What should I do with my pensions??

Brie

This is mostly a sense check that I'm not chasing down a completely wrong path so any gentle prods in the right direction would be appreciated.

OK so I'm currently in receipt of a small pension, also work in a very part time job and have SP starting in a few months which will tick me into tax paying territory.  The total of that is not enough to keep us get ahead but that's ok as there's essentially no mortgage any more and when the OH's DB scheme starts next year and SP also kicks in (2 years) that will be a workable total. (& I'll likely stop working then too)

My mission is to get through the next couple of years until the income flow is a bit more stable.  

So I've got 2 different DC schemes one of which is currently valued at about £120k and the other maybe a bit south of £25k.  I'm considering moving them both into a Barclays SIPP and taking drawdown.   I'm never going to hit a high tax bracket so that's not a problem so wondering if I should just take out a tax free lump in this tax year to bolster us along.  And frankly I can't imagine any IFA will be interested in advising me as they'd get very little back for their time and effort.

In the background I'm also contributing to NEST which will provide at best enough for a nice meal out when I take it in a couple of years.  I've got a substantial chunk of shares from my ex employer that I'm tracking waiting for the price to recover.  And I have money owed to me from overseas some of which I'm hoping to land in the UK in a couple of months.  So no money worries per se but just trying to be sensible about it all.  

Thoughts, comments, ideas??

InvesterJones

Could try the pensions board?

https://forums.moneysavingexpert.com/categories/pensions-annuities-retirement-planning

bunnygo

random on internet here (not pensions or tax adviser)

1) book a pensionwise appointment. Fabulous people who will talk you through options and may well come up with things that you did not know about. They don't do investment advice.

2) moving pensions once in drawdown can be tricky; be absolutely sure about what options you may close off before any move

3) consider UFPLS which isn't drawdown and can make the most of your tax free allowance. It triggers the money purchase lifetime allowance, although that has just gone up.

4) charges charges charges; wherever you put the pension, minimise them. And look for transfer incentives; Fidelity are doing one at the moment. Other providers available!

Brie

bunnygo said:

random on internet here (not pensions or tax adviser)

1) book a pensionwise appointment. Fabulous people who will talk you through options and may well come up with things that you did not know about. They don't do investment advice.

2) moving pensions once in drawdown can be tricky; be absolutely sure about what options you may close off before any move

3) consider UFPLS which isn't drawdown and can make the most of your tax free allowance. It triggers the money purchase lifetime allowance, although that has just gone up.

4) charges charges charges; wherever you put the pension, minimise them. And look for transfer incentives; Fidelity are doing one at the moment. Other providers available!

@InvesterJones
Ta! I've asked for it to be moved.
@bunnygo
1 & 4 yes to pensionwise and minimising charges.  I get a special extra low rate at Barclays so that's why I'm looking there.  Will double check but think it's about .1%.
2 why?  couldn't I just draw out the lot?  (yes I need to read up more on everything)
3 off to google UFPLS as I've no clue what that is.

Miser1964

TBH, I think you'd need to use a spreadsheet to understand how significant your income shortfall will be until reaching normal retirement age for your & partners pensions and the state pension. If you're on bread and water, then what are the penalties for taking the £120k pension early? Full transfer out valuations are usually grim.

Brie

Miser1964 said:

TBH, I think you'd need to use a spreadsheet to understand how significant your income shortfall will be until reaching normal retirement age for your & partners pensions and the state pension. If you're on bread and water, then what are the penalties for taking the £120k pension early? Full transfer out valuations are usually grim.

No penalties for taking anything early as I'm above the NRD.  And being DC they both would need to be moved somewhere in any case as there's nothing available in house for either OP.  

Def not on bread and water!!  OH has a nice chunk of savings that is being nibbled at and should last us a while yet.  But I'll be happier knowing better what we've got wherever we have it.  And the steady income too from DB & SP etc as having worked forever I'm used to a monthly "paycheque".

QrizB

Brie said:

So I've got 2 different DC schemes one of which is currently valued at about £120k and the other maybe a bit south of £25k.

£145k of DC money, with you not far from state pension age, could buy you an RPI-linked annuity of about £7k pa (based on HL's current best buys). Or at 4% drawdown (which might be a bit optimistic) you're looking at £5.8k pa.

Either option would be a useful top-up to your state pension - do you have a forecast, are you expecting the full amount or do you need to buy extra years?

Albermarle

Brie said:

bunnygo said:

random on internet here (not pensions or tax adviser)

1) book a pensionwise appointment. Fabulous people who will talk you through options and may well come up with things that you did not know about. They don't do investment advice.

2) moving pensions once in drawdown can be tricky; be absolutely sure about what options you may close off before any move

3) consider UFPLS which isn't drawdown and can make the most of your tax free allowance. It triggers the money purchase lifetime allowance, although that has just gone up.

4) charges charges charges; wherever you put the pension, minimise them. And look for transfer incentives; Fidelity are doing one at the moment. Other providers available!

@InvesterJones
Ta! I've asked for it to be moved.
@bunnygo
1 & 4 yes to pensionwise and minimising charges.  I get a special extra low rate at Barclays so that's why I'm looking there.  Will double check but think it's about .1%.
2 why?  couldn't I just draw out the lot?  (yes I need to read up more on everything)
3 off to google UFPLS as I've no clue what that is.

Regarding Point 2 
Transferring an uncrystallised pension pot ( means no withdrawals have been made) is simpler than transferring a crystallised or partly crystallised pot ( where some withdrawals have been made) .
So as said best to make sure you are happy with your choice of SIPP provider before starting withdrawals.

With a DC pension pot you basically have four ways of taking the money.
1) Withdraw it all as one big lump sum ( normally not recommended)
2) Buy an Annuity
3) Flexi access drawdown
4) UFPLS
You could say 3) & 4) are similar in that you are withdrawing money gradually over a period of time, but the method is a bit different,

.Taking your pension | Help with taking your pension | MoneyHelper

Under 'Taking your pension'
Click 'View All' 

Pipthecat

2 why?  couldn't I just draw out the lot?  (yes I need to read up more on everything)

If you mean withdrawing 120k in one go, you could potentially be facing a >£20k tax bill Pension tax calculator - Which?

Marcon

Brie said:

This is mostly a sense check that I'm not chasing down a completely wrong path so any gentle prods in the right direction would be appreciated.

OK so I'm currently in receipt of a small pension, also work in a very part time job and have SP starting in a few months which will tick me into tax paying territory.  The total of that is not enough to keep us get ahead but that's ok as there's essentially no mortgage any more and when the OH's DB scheme starts next year and SP also kicks in (2 years) that will be a workable total. (& I'll likely stop working then too)

My mission is to get through the next couple of years until the income flow is a bit more stable.  

So I've got 2 different DC schemes one of which is currently valued at about £120k and the other maybe a bit south of £25k.  I'm considering moving them both into a Barclays SIPP and taking drawdown.   I'm never going to hit a high tax bracket so that's not a problem so wondering if I should just take out a tax free lump in this tax year to bolster us along.  And frankly I can't imagine any IFA will be interested in advising me as they'd get very little back for their time and effort.

In the background I'm also contributing to NEST which will provide at best enough for a nice meal out when I take it in a couple of years.  I've got a substantial chunk of shares from my ex employer that I'm tracking waiting for the price to recover.  And I have money owed to me from overseas some of which I'm hoping to land in the UK in a couple of months.  So no money worries per se but just trying to be sensible about it all.  

Thoughts, comments, ideas??

NEST has a contribution charge of 1.8%, which means if your money is only going to be invested with them for a short period of time, that's quite a hefty price to pay for the privilege (although if it's your employer's auto enrolment scheme and that's the only option, then the employer contribution makes it worthwhile). Plenty of cheaper options.

Why a Barclays SIPP? It's administered by AJ Bell - have you checked if it would be cheaper to go direct to them?

Brie

@Marcon I've got a Barclays investment account that charges me .1% and I've not seen anything remotely close to that anywhere else.  I'll need to double check that their SIPP charges a similar rate.  And yes NEST was the only option with my current employer so I'm just in it to max on their contributions.  

@QrizB
Thanks - that's some useful numbers !