A little advice on a smaller pot, taking it now and reinvesting.

Fly100

Hello all,

I have a small BT pension that’s indexed linked ( paid into for 8 years ) that I have the opportunity to draw. Some round figures. If I take it now as I approach 52 its will pay me just under £200 per month ( no lump sum £150 with a 12k Lump). Alternatively if I wait until im 60 where I will be forced to draw it comes out at £250 ( no lump sum).
My question is would I be better off taking that £200 now and paying it back into my own Personnel Pension as Im not likely to retire for another 10 years min. On paper it seems a easy decision but I’m not a money wizard.
Appreciate your thoughts.

FLY

JohnWinder

Well, you don't tell us whether you or someone else will or will not be contributing to this BT pension from now until age 60. It seems relevant.

Fly100

JohnWinder said:

Well, you don't tell us whether you or someone else will or will not be contributing to this BT pension from now until age 60. It seems relevant.

Good piont...I no longer work for BT and havent for 25 years.

El_Torro

I believe the £250 you will get at 60 is just a projection. The annual / monthly income should be linked to inflation, so you may get more or less than this. 

If you don't need the money now I would wait. An index linked pension (albeit a small one) is valuable once you have retired. 

Are you retired already? Or plan to retire at 60, or later? If you're not retired yet I would be inclined to wait before taking this pension.

Marcon

Fly100 said:

Hello all,

I have a small BT pension that’s indexed linked ( paid into for 8 years ) that I have the opportunity to draw. Some round figures. If I take it now as I approach 52 its will pay me just under £200 per month ( no lump sum £150 with a 12k Lump). Alternatively if I wait until im 60 where I will be forced to draw it comes out at £250 ( no lump sum).
My question is would I be better off taking that £200 now and paying it back into my own Personnel Pension as Im not likely to retire for another 10 years min. On paper it seems a easy decision but I’m not a money wizard.
Appreciate your thoughts.

FLY

Are you sure you can draw it now - do you have a 'protected pension age' - otherwise you need to be at least 55, or (from April 2028) 57.

Albermarle

If you are still working the £200 per month will get taxed at your usual rate.
If you take it later you may be able to take the pension tax free, depending on your other income at the time.

Pat38493

Fly100 said:

Hello all,

I have a small BT pension that’s indexed linked ( paid into for 8 years ) that I have the opportunity to draw. Some round figures. If I take it now as I approach 52 its will pay me just under £200 per month ( no lump sum £150 with a 12k Lump). Alternatively if I wait until im 60 where I will be forced to draw it comes out at £250 ( no lump sum).
My question is would I be better off taking that £200 now and paying it back into my own Personnel Pension as Im not likely to retire for another 10 years min. On paper it seems a easy decision but I’m not a money wizard.
Appreciate your thoughts.

FLY

If you are thinking of taking the pension and paying it all into your DC pension, this means you would avoid tax on it by paying the corresponding amount back into your DC pension.  From a practical point of view, it might be easier to pay the corresponding amount from your pay into your employer scheme if that's an option for you.

Regarding the lump sum that you mentioned - you may want to read the HMRC guidance on pension tax free lump sum recycling.  It's fine to put the DB pension income part back into another pension, but the lump sum part you just need to be aware of recycling guidelines.

Also as another poster mentioned - are you actually able to draw the pension now at age 52?  For most people it wouldn't be before 55 (soon going up to 57), unless that particular pension has some kind of protected age.