo, we did eventually find out that hubby could use that marriage allowance, pitiful as it is, every little bit helps. 

In which case your PA is reduced and you would need to make adjustments to your drawdown to take account of this when you consider the tax situation.

Do you, or anyone reading, happen to know why my provider won't allow me to just cash in my 19k rather than having to transfer it ? 

You did read this post from Silvertabby (retired LGPS administrator)?

But note  tax treatment of TC (if the option is available)

A quarter (25%) of the value of most pension schemes can be converted into tax-free cash when the pension starts to be paid. This is the same for trivial commutation lump sums. A quarter (25%) will be free of tax and the remaining three quarters (75%) will be taxable as normal income in the year in which it is paid.

£19000 - £4750 = £14,250 (which is higher than your PA for the year - therefore some tax would be payable.

If it is possible to transfer to a SIPP, this could give greater control over when you drew down the pension and therefore the tax situation.

Yeah my husband was always on at me to pay voluntary contributions after I left my job but I've never done it. Do you think I should? 

What exactly does your state pension forecast say?

Have a look at the blue box at the end of this article

By next month, it may be easier to get through to the Future Pension Service and explore the question of Voluntary Contributions.

Thanks for reminding me that my tax allowance is reduced due to hubb using married thing as Id forgotten about that. I've also finally managed to reply to silvertabby but had to go on my laptop to do so as my tablet wouldn't allow it, I tried 5 times, which is very strange as I can reply to everyone else on tablet !!

"But note  tax treatment of TC (if the option is available)"  Could you tell me what TC is ? Thanks 

ian16527

Sheba42 said:

Ian16527, were you able to access the DB pension money you transferred immediately ? 

You could but:
If you took it as a lump sum, then you would be liable for tax and the £295 fee from AJ Bell if you closed or moved it within 12 months as Albemarle said previously.
Other platforms may not have early exit penalties as AJ Bell have.

JoeCrystal

I wonder. Is there  required minimum value in AJ Bell SIPP? Maybe leave a token £1 to avoid it's exit fees 

xylophone

"But note  tax treatment of TC (if the option is available)"  Could you tell me what TC is ? Thanks 

Trivial Commutation.

Sheba42

JoeCrystal said:

I wonder. Is there  required minimum value in AJ Bell SIPP? Maybe leave a token £1 to avoid it's exit fees 

I was wondering that too Joe, I looked it up but couldn't find out. 
AJ Bell seemed quite favourable when I looked them up on Which, so I think that might be where I'll go. 

Sheba42

I just found a CETV calculator online that said my CETV would probably be around 21-33k.

Hmmm 🤔 so now I'm wondering if the 19k they have given me is rather low. 
I've never requested one before so I have nothing to compare it to.