Small pension pot

cherryade44

Hello I was contributing to  a workplace pension until being made redundant 18 months ago. I assumed the pension would then be frozen, but it seems it is still being affected by the stock market and has lost about 15% off it's previous high. I am not currently working or claiming benefits. If next year I needed to access some of the money what is the procedure, for  example if i withdrew a lump sum about 20% do i involve a third party or contact my former employers. Also if i withdrew some money would the rest still be affected to falls and rises in value. Hope this makes sense, thanks in advance

Marcon

cherryade44 said:

Hello I was contributing to  a workplace pension until being made redundant 18 months ago. I assumed the pension would then be frozen, but it seems it is still being affected by the stock market and has lost about 15% off it's previous high. I am not currently working or claiming benefits. If next year I needed to access some of the money what is the procedure, for  example if i withdrew a lump sum about 20% do i involve a third party or contact my former employers. Also if i withdrew some money would the rest still be affected to falls and rises in value. Hope this makes sense, thanks in advance

From what you've said, this is a defined contribution pension scheme. It will remain invested wherever it was invested while you were contributing to it, unless you change your investment choices. If you withdraw some cash (and you'll need to be at least 55 to do so), the remainder will remain invested in the same funds and in the same proportions as before your withdrawal, unless you give instructions to change this. 

If it's some sort of personal pension (do the words 'group personal pension' or 'group stakeholder pension' appear on any paperwork?), you contact the pension provider direct - it is no longer anything to do with your former employer. The same is almost certainly the case if it is a true 'employer' scheme - one run by a board of trustees purely for employees and former employees of the company. 

Assuming you've informed the pension provider of any change of address since you left 18 months ago, you should be receiving annual statements and/or have online access, which is presumably how you spotted the value has changed. That should include a helpline number, so give that a ring if you have further queries.

Be aware that if you take anything in excess of the permitted tax free cash*, you will trigger something known as the Money Purchase Annual Allowance. The MPAA limits future pension contributions to £4,000 per annum, including any tax relief on personal contributions plus any employer contributions. Once triggered, it applies for life, so you won't under current legislation be able to top up your pension savings by more than £4,000 a year. That's probably an 'I wish' scenario at present, but something to keep in mind.

*see for a fuller explanation: https://www.moneyhelper.org.uk/en/pensions-and-retirement/taking-your-pension/your-options-for-using-your-defined-contribution-pension-pot

cherryade44

Many thanks Marcon 

NannaH

Is any of your pension in cash funds?
If so it will be unaffected by fund price movements.
If not,  a bit of advice for the future -  if you know you are going to need some pension income within a year or two,  then make the move into cash for the income required.  It’s always a good idea to have enough in cash for a lump sum or 2/3 years of income if you are retiring , this saves the risk of selling at a low point.  You can do this by having income producing funds and/ or by selling funds on a trickle basis over months/years.  

If you are in a lifestyling type fund that’s heavy in bonds,  you’ve lost money due to bond funds being badly affected ( a once a generation event)  
Equity funds are climbing again but bonds may not recover for years. 

I don’t know if general advice is to get out of bonds/bond heavy funds but personally,  I’ve taken a hit to dump one for equities,  risky but I feel that I’ve a better chance of recouping the loss,  as it stands my new fund is up 3% in 6 months but of course it could have gone the other way.
I can’t imagine how people in lifestyling funds who are due to retire feel about their pensions at the moment. 

Albermarle

I assumed the pension would then be frozen, but it seems it is still being affected by the stock market and has lost about 15% off it's previous high.

Just because you have stopped contributing it does not mean it is frozen. As Marcon said the investments within the pension( where your money is) will have remained the same, unless you change them.

It is better this way as in the long run, investments should grow. However in the short term, they can go up and down as you have now found out. Previous to this recent drop they most likely increased quite a lot in the previous years.

You may find the providers website clearly explains your withdrawal options, so worth having a look there and getting on line access to your account, if you have not got that already.

xylophone

If next year I needed to access some of the money what is the procedure, for  example if i withdrew a lump sum about 20% do i involve a third party or contact my former employers. Also if i withdrew some money would the rest still be affected to falls and rises in value. Hope this makes sense, thanks in advance

Are you of an age to be able to access the pension?

Do you have a guide to your pension scheme/policy?

What exactly does it say about access?

Have you obtained a state pension forecast?

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

cherryade44

Hello again. I contacted my former employer about accessing money from my pension and they have sent me tons of info and forms to fill in. It says I must either talk to pension wise or sign to say I have opted out . I went online and booked an appointment but the earliest was April..
I wanted to make any withdrawal for this tax year incase I need to make another withdrawal in the new tax year 23/24
Have  I left things too late for this tax year or should I opt out of the appointment with pension wise and start the process
 My former employer has recommended a withdrawal provider called Lifesight  , 
I find all this confusing , thanks for any advice 

xylophone

My former employer has recommended a withdrawal provider called Lifesight  , 

I am somewhat puzzled by this. Is your ex employer providing the pension through this?

https://www.lifesight.com/

LifeSight is WTW’s defined contribution multi-employer pension trust for employers who would benefit from high-quality, lower risk, market-competitive pension provision without the governance burden.

Who is the ex employer?

cherryade44

xylophone said:

My former employer has recommended a withdrawal provider called Lifesight  , 

I am somewhat puzzled by this. Is your ex employer providing the pension through this?

https://www.lifesight.com/

LifeSight is WTW’s defined contribution multi-employer pension trust for employers who would benefit from high-quality, lower risk, market-competitive pension provision without the governance burden.

Who is the ex employer?

Thanks for replying Xylophone, my former employer was DHL, they say although there are other providers to choose from Lifesight is one provider selected by the trustee for me to consider 

cherryade44

Looking at the forms I am slightly confused by the first  question ( please see image ) 
Does that mean if the tax free lump sum I am requesting is more than £7,500 i leave that box unticked , thanks 

Linton

cherryade44 said:

Looking at the forms I am slightly confused by the first  question ( please see image ) 
Does that mean if the tax free lump sum I am requesting is more than £7,500 i leave that box unticked , thanks 

In the situation you have described you are right in that you should leave the first box unticked

What this is about is that if you take the tax free lump sum and use it to contribute extra into your pension you will be getting an extra tax free lump sum from cash that was tax free to begin with.  HMRC may not like this.  However if any of the boxes are ticked, which I assume they will be, then HMRC will be happy as the sums involved will be considered non-significant..