Combining company pensions

dont_use_vistaprint

Hi, I have two pensions from 2 different past employers one is quite small and one  is quite large.

I can access them in just over one year and initially my plan is to shift 20K a year into my cash ISA, (well below the 25% tax free)amount) , then just let the rest carry on being invested in medium risk funds as they are both doing well at the moment.

i am retired and have no income other than interest savings currently and dont plan to work again  

This plan of course might change by then.

But  anyway, the question, considering the current pension regulations, the market and my limited plans is there any merits or otherwise I’ve combining these or keeping them separate.

for those that have combined or plan to combine individual pensions, or think combining has advantages, what is the criteria that you use to decide which pension they go into? 

eskbanker

How small is 'quite small'?  If below £30K then this may open up opportunities for trivial commutation under the small pots provisions....

MallyGirl

it depends on how old the pensions are - some older plans would not support what you want to do. You might be better off transferring both to a modern product if they have limited functionality. Presumably you have other pensions that you live off?

Linton

Whether and where you merge pensions depends on the details of the pensions.  Typical relevent details:

1) charges
2) range of funds available.  
3) features - eg some old pensions may have valuable guarantees or they may not support drawdown.

Your options are to merge one with the other, which may not be possible, or to merge both into another existing pension  (eg are you currently a member of an employers scheme?) or a new personal pension such as a SIPP.

Why do you want to take some of the pension now?  It may be better to keep then invested until you need the money.

I assume these pensions are both DC and not DB (eg final salary). 

dont_use_vistaprint

They are not that old Aviva has an app it’s about 7 years old and the other is Aegon about 12 years old. 

I spoke to them both and they confirmed I can access the money in just over a year. They will write to me in about eight months with the information but it seems that every pound I take out they will place £3 into a drawdown pot, which will be invested in exactly exactly the same way as the remaining money left in the pension. Anything I take out of the drawdown pot would be counted on my tax return.

The only other pension I have is an old LGPS that I cannot access until 65 so currently just living on savings

dont_use_vistaprint

eskbanker said:

How small is 'quite small'?  If below £30K then this may open up opportunities for trivial commutation under the small pots provisions....

eskbanker said:

How small is 'quite small'?  If below £30K then this may open up opportunities for trivial commutation under the small pots provisions....

No not that small , the smaller is around 50k, the larger about 350k.

I also confirmed with both that there are no fees whatsoever to access any of the money left as is

Silvertabby

dont_use_vistaprint said:

They are not that old Aviva has an app it’s about 7 years old and the other is Aegon about 12 years old. 

I spoke to them both and they confirmed I can access the money in just over a year. They will write to me in about eight months with the information but it seems that every pound I take out they will place £3 into a drawdown pot, which will be invested in exactly exactly the same way as the remaining money left in the pension. Anything I take out of the drawdown pot would be counted on my tax return.

The only other pension I have is an old LGPS that I cannot access until 65 so currently just living on savings

Exactly how old is your LGPS pension?  Do you have any R85/early payment protections?  

dont_use_vistaprint

Linton said:

Whether and where you merge pensions depends on the details of the pensions.  Typical relevent details:

1) charges
2) range of funds available.  
3) features - eg some old pensions may have valuable guarantees or they may not support drawdown.

Your options are to merge one with the other, which may not be possible, or to merge both into another existing pension  (eg are you currently a member of an employers scheme?) or a new personal pension such as a SIPP.

Why do you want to take some of the pension now?  It may be better to keep then invested until you need the money.

I assume these pensions are both DC and not DB (eg final salary). 

Thanks, I do need to check out the charges of each fund/pension and my gut feel is that the Aviva platform has the better features and support after the recent experience of all the IT issues  and unavailability with Aegon.

why do I want to access some of the money now?

 It’s a risk isn’t it? It’s always a risk. Do I leave It invested growing nicely between 7% and 11% but subject to tax in the future,  next year could be different it might lose money, or do I shift 20K a year out where it stays tax-free for life and grows a fixed  5.17% now &  maybe  substantially lower in the next 12 to 24 months 

dunstonh

i am retired and have no income other than interest savings currently and dont plan to work again  

Taking some of the 25% but no taxable whilst you have no income is wasteful.   You have £12570 personal allowance you can use from the taxable element until other incomes kick in.

Your way is going to cost you thousands of pounds in tax later on.

dont_use_vistaprint

Silvertabby said:

dont_use_vistaprint said:

They are not that old Aviva has an app it’s about 7 years old and the other is Aegon about 12 years old. 

I spoke to them both and they confirmed I can access the money in just over a year. They will write to me in about eight months with the information but it seems that every pound I take out they will place £3 into a drawdown pot, which will be invested in exactly exactly the same way as the remaining money left in the pension. Anything I take out of the drawdown pot would be counted on my tax return.

The only other pension I have is an old LGPS that I cannot access until 65 so currently just living on savings

Exactly how old is your LGPS pension?  Do you have any R85/early payment protections?  

It ended in 2013 I have around 12 years contributions so it’s not a lot, not aware of any R85/early payment protections

dont_use_vistaprint

dunstonh said:

i am retired and have no income other than interest savings currently and dont plan to work again  

Taking some of the 25% but no taxable whilst you have no income is wasteful.   You have £12570 personal allowance you can use from the taxable element until other incomes kick in.

Your way is going to cost you thousands of pounds in tax later on.

Are you saying I should be accessing  the taxable part first, up to my personal allowance. I didn’t actually know that was an option. I just assumed I had to take the tax free 25% out first,  but that does make a lot of sense as my only income is interest from savings. 

I need to look into this option with them thank you