fathers pension now he's almost retired

christianG

Good evening, just wondering if I could sound something out and see if it makes sense. My father has an old workplace pension, valued at approx £70k, which he didn't know he had! he has always had a low paid job and wasn't able to save for his retirement properly. He isn't due to retire for another 3 years but was just trying to get everything in order so I did some digging and found it for him. It obviously won't give him enough to live on in retirement. My questions are as follows: Is he better cashing it out now, before he retires? or is he better leaving it as is, and drawing on it once he retires? will him having this pension affect how much he gets from his state pension or any other benefits he may later have been entitled to? thanks for any advice at all.

xylophone

My father has an old workplace pension, valued at approx £70k, 

What kind of pension?  Details?

Does he have a  workplace pension with his current employer? If so, what might he expect when he retires?

By three years to retirement do you mean three years to state pension age?

Has he obtained a state pension forecast?

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

If so, what exactly does it say?

Is your father married/ a widower?

Albermarle

Presuming it is a defined contribution pension where there is just a pot of money ( it sounds like it is) .
Firstly if he is entitled to a full state pension , he will get it regardless of any other pensions, savings, lottery wins etc 
It is worth double checking he is going to get a full state pension .Check your State Pension forecast - GOV.UK (www.gov.uk)

From the workplace pension , he can take 25% tax free and the rest is taxable ( but may not be taxed if he does not have enough income overall ) Note though that the state pension is classed as taxable income but he will still have his personal tax allowance like now. 

There is no reason to withdraw it all in one go , especially as he is still working , as he will get hit with a big tax bill.
He should withdraw it as and when he needs it . The state pension is not really quite enough to live on, so if he can top it up from this pension that will help .

In fact rather than withdrawing from it , a better plan would be add more to each month , if possible, whilst he is still working.

eskbanker

Difficult to give answers without more info - you say it's obviously not enough to live on in retirement but what are his other plans for retirement funding, i.e. other pensions, properties, assets, etc?

Likewise it's not really possible to advise on impact on benefits - some are means-tested but others aren't - but it won't affect his state pension.

christianG

hi thanks for the speedy responses. It was an old work pension, which he stopped paying into after his old employment company closed down. He does not have a current work pension, he opted out of the nest pension when it was brought in as he didn't think he earned enough to save. he has no property (currently rents) and no other assets. He divorced my mother 20 years ago and has no partner/wife etc. he was worried that this pension we discovered would affect the amount he may have got from his state pension(after reading a Facebook post!) thinking the amount this one would give him is deducted from his state pension.

AlanP_2

You could repost on the Benefits Board for specific comment on non-SP entitlements.

From the little I know it may reduce (or eliminate) his chances of getting Pension Credit to top up his SP, and that (I think) is a "gateway" to other benefits.

Get him to carefully check his SP forecast as outlined above and try and persuade him to take the free money his employer and the government want to give him by enrolling in to his workplace scheme.

xylophone

 It was an old work pension, which he stopped paying into after his old employment company closed down.

The defunct company offered a pension scheme and your father was a member of the scheme?

What details do you have on this pension?

If you could ask him to check his state pension forecast (link above) and come back with what exactly it says, comments might be more helpful.

NannaH

It will stop him getting any other means tested benefits as once he reaches State pension age it will be taken into account as income, whether or not he actually takes an income from it.
My Sister had a tiny pension of £120 a month and it took her a fiver above the limit for pension credit and the gateway to her rent paid etc.  She would have been FAR better off without the small pension but that is an annuity,  your Dad’s case is different. 
They also use a ridiculous figure for assuming income : £16 per month per £1000 of savings/pension 🙄 (which would be £13k a year)  far above any attainable income. 
In reality he would see a drawdown income of around £3000 a year.  

He would be wise to start paying into his work pension to get the free employer + government contributions.  

In these situations it can often be to worse to have a pension than none at all unfortunately but if he does eventually empty his ‘pot’  there is that safety net,  I imagine he will need to use it to pay his rent. 

Brie

He does not have a current work pension, he opted out of the nest pension when it was brought in as he didn't think he earned enough to save.

And is he still not in NEST?  I thought a company had to reinstate you at least once every 3 years and he would have needed to opt out each time this happened.

Kim1965

Classic  issue for those who go into retirement as renters.