Lump sums @ 55

Craig121598

Good evening all,

New poster here just wanted to get feedback from experienced posters of My situation please.

55th Birthday lands in August I currently have approx 30k of bad debt! * most are on higher APR due to poor credit history and its crippling more each Month. I've got no properties but am hoping to have a large deposit for a purchase especially after clearing my debt! 

I have an old work final salary pension with tranfer value of 126k
Currently I also have a healthy works pension sitting @111k

I am aware I can retire on my final salary pension with a lumpsum equal to 25% tax free and also take 25% from my current employer which would be roughly equal to 50k combined only leaving me with 20k house deposit and not really enough of a chunk for a decent mortgage given my age. 
Although must add my partner has 30k in saving to add .

Here's the Dilemma and I know I missed the boat with tranfer values final salary they were nearly double the amount 2 yrs ago.

Am grapling with the idea of transferring all my final salary pension 126k to either my current work pension ( or better option) then swiftly taking out 150k of which 25k would be from the current pension the rest from my lump sum in order to gain a larger pcnt of ready cash big deposit 
I was hoping to have approx 70/80k with partners 30k then mortgage 10yrs 100k 

To deal with my current pension moving fwd which would currently sit at 80k I intend to up my own contributions to 15% a year I earn 45k year in Scotland so above the tax threshold anyway.

I understand it will be tough convincing a financial advisor due to regulations but I can proceed under persistent 

Question is ? Is there anything else I should consider other than paying the higher tax rate on the 126k withdrawal 

Many thanks Craig.

Marcon

Craig121598 said:

Good evening all,

New poster here just wanted to get feedback from experienced posters of My situation please.

55th Birthday lands in August I currently have approx 30k of bad debt! * most are on higher APR due to poor credit history and its crippling more each Month. I've got no properties but am hoping to have a large deposit for a purchase especially after clearing my debt! 

I have an old work final salary pension with tranfer value of 126k
Currently I also have a healthy works pension sitting @111k

I am aware I can retire on my final salary pension with a lumpsum equal to 25% tax free and also take 25% from my current employer which would be roughly equal to 50k combined only leaving me with 20k house deposit and not really enough of a chunk for a decent mortgage given my age. 
Although must add my partner has 30k in saving to add .

Here's the Dilemma and I know I missed the boat with tranfer values final salary they were nearly double the amount 2 yrs ago.

Am grapling with the idea of transferring all my final salary pension 126k to either my current work pension ( or better option) then swiftly taking out 150k of which 25k would be from the current pension the rest from my lump sum in order to gain a larger pcnt of ready cash big deposit 
I was hoping to have approx 70/80k with partners 30k then mortgage 10yrs 100k 

To deal with my current pension moving fwd which would currently sit at 80k I intend to up my own contributions to 15% a year I earn 45k year in Scotland so above the tax threshold anyway.

I understand it will be tough convincing a financial advisor due to regulations but I can proceed under persistent 

Question is ? Is there anything else I should consider other than paying the higher tax rate on the 126k withdrawal 

Many thanks Craig.

You don't have to convince them. The requirement is that you receive advice, not that you follow it. You can open a stakeholder pension yourself (no adviser involved) and transfer to that - stakeholder pensions must accept all transfers from UK registered pension schemes. You'll still need advice before the DB scheme can transfer the funds.

Whether it's a good idea is quite another matter...

MallyGirl

Craig121598 said:

Good evening all,

I have an old work final salary pension with tranfer value of 126k
Currently I also have a healthy works pension sitting @111k

I am aware I can retire on my final salary pension with a lump sum equal to 25% tax free [are you sure of that based on the rules of your particular final salary pension scheme] and also take 25% from my current employer which would be roughly equal to 50k combined only leaving me with 20k house deposit and not really enough of a chunk for a decent mortgage given my age. 
Although must add my partner has 30k in saving to add .

See bit in bold

Marcon

MallyGirl said:

Craig121598 said:

Good evening all,

I have an old work final salary pension with tranfer value of 126k
Currently I also have a healthy works pension sitting @111k

I am aware I can retire on my final salary pension with a lump sum equal to 25% tax free [are you sure of that based on the rules of your particular final salary pension scheme] and also take 25% from my current employer which would be roughly equal to 50k combined only leaving me with 20k house deposit and not really enough of a chunk for a decent mortgage given my age. 
Although must add my partner has 30k in saving to add .

See bit in bold

If it really is 25%, could be a public sector scheme...and if it's an unfunded scheme (eg NHS), then transfers can only be made to another defined benefit scheme, which would scupper the plan at the off!

AlanP_2

Ignoring the wisdom and practicalities of transferring the DB for now:

If you take even 1p of taxable income from your DC pot you will be affected by MPAA and limited to £10k a year of pension contributions - including yours, employers and HMRC tax relief.

May not be an issue but best to be aware.

Craig121598

Hi Mollygirl and Marcoon

A previous employee whom I still keep in touch with was given the option to retire on the Scheme aged 50 (now 55) he was offered 25% and a reduced pension, I have asked for the breakdown from the pension provider and paperwork here next week so can post figures then 

AllanP thank you for the heads up with MPAA I'll be mindful of this rule and consideration.

Overall I see the importance of gaining a foot on the property ladder and this lumpsum is my only chance I would hate to keep renting into retirement, and even limiting to 10k a year might still work out in the longer run pressuming I continue working until 67 ?
My current works pension sitting at 111k 

Craig121598

MallyGirl said:

Craig121598 said:

Good evening all,

I have an old work final salary pension with tranfer value of 126k
Currently I also have a healthy works pension sitting @111k

I am aware I can retire on my final salary pension with a lump sum equal to 25% tax free [are you sure of that based on the rules of your particular final salary pension scheme] and also take 25% from my current employer which would be roughly equal to 50k combined only leaving me with 20k house deposit and not really enough of a chunk for a decent mortgage given my age. 
Although must add my partner has 30k in saving to add .

See bit in bold

My pension provider gave the sums via email 
The offer 30k with 450 a month quite generous 👍so I've gave up the idea of full withdrawal since the pension would be passed to my partner  reduced % then scribbling 

wjr4

You’d pay additional income tax if you made that large withdrawal