Contracted Out Pension Pot - What To Do?

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You could move it to a SIPP to obtain the flexibility you require.

You could then take  approx £5,800 as a  tax free PCLS plus approx £3,750 taxable income fom the balance to keep you within the £12,570 PA.

This could then be contributed to the ISA.

You could then withdraw as required over the next (approx) four tax years.

As things stand at present, you could consider a transfer to HL - if the balance were held in cash there would be no admin charge but a little interest earned. 

https://www.hl.co.uk/pensions/transfer-to-the-sipp

https://www.hl.co.uk/charges-and-interest-rates